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283-Naar-een-nieuw-sociaal-contract_Het-pensioen-op-punten_Leuvense-Economische-Standpunten-2017_162_10-april-2017

LEUVENSE ECONOMISCHE STANDPUNTEN 2017/162 Erik Schokkaert erik schokkaert@kuleuven be Pierre Devolder pierre devolder@uclouvain Jean Hindriks jean hindriks@uclouvain Frank Vandenbroucke F I G Vandenbroucke@uva nl 10 april 2017 NAAR EEN NIEUW SOCIAAL CONTRACT – HET PENSIOEN OP PUNTEN SAMENVATTING • Een echte pensioenhervorming moet verder gaan dan punctuele ingrepen Ze op een geloofwaardige wijze gestalte geven aan nieuw sociaal contract tussen de verschillende generaties De Commissie Pensioenhervorming had die nieuwe architectuur opgebouwd rond invoering van puntensysteem In dit Standpunt brengen we basisprincipes ervan nog eens in herinnering Mensen bouwen tijdens hun actieve leven aantal pensioenpunten waarop punten worden toegekend bepaalt verdeling binnen generatie Het totaal verworven wordt het moment pensionering omgezet pensioenbedrag waarde punt garandeert gepensioneerden inkomen dat verhouding staat tot gemiddelde samenleving uittreding kan zekere hoogte door mensen zelf gekozen maar wel actuarieel neutrale gebeuren We stellen correctie voor eerste instantie afhangt duur loopbaan tonen welke mogelijkheid deeltijds pensioen ingebouwd en hoe er rekening gehouden met zwaarte beroep toekomstige stijging levensverwachting opgevangen verlenging referentieloopbaan Wanneer niet voldoende is last aanpassingen evenwichtige over verdeeld Musgrave-regel legt loon na aftrek bijdragen pensioenen constant blijft LES 2 Naar INLEIDING 2020- 2040 heeft zijn rapport juni 2014 samenhangende visie ontwikkeld grondige hervorming Belgische pensioensysteem1 regeerakkoord regering-Michel voorstel gedeeltelijk overgenomen Tot nu toe werden echter hoofdzakelijk maatregelen genomen waarvan verschuiving pensioenleeftijd 65 naar 67 jaar meest opvallende Punctuele voldoende: dringend gewerkt uitbouw globale systeem voorbereiding werd ook opgenomen willen daarbij technische details of formele aspecten eerder onderliggende maatschappelijke doelstellingen meer presentatie gevonden et al (2017)2 (2017)3 vormt andere korte inleiding iets klemtoon “Jongeren zullen slechts bereid bij te dragen wanneer ze geloven hen toekomst aanvaardbaar zal opleveren ” belangrijkste uitdagingen waarmee pensioensysteem geconfronteerd afbrokkelende vertrouwen groeiende onzekerheid zowel oudere als jongere Dat hangt samen twijfels betaalbaarheid langere termijn vooral licht vergrijzing Voor deel verklaard beperkte transparantie hebben moeilijk om goede kijk krijgen pensioenrechten opbouwen repartitiestelsel waarbij nochtans houdbaar Jongeren immers sociale aanvaardbaarheid dus maken intergenerationele rechtvaardigheid d w z welvaartsverhouding ouderen jongeren Maar geïnteresseerd coherent daarover klare regels bevatten Bovendien wijzigende omstandigheden Traditionele gezinsstructuren staan onder druk individualisering leidt toenemende vraag flexibiliteit vrijheid uitdaging bestaat tegemoet komen collectief Enkel grote repartitiecomponent economische schokken vangen effecten spreiden4 correcte geconcipieerd moeten uitgewerkt duidelijk verantwoordelijkheid impliceert techniek ertoe deze principes implementeren leggen eerst uit dieper elementen BASISPRINCIPES VAN PUNTENSYSTEEM intragenerationele (afdeling 3) 1 commissie bestond Jos Berghman (+) Jacques Boulet Bea Cantillon Ria Janvier Alain Jousten Françoise Masai Gabriel Perl Yves Stevens Haar werkzaamheden ondersteund Hans Peeters Guy Van Camp Koen Vleminckx volledige beschikbaar http://pension2040 belgium be/nl/ E P J (2017) Towards an equitable and sustainable points system A proposal for pension reform Belgium Discussion Paper DPS 17 03 Department Economics KU Leuven 3 Réforme des pensions légales: le système à Regards Economiques No 130 4 betekent overigens geen ruimte zou kapitalisatie Integendeel gestreefd mix repartitie maandelijks euro behulp volgende eenvoudige formule: = opgebouwde x correctiefactor afhankelijk situatie Alle verzameld zelfde onafhankelijk periode waarin verkregen mechanisme bepaald transparante inhoud beloften gedaan zekerheid bieden welvaartspositie lichten afdeling 5 type – tegenstelling wat vaak geval alleen af leeftijd betrokkene haar iemand wiens overeenstemt vastgelegde referentieduur gelijk Hij kleiner groter later uitgelegd men reeds principe welvaartsvast geïndexeerd nominale groeivoet brutoloon economie noodzakelijk bewaken kunnen bestaande hierin betrokken Op zogenaamde houdbaarheidscoëfficient toegepast (zie 5) gepleit fusie pensioenstelsels werknemers zelfstandigen ambtenaren stelsels dezelfde passen gemengde zouden elk actief uiteindelijke samengesteld deelpensioenen nota illustreren werknemersstelsel PUNTENOPBOUW TIJDENS ACTIEVE LEVEN: INTRAGENERATIONELE RECHTVAARDIGHEID rechten huidige berekend som inflatie gecorrigeerde geplafonneerde brutoverdiensten gedeeld 45 vermenigvuldigd vervangingsratio (0 60 0 75 gezinssituatie) opbouw puntenrekening gebeurt gelijkaardige doordat gerekend facto wijzigingen reële bruto één pensioenpunt kennen gedurende bruto-inkomen verdiend voorbeeld illustreert Voorbeeld 1: André accumuleert basis eigen jaarlijks alle private sector Als verwerft hij 80% bedraagt krijgt 8 120% steeds uiteindelijk Dit biedt transparant Hierbij vorm verzekeringsprincipe gerespecteerd langer werkt verdient verwerven Natuurlijk weet betekenen latere geldtermen: terugkomen toch zonder probleem relatieve plaats bepalen verzamelt Solidariteit verzekeringssysteem solidariteit zwakkeren opvattingen (en politieke partijen bewegingen) lopen uiteen ver waar grenslijn getrokken individuele collectieve maakt mogelijk hierover plafonds minima ingevoerd boven plafond uitstijgt levert gedeelte bijkomende zich uitgesproken voorgesteld mee laten evolueren zwaksten minimale puntengarantie hele voltijds daardoor recht puntentotaal 10% bestaansminimum ligt garantie via minimum proportioneel lengte tweede periodes inactiviteit (onvrijwillige werkloosheid ziekte ouderschapsverlof enz ) beslissen activiteiten gelijkstelling aanmerking Hier zeker breed maatschappelijk debat: bijvoorbeeld mantelzorg belangrijker toekennen mantelzorgers ophouden werken zorg verlenen? En hoeveel krijgen? Moet hier forfaitaire hoeveelheid daarvoor loon? Zoals gezegd zichzelf antwoord vragen antwoorden concreet coherente Doordat makkelijk interpreteren (het geeft verdiend) discussie gevoerd Men hoeft beantwoorden welk geldelijk overeenkomen perioden rechtstreeks concentreren positie vergelijking FLEXIBELE UITTREDINGSLEEFTIJD essentieel inschatting uitleggen daar uittredingsbeslissing Deze wenselijk omdat aansluit aanvaardbare Duur “normale” arbeidsmarkt Om maken: gekeken wagen kilometers kilometerteller (zonder sanctie) achter rug iedereen beginnen bereikt worden5 Rond vooraf venster6 lager (een malus) hoger bonus) idee geoperationaliseerd “correctiefactor” voorkomt basisformule normale verlaat bonus malus verschil effectieve individu geargumenteerd repartitiesysteem zin uniforme wettelijke verdwijnt zeer late lange (niet-gelijkgestelde) hoog interactie « » ons «normale» 6 model uniform ogenblik begon qua benadering Rapport 2020-2040 impliceren venster laat variëren functie Vanzelfsprekend vormen specifieke voorstellen stof toegepaste afhangen levensverwachting7 Formeel uitgedrukt correctiecoëfficiënt Die vroeger gaat toont denkbeeldige (die louter ter illustratie vastprikken jaar)8 2: Veronderstel 21-jarige 66 wil vervroegd zij 64 50 €40 Omdat twee (verwacht overblijvende levensjaren jaar/ verwacht jaar) 19 2/20 9239 40 923 1846€ Deeltijds gericht standaardgeval volledig Flexibiliteit einde blijven optie geleidelijk verlaten veel gelegenheid creëren economisch robuust uitstapregelingen creëert duidelijkheid statuut personen (deeltijds) tijd vullen zoals verkiest: voorwaarde opgelegd tegelijkertijd behoudt professionele activiteit oefenen ingewikkelde regulering vermijden weer verdwijnen natuurlijk enkel inderdaad invoert doen belang nemen daarna Ook verduidelijken hand eenvoudig “Deeltijds 3: Charles 21 geworden helft omzetten Rekening houdend hem 25 923€ halftijds stopt zet (25 + 26 2) Er veronderstellen lijn gestegen 41€ 41 1074€ 946€ Zijn 64-jarige 2020€ Vergelijk welvaartsaanpassing 1892€ Zware beroepen Bij elke speelt zware rol tamelijk algemeen rechtvaardig beschouwd fysiek psychisch zwaar uitoefenen erover arbeidsduur soms loopbaanduur criterium problematiek zwaardere terecht 7 Zie aanvullende minstens Indien uitvallen zie 9 cijfers http://ec europa eu/eurostat/web/population-demography-migration-projections/ deaths-life-expectancy-data (update 20/3/2017) voeren Aan namelijk additionele gevolg ouder grotere compenseren vervroegde zodat hetzelfde uittreden uitgeoefend “Aan vele voordelen gemakkelijke houden verschuivingen definitie doorheen belonen lichter overgeschakeld Daardoor laatste beslissing ontmoedigd wordende moeite (zwaar) overstappen mogelijkheden gedrang blijkt zo gemakkelijk consensus precieze bestaan overtuigende objectieve indicatoren bovendien veranderen overleg daarom vaste reserveren allocatie daarvan partners beslissingen vast liggend puntenbudget DE WAARDE PUNT: VERTROUWEN EN ZEKERHEID open vastgelegd sleutelparameter ik heb 25-jarige leeftijd: weten mijn niemand uitzien tussentijd raken kern probleem: vertrouwenwekkend formuleren ouderen? gezicht denken meeste geboden geldelijke tegenwaarde misvatting (vanuit oogpunt) geldbedrag sterk gegroeid bedrag mij net (of onder) armoedegrens ingestort beloofde overeenkomt hoge levensstandaard realiseren verzekering tegen risico vanuit welvaartsstandpunt beter koppelen arbeidsinkomen onmogelijk genereuze toestand verslechtert aanzienlijk nageleefd onwaarschijnlijk (de jongeren) welvaartspeil bereiken Geloofwaardige vereisen voorhand nagedacht mogelijke aanpassingsmechanismen wijzigt ideeën achtereenvolgens Echte valse zekerheden: linkt geldende levensstandaard10 Beschouw precies volbracht zodanig persoon fractie hypothetische vermits praktijk voortschrijdend 4: Dirk juist referentieloopbaan) 100€ 50% voorziet (gelijk punt) 550€ 555€/45 34 4€ identiek Iedereen perfect volgen voorspellen referentiepersoon verhouden Gedurende bekend: waarborg toelaten vergelijkbaar anderen enige beste Zodra gepensioneerd welvaartsvast: aangepast evolutie lonen tenzij bepaalde waarborgen rechtvaardige stabiel stand Aanpassingsmechanismen: contract: referentiepunt liggende best voorspelbare) wijziging logisch prikkel indien behouden voorwaardelijke zekerheid: stijgt11 theorie leiden daling puntenwaarde beïnvloed normaal gesproken stijgen voorzien waardoor nooit dalen hoogstens jaren bevroren totdat wenselijke modaliteiten voorwerp uitmaken onderhandelingen: voorspelbaar gecreëerd houdbaarheid pensioenstelsel “De stijgt betaalbaar voordoen (bv sterke structurele werkloosheid) waarvoor aanpassing bevolking gevallen zuiver defined benefit» afhankelijkheidsratio bijdragevoet daarop loonkosten concurrentiepositie «defined contribution» verminderen schouders Ervaringen landen uitgewezen welvaartsverliezen lage evenwichtig aanpassingsmechanisme eerlijk verdelen actieven stelt baseren 11 standaardmodel aangetoond wijzigen aandeel pensioenjaren vanaf begin Musgrave-regel12 regel past filosofie vastliggende gehanteerd bepaling werking vereenvoudigd realistisch kader 5: budgetvoorwaarde geschreven gemiddeld loontrekkenden schrijven (aantal gepensioneerden/ loontrekkenden) Vertrekken initiële dubbel zoveel respectievelijk 000€ 500€ 25% evenwicht Musgrave-ratio 500/ ((1-0 25) 000) Bekijken 35 2% derde kolom Veronderstellen (vierde kolom) (vijfde zelfs (rechterkolom) onderstaande tabel vergelijkt drie situaties: (bovenste paneel) groei volgt omwille (middenste Musgrave (onderste spreidt Zowel netto-lonen stijgen(omdat 2%) stijgingsritme cruciaal reageert verhoogd daalt Musgrave-verhouding productiviteitstoename fors omhoog 12 Richard (1986) «A reappraisal Financing Social Security» Public Finance a Democratic Society Vol New York Press Economische VASTE BIJDRAGEVOET 500 000 142 876 netto 250 56 48 42 VAST 30 200 900 600 71 77 83 MUSGRAVE REGEL 852 692 574 28 32 320 080

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282-Case-Study_EUBS_IMH_US_16122015_Luigjes_Vandenbroucke

1 Institutional moral hazard in the multi-tiered regulation of unemployment United States – Background paper Chris Luigjes & Frank Vandenbroucke December 2015 This document reflects views only authors and European Commission cannot be held responsible for any use that may made information contained therein Please refer to this as follows: C F (2015) support ‘Institutional Moral Hazard Multi-tiered Regulation Unemployment Social Assistance Benefits Activation – A summary eight country case studies’ Abstract has been written preparation a research project funded by (on Feasibility Added Value Benefit Scheme contract VC/2015/0006) adds detailed analysis following deliverable project: studies; but it was not We concept ‘institutional hazard’ analyse intergovernmental relations within welfare states specifically domain unemployment-related benefits related activation policies (the ‘regulation unemployment’) is one separate studies focuses on US insurance cooperation between federal government assistance divided state-operated programmes block grants federally designed food Transversal are implemented At first sight concerns institutional seem limited But several reforms altered cost-sharing arrangements social led stricter minimum requirements state-run Therefore would mistake overlook role system Keywords: hazard; states; relations; insurance; assistance; Active Labour Market Policies; activation; policy; 2 States1 thank Burt Barnow O’Leary very useful exchanges Georg Fischer comments List abbreviations ABAWD Able Bodied Adults without Dependents AFDC Aid Families with Dependent Children BBCE Broad-Based Categorical Eligibility BCR Cost Ratio DHHS Department Health Human Services DOL –Department EB Extended Compensation EmB Emergency ESAA Employment Service Administration Account EUC08 programme 2008 ITA Individual Training FUTA Federal Tax Act MoE Maintenance Effort PRWORA Personal Responsibility Work Opportunity Reconciliation SA SFAG State Family Grant SNAP Supplemental Nutrition Programme E&T SSA Security TANF Temporary Needy UI DA (FNS) Agriculture (Food Service) USP Unified Plan WDB Workforce Development Board WIA Investment WIB Boards WIOA Innovation Introduction Two actors dominate unemployment: The have large amount autonomy just implementation benefit systems also creation sub-state governance administration As consequence American schemes different their set-up than most other cases we examine Its (UI) federal-state relatively low generosity scheme its multiple distinguishing features relative Furthermore does single unified (SA); instead multitude residual services two important SA-related schemes: (TANF) (SNAP) significant concerning design basic parameters such levels more centralised still involves various Finally from those ’workforce development’ overarches both unemployed employed jobseekers links at level 3 individuals specific (although some exceptions do exist) considerable leeway workforce development even charge development-governance Because mechanisms control possible exception Canada often exerts influence through conditional funding However generally remain own legislation (and therefore forced laws) focus strongly administrative conditions rather actual behaviour result might less prominent view perhaps reinforced which makes fiscal impact salient entirely correct however below will show an driver reform 4 somewhat like Austrian scheme: laid down state So constituent parts federation they adopted unlike contribute costs cooperative Cf Table division labour Division governments Source: 2013: 1-2 Ensure conformity substantial compliance law regulations rules operations Determine operation methods directly administer fund provide money proper efficient Take claims determine eligibility insure timely payment workers Set broad overall policy monitor performance technical necessary employer liability assess collect contributions Hold invest all trust until drawn compensation three four five six

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281-Case-Study_EUBS_IMH_Switzerland_16122015_Luigjes_Vandenbroucke

1 Institutional moral hazard in the multi-tiered regulation of unemployment Switzerland – Background paper Chris Luigjes & Frank Vandenbroucke December 2015 This document reflects views only authors and European Commission cannot be held responsible for any use that may made information contained therein Please refer to this as follows: C F (2015) support ‘Institutional Moral Hazard Multi-tiered Regulation Unemployment Social Assistance Benefits Activation – A summary eight country case studies’ Abstract has been written preparation a research project funded by (on Feasibility Added Value Benefit Scheme contract VC/2015/0006) adds detailed analysis following deliverable project: studies; but it was not We concept ‘institutional hazard’ analyse intergovernmental relations within welfare states specifically domain unemployment-related benefits related activation policies (the ‘regulation unemployment’) is one separate studies focuses on Swiss insurance regulated federal government thereof implemented cantonal offices Minimum requirements monitoring system were introduced ensure these focused caseloads Furthermore attempted harmonise social assistance top-down efforts dropped favour non-binding inter-cantonal guidelines In short reforms borne out concerns often rejected or altered cantons defended their autonomy Keywords: hazard; states; relations; insurance; assistance; Active Labour Market Policies; activation; policy; 2 Switzerland1 thank Guiliano Bonoli Cyrielle Champion very useful exchanges extensive comments our drafts List Abbreviations AC Fonds de compensation l’assurance-chômage (unemployment fund) ALMP Policy AVIG/LACI Arbeitsversicherungsgesetz/Loi sur l’assurance Chomage (Federal Act Obligatory Insurance Insolvency Compensation) MAMAC Medizinisch‐Arbeitsmarktliche Assesments mit Case Management (inter-agency collaboration pilot project) PES Public Employment Services RAV/ORP Regionalen Arbeitsvermittlungszentren/offices régionaux placement (Regional employment offices) SA SI Supplément d’intégration (integration supplement SA) SODK/CDAS Konferenz der kantonalen Sozialdirektorinnen und Sozialdirektoren/ Conférence des directrices et directeurs cantonaux affaires sociales (inter-cantonal association ministries) SKOS/CSIAS Schweizerische für Sozialhilfe/Conférence suisse institutions d’action sociale (Swiss Conference Assistance) SMI minimal UA UI Introduction interesting subject at hand due combination factors First all characterised significant political decentralisation involves three levels government: level municipalities Secondly are amongst highest OECD terms net replacement rates other words if combined with long duration high accessibility probable labour market governance will confronted substantial measure both individual institutional issues Finally somewhat resembles German opted sustain face same dilemmas Germany opt more control protection governed unique (Bertozzi Ross 2008 p 122) its brand federalism encompasses major executive role 26 regions ‘cantons’ relatively generous also heavily private (for-profit non-profit) agencies Some argue two features inhibits formulation coherent strategy “some categories non-working individuals […] catered regimes obeying different masters” Thirdly akin Anglo-Saxon archetype than continental characterises most neighbouring countries The type shares characteristics US counterparts (Obinger Armingeon Bertozzi 2005 263) interplay between state Obinger al note forces have decisive shaping policy: 1) unifying centralizing which formed challenges 19th 20th century; 2) cooperation 3 municipal administrations context weak central state; 3) force diversity decentralization “stemming from competencies resources polities politics policies” These influential It could said four key principle sanctioned legislate policy area no explicit constitutional competence Every takeover new requires direct democratic parliamentary approval Second differentiates substantially region tax public services contrary Austrian Third prerogative levy taxes periodic parliament voters always granted temporary basis creates bias towards ‘lean’ reflecting what called ‘the federalism’ reliant administration systems implementing programmes pp 266-267) Not included list probably distinguishing influence institutionalization democracy through referenda Direct essentially functions “strengthen power veto available constituent units” 270) preserves promotes regional combines some benefit schemes strong an (both for-profit regulates old-age pensions sickness invalidity insurances maternity leave child completely organised insurers play large federally especially when comes (Duell Tergeist Bazant Cimper 2010 81) “However although main legislative regulatory authority over finances respective make considerable they given set up varying implementation mechanisms Thus there nationally-unified since free choice means reach goals national level” 38) design financing left So fragmented actors responsibilities multiple Then unlike Dismissal limited exposing business cycle Immigrant workers time functioned reserve perceived success WWII until 1990s crisis broke point led many (attempted) revisions rising resulted renewed focus changed nature various security tried prevent dumping According areas relied contributed fragmentation (i e 4 started promote multi-level coordination early 2000s (Champion Pisoni 2014 15) reduce practice initiatives experimentation several types 5 experienced genesis scheme everything do special administrated financed 38 funds (Caisses chômage) obligatory 1982 Each canton own fund 12 privately partners overseen Ministry economy organisation can vary slightly “the rather precise rules granting fixed law corresponding ordinance” 53) constellation reflection historical developments first had already created century (tripartite result legislation (private) local action therefore dispersed heterogeneous delayed current factors: initial absence jurisdiction feedback arrangements lack will” 276) Only after WWI general strike did pressure intervention increase By then beginning along lines Ghent anchored provide subsidies standards 1924 seen gradual step direction involvement less homogenous today would prove inadequate Great Depression sparked round debate See Articles 77-78 AVIG Article 114 Constitution 1947 decades intense confederation adopted amendment empowered enact Federal followed 1951 institutionalised existing obligated them adhere However voluntary never gained great importance 283) oil shocks 1970s kick-started wave (provisional) yet create Compensation (AVIG/LACI) name suggests “enacted statute procedural substantive law” 135) additional regulations dominant Since undergone economic recession notably 1995 2003 2011 characterise inherent status quo They blocked development shielded austerity And so retrenchment during either watered down coupled 288-289) reform possible compromise; generosity toned little return 6 measures (ALMPs) extension maximum impact federalist structure Popular protest opposition against slashing hold latter incentive agree spill 291) Further 3rd 4th revision discussed detail later below All employees nowadays covered designed Despite existence Denmark we classify federalised administratively decentralised devolved primarily contributions fiscal burden equally divided employers amount 90% total while rest 52-53) (see Table revenues collected (Fonds AC) ALMPs job centres) managed ministry fully under 1a risks 2-5 22 7 27 Duell 88 200 daily allowances reflect regime people who exempt receive 90 Financial (AC) Source http://www espace-emploi ch/ueberuns/arbeitslosenversicherung/ 2013 Millions CHF % Contributions insured 6633 91 6% 6457 5% participation Confederation 454 3% 449 4% 151 1% 149 five six

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280Case-Study_EUBS_IMH_Germany_24032017_Luigjes_Vandenbroucke

1 Institutional moral hazard in the multi-tiered regulation of unemployment Germany – Background paper Chris Luigjes & Frank Vandenbroucke December 2015 This document reflects views only authors and European Commission cannot be held responsible for any use that may made information contained therein Please refer to this as follows: C F (2015) support ‘Institutional Moral Hazard Multi-tiered Regulation Unemployment Social Assistance Benefits Activation – A summary eight country case studies’ Abstract has been written preparation a research project funded by (on Feasibility Added Value Benefit Scheme contract VC/2015/0006) adds detailed analysis following deliverable project: studies; but it was not We concept ‘institutional hazard’ analyse intergovernmental relations within welfare states specifically domain unemployment-related benefits related activation policies (the ‘regulation unemployment’) is one separate studies focuses on Responsibilities German are divided between federal government Public Employment Services (PES) local level with supervisory role regional The system relatively centralised result reforms aimed at mitigating institutional increasing divergence insurance social assistance caseloads Specifically these created new scheme more tightly regulated placed responsibilities one-stop-shops operated jointly PES municipalities Keywords: hazard; states; relations; insurance; assistance; Active Labour Market Policies; activation; policy; 2 Germany1 thank Regina Konle-Seidl Werner Eichhorst very useful exchanges extensive comments our drafts List Abbreviations ALG I Arbeitslosenversicherung often referred Arbeitslosengeld (unemployment insurance) II Grundsicherung für Arbeitsuchende (social assistance) ARGEn Arbeitsgemeinschaften (pre-reform joint one-stop shops; despite current Gemeinsame Einrichtungen still ARGEn) BA Bundesagentur Arbeit (federal PES) BMAS Bundesministerium und Soziales (German Federal Ministry Affairs) SA SGB Zweites Sozialgezetsbuch (legislation governing II) III Drittes I) UI Insurance Introduction federation which However always involves several important actors: semi-independent (Bundesagentur or BA) regions Heterogeneity practices instances were among contributing factors leading up Hartz IV experience followed make an interesting Before 2002-2005 had multiple employment-related benefit schemes administered different levels More importantly those rested hands set-up akin Switzerland Austria In face similar challenges (a dichotomy heterogeneity performance) opted (SA) combined (into became centrally financed changes (UI) modest remained fully governance beneficiaries underwent introduced shops central authorities side-by-side It consortia subject subsequent issues arose constitutional also practical nature unique feature model parallel have out Starting policy experiment so-called Optionskommunen since become embedded legislation thereby creating three types 3 perform services: offices Notwithstanding could argued most all cases As explained synthesis report we distinction ‘principal agent problems’ expression situations two political constituencies involved; if actors involved lower do principal-agent problems Our ‘principal-agent relation’ can questioned institution such (BA): ‘agent’ self-governing partners ‘principal’ ‘principal-agent’ terminology used recognize validity criticism2; corroborated typology developed Mabbett Bolderson who argue multi-level prevails relationships governments administering institutions security rather than simple (Mabbett 1998) Nevertheless context want maintain involving non-political (including latter some extent ‘principals’) follow-up will return question indebted point 4 (Arbeitslosenversicherung federally legislated implemented Its replacement rates vary 60% 67% previous net wage depending whether beneficiary children maximum duration years Jobless workers able available actively seeking employment insured minimum twelve months two-year period eligible 5 strictness eligibility criteria average compared other OECD countries (see Figure 1) There reasons this; hand there comparatively strict availability requirements suitable work job search monitoring On relaxed sanctioning regime 2) See paragraphs 89 129 149-154 118-121 147-148 155-160 Overall Source: Langenbucher p 27 Strictness codified (SGB III) employer employee contributions 6 administration disbursement operates 178 over 773 branches overseen 10 directorates Much like its Austrian counterpart at-arm’s-length agency ministry 7 responsibility operations lies management board (Vorstand) monitored tripartite (Verwaltungsrat) Management committees supervise 341-349 regulations amounts how they collected when paid Paragraphs 363-365 determine funding comes from level; deficit covered (Ebbinghaus 2007 pp 35-36) sections chapter 11 0 Average 8 cases6 inform misconduct left untouched sole legislative authority because no meaningful autonomy determining parameters regard sensu stricto neither decentralised nor delegated analytical grid paragraph 374 becomes clear Table structural differences across Länder Unfortunately data per municipality region readily quite large making probable indeed size Since both entails redistribution EU Force Survey NUTS own calculations 1999 2000 2001 2002 2003 2004 2005 2006 9 98 13 12 Standard deviation 92 05 32 26 94 43 Coefficient variation 45 50 56 49 44 42 36 2008 2009 2010 2011 2012 2013 2014 08 07 16 91 09 03 65 33 21 39 35 34 four five six

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1 Institutional moral hazard in the multi-tiered regulation of unemployment Denmark – Background paper Chris Luigjes & Frank Vandenbroucke December 2015 This document reflects views only authors and European Commission cannot be held responsible for any use that may made information contained therein Please refer to this as follows: C F (2015) support ‘Institutional Moral Hazard Multi-tiered Regulation Unemployment Social Assistance Benefits Activation – A summary eight country case studies’ Abstract has been written preparation a research project funded by (on Feasibility Added Value Benefit Scheme contract VC/2015/0006) adds detailed analysis following deliverable project: studies; but it was not We concept ‘institutional hazard’ analyse intergovernmental relations within welfare states specifically domain unemployment-related benefits related activation policies (the ‘regulation unemployment’) is one separate studies focuses on There are two principal actors Danish unemployment: central government municipalities insurance funds regional governments have less important role Concern institutional led several reforms municipal system resulting increasingly monitoring complicated financing method The trade-off between complexity controls need local flexibility source ongoing reform efforts Keywords: hazard; states; relations; insurance; social assistance; Active Labour Market Policies; activation; policy; 2 Denmark1 thank Bodil Damgaard Thomas Bredgaard Michael Rosholm very useful exchanges These councils tripartite institutions which public authorities partners meet discuss both implementation thereof were introduced other levels well cf infra 3 employment regions distinct from labour market councils; they act transmission level Cf their precise List Abbreviations PES Public Employment Services SA UI Insurance Introduction can characterised fully municipalised decentralisation Due combination large fact still bears substantial part budgetary impact assistance (SA) (UI) extensive experience with performance management Furthermore undergone many changes unemployment; since most these reactions what seen relevant subject at hand Contrary cases examined study federation However multi-layered four play key role: All had some point or another major design implementing Historically benefit regime centralised responsibility included includes extent trade unions administered (co-)financed (Arbejdsløshedskassen) disbursed delivered services insured unemployed It regulated scheme monitored while charge administration Reforms 1994 reshuffled responsibilities altered size even new player: Currently (co-)finances schemes finances regions3 sets out broad targets set up reimbursement model through influences behaviour become all administer link although formal shrinking also lost reshuffling Landmark include 2007 resizing introduction jobcentres They 2009 complete municipalisation became beneficiaries implemented co-financed contingent being line developments accompanied every representatives could monitor share undergoing again aimed changing 4 replacement rates historically among highest Europe currently remain same 90% say there (generosity of) remains politically controversial duration From until 2003 succession shortened eligibility period seven years;5 2011 further reduced maximum years three-year One year enough requalify entire under fire because short(ened) combined means-tested results individuals who ‘fall out’ system: people exhaust claim suffer great loss income when do qualify In 2014 special commission Dagpenge Kommissionen) created address issues recently published findings now considered 6 Shortening consequences sense earlier strategy (see section UI) Capped DKK 815 per day 5 Not change first mandatory; ended ‘passive period’ altogether (Andersen Svarer p 12) An interesting proposal greater incentives take work Working short spells will either extend create record Related proposes couple ‘break’ days during would excluded payments (Dagpengekommissionen 2015) scores higher criteria average study; strictness relates mostly availability requirements sanctions repeat offenders Figure Error! Reference found ) strict likely high strong focus crucial its flexicurity Overall Source: Langenbucher 27 involvement Trade manage disburse Workers must apply fund choice initiate coverage Thus contrast (with exception Switzerland) directly controlled (agency) Yet formally approved 7 form Ministers Pensions oversees conduct 8 legislation Act governing 9 sensu stricto contrary Swiss (and affiliated unions) an (implementation) Their throughout successive concern described sections For suffices least See chapter chapters 14-15 Other acts Organisation Support Efforts deals different governance Measures predominantly Strictness financed three sources: contributions (paid members funds) used finance costs 10 After weeks municipality starts contribute 50% 100% cost individual care Table 1) 11 initial four-week government’s 12 (76-78) reforming adjustment contribution more discussion 0 Average cases7 Municipal after Chapter (82 a) Default 70% clients participating (Chapters Measures) job/activation offer (Chapter 16 started time five six

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1 Institutional moral hazard in the multi-tiered regulation of unemployment Canada – Background paper Chris Luigjes Donna Wood & Frank Vandenbroucke December 2015 This document reflects views only authors and European Commission cannot be held responsible for any use that may made information contained therein Please refer to this as follows: C D F (2015) support ‘Institutional Moral Hazard Multi-tiered Regulation Unemployment Social Assistance Benefits Activation – A summary eight country case studies’ Abstract has been written preparation a research project funded by (on Feasibility Added Value Benefit Scheme contract VC/2015/0006) adds detailed analysis following deliverable project: studies; but it was not We concept ‘institutional hazard’ analyse intergovernmental relations within welfare states specifically domain unemployment-related benefits related activation policies (the ‘regulation unemployment’) is one separate studies focuses on Responsibilities Canadian are divided between federal government provinces The insurance social assistance all caseloads Provincial responsibilities loosely regulated bilateral agreements with Even though system generates institutional does seem major concern characterised high level provincial autonomy Keywords: hazard; states; relations; insurance; assistance; Active Labour Market Policies; activation; policy; 2 List Abbreviations AFDC Aid Families Dependent Children ALMP Policy CAP Plan CEIC Employment Insurance CJG Job Grant CHST Health Transfer CHT CRF Consolidated Revenue Fund CST EAS Services EBSM Support Measures EI EIA Act EIOA Operating Account EIR Regulations FPFA Federal-Provincial Fiscal Arrangements JFA Agreements LMA Agreement LMDA Development MAR Monitoring Assessment Report MISWAA Task Force Modernizing Income Security Working Age Adults P/T Provincial/territorial PES Public TANF Temporary needy UI WITC Tax Credit Introduction federation relevant subject at hand Its ten three territories (from here referred provinces) play significant role its It classified politically decentralised (Mosley 2011 p 9) have shifted levels throughout modern history Starting from 1867 constitution dominant player changed after First World War again before during Second when initiated (UI) scheme included employment services However retained responsibility (SA) training albeit different forms through time Changes 1990s marked start political decentralisation effort where transferred (but benefits) granting them considerable flexibility leeway designing implementing become funding management pan-Canadian aspects while still retaining some direct delivery (for Aboriginal youth disabled programs) current brand federalism policy area reminiscent US type providing (block grant or agreement-based) provincially designed implemented programmes mechanisms labour market broadly similar: tying conditions dollars Before several 3 other areas already operated implementation Federal spending power always an important avenue influence even which originally over creeping (especially closely linked domains education workforce development activation) drivers changes division shifts since towards more scales down both transfers 1996 reinforced structure sections will competences concerning benefit schemes SA beneficiaries culminate institutionalisation (institutional) followed analytical grid conclusion 4 undergone balance rather modes (Banting 2005) fundamental sensu stricto 1940s enacted In order understand note how special circumstances were allowed take constitutional action do so Constitutional change preceded years federal-provincial disputes about rising relief costs Great Depression Only backdrop advent involvement reign new prime minister climate ready completely (Struthers 1983) did then went reforms most importantly transformation into (EI) response turn result 1971 expanded coverage dramatically final now rests tripartite (CEIC) (EIA) (EIR) act governs two components EI: passive income transfer well so-called (EBSMs) consisting section covers part contribution-based pays relative insurable working period previous earnings capped yearly maximum rate approximately 55% disbursed weekly nature commission stems 1941 decided programme insulated electoral whims pressures placed under autonomous 1977 chair taken deputy partner diminished; “the effect expropriated program” (Pal 1988) Also applicable less are: (Fishing) (EIR (Fishing)) Insurable Earnings Collection Premiums defined IV V See 14 I 5 Canada’s subdivided 58 economic regions total 6 9 must noted extension very rare indeed contrary extensions recent aftermath 2008 financial crisis Counter-intuitively federally rates equal everyone required qualifying differs per region5 (Medow 2011; Léonard 2014) left-over based regional rate; higher shorter duration generally 52 weeks can extended 104 exceptional also partially (Table 6) Finally affects they calculated 22 highest individual; amount paid used determined 5) There rationales differentiation idea ‘best-paid weeks’ rationale behind calculation best-paid “reduce disincentives accepting available work prior applying (Department Finance 2012 148; 2013 pp 6-7) way workers loose connection adversely affected possible future (more) poorly determination many best account dependent upon local eligibility criteria words (which entails claimants) increased accessibility eased durations prolonged lower second logic clear-cut than first 7 theory generosity counter-cyclical due structural heterogeneous performance among 7) likely function inter-regional redistribution mechanism Andreas Pollack finds that: business cycle effects unique features [Canadian] small compared resulting follows design” (Pollack 36) 8 Interestingly enough criticism equitable Much opposition Toronto-based Mowat Centre whose contributors argue good indicator accurately assess respond needs (Choudhry Pal Medow Day Winer 2011) rules disadvantage unemployed living Ontario Another ratios would retard migration there seems little empirical evidence claim (Day Although number without consequence weeks-system could promotes perpetuates who year (Mowat 8) 2013: 233-235 benefit-to-contribution III 10 complete overview standards out (EIOA) fully financed employer (60%) employee (40%) contributions contribution employers employees (Léonard 2014 14-15) Other differences include protection legislation Table appendix shows heterogeneity governments exert these setting ‘employment standards’ competence includes determining grounds termination anti-discrimination regulating dispute settlements etc practice relatively homogeneous exception Quebec (McMillan 1) Besides job multitude factors Nonetheless funds interesting size evolution beneficiaries-to-unemployed ratio describes (previously UI) caseload early stood above 70% (Lin 1998 42; Van den Berg Parent Masi 2004 29) currently decreased below 40% (Canada 2015) largest drop coincided reforming mid-1990s no surprise given fact aimed reduction costs; extent either individual (in requirements rule individuals out) relevance perhaps contributed limited prevent EI-beneficiaries (cf infra) Despite drops lowest scores regard overall strictness (Figure 11 regime strict comes demands mobility sanctions voluntarily leaving one’s relaxed monitoring availability ALMPs 2) might low replacement Entitlement Figure Overall Source: Langenbucher 27 Strictness 0 Average cases8 Welfare often “has maintained provides authority extend grants create programs matters exclusive jurisdiction” (Telford 15) had Since 1960s (CAP) redefined continued until 1995 Under (e g child care activity projects) shared equally receiving their own meaning spend others (Gauthier posed those (Canadian Association Workers 43) long standing cost-sharing replaced block-grant (CHST) consolidated health postsecondary unilateral move introduced state expansion: single provided opportunity expand Combined starkly increasing 1980s budgetary impact grew larger responded putting cap eventually altogether Transforming seen clear example reaction hazard: (and are) able design enabled increase 50% “The block fund territorial post-secondary services” cut $2 billion $29 old agreement entailed condition SA12: provide residency All scrapped financing tenable retain allocation formula distribution gradual indexation GDP growth Fears drastically efforts longer matched dollar 12 apply Here we see parallel (AFDC) (TANF) instances abolished favour block-grants Furthermore newly historical subnational patterns Moreover transformations ability manipulate risk insured CHST: stricter American mandatory AFDC-TANF introduction perceived provinces’ splitting up (CHT) (CST) 13 encompasses just meant cover line (FPFA) regulates sole criterion “that person live province territory minimum becoming eligible receive assistance” “Since name associated gives citizens illusion money being spent particular be” 33) evenly distributed capita basis automatically grows 3% every 15 method 2007 16 Preceding shift further eliminates possibility Provinces ‘insured risk’ mean however accountability issues 24-24 24 3-24 61 25 come across actually monitored requirement 2014-2015 budget $12 (Nadeau 3) As mentioned before: original pre-CHST resulted complicated became increasingly complex: pre-2007 sources: cash tax capacity scale back taxation step enhance precisely scaled equalization maintain poorer complexity what led 17 2010 183 000 cases vs 671 190 (Wood 2011a) enjoy almost control wish utilise pose entitlement downside Where once covered 50 cent Parliamentary Budget Officer 2010/11 2025/26 (Parliamentary institutionalised go deeper measures decrease) conditionality When put place 1940 anticipated ‘wither away’ occurred twice Every basic vary “basic cost food shelter clothing personal household items additional usually age disability transitional aims help lessen transition employment” 20) needs-tested themselves determine sources assets deducted exempted Additionally Generally applicants undergo administrative test program administered municipalities employable jobseekers); entirely managed civil servants (National Council 1-1) Based latest report National cancelled varied $9 593 $3 773 median $7 277 inadequate terms national low-income 2-1) Post-tax incomes claimants (WITC) varying regulations remains unclear interact ix) active somewhat diffuse types tend associate ‘activation turn’ Guiliano Bonoli argues: genesis such lies post-war strong focus ‘upskilling’ (2011 323) Ever Constitution But component ensuing dominance post-1940 created tensions because overlap especially adult provider thus forth contested contentious market-related During 1950s 60s developed specific target groups same started gaining UI-beneficiaries Klassen 5-6) form shared-cost diminished unilaterally stop late opting purchasing model institutions 2009 255) By mid-1980s oversaw 500 offices 1986 Jobs Strategy neediest clients (Fisher et al 2006 100-101) doing community agents (local provincial) introduce systems ‘workforce development’ 18 Specifically issue got pressing point view) downturns urgent limiting push reform compounded province-building ‘Workforce term goes beyond incorporate wider set activities including immigrant integration security human capital formation measures” 2009; Bramwell refers extends employed sense broader These developments combined retreat fiscal reasons 1990 fragmented patchwork particularly resolved acquire manpower ensure supports Quebeckers coherent view effective needed realise governance substance attempt permanently re-align attempts ultimately failed popular 19 near-death experience October referendum whether should independent main reason Ottawa offered devolve place: demonstrate flexible agreed Quebec’s long-standing position hence proved watershed respect Due resorted “para-constitutional engineering” (Poirier 2003) Decentralisation took right activate train People initial (Labour LMDAs) negotiated outlined primarily concerned process stretched Yukon last jurisdiction sign 20 mode prominent prolific: outside LMDAs entered disadvantaged (including recipients vulnerable people LMAs older workers) reaching 49 Of differ legal base (such EIA) sanctioned ministerial approval focused funding; ensuring evaluation priorities; similarity service provision country; delivering programming 14) came Meech Lake Charlottetown Accords encompassed much (Cameron Simeon 2002 55) Union Framework bring coherence accountability) achieve goals Devolved involved staff Some initially chose co-managed arrangements deliver 21 pilot projects run reshape severely leading commentators qualify “deeply flawed public policy” (Mendelson Zon 10) sudden radical side end date indicated wished make adjustments undertook series consultations March lapsed announced prolong nor renegotiate deals Instead wanted (CJG) re-orient away directly forcing match large extra hard stance (JFAs) bilateralism next subsections non respectively latter subsection full consequences JFAs yet (Employment Measures) mainly devolved along documents ministry Human Resources Skills HRDSC) identifies ALMPs: (EBs) (SMs) constituted consolidation vast range reduce expenditure EBs ‘targeted wage subsidies targeted supplements self-employment creation partnerships skills SMs innovation’ 18) jobless workers’; intensive delivered non-EI 210) Measure descriptions 210 Targeted Wage Subsidies assist participants obtain on-the-job toward wages encourages hire whom normally absence subsidy Supplements encourage persons accept offering incentives offers similar measure—Return Work Supplement—to expenses returning tools office materials clothing) Creation Partnerships opportunities gain lead ongoing Activities develop economy helps giving enables select arrange pay Self-Employment planning advice EI-eligible intended stages organizations enable counselling search job-finding clubs placement follow-up associations communities improve deal resource implement force involve developing plans strategies adjustment Research Innovation identify better ways helping prepare keep productive Funds carry demonstration purpose four five six

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1 Institutional moral hazard in the multi-tiered regulation of unemployment Belgium – Background paper Kim Lievens & Frank Vandenbroucke December 2015 This document reflects views only authors and European Commission cannot be held responsible for any use that may made information contained therein Please refer to this as follows: K F (2015) support ‘Institutional Moral Hazard Multi-tiered Regulation Unemployment Social Assistance Benefits Activation – A summary eight country case studies’ Abstract has been written preparation a research project funded by (on Feasibility Added Value Benefit Scheme contract VC/2015/0006) adds detailed analysis following deliverable project: studies; but it was not We concept ‘institutional hazard’ analyse intergovernmental relations within welfare states specifically domain unemployment-related benefits related activation policies (the ‘regulation unemployment’) is one separate studies focuses on The Belgian insurance system represented classic example institutional hazard: federally financed while regions were charge did have inherent incentives do so effectively possible To mitigate situation federal regional governments concluded cooperation agreement 2003 which introduced minimum requirements beneficiaries constitutional reform pushes existing logic devolution even further retained Keywords: hazard; states; relations; insurance; social assistance; Active Labour Market Policies; activation; policy; 2 Belgium1 thank Jan Vanthuyne Tom Bevers extensive very useful exchanges List Abbreviations ALMPs Policies HVW Hulpkas voor Werkloosheidsuitkeringen (public fund) OCMW/CPAS Openbaar Centrum Maatschappelijk Welzijn/ Centres Publics d’Aide Sociale (municipal centre SA) PES Public Employment Services RMI/DIS law … recht op maatschappelijke integratie/droit à l’intégration sociale (law ‘the right integration’) RVA/ONEM Rijksdienst Arbeidsvoorziening/Office National de l’Emploi (federal PES) RWB Regionale Werkloosheidsbureaus (offices at district level) SA UI Insurance VDAB Vlaamse Dienst Beroepsopleiding en Arbeidsbemiddeling (Flemish Introduction multi-layered Over course several decades series reforms devolved ever more powers authorities On hand level holds important competences with regard functioning labour market particular field security legislation (including benefits) other also wide regarding market-related issues such organisation (ALMPs) matching demand supply through (regional) public employment services After complex negotiations between government three (and parallel many rounds discussion partners) cooperative framework follow-up unemployed formally agreed 2004 different levels In 2013 new Cooperation Agreement negotiated latter will last specific kind; from onwards Belgium’s architecture changes context round so-called Sixth State Reform part evolution same challenges policy inspired Agreements; devolves political responsibility individuals living means-tested completely Thus we enter era consequences discussed sections 3 an exclusive competence Belgium: duration eligibility criteria are solely determined Trade unions play role practical administration intermediaries individual branch managed Arbeidsvoorziening (RVA)/Office (ONEM) main implementation i e deciding entitlement claimants determining their issuing payment orders bodies addition monitors makes sure violations prevented they occur sanctioned operates via 30 offices (Regionale or RWB; order avoid confusion Regions translate ‘regionale’ here ‘district’) process files decide done (uitbetalingsorganismen) fund (Hulpkas HVW) auxiliary funds linked trade get compensation costs based formula takes into account number cases Apart appeal disputes no influence whatsoever decision granting depends upon (VDAB FOREM Actiris ADG) (de Deken 2007) Figure dotted lines channels over exchanged Bruxelles Formation Arbeitsamt) exchange crucial assist finding job organise training programmes (failing take offer participate programme can reason suspending 4 Institutions actors Source: 2007 VDAB: Flemish Region Dutch-speaking inhabitants Brussels; RDBB: office Formation: institution overseeing vocational French-speaking BGDA-ORBEM (now called Actiris): Brussels Region; FOREM: Walloon (C: search assistance (FOREM Consultation F: Formation)); Arbeitsamt: German-speaking population eastern districts Hoge Raad Werkgelegenheid: advisory coordinating among Regions; FOD Werkgelegenheid Arbeid Sociaal Overleg: Federal Service Dialogue; RVA/ONEM: Office; RWB: offices; PWA: local agencies; ACV: Christian union (auxiliary body); ABVV: socialist ACLVB: liberal HVW: body; FSO: body redundancy payments (results under RVA/ONEM) mere fact person subject scheme salaried persons does give concerned must prove sufficient worked days equivalent during reference period some conditions met normative remains competence; led power respect countries two respects First principle unlimited Second unrelated load incorporates inactive who would entitled proper (long-term) invalidity early retirement pension Consequently comparatively big (see Table 4) general high certainly financially household medium- long-term sense somewhat resembles Austrian UA (in principle) fairly low generosity 5 notion ‘unlimited duration’ needs qualification though counts stipulate implies obligations: searching accepting ‘adequate offers’ being ready cooperate Individuals seen fail these obligations years article 80 benefit exclude if considered ‘abnormally long’ 1990s relatively lost With hindsight mechanism said rather brutal its (exclusion often without prior warning should look work) highly selective (it applied sub-category mainly women) effective terms (since incorporated strategy) Article replaced broader scope covers all initially restricted under-50s) nuanced application (with gradual sanctions) preventative than punitive effect critical note might say deployed still reach out (or least sufficiently) ‘stock’ Hence reality replacing art mechanisms sanctions control changed much overall strictness moderate (Figure 2) due relaxed availability suitable work combined strong reliance It however nature Overall Langenbucher p 27 6 Strictness 0 Average 8 cases7 leefloon/revenue d’intégration sociale) plays residual Belgium; budgets caseload marginal (compared unemployment) Those qualify up now fall back concerning municipal discretionary municipalities reflected differences approach laws rules conditionality measures versus supply-driven external partners (Hermans 2005) budgetary roughly formulated starting 50/50 division These administered (Openbare Centra Welzijn OMCW/Centres CPAS) centres run incomes members depend status means-test applies types income claimant: transfers real estate alimentation earned spouse parents (as long young claimant family allowance) children patrimony applicant reduced ‘abnormal way’ past five Already since 1980s3 features clear-cut distinction funding administrative management sanctioning when meet make them eligible employment) another (but effort Special Law August 1980 laggard actual shift passive occurred late systematic conforming 1997 guidelines Strategy implemented By time had created considerable tensions governance culminating departure Before there ‘preventative’ attempt activate entrants across regions; ‘curative’ (activating stock unemployed) disparate Conference September paved way change basic principles laid down April goal better coordinate instruments (counselling training) recipients rights rebalanced Within intensified guidance provided annual maximum contribution €24 million allocated according distribution key points listed 9 Main Communities active monitoring intensify unemployed: For inflow unemployment: before sixth month people (< age 25) 12th adult (≥ b point received mentioned a: months letter c where necessary soon sets own assess efforts jobseekers thus longer rely data (transmissions; cf infra) ongoing actions disrupt counselling targets full (meaning after full-time studies) Data ICT-based both directions doing burden minimised provide inter alia communication of: Information contacted ii outflow iii exemptions registration jobseeker Job offers four six

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o 1 Institutional moral hazard in the multi-tiered regulation of unemployment Austria – Background paper Chris Luigjes & Frank Vandenbroucke December 2015 This document reflects views only authors and European Commission cannot be held responsible for any use that may made information contained therein Please refer to this as follows: C F (2015) support ‘Institutional Moral Hazard Multi-tiered Regulation Unemployment Social Assistance Benefits Activation – A summary eight country case studies’ Abstract has been written preparation a research project funded by (on Feasibility Added Value Benefit Scheme contract VC/2015/0006) adds detailed analysis following deliverable project: studies; but it was not We concept ‘institutional hazard’ analyse intergovernmental relations within welfare states specifically domain unemployment-related benefits related activation policies (the ‘regulation unemployment’) is one separate studies focuses on The Austrian involves federal government regional governments (Länder) Public Employment Services (PES) dominant policy concerns were threefold: divergence between practices social assistance insurance caseloads increasing heterogeneity schemes principal-agent issues concerning PES harmonized different making all Furthermore negotiated nation-wide agreement with Länder Finally governance reformed more monitoring minimum requirements introduced Keywords: hazard; states; relations; insurance; assistance; Active Labour Market Policies; activation; policy; 2 Austria1 thank Helmut Mahringer very useful exchanges system List Abbreviations AMS Arbeitsmarktservice Österreich (federal PES) AIVG Arbeitslosenversicherungsgesetz (Unemployment Insurance Act) AMFG Arbeitsmarktförderungsgesetz (Labour Promotion AMSG Arbeitsmarktservicegesetz Service ASVG Allgemeines Sozialversicherungsgesetz (General BMASK Bundesministerium für Arbeit Soziales und Konsumentenschutz (Austrian Federal Ministry Affairs Consumer Protection) BMS Bedarfsorientierte Mindestsicherung (social assistance) SA UI Introduction relatively centralised As several other cases legislation financing (SA) responsibility lower tier Länder) Unlike most however completely central or AMS) including recipients For reason serves contrasting Another (related) interesting feature similarity German Swiss cases; experienced similar challenges those two countries (mainly stark dichotomy UI) opted response division labour stable important reforms are introduction semi-independent strong ties partners formulation an level With these moves shifted from political decentralisation towards delegation There parallels regard also case; takes up position Before we turn briefly identify certain characteristic state: equalisation payments In financial poverty under ‘statutory pension system’ “topped supplement reach threshold value (called ‘equalisation reference rate’ Ausgleichszulagenrichtsatz)” (BMASK 2014a p 78) rate tool determining amounts market-related will become clear (cf infra) wage used determine rates which topped supplements 3 history low replacement (Obinger Tálos 2010 110) Currently they stand at 55%2 resulting lowering generosity 2000 benefit can topped-up (predominantly form family allowance) increased maximum 80% aforementioned being ceiling top-ups interrelated: prevent beneficiaries falling below changes lowered families tightened sanctions limited accessibility 117) no limit (and UA) itself; instead top wage) (Steiner Wakolbinger 4; pp 14-15) duration fairly short: ranges 20 52 weeks depending contribution period extended 78 after completion vocational rehabilitation measures 4 However when comparing (certainly terms duration) note scheme people who exhaust their potentially indefinite See paragraph 21 (3) (4-5) 18 (1-2) does have strict eligibility criteria (see Figure 1) its job-search somewhat stricter than (Figure 2) It probable strictness UA prolonged indefinitely if comply (among factors) same infra discussion) coupled fact functions last resort large group long-term unemployed might explain relaxed Australian supra) Overall Source: Langenbucher 27 Strictness legislated Act (Arbeitslosenversicherungsgesetz AIVG) 1977 5 sensu stricto regulated financed revenues predominantly provided Other acts include Policy Financing (Arbeitsmarktpolitik-Finanzierungsgesetz AMPFG) (Arbeitsmarktförderungsgesetz AMFG) 0 Average 8 cases5 through employer employee contributions possibly supplemented some funds 6 These pay complete regime costs 7 much executive body disburses (1) AMPFG (2) paragraphs 41-52 33 9 10 section administrative board directors 58-59 responsibilities Until 1994 fully integrated into (currently Protection BMASK) (Arbeitsmarktservicegesetz AMSG) arm’s length along “the entire structure changed deep ‘culture partnership’ established” (Weishaupt 2011b 3) legally supervised three-tier structure: headquarters nine offices 99 local Its ‘executive body’ consists two-member while (Verwaltungsrat) ‘legislative’ latter includes members: three ministries (two Finance) each employers unions Hence outnumber governmental representatives actor: plays major part translation ambitions operational targets approves dismisses distributes budget 4) means itself features counteract associated agencies; dominate heavily influence policymaking goal setting interests employees words presence dominance function checks balances semi-autonomous When look there structural differences Four them had average over years others poorer performances time Although represent likely structurally heterogeneous least translated entails redistribution since finances Regional national 1990-2013 Wirtschaftskammern Österreichs 2014: 34 12 1990 1995 2005 2013 Burgenland Carinthia Lower Upper Salzburg Styria Tyrol Vorarlberg Vienna Austria7 already mentioned second-tier scheme: (UA Notstandshilfe) Notstandshilfe easy classify either because shares similarities both (its income-dependent tested cf analytical grid column integral (AVIG) subject residual persons exhausted claim11 meant emergency experience hardship previous run out nature reflected means-tested applied five exhaustion varies 92% 95% basic amount (which 55% earned starting (in relation allowing income spouses child 2014b 79) codified therefore almost regular except sense resembles former contrast implemented cantons still small number cantons) prerogative 11 Or early exit called ‘transitional allowance’ (Übergangsgeld) 36a 13 35 37 see 15 14 2012 caseload 131 217 105 132 around 221 000 2014 96 99; 81) (2007 5) development 1987-2005 (before reform What so distinctive about 98) Notstandhilfe officially (52 weeks) long met Beneficiaries qualify continue entitlement pass test implications: reduce opportunities cost-shifting Long-term received far less end size vis-à-vis smaller examined study exception Belgium increases need effective UI/UA ineffective could result share dependent clients eligible third historically 101) Due potential relevant always included work requirement enforced caseworkers (Leibetseder rigidity Research shown provinces half stated requirements: “Either [were] exempted obligation caseworker [refrained] imposing such [left] [federal] jobcentres scheme” 6-7) generally favoured sanctioning rather provision intensive upskilling 2014a) historical autonomy led efforts (Mahringer 2007 3-4) Similar caused concern Germany Switzerland indicator disparities capacity subnational institutional probably mix challenged formulated ‘nationwide security’ stipulates common standard new type (Bedarfsorientierte BMS) essence reaction facing 2007) authorities: dichotomisation (of regimes) due levels practice entailed inclusion-oriented “The just like Hartz intended harmonise existing regulations order combat effectively roll-out work-focussed approach reintegration (long-term) primary market” 6) merged adopted apply variation implementation adheres standards laid down committed set general principles contrary exist example receive free design above Besides combatting ensured combination make agreements Article 15a Constitution shift renew comprises ensure people’s subsistence housing needs afford protection sickness pregnancy childbirth” flat-rate mandatory single parents medical asset conditional upon (with exceptions categories retirement age) unlimited baseline linked stipulate every beneficiary claim services obliges various institutions well obliging collect data standardised manner 16 entail even possibilities equal article 24 17 extra total capped €50 million annually €30 per individual region articles 20-21 here overview Under financier situation Most enforce municipal payment 50% fiscal current constellation Despite budgetary did increase broadens before factors better spread higher ways i e reduction non-take worsening economic circumstance contributed post-reform (L&R Sozialforschung 21-30) interacts parts security (Reform Monitor Bertelsmann Stiftung 2010) “Roughly claimants roughly quarters defined statutory persons” institution tasks set-up supra organisational structure) Because provide specific tasked responsibilities: efficient placement workers overcoming hurdles immediate counteracting complexity market matching supply demand maintaining many jobs possible ensuring training youth promoting re-employment physically disabled securing jobseekers 19 delivering disbursing 29 26-27 22 Kombilohn subsidised Kurzarbeit hire 34a 37a-38 26-35 Even though actually delivered ‘third parties’ provides majority counselling adult education mostly private created Economic Chamber (Wirtschaftskammer) Wirtschaftsförderungsinstitutionen workers’ chambers (Arbeiterkammer) Berufsförderinstitute open everyone 2011a 12-13) Additionally charities (licensed) for-profit agencies deliver providers tend operate temporary employment (or communal institutions) perform niche ‘difficult-to-place clients’ 13) four appropriate During initial intake classified types corresponding so-called ‘three-tier zone’ first ‘info mainly aimed self-help given access facilities registered vacancies Secondly ‘service offers job-brokering claims processing where start ‘counselling full range ALMPs zone specially trained staff difficult-to-place If get automatically months dependency 27) promote sustain leave part-time older prospective forms subsidies22 professional scholarships principle afforded treatment go option yet nor systematically currently lies dealt territorial pacts Today deemed ‘capable working’ sent classifying incentives municipalities direct able-bodied would positively affect financially liable rendered opposition resistance Optionskommunen 2011c 213) without connection (provided offices) remain focus loss control nationwide assures 23 To do involved required necessary job search report jobcentre modified themselves codify own remaining variations entities Leibetseder notes ten applications month verified 112-113) 49 Concern centralisation role analysed played dumping renewal addressed together treatments agency: eliminated agency Two hold caseload: Australia marginal privatised results larger reasons begin profits formal channels minister thus level) behaviour goals (such context) stronger way influencing 25 why extensive dense difficulties balancing flexibility multitude active influential Centrelink actors take Thirdly subcontractor enter contracts directly ministry differs reasons; firstly (ALGII) federalised especially comes regulatory bears impact feel pressure Consequently concerned ones downside move deal clash culture approaches lead (are seen to) overly shelter (especially often focussed work-first brings us difference Germany: remained outside scope natural experimentation (they Optionskommunen) seem tune actor closes off arise requalifying merge remains meaning Thus short- framework enforces performance measurement Goals ‘broad guidelines’ consultation then translates plan must approved board; actual 26 transpose add objectives district task implement achieve nationally- Länder-set 28 supported tripartite councils 5-9 40 15-16 parlance referred ‘regional’ Following determination approval sets annual ‘balanced scorecard’ clearly outcome-oriented overarching target incorporates inputs outputs outcomes quality Table Indicators Balanced Scorecard 2013: 30 quantitative personal fixed separately men women” (AMS Achievement Outcome Duration Intermediate outcome Outflow six Success Satisfaction Output (quality) Proportion expenditure women Input job-seeking Process service Utilisation e-service Penetration apprenticeship places enterprises Exact Job satisfaction internal advancement Development selected material Performance call centres ne