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RecensionsBook Reviews

Labour Market and Social Protection Reforms in International Perspective: Parallel or Converging Tracks? edited by Hedva Sarfati and Giuliano Bonoli, Aldershot: Ashgate Publishing, 2002, 494 pp., ISBN 0-7546-1926-5.

  • Axel van den Berg

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  • Axel van den Berg
    McGill University

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This is a sprawling collection trying to cover a sprawling reality : the interaction between recent and projected trends in the labour markets of the industrialized countries and current and anticipated changes in the existing systems of social protection. The book is the result of a project sponsored by the International Social Security Association and directed by the energetic former head of the ILO’s Industrial Relations and Labour Administration Department, Hedva Sarfati, with the help of Giuliano Bonoli, a social policy researcher at the University of Fribourg. The book brings together an international group of experts on labour markets and social protection to compare notes on this broad set of issues. Given its provenance, it is perhaps not surprising that there is also a clearly recognizable subplot : that recent trends in Europe refute the “standard interpretation” according to which there is an inescapable trade-off between low-quality jobs (the Anglo-Saxon model) and chronic unemployment (the European model), raising new hopes that Europe can have its social cake and eat it too, after all.

In the opening chapter, the editors of the volume do an admirable job of surveying and documenting the most recent important trends in labour market and social protection policies. This will be useful and informative even for many experts as few of them will be fully on top of every one of the trends reviewed. Thus they remind us of how important the growth of service sector jobs has been in accounting for the “job miracles” in some countries and their absence in others, and how it has interacted with trends in female labour force participation to produce quite distinctive employment and participation patterns between otherwise roughly equally “developed” economies. The editors review the trends in (early) retirement and youth (un-)employment, including the looming pensions crisis. While discussing the “diversification” of employment forms at some length, they wisely steer clear of unguarded endorsements of the recent hype about the supposed rise in insecurity due to the spread of “non-standard” jobs.

Unfortunately, not all contributors exhibit such restraint. Several of them happily parrot the latest inflated rhetoric about the impending demise of stable jobs as we used to know them. Thus, for instance, French economist Jacques Freyssinet serves up the standard litany of disappearing stable jobs, deteriorating social protection, diversification of lifestyles, and dramatic new requirements of the knowledge-based economy, without a shred of evidence, and then goes on to call for a totally new approach to linking social protection to work, without bothering with any details as to what exactly that might mean. Ironically, while bombarding the reader with a plethora of not always very readable graphs and tables documenting trends in unemployment, employment and demography, Futuribles consultants Hugues de Jouvenel and Alain Parant proceed to talk gravely of “the extension of McWorld” (p. 160) in which “atypical jobs foreshadow the jobs of the future” (ibid.), with only very little in the way of solid evidence. Similarly, Jean-Michel Belorgey, a high-ranking French official, takes all the loose talk about precarious jobs, diversifying lifestyles and declining social protection at face value in order to present a long list of vaguely worded desiderata and principles that are to ensure that everyone has access to work, a decent income, protection from undue risk, etc. Is there something of a Gallic pattern here? In any case, the repeated dishing up of such hype is a little surprising, particularly since the book also contains a short contribution by Auer and Cazes making their now familiar point that while the cognoscenti were busy pushing their sweeping claims, in reality, average job tenure rates have remained surprisingly stable or have even increased.

But the book also contains a number of highly informative and well-argued pieces on, for instance, the Danish flexicurity model (by Per Madsen), Dutch difficulties in reactivating the disabled (Frans Pennings), British efforts to create an active welfare state (Jane Millar), and an excellent analysis of the available reserve pool of older workers in the U.S. by Doeringer, Sum and Terkla.

The book is divided into three parts. Part I sets out the “key issues.” In addition to the Introduction by the authors, the best piece in this section for my money is the chapter by Andersen and Jensen. Presenting a large amount of comparative data on unemployment and employment rates and durations, poverty rates and earnings dispersions, they argue forcefully that the success of several European countries in achieving both high employment rates and low unemployment without allowing earnings inequality and poverty rates comparable to those in the U.S. or Great Britain puts the “standard interpretation” into serious doubt. The heroes of the piece are, of course, the Netherlands, Denmark, Sweden and Austria.

While impressively argued, I still fear that the sceptic will not be entirely convinced. And this scepticism would be further strengthened by several of the contributions that, inadvertently or not, provide less self-evident support for the European Social Model than the authors might intend. Thus, the figures presented by de Jouvenel and Parant on the relation between real wages, employment and wages as a proportion of total value added in the European Union and the U.S. (p. 146), for instance, actually look like pretty strong evidence for the standard interpretation. But the proof of the pudding is perhaps to be had in Part II of the book which is devoted to a series of country reports documenting and evaluating national responses to the trends outlined. This is the place where one would expect to find detailed evidence to bolster the European case that “there is no necessary incompatibility between high levels of social protection and economic performance” (p. 5). Yet the evidence turns out to be less than overwhelming. Harbridge and Bagley’s report on Australia briefly recounts the Labour government’s 1993 introduction of various activating policies, which were subsequently swept aside by the new Liberal-National coalition’s commitment to deregulation, Work for the Dole and privatization. The evidence for and against the effectiveness of these policies is, the authors tell us, apparently ambiguous and controversial along entirely predictable party lines. But then there is New Zealand, which underwent perhaps the most spectacular revolution of labour market and social protection policy in the industrialized world. If anywhere, here we should find evidence for or against radical deregulation and privatization as a long-term solution to chronic employment problems. But unfortunately, the two contributions devoted to the case of New Zealand provide little in the way of useful information in this regard. Harbridge and Walsh report on the Labour government’s elimination of various forms of market protection in the 1980s and on the Conservative National government’s apparently successful attack on the unions, and reductions in social protection benefit levels in the 1990s. But they report no clear effects on either employment patterns or inequality. It is not even very clear from their account how exactly the Conservative anti-union Employment Contracts Act managed to produce the dramatic decline in union density that occurred in its wake, nor in what ways the subsequent Labour government’s repeal of the Act is likely to change things. A second brief “Feature” by Anne de Bruin simply asserts, with little evidence, that the Conservative reforms led to much inequality and poverty, and proclaims the new Labour government’s “commitment to the growth of an inclusive knowledge society” (p. 223). The contribution by European Trade Union Confederation advisor Henri Lourdelle about the Central and Eastern European transition countries contains little information beyond the fact that these countries are dealing with problems quite different from those discussed elsewhere in the collection, and unsurprising warnings—from a union advisor—that these countries should not be tempted to go too far down the path of deregulation.

The three remaining country reports, on Denmark, Great Britain and the Netherlands, are much more informative but they do not provide unambiguous support for the European Social Model either. Jane Millar’s contribution on Great Britain reviews the plethora of new activating programs and regulations introduced by the Labour government since 1997 with the aim of helping or nudging specific groups, including youth, women and the handicapped, (back) into the labour market and sustainable jobs. It is a clear carrot-and-stick approach, involving individualized counselling and incentives as well as compulsory participation under the threat of benefit loss. The evidence that these programs have worked is, by Millar’s own admission, only slightly encouraging, particularly since it is hard to say how much of the result depends on the wider macroeconomic context. What the chapter does not in any way address is the degree to which the relatively good employment record of Great Britain is, or is not due to the greater earnings differentials resulting from earlier deregulation. But then there are the two flagbearers for the case against the U.S. Market Model : Denmark and the Netherlands. Per Konghøj Madsen’s chapter on the Danish flexicurity model is quite informative on the typically Scandinavian combination of extremely generous benefits with active labour market policies and a relatively low level of job protection, but unfortunately is less so on the celebrated Danish experiments with educational leaves. In addition, he reports that since 1994 the Danish government has been gradually tightening up the eligibility requirements and especially the maximum duration for ‘passive’ benefits. So far, the findings of the evaluation studies he cites appear to be mixed, however. The activating effects of the standard array of activating programs (training, counselling, etc.) appear to be modest whereas the recent tightening up seems to have had a clear effect in terms of pushing people back into the labour market. The educational leave programs appear to have done more to hide unemployment by reclassifying the unemployed than by creating new positions for the previously unemployed. Moreover, as Madsen, to his credit, reminds the reader several times, it is impossible to say whether the recent relative success of the Danish “model” is primarily due to an exogenous economic upswing or to the improved functioning of the labour market. Hans Pennings’ report on the Netherlands is even more sobering. Pennings focuses on efforts to move the Dutch inactive population of working age back into the labour force. There appear to be few efforts to activate those on unemployment insurance benefits. The considerable efforts to reduce the notoriously swollen ranks of Dutchmen receiving disability benefits appear to have come to little, as have recent attempts to reactivate long-term social assistance recipients, while participation rates of older workers and women remain low by international standards. In addition, the Dutch “job miracle,” as even its celebrants concede, was largely based on a concerted effort to keep down Dutch wages. Thus, not even the flagbearers for the European Model look quite as impressive as they appeared at first sight.

The final section of the book consists of 10 pieces discussing “alternative policy mix scenarios.” These are an even more uneven lot than the rest of the book. There are several pieces on older workers and the looming pensions crisis which do not strike me as presenting anything particularly new or exciting. There is another visionary piece by Robert Salais heralding a “Third Age in Relations between Work and Social Protection” which will provide us with “[n]ew forms of security and concepts of work, rights to, [sic] the quality of the supply of employment, access to the capacity to control one’s life, [which] must be available right away to all workers” (p. 448), without the slightest consideration of actual empirical trends or of the concrete meaning of these noble principles. Another couple of pieces more or less piously proclaim the desirability of cooperation and dialogue between the social partners. It includes another lengthy piece by the aforementioned Henri Lourdelle, apparently presenting the official line of the ETUC which is, as official lines tend to be, full of statements about the need to sustain the European Social Model that are as noble as they are vapid, much talk about the need for “social partners” (read : unions) to be consulted in reforms, the usual jabs at neoliberal and pro-market thinking and some veiled threats to those who would seek to reform, say, the floundering pension system without properly consulting the aforementioned “social partners.”

The concluding chapter by the editors does an admirable job of trying to tie all these disparate strands together and to derive some coherent conclusions from them. “Overall,” they say, “the case studies in this volume suggest that there are alternatives to the trade-off between equality and jobs, based on carefully balanced policy mixes of flexibility, regulation and ex post intervention” (p. 472). A little later, they reiterate that the “findings suggest that, in contrast with the views that were widely held at the beginning of the 1990s, there is probably more than one route to successful labour market and social protection adjustment” (p. 480). It seems to me that the contents of this volume lend more support for the latter than the former statement. The evidence of success in keeping inequality low while at the same time raising employment levels and participation rates as a result of judicious policy intervention (as opposed to more or less fortuitous macroeonomics) is not overwhelming.

The editors are keen to promote non-ideological dialogue. This is important and timely. It is not entirely successful, however. Several of the contributions simply state the official lines of the organizations their authors represent, sounding more like lengthy press releases or propaganda than scholarly analyses or reports. Some simply make the case for some preferred policy on basically ideological grounds without seriously considering any of the empirical evidence or practical implications and complications. This is the case, for instance, with the chapter by Jepsen and Meulders decrying the “forms of injustice” that they claim result from “derived” social protection rights, mainly for female spouses. While their claim that it favours “couples over others” (p. 108) would hardly seem controversial, it also would not, at least in the eyes of traditionalists, qualify as an “injustice.” On the other hand, we are not presented with any hard evidence of the claim that such rights discourage women from seeking work (although this would seem plausible enough and not difficult to document), that it encourages atypical forms of employment (another “injustice”?), or that it increases the risk of dependence (true by definition?) and poverty for spouses who stay at home (pp. 108-110). As against this, Jay Ginn, in her contribution, quite sensibly points out that traditional work insurance-based individual forms of social protection tend to hurt women so long as they continue to take on most of the burden of family care. She advocates a system of state pension schemes that compensate for women’s periods of absence from the labour force to take care of family members, but she neglects to consider costs or political considerations. Almost all contributing authors recommend “active” labour market policies of various kinds without worrying much about the rather large body of existing empirical evidence questioning their effectiveness. At the same time, these same authors routinely dismiss “Anglo-Saxon” style workfare as socially regressive and uncivilized, without ever facing up to the thorny issue of the work or training obligation which is an almost unavoidable aspect of the “active” measures they so enthusiastically recommend.

Let me conclude with one last word on what I found to be by far the most interesting and well-argued piece in the volume, the chapter by Doeringer, Sum and Terkla on “Older Workers and Active Labour Market Policy in a Full Employment Economy : The Case of the United States.” After first carefully documenting the emergence in the U.S. of a growing pool of underutilized older workers who could be drawn back into the labour force by proper incentives and training opportunities, Doeringer and his colleagues zero in on nearly full-employment Massachussetts. They argue that the older worker population represents the only ready labour reserve capable of alleviating impending labour shortages that might choke off growth altogether in the future, not to mention capable of lightening the growing pension burden. After careful analysis of a number of factors that keep these older workers out of the labour force today, the authors present a series of practical recommendations to overcome those obstacles. There are several indications in the other contributions to this volume that suggest that Europe may well be headed in the same direction, given current demographic and economic trends. So perhaps the U.S. presents Europe with (part of) its future after all!