The active welfare state and the transformation of public service organisations

Transcription

1 The active welfare state and the transformation of public service organisations Paper for the CARMA 25 th anniversary conference, Workshop 4. Changing labour markets Changing governance of employment policies, Aalborg, October 9-10, 2008 Rik van Berkel Utrecht University Utrecht School of Governance Utrecht The Netherlands

2 Abstract This paper argues, that the transformation from passive to active welfare states that has been taking place in Europe now for almost two decades, has far reaching consequences for public agencies involved in the service provision for unemployed people: benefit agencies, local welfare agencies and public employment service organisations. It analyses these consequences from two perspectives. Firstly, it looks at the reforms of the organisational structure for the administration of benefits and the provision of activation services (operational policy reforms). In doing so, it focuses on four countries: Germany, the UK, Denmark and the Netherlands, and shows how these reforms promoted inter-agency cooperation, introduced decentralisation and quasi-markets for service provision, reduced the role of social partners and introduced new public management styles of managing public organisations. Secondly, based on a case study of Dutch local welfare agencies, the paper looks at processes of intra-organisational change. It shows how these agencies, in response to and as a consequence of welfare state transformations, deal with an increased variety in quantitative and qualitative terms of tasks, redesign primary processes and the work of frontline workers, and introduce new ways of managing frontline workers. Introduction In studying reforms aimed at making European welfare states more active, it is useful to distinguish two types of reforms (Carmel and Papadopoulos 2003; Van Berkel and Borghi 2008). Firstly, reforms that are focused on the content or substance of social policy programmes and include the introduction and development of activation programmes and changes in income protection schemes. Secondly, reforms processes that aim at restructuring service provision models, i.e. the design of the organisational arena through which income protection schemes and activation programmes are administered and delivered. Both types of reforms target different though interconnected aspects of social policies: on the one hand formal policies, i.e. the content of policy programmes and schemes; and on the other operational policies, i.e. the governance and organisation of programme implementation and service delivery. Formal policy reforms have been studied by social policy researchers extensively (e.g., Lødemel and Trickey 2001, Goul Andersen et al. 2002, Gilbert 2002, Serrano Pascual and Magnusson 2007). These studies showed, among others, how income protection schemes were made less generous in order to introduce stronger work incentives; how activation programmes were introduced and subsequently often transformed into Work First or labour attachment programmes that were gradually targeted at more and more subgroups of unemployed people; how eligibility for income protection increasingly became subjected to an individual responsibility test ; and how clients behaviour was subjected to stricter monitor practices and the use of sanctions became more common. Both reform waves have had significant consequences for the public organisations involved, for their managers, and for the frontline workers in these organisations (of course, they also had major consequences for the unemployed who are clients of these organisations, but we will pay only very limited attention to them here). This paper will explore these consequences, looking at public benefit/social assistance agencies as well as public employment service organisations, as the integration of both social policy areas is a core characteristic of active welfare states. It will do so from two different perspectives. Firstly, the focus will be on reforms of the design of the broader organisational setting for the delivery of income and employment services to unemployed people. We will analyse and compare public sector reforms in these social policy domains in four EU countries: the UK, Germany, the Netherlands and Denmark. In all four countries, the 21 st century brought major operational reforms, that established new public organisations, reorganised or 2

3 completely dissolved old ones, and introduced new ways of structuring public-public and public-private organisational relations, as well as new ways of governing and managing public organisations. We will look at the following reforms: - The merger of the Benefit Agency and the Employment Service into Jobcentre Plus in the UK (2002); - The Hartz reforms in Germany, an extensive reform package involving significant formal and operational policy changes ( ); - The Structural Reform in Denmark, which involves the entire Danish public sector and includes the governance of labour-market policies (2007); - The SUWI reforms (SUWI stands for Structure of the Administration of Work and Income) in the Netherlands (2002). Secondly, we will pay attention to intra-organisational processes of change taking place in order to adapt to and cope with formal and operational policy reforms. Unfortunately, little research data is available that could be used for an international comparison of processes of organisational change in public benefit or employment service agencies, at least in the EU. Instead, we will use a case study approach in which we will look at processes of organisational change within one type of public organisation in one of the four countries mentioned before: Dutch municipal welfare agencies responsible for the administration of social assistance and the activation of social assistance recipients. Evidently, this case study cannot be considered as representative for what is happening in other public organisations and in other countries. Nevertheless, we believe that this case study can illustrate some aspects of the impact that active welfare states have on these public organisations, as well as some of the challenges they are confronted with. This paper is structured as follows. The next section analyses and compares public sector reforms in the policy areas of social security and activation/employment policies in the four countries mentioned before. The third section argues, that these reforms are not merely reflecting the increasing dominance of New Public Management ways of thinking about managing public organisations and delivering public services, but should also be interpreted as responses to problems and challenges raised by active welfare state transformations. The fourth section focuses on processes of organisational change in Dutch local welfare agencies. We conclude with a discussion. Public sector reforms in four EU countries Germany Before the Hartz reforms, the German social security system for unemployed people was more differentiated than those in the other three countries at the time. Germany had a wagerelated unemployment benefit system, a wage-related and means-tested unemployment assistance system, and social assistance. The unemployment assistance system provided income support for unemployed people who exhausted their unemployment benefit entitlements. Social assistance was a safety net targeted at people who were not entitled to unemployment benefits or unemployment assistance. It could also be a supplementary income provision for people whose income from unemployment benefit or assistance was too low (Finn et al. 2005). Both unemployment benefits and unemployment assistance were administered by the Federal Employment Agency. This agency was also responsible for the activation of unemployment benefit and unemployment assistance recipients: income provision and activation were integrated for these groups of unemployed. Already in 1998, local offices of 3

4 the Federal Employment Agency gained significant autonomy in implementing activation as a consequence of a decentralisation process through which a variety of activation measures were integrated into one reintegration budget. This budget gave local offices more room in deciding about the mix of measures that would be available (Mosley 2005). During the pre- Hartz period, municipalities were responsible for administering social assistance payments, which consisted of two parts: income provision and an allowance for housing and heating costs. Municipalities were expected to refer those social assistance recipients who were able to work to the local office of the Federal Employment Agency for activation. However, as the Federal Employment Agency prioritised its own clients, many municipalities started to develop activation programmes for their clients (Finn et al. 2005). The Hartz reforms in contrast with the other reforms discussed in this paper combined formal and operational policy reforms. One of the core and most far-reaching formal policy reforms that were introduced, was the integration of unemployment assistance and social assistance for the unemployed who are able to work into one benefit system, unemployment benefit II. Municipalities remain responsible for social assistance recipients who are unable to work, as well as for the payment of housing and heating costs of recipients of unemployment benefit II. In terms of operational reforms, the main issue was how to streamline service provision for the long-term unemployed, i.e. recipients of the new unemployment benefit II (Ebbinghaus and Eichhorst 2007). Eventually, a mainstream and an experimental model were introduced. In the mainstream model, a new local agency (the so-called ARGE) was established, which is jointly managed by the Federal Employment Agency and the municipality and joins their services (benefit administration, activation and social services) in order to create a one-stop-shop for the long-term unemployed. The ARGE agency is located in the local Job Centre, the new name for the local offices of the Federal Employment Agency. This Job Centre also houses a second agency, the Service Centre of the Federal Employment Agency which provides income and activation to the short-term unemployed (recipients of unemployment benefit I). Besides this mainstream model, 69 municipalities work with an experimental model in which the municipality is fully responsible for the provision of income, activation and social services for the long-term unemployed, without involvement of the Federal Employment Agency (Finn et al. 2005; Ebbinghaus and Eichhorst 2007). One of the main targets of the Hartz reforms was the functioning of the Federal Employment Agency, which was considered to be inefficient, ineffective and too bureaucratic. The Hartz Commission that prepared the reforms considered the traditional corporatist governance of the Agency to be one of the main reasons for this (Ebbinghaus and Eichhorst 2007). Because of that, the role of social partners was reduced: their direct executive influence was curtailed. Instead, social partners are now represented in a tripartite supervisory board. Another instrument that was used to improve the effectiveness and efficiency of activation was the increased use of competition in service provision. In itself, the involvement of external providers of services is not new, as already in the pre-hartz period, extensive use was made of services delivered by external (training) agencies. However, the Hartz reforms introduced more pronounced quasi-market mechanisms into the German service provision model, among others, through the use of so-called placement and training vouchers (Konle-Seidl 2005, Hipp and Warner 2008). Finally, new public management tools have been introduced in managing the Federal Employment Agency. For example, the Ministry concludes performance agreements with the Agency, from which specified quantitative goals that local offices should realise are deducted. Another example is that the Agency has to pay an amount of approximately euros to the federal government for each unemployment benefit I 4

5 recipient that is transferred to unemployment benefit II (Ebbinghaus and Eichhorst 2007), which should be an incentive to prevent long-term unemployment. United Kingdom Contrary to many continental countries, the UK does not have a wage-related unemployment benefit system. Instead, it has a flat-rate unemployment benefit which was integrated with British social assistance (Income Support) in 1996 into the Jobseekers Allowance (JSA). This Allowance consists of two parts: a flat-rate contribution-based JSA for a maximum period of 6 months, and an income-based, means tested JSA which is not limited in duration. Another striking difference with many other European countries considers the administration of income protection schemes: social partners and municipalities are not involved, and the administration is fully under national government control. Municipalities do have a role, however, in the administration of other forms of financial support, such as housing benefit and council tax benefit (Clasen 2007). As far as activation is concerned, a process of modernising Employment Services in the 1970s established a network of local Job Centres and separated benefit administration from employment services (Finn et al. 2005). Social partners were represented in the tripartite Manpower Services Commission (MSC), which supervised the process of building a Jobcentre network and a training system. Finn (2005) points out that this Commission was one of the first public agencies that made extensive use of contracting out service provision to public, private and voluntary agencies. Both the corporatist nature of governing employment services and the separation of benefit administration and activation started to change in the late 1980s (Finn et al. 2005). The MSC was abolished, and the responsibility for the delivery of training programmes privatised. In addition, coordination of the Employment Service and Benefit Agency, which were transformed into so-called Next Steps agencies and became subject to NPM styles of management (Considine 2001), was gradually strengthened. This process accelerated when, after the introduction of the JSA in 1996, pilots were started that established one-stop shops where the services provided by the Jobcentres, the Benefit Agency and the municipalities were brought together. These pilots eventually turned out to be the predecessors of Jobcentre Plus that was established in 2002, though municipalities were left outside: Jobcentre Plus integrated the services provided by the Jobcentres and the Benefit Agency and, thus, merged income provision and activation for all unemployed people of working age who are able to work (Finn et al. 2005). As was mentioned before, municipalities do not have a role in the administration of JSA. They are involved, however, in implementing activation, especially through their participation in local partnerships through which local Jobcentre Plus organises and provides employment services (Clasen 2007). In general, activation in the UK has been more centralised than in many other EU countries, although local discretion has been enlarged in order to tailor service provision (Turok 2005). Although all four countries have seen the introduction of New Public Management in the management of public institutions, this development is probably most pronounced in the UK (cf. Caulfield 2004). For example, each Jobcentre Plus has to acquire a certain number of points that can be gained by supporting people in finding a job. For various subgroups of unemployed people, a different number of points is awarded, in order to avoid a situation in which only the unemployed who are most ready to work are being served (Pendleton 2006). Other performance indicators include customer service towards clients and employers, and business delivery performance, which focuses on the efficiency and effectiveness of service delivery (Karagiannaki 2007). 5

6 Denmark Denmark has a two-tier system of income protection for the unemployed: unemployment insurance and social assistance. The insurance funds that administer unemployment insurance are independent from government, although they are supervised by the Ministry. The funds, often closely connected to the trade unions, are governed by a board elected by their members. Unemployed people who are not or no longer entitled to unemployment benefits, may claim means-tested social assistance which is administered by the municipalities. Since 2001, both unemployment insurance and social assistance are the responsibility of the Ministry of Employment: until then, social assistance used to be the responsibility of the Ministry of Social Affairs. Up until the introduction of the Structural Reform of 2007, the two-tier income protection system for unemployed people was also reflected in the way in which activation services for both groups were organised. The Public Employment Service was responsible for the activation of the insured unemployed. Characteristic for the governance of the Danish PES was the strong involvement of social partners: the Danish variety of corporatism involved social partners in drafting legislation as well as in implementation (Madsen 2007). At the national level, social partners were represented in the National Labour Market Council which was consulted by the Ministry in determining national and regional targets. In addition, there were 14 tripartite regional Labour Market Councils which, since 1994, had larger budgets for, and increased autonomy in, deciding about regional labour market and activation policies. New public management has been introduced in Denmark as well: the regional PES negotiates yearly with the Ministry about objectives and targets, which are very specific and monitored rigorously (Hendeliowitz and Bastlund Woollhead 2005), though the regional PES has large discretion in deciding how to reach these objectives and targets (Madsen 2007). Since 2001, private providers (in Denmark referred to as other actors ) can be contracted for activation services (Hendeliowitz and Bastlund Woollhead 2005), although the PES itself remains an important provider as well. Interestingly, trade unions and insurance funds are important private providers of activation services (Bredgaard and Larsen 2008). The municipalities were responsible for the activation of social assistance recipients who are considered able to work. Danish social assistance is jointly financed by the state and the municipalities. At the local level, social coordination committees exist with representatives from, among others, the PES, the municipalities and the social partners. These committees exchange information and coordinate activities aimed at preventing unemployment and promoting labour-market participation (Madsen 2007). The Structural Reform implemented in 2007 affected the governance of employment and activation policies, but had a far broader scope, involving the entire Danish public sector. Hendeliowitz and Bastlund Woollhead (2005: 134) list the objectives of the reform, which include decentralisation, improving the accessibility of public services, facilitating the implementation of national policies and more efficiency. As a consequence of the reform, the number of municipalities is reduced from 271 to about 100, and the number of regions from 14 to 5. The regions, now covering a larger territory, still have a tripartite regional Council (called Employment Council), but their responsibilities are mainly advice and monitoring, so that the influence of social partners has been reduced as they lost their influence on decisions regarding the allocation of resources to activation measures (Madsen 2007). At local level, Job Centres are established which function as one-stop shops for the services provided by the PES and the municipalities, although the financing and administration of social assistance and unemployment benefits are not integrated. The Centres are populated by two categories of staff: those employed by the PES and those employed by the municipalities. Thus, the Job Centres and the co-location of services from PES and municipalities will primarily promote coordination and cooperation in the area of activation policies. About a dozen municipalities 6

7 will experiment with an alternative system, in which the municipalities are fully responsible for the activation services of all unemployed in their community (Madsen 2007). The Netherlands Like Denmark, the Netherlands has a two-tier system of income protection for unemployed people: unemployment insurance and social assistance. Social assistance as well as the activation of social assistance recipients are administered by the municipalities and funded by national government, though national funds are budgeted since 2004 when a new Social Assistance Act was introduced. This budgeting system intended to provide a strong incentive for municipalities to reduce the numbers of social assistance recipients (Van Berkel 2006). For most of the post-war period, the administration of Dutch unemployment insurance was the responsibility of trade associations organised by industrial or service sector, which were governed by the social partners who delegated administrative tasks to administration offices. These associations were supervised by a national tripartite social insurance council. During the 1990s, however, successive governments started to reduce the dominant role of social partners in the administration of social insurance schemes. One of the main reasons was, that social partners were held responsible for the enormous increase of the numbers of social insurance claimants, especially claimants of disability insurance which was used as a relatively generous labour-market exit route frequently, thus frustrating rather than contributing to national government s aim to increase labour-market participation rates. The process of dismantling the corporatist administration of social insurance (Van der Veen 2002) was completed in 2002, with the implementation of the SUWI reform (Structure for the Administration of Work and Income). In that year, the UWV (Administrative Agency for Employees Insurance) was established. The only and, compared to the old situation, quite marginal role left for social partners is their representation (together with municipalities) in a national advisory council, the Council for Work and Income. SUWI not only brought a new administration agency for social insurance, it also introduced competition and marketisation in the provision of activation services (Van Berkel and Van der Aa 2005) and put an end to the provision of activation by the Public Employment Service. The PES department that used to provide activation was privatised, but did not manage to survive in the market. Initially, both the benefit agency and the municipalities were obliged to spend most of their activation budgets on the market, which is dominated by private for-profit providers. This obligation was abolished for the municipalities, however, after the introduction of the new Social Assistance Act of For the UWV, the situation remained unchanged. After the privatisation of activation, the remaining parts of the PES organisation were reorganised into a national network of local Centres for Work and Income. These Centres are the gateway to Dutch social security for the unemployed: they provide work intake interviews (focused on determining the labour-market distance of benefit claimants), income intake interviews (focused on collecting the information that UWV and the municipalities need to determine income support eligibility), and activation for the easiest to reintegrate unemployed during the first 6 months of benefit or social assistance dependency. CWI s activation services mainly consist of job mediation; CWI does not purchase activation services from private providers. There is no role for social partners in the management of CWI: the involvement of social partners in PES governance was abolished in the 1990s. Both UWV and CWI are independent public agencies that operate under ministerial supervision. Yearly, the Ministry negotiates with the agencies about budgets and performance indicators. Performance indicators include norms on a variety of objectives, such as: job placement rates; timely processing of benefit claims; prevention, i.e. the proportion of benefit claims that do not result in actual benefit dependency; and client satisfaction. As far as the 7

8 municipalities are concerned, the main steering instrument is the budgeting of financial resources for social assistance payments and activation. This provides a strong incentive for municipalities to reduce social assistance dependency by strengthening the gate-keeper function and by promoting social assistance exits, as municipalities directly experience the financial consequences of spending more or less than the budget they receive (Van Berkel 2006). Comparing public sector reforms When we compare these reforms, we find common trends as well as differences in the ways in which the four countries have reorganised the organisational arena through which income protection schemes and activation services for the unemployed are delivered. First of all, all countries have created local one-stop agencies: Jobcentre Plus in the UK, Job Centres in Germany and Denmark, and the Centres for Work and Income in the Netherlands. The status and responsibilities of these agencies differ, however, and with this, the actual degree and nature of service integration. In some cases, the agencies integrate income protection and activation; in others, they integrate or coordinate service provision for the insured and uninsured unemployed. After the introduction of Jobcentre Plus, the UK has one agency responsible for the activation and income protection of all unemployed, realising the highest level of integration among the four countries discussed in this paper. In Germany, the Hartz reforms created a situation in which income protection and activation have been integrated through separate agencies for the short-term and long-term unemployed. In the mainstream service provision model, German Job Centres are divided into two sections: the Federal Employment Agency s Service Centres for the short-term unemployed (i.e., recipients of unemployment benefit I); and the ARGE, under joint responsibility of the Employment Agency and the municipalities, for the long-term unemployed (i.e., recipients of unemployment benefit II). In Denmark, the introduction of Job Centres was mainly focused on coordinating activation services: income protection remains the responsibility of the Insurance Funds and municipalities respectively. The provision of activation services for all unemployed is co-located in the Job Centres, but the Centres are divided into two sections, one for the insured under responsibility of the state, and one for the non-insured under responsibility of the municipalities. A higher degree of integration of activation for all unemployed is achieved in the Danish pilot municipalities. The Dutch CWI has no responsibilities in benefit or social assistance administration (although CWI collects information from income protection claimants, the actual benefit administration remains the responsibility of the benefit agency and the municipalities), and only a limited task in activation: the activation of people who are unemployed for more than 6 months is the responsibility of the agency from which they receive income support (UWV or municipalities). Service integration mainly concerns the gate-keeper function of social security. Secondly, all countries introduced decentralisation, specifically in the area of activation, in order to promote service provision tailored to local and individual circumstances. Various forms of decentralisation can be distinguished: firstly, increased room for regional and local offices of national agencies in implementing activation programmes; secondly, the devolution of policy authority to municipalities, for example in the context of social assistance schemes; and thirdly, the promotion of local partnerships in the provision of services for the unemployed. In this context, it should be noted that the role of municipalities in the four countries is different. Danish and Dutch municipalities are responsible for the income protection of the non-insured unemployed, and play a leading role in funding and organising 8

9 (which does not necessarily imply providing) activation as well as additional social services for social assistance recipients. British municipalities are responsible for additional income support only; in addition, they have a role in providing social services. In the UK, municipalities participate in local partnerships and supply services, but the leading role lies with Jobcentre Plus. In Germany, municipalities share responsibility for the activation and income protection of the long-term unemployed with the Federal Employment Agency, with the exception of the 69 experimental municipalities that have full responsibility. A third common trend in the four countries is the introduction of out-sourcing and quasimarkets in the provision of activation services. The UK started this process well before the introduction of Jobcentre Plus, contracting a variety of public and private actors. In the other countries, quasi-markets for activation services are a more recent phenomenon, and the reforms discussed in this article intended to strengthen the role of markets in service provision. The Dutch SUWI reforms represent the most radical form of marketisation, as they obliged the benefit agency and the municipalities to contract private companies for the provision of most activation services. In the other countries, mixed service provision models exist: a part of the services is produced in-house, a part of them is contracted. More recent developments have weakened the marketised character of the activation of Dutch social assistance recipients, as municipalities are now free to decide whether they want to make use of private providers or not. A fourth common trend in all countries is a decrease in the involvement of social partners in the administration of social insurance and in employment services. The UK excluded the trade unions from the management of employment services in the 1980s already; social partners were not involved in the administration of social insurance, contrary to the other countries. In those countries, the reforms discussed before implied a significant loss of influence of social partners, especially in Germany and the Netherlands. In both countries, social partners were blamed for abusing social security as a labour-market exit strategy, and for impeding reforms aimed at making welfare states more activating. In Denmark, the decrease in the influence of social partners concerned labour-market policies only: trade unions still play an important role in the insurance funds. Finally, new public management is now a core characteristic of the ways in which national agencies in the four countries are managed. They were de-coupled from the Ministries that supervise them, and are steered through contracts between the agencies and the Ministries that define the targets and performance levels that the agencies are expected to realise. In many cases, contractualisation also regulates relationships between national and regional or local agency offices. Decreasing the role of social partners also seems to have contributed to a more managerial style of governing activation and income protection. The introduction of activation as an explanation of public sector reforms As was argued in the introduction, the reforms analysed and compared in the former two sections can, at least partly, be understood as attempts to cope with challenges and problems that came to the fore in the process of making European welfare states more activating and adjusting policy programmes accordingly. In this section, we will elaborate this. Firstly, in the process of transforming welfare states, national governments experience the need to take measures aimed at ensuring that the organisations involved in policy implementation actually do what they are expected to do: for example, to reduce welfare dependency, to treat unemployed people in new ways, to promote their employability and 9

10 labour-market participation, and to make income provision conditional on participation in activation programmes. This is one of the reasons, as we saw in the German and Dutch cases specifically, for curtailing the influence of social partners in the governance and management of benefit and public employment services agencies: this way, national governments hoped to strengthen their control over policy implementation and to restore the primacy of politics. This does not imply that social partnership has always been considered incompatible with active welfare states, on the contrary: in the 1990s, Danish and Dutch governments strengthened the role of social partners in the provision of activation and employment policies, as their involvement was considered crucial in making these policies successful. Strengthening governmental control over the actual implementation process can also explain the introduction of NPM instruments in the governance and management of public agencies. All four countries have introduced incentive mechanisms (for example, in the form of performance agreements, financial sanctions or decentralising financial responsibilities) that should encourage public agencies to reduce benefit dependency and promote labour-market participation and thus, to contribute to national government policy objectives. Secondly, the shift from income protection to activation as the core objective of policy interventions targeted at unemployed people implies that the agencies involved in the provision of services for the unemployed have to change their core business and introduce new technologies for social interventions. Whereas providing income protection services requires people-sustaining activities, that are designed to maintain the well-being of clients without attempting to change their personal attributes, activation calls for people-changing or transforming services that are designed to alter the personal attributes, motivation, and behaviours of clients (Meyers et al. 1998: 9). One of the issues arising in this context is that street-level discretion is required to make activation successful, and that traditional ruleoriented modes of implementation aimed at reducing or eliminating discretion are inadequate given the nature of activation processes and services (Jewell 2007). Although bureaucratic modes of regulation have been introduced in activation to control discretion ( for example, by developing precise rules regarding what activation offers should be made to what categories of unemployed people and by introducing profiling procedures), alternative strategies to deal with discretion have been developed as well. Brodkin (2007) discusses two alternative strategies which can be traced back to the operational policy reforms discussed before: firstly, the introduction of NPM instruments such as management by objectives and performance measurement; and secondly, the marketisation of service provision, which in a way exports the problem of (controlling) discretion. Thirdly, even though the process of activating welfare states takes different shapes in different countries (Dingeldey 2007), a stronger integration of income protection and activation programmes and an increased conditionality of entitlements to income support are universal trends in active welfare state reforms. In terms of the design of the organisational structure for providing income protection and activation, this is seen as requiring more cooperation between, and coordination of, the activities of the agencies responsible for income protection and activation programmes (cf. Lindsay and McQuaid 2008). The one-stop shop agencies that all countries have introduced are clear examples of how cooperation and coordination are being promoted, even though, as we saw, the actual nature and degree of service integration that these agencies are expected to realise, differs significantly from country to country. A core issue in this context, especially in the continental countries, is how to coordinate the responsibilities and tasks of national and municipal organisations. Denmark and Germany are interesting cases in this respect: both countries have created agencies where services of 10

11 national and local agencies are co-located, but at the same time started more far-reaching experiments where traditional national responsibilities were devolved to local agencies. Fourthly, the issues of service coordination and integration and the involvement of local actors become even more urgent where the activation of long-term unemployed is concerned. Many countries have experienced difficulties in activating these groups of unemployed (Van Berkel and Hornemann Møller 2004). Decreasing strict dividing lines between activation services aimed at the short-term and long-term unemployed is one of the reforms that took place in several countries: the UK and, to a lesser extent, Germany and Denmark are examples. However, successfully activating long-term unemployed people often requires social services beyond activation, which are often provided by municipalities or other local agents and include, among others, services in the areas of housing, child care, family support, health, debts, addiction problems. Against this background, the development of local social services networks and other forms of network governance such as the local partnerships in the UK and the ARGE in Germany are considered of major importance (cf. Genova 2008, Bifulco et al. 2008). Fifthly, it is generally considered to contribute to the successfulness of activation interventions when these can be tailored to individual and local needs (Van Berkel and Valkenburg 2007). In order to individualise services and make them more flexible, it is considered necessary to devolve policy making and implementation authority in order to give local agencies and local authorities more room in developing activation interventions and in deciding what services should be provided in what cases. As we saw before, all countries have decentralised and devolved policy responsibilities, especially in the area of activation services. Apart from decentralisation, marketisation of service provision can be considered as a strategy to promote tailor-made service provision as well. Competition between providers is expected to make activation services more de-standardised and flexible and, thus, more effective (as well as, of course, more cost efficient). Organisational change in the context of welfare state reforms: a case study of Dutch local welfare agencies In the former section, we looked at reforms of the broader organisational setting for the provision of income support and activation. These reforms as well as those of formal policies, have important consequences for the tasks of public agencies, as well as for the ways in which the agencies carry out these tasks. The processes of intra-organisational change needed to adapt to formal and operational policy reforms will be illustrated in this section, which is based on a study of change processes in four Dutch local welfare agencies which are responsible for the administration of social assistance and the activation of social assistance recipients (see Van Berkel et al., 2007; 2008, on which this section is based). The nature of the primary process Both the content of the services provided to social assistance recipients and the roles and tasks of local welfare agencies in providing these services are changing. Basically, local welfare offices now deliver three different types of services to their clients: income support/benefits; activation and reintegration, preferably into paid work; and care services to prevent (further) social exclusion and escalation of personal problems, mainly though not exclusively focused on social assistance recipients who are exempted from the work obligation. These services and the ways in which they are organised should contribute to realising a variety of objectives which as is the case for many public organisations are often contested, contradictory and ambiguous. Local welfare offices have to prevent poverty and to prevent 11

12 social assistance dependency; they have to promote sustainable labour-market inclusion and to reintegrate people into the labour market as quickly as possible; they have to promote social assistance independence and to take care of the unemployed that are difficult to reintegrate into the labour market; they have to provide individualised and effective services and to reduce costs; they have to motivate clients and to be aware that clients may be potential frauds. Furthermore, these objectives have to be realised with limited resources another characteristic of the context in which public organisations operate which makes setting priorities necessary. Active welfare state reforms have made activation and reintegration a top priority and, more generally, introduced a shift in technologies and dealing with clients from people processing to people changing. In the context of activation, people changing technologies are processes aimed at determining how labour-market integration can be promoted, defining the individual recipient s obligations and responsibilities in realising this aim, and checking the individual s compliance with the behaviour expected from him or her. Prioritising activation and the shift towards people changing technologies did not automatically result in major changes in Dutch local welfare agencies. External regulations (the obligation to contract out most activation services) and internal concerns (lack of experience with people changing technologies) stimulated organisational strategies in which clients were massively referred to private reintegration companies without much further involvement in individual activation processes of local welfare agencies frontline workers. However, the lack of local welfare agencies involvement in and control over activation that was the result of this strategy, was not tenable in a context in which municipalities were increasingly responsible for the financial consequences of policy choices. All four local agencies in our study were faced with disappointing results of the services provided by private companies. So as soon as contracting out of activation became optional for local welfare agencies, they concluded that frontline workers within the agencies should become more involved in the activation of clients. In all four agencies, in-house people changing technologies were developed, as well as new ways of structuring and organising relationships with external service providers. Outsourcing is still being used by the agencies in our sample, but external providers are forced to provide less standardised and more individualised services, and there is stricter control over their activities. Furthermore, a larger share of activation services is organised in-house. In some local welfare agencies, a similar reconsideration of relationships with external partners took place regarding co-operation with CWI offices, that are responsible for the activation of the short-term unemployed. Officially, local welfare agencies have to wait 6 months before they can start activating new social assistance recipients. However, in case the CWI does not do its job or does not do it appropriately, municipalities are confronted with the financial consequences of extended social assistance dependency. Therefore, some local welfare agencies have started to develop early interventions aimed at social assistance recipients inadequately served by CWI. Budgeting social assistance is a clear example of NPM strategies introduced in governing public agencies. Apart from the consequences in terms of the organisation of activation services mentioned above, the budget system has had several other effects on local services. One of them is an emphasis on activation instruments that can contribute to the objective of offering clients the shortest road towards a job. Education and training are now far less popular than several years ago, whereas Work First which, perhaps unintentionally but certainly not unwelcome, also has the effect to deter unemployed people from claiming Social Assistance has gained popularity and is now used by three municipalities in our sample. Another example concerns service provision to the most vulnerable unemployed, who need care instead of, or in addition to, activation. Although it is the aim of the new Social 12

13 Assistance Act to provide services for all recipients, the budgeting system as well as a lack of resources make it attractive for local welfare agencies to prioritise services for clients with better chances to find a job. Of course, prioritising activation does not imply fully abandoning traditional services and technologies. The challenge that local welfare agencies are confronted with, is not so much to replace one kind of services with another, but to combine a diversity of services and technologies. Several issues are of importance in this respect. For example, the issue of assigning priorities and resources to various services. All organisations try to give greater weight to gate keeping and activation, and are taking measures that should reduce resources devoted to income provision related work processes. As we mentioned already, care services get little priority everywhere, probably because their contribution to the core values of efficiency, effectiveness and work before income is unclear. Another issue concerns the consequences of coping with a diversity of services and technologies for the organisation of work and the management of frontline workers. We will return to this below. Actors in local welfare agencies: frontline workers and managers As we mentioned before, the activation related work of frontline workers has changed considerably over the years. Initially, their involvement in activation was limited: clients were referred to private reintegration companies massively. Nowadays, their role in activation is much stronger: frontline workers have an important role in determining the content of individual reintegration processes and in selecting the provider of services, they monitor the progress of activation processes more closely, and sometimes they provide activation services themselves. For reasons mentioned above, care services for the most vulnerable and hard to integrate people remain relatively underdeveloped in all municipalities. Various organisational aspects contribute to this state of affairs: a lack of time, high caseloads, a lack of skills among part of the case managers, and no organisational incentives to develop and provide care. Nevertheless, this situation is gradually changing. As a consequence of favourable economic circumstances and the introduction of the new Social Assistance Act, the number of social assistance recipients has decreased in all four municipalities, in some cases significantly. This implies, that the proportion of hard to integrate clients has increased, which makes the question how to serve these clients more urgent. The changing role of welfare offices frontline workers in activation, and the growing interest in care services for the most vulnerable unemployed, has made the issue of professionalism an important one in all agencies. There is considerable doubt in all agencies, that activation and care tasks should be organised and managed in the traditional bureaucratic and rule-directed way. This may be useful where people processing technologies are concerned, as in the case of benefit administration, but is considered inadequate in the context of people changing technologies, where individualised services are seen as requiring discretionary judgements of frontline workers. Interestingly, this seems to trigger a process of professionalisation of frontline workers: managers in the four welfare agencies talk about these workers in terms of professionals, and increasingly treat them as such, for example, by increasing their autonomy and room for decision making, and by promoting processes of fraternal consultancy and advice. Elsewhere, we called Dutch case managers professionals without a profession (Van Berkel et al., 2008), as in institutional terms (cf. Freidson, 2002), case management in Dutch local welfare agencies can hardly be called professionalised: for example, there is no professional organisation of case managers in local welfare agencies, and principally, the job of case manager is open to anyone. At the same time, the professionalisation process is not free from ambiguities. For example, in the largest welfare 13

14 agency in our sample, various specialised functions were created within the activation domain, which can be seen as a way of curbing discretion. An important organisational issue that arises against the background of the mix of services that local welfare offices are responsible for, concerns the design of the functions of frontline workers: should the core tasks of activation and income provision be integrated or organised in specialised functions? In our sample, three local welfare agencies have opted for specialised case management for work and income related tasks. In these agencies, the combination of income and activation tasks in one frontline worker proved to be complicated. Not only because workers need to have a variety of skills, attitudes and technologies in order to carry out both tasks, but also, because past experiences made clear that integrated case management in practice meant that workers had great difficulties to give sufficient attention to activation. In these agencies, the autonomy and responsibilities of activation frontline workers are increased, and hierarchical control is reduced. The three organisations deal with the organisation of the work of income frontline workers in different ways. For example, the largest welfare office clearly distinguishes between a professional activation frontline workers and a more bureaucratic income frontline worker. The smallest agency, on the contrary, wants to professionalise the function of income frontline worker as well by increasing discretion and responsibilities and replacing hierarchical control by fraternal consultation. Of course, the debate about the design of the work of frontline workers also affects the nature of work of managers. In the traditional local welfare office, procedures were an important coordination instrument, and the organisation was structured in a hierarchical and centralised way. This structure was considered to be adequate given what was then the core task of municipal social service organisations: to evaluate in a rightful way whether or not social assistance claims were legitimate. Frontline workers worked with extensive handbooks or manuals, which were updated frequently and contained detailed guidelines and rules on how to reach decisions. Nevertheless, discretion was unavoidable, as it was regarded as an inherent aspect of applying the individualisation principle underlying Dutch social assistance. In order to manage discretion and promote equal treatment, frontline workers were assigned the role of advisors : decisions regarding, for example, social assistance eligibility or sanctions were taken by officials higher in the hierarchy. All four municipalities are now changing coordination and management mechanisms, and the current situation shows a rather hybrid picture. We already mentioned the professionalisation trend, specifically where managing activation frontline workers is concerned. At the same time, all municipalities which we investigated continue to use profiling systems which determine clients labour-market distance on which decisions regarding activation offers are based. This can be seen as a traditional bureaucratic way to subject activation to rules and procedures, limiting the discretion of frontline workers by standardising work processes although the profiling system can be used in a quite flexible way. Simultaneously, the agencies are carefully introducing more performance oriented management instruments, although it is not quite clear how strictly these will be applied in the evaluations of frontline workers performance. For example, two local welfare agencies are introducing internal performance indicators related to the number of clients that have exited social assistance. In another agency, frontline workers have to select 40 clients from their caseload of 125 whom they want to make independent from social assistance in a year time. This municipality is considering making wage increases of frontline workers dependent on their exit results, which would involve a considerable if not revolutionary break with traditional wage systems which are based on function and seniority rather than performance. In yet another local welfare agency, there are plans to decentralise budget responsibilities to (groups of) frontline workers. 14

15 Of course, these processes of change are not free from tensions. The managers in our four municipalities are clearly aware of the importance of change, and of the major significance of issues related to the design of the work of frontline workers. Some managers made it clear to us that they can no longer act as hierarchical managers of policy administrators, but at least partly are dealing now with professionals who need autonomy, competences, responsibilities and support in order to be able to provide tailor-made services. At the same time, some managers seem to be reluctant to share and devolve responsibilities: not only because it requires new management styles, but also because budgetary concerns may make managers weary to take risks and lose control. In addition, trust plays a vital role as well: several managers are not convinced that case managers have the competences and willingness not only to adopt new roles, but also to accept new responsibilities. Resistance is also present among part of the frontline workers: some of them are reluctant to bear new responsibilities, to work in a context of enlarged autonomy, to discuss work with colleagues rather than superiors, or to accept performance targets that in the eyes of some of them focus on quantity rather than quality. At the same time, there are frontline workers who complained of the lack of trust among managers regarding their competences and their ability to use discretion in a responsible and professional way. Discussion Public benefit agencies, local welfare offices and employment service organisations all over Europe are involved in considerable change processes. The activation of welfare arrangements for unemployed people is an important factor in explaining these processes of change, as activating welfare states require a shift in these agencies core tasks, technologies and the treatment of clients: rather than providing income protection and administering benefits, they are now supposed to provide support, services and incentives that contribute to unemployed people s employability and labour-market participation, and to emphasise unemployed people s individual responsibilities (cf. Handler 2004). These formal policy reforms were accompanied by operational policy reforms. Of course, the latter are inspired by New Public Management views on how public sector organisations should be managed and the provision of public services organised. Nevertheless, we have argued that the reforms that we discussed in this paper are not simply a manifestation of dominant neo-liberal thinking about the public sector. Active welfare state reforms especially the introduction of activation services and the increasing conditionality of income protection require a reconsideration of service provision models, regardless of the dominant views about managing public organisations and providing public services. Put differently: operational policy reforms not only have consequences for formal policy reforms (as argued, for example, by Bredgaard and Larsen (2008)), but the reverse is true as well: formal policy reforms create a need for operational policy reforms. One-stop agencies were introduced to coordinate income protection and activation and/or to integrate service provision for short-term and longterm unemployed people; a decentralisation of policy making authority was introduced to promote the provision of tailor-made services; quasi-markets for the provision of activation services were established or strengthened as these were expected to improve the responsiveness and effectiveness of services and the efficiency of their provision; the role of social partners in governing social security and/or employment services was reduced to increase governments capacity to enforce welfare state reforms; and new public management instruments were introduced to ensure compliance of local agencies or local authorities with national policy objectives, an issue that was considered to be especially urgent in a context of increased decentralisation. Although it is clear that path dependencies do have an impact on reform paths (for example, the countries have different roles for municipalities, different social security systems, different histories concerning the involvement of social partners in 15

16 welfare governance), the similarities in operational policy reforms that these four countries each of which represents a different welfare state regime reveal, can certainly be called striking. They all introduced hybrid governance models, combining bureaucratic, network and market modes of governance; they all strengthened the state s primacy over politics by curtailing the role of social partners; and the process of policy devolution was accompanied by a strengthening of steering instruments based on NPM thinking. Formal and operational reforms do not leave the internal organisation of work and management processes in the public agencies involved in providing income protection and activation unaffected. This paper explored the consequences of these reforms through a case study of Dutch local welfare agencies. Although the findings cannot be generalised, they point at several issues that may be relevant for similar public organisations in other countries. Firstly, the organisations have to cope with an increased variety of tasks. They may decide to outsource part of these tasks, but as the Dutch case shows, this may result in lack of control over external service providers. Alternatively, new tasks may partly or entirely be produced in house, which will require an investment in frontline workers skills and qualifications. Evidently, the Dutch developments in contracting out also reveal, that service privatisation is a dynamic process (cf. Hefetz and Warner 2004). Secondly, cooperation with other public agencies is likely to produce coordination problems. Partly, these depend on mutual dependencies between the agencies. In the Dutch case, this was clear where the cooperation between local welfare agencies and the Centres for Work and Income were concerned: the local agencies more strongly depend on the CWI than vice versa. This may lead to a situation in which public agencies develop activities that are formally assigned to other public agencies. Thirdly, the (re-)design of case management and the work of frontline workers is likely to be an issue that many public agencies will be confronted with, not only in the Dutch case but also in other countries (cf. Hill 2005). Against the background of integrating activation and income protection which is one of the core characteristics of active welfare state reforms, integrated or unified case management may be desirable, but organisational issues may, as we saw, stimulate public agencies to organise case management in specialised functions. Finally, the management of frontline workers is an issue that will probably arise in many public agencies. As we argued in this paper, the introduction of activation services will put traditional bureaucratic styles of management under pressure. Although this does not mean that we will not witness attempts to subject frontline workers to bureaucratic rule and to hierarchical modes of coordination, the Dutch case shows that public agencies may also decide to (re-)professionalise the work of frontline workers. What this will mean for frontline workers, will to an important degree depend on the role that their managers will give to performance measures and other NPM instruments in managing these (semi-)professionals. References Bifulco, L., Bricocoli, M. and Monteleone, R. (2008), Activation and local welfare in Italy: trends and issues, Social policy and administration, 42, 2: Bredgaard, T. and F. Larsen (2008) Quasi-markets in employment policy: do they deliver on promises? Journal of social policy and society, 7(3): Brodkin, E. (2007) Bureaucracy redux: management reformism and the welfare state, Journal of public administration theory and practice, 17(1): Carmel, E. and Papadopoulos, T. (2003), The new governance of social security in Britain, in J. Millar (ed.), Understanding social security: Issues for social policy and practice. Bristol, Policy Press. 16

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