A Decade of Innovation in EU Social Governance

1. A Decade of Innovation in EU Social Governance Jonathan ZeitlinUniversity of Wisconsin-MadisonMarch 2008

2. Outline of the talk • I. The European Employment Strategy (EES) as an EU governance innovation • II. From the EES to the Open Method of Coordination (OMC) • III. The OMC in action • IV. The OMC and the Lisbon Strategy relaunch • V. Closing the implementation gap through better governance? • VI. Reorienting the relaunch • VII. Post-mortem and future prospects

3. I. The European Employment Strategy as an EU governance innovation • The EES originated from a combination of: • Widespread uncertainty among EU MS on how to combat persistent high unemployment • 1993 Delors White Paper, 1994 Essen common action plan • Political spillover from EMU • Demand for an employment chapter in EU Treaty to sustain public support for European integration • European advocacy coalition committed to a more active role for the EU in employment policy • Commission, Parliament, MS gov’ts (esp. Sweden) • Consolidated by political changes in key MS (UK, France)

4. The EES as a political compromise • Like employment chapter of Amsterdam Treaty, the EES or ‘Luxembourg Process’ launched in November 1997 was a political compromise • Focused around four ‘pillars’: employability, adaptability, entrepreneurship, equal gender opportunities • Not only built on common employment policy priorities (agreed at Essen in 1994), but also combined ideas from social democratic, liberal, and ‘Third Way’ approaches

5. The EES as a procedural solution • Amsterdam Treaty authorized EU to coordinate MS policies towards achieving a ‘high level of employment’, but granted it no new legislative or spending powers • EES sought to square this circle by developing a new iterative process of benchmarking national progress towards common European objectives, supported by organized mutual learning

6. The EES as a new governance architecture • EES as a new governance architecture based on a recurring annual cycle • Establishment of common but non-binding guidelines, targets, and indicators • National Action Plans, assessing relative progress and proposing corrective action where needed • Peer review of NAPs by MS reps in Employment Committee (EMCO), supported by contextualized exchange of good practices • Joint Employment Report and country-specific recommendations • Review and revision of guidelines, targets, indicators, and procedures in light of implementation experience

7. The EES as an innovative approach to EU governance • Built and improved on methods for coordination of MS policies developed during the 1990s • ‘Essen procedure’ of annual reporting on national progress towards common EU employment priorities, but with stronger and more systematic guidance, monitoring, and evaluation of MS policies • Broad Economic Policy Guidelines & EMU convergence programs, but with greater emphasis on adaptation of common European approaches to diverse national circumstances and mutual learning • Quickly recognized as an innovative approach to EU governance by Commission as well as academics

8. II. From the EES to the OMC • The Open Method of Coordination introduced at the extraordinary European Council of March 2000 as a broadly applicable new governance instrument for the EU • Designed to assist in achieving the ambitious goals of the ‘Lisbon Strategy’: ‘to make the EU the most dynamic and competitive knowledge-based economy in the world, capable of sustainable economic growth, with more and better jobs and greater social cohesion’

9. OMC as a new governance architecture • OMC defined at Lisbon as a new governance architecture involving four key elements: • ‘Fixing guidelines for the Union combined with specific timetables for achieving the goals which they set in the short, medium and long term; • establishing, where appropriate, quantitative and qualitative indicators and benchmarks against the best in the world and tailored to the needs of different Member States and sectors as a means of comparing best practices; • translating these European guidelines into national and regional policies by setting specific targets and adopting measures, taking into account national and regional differences; • periodic monitoring, evaluation and peer review organized as mutual learning processes.’ • Modeled directly on the EES

10. Diffusion and dilution • Lisbon European Council authorized application of the OMC to a wide range of policy areas • R&D/innovation, information society/eEurope, enterprise promotion, structural economic reform, social inclusion, education/training • Subsequently extended to various other fields, including pensions, health/long-term care, youth policy, better regulation, industrial relations • But many of these ‘OMCs’ included only fragmentary elements of the four-stage governance architecture defined at Lisbon

11. Theoretical promise of a new mode of governance • OMC widely hailed by policy makers and academics as a ‘third way’ for EU governance, between harmonization/centralization and regulatory competition/fragmentation • A mechanism for reconciling pursuit of European objectives with respect for national diversity through iterative benchmarking of performance against common indicators • An instrument for promoting experimental learning and deliberative problem solving through systematic comparison of different national approaches to similar problems

12. OMC as an EU policy template • During the years immediately following the Lisbon Summit, the OMC rapidly became the governance instrument of choice for EU policy making in complex, domestically sensitive areas • where the Treaty base for Community action is weak • where inaction is politically unacceptable • where diversity among Member States precludes harmonization • where widespread strategic uncertainty recommends mutual learning at the national as well as European level

13. III. The OMC in action • National influence and effectiveness of OMC processes is notoriously hard to evaluate • Methodological problems of assessing the causal impact of an iterative policy-making process based on collaboration between EU institutions and MS governments without legally binding sanctions • But now a large body of empirical research, based on both official and independent sources • Zeitlin & Pochet 2005; Heidenreich & Zeitlin forthcoming • Focused on employment and social inclusion: oldest, most developed, best institutionalized OMC processes

14. OMC in employment and social inclusion: a qualified success • Contributions to substantive policy change • Cognitive shifts: incorporating EU concepts into domestic debates, exposing policy makers to new approaches, challenging entrenched assumptions • Political shifts: putting new issues on the domestic agenda and/or raising their relative salience • Policy shifts: changes in specific laws/programs • A two-way interaction rather than a one-way causal impact • Active role of MS in shaping the development of OMC processes (‘uploading’) and selectively interpreting their message (‘downloading’)

15. OMC in employment/inclusion:a qualified success (2) • Procedural shifts in governance/policymaking • Better horizontal integration across policy areas • Improved statistical and steering capacity • Enhanced vertical coordination between levels of governance • Increased involvement of non-state actors • Particularly strong in social inclusion • Uneven but growing participation in employment • Development of horizontal/diagonal networks for participation of non-state/subnational actors in EU policy making

16. OMC in employment and inclusion: a qualified success (3) • Mutual learning • Identification of common challenges and promising policy approaches • Enhanced awareness of policies, practices, and problems in other MS • Statistical harmonization and capacity building at both national and EU levels • MS stimulated to rethink own approaches/practices, as a result of comparisons with other countries and ongoing obligations to re-evaluate national performance against European objectives

17. OMC in employment and social inclusion: limitations • Lack of openness and transparency • Dominant role of bureaucratic actors in OMC processes at both EU and national level • Weak integration into national policy making • NAPs as reports to EU rather than operational plans • Low public awareness and media coverage • Little bottom-up/horizontal policy learning • Few examples of upwards knowledge transfer and cross-national diffusion from innovative local practice

18. A reflexive reform strategy • Overcome limitations of existing OMC processes by applying method to its own procedures • Benchmarking, peer review, monitoring, evaluation, iterative redesign • Ongoing reforms as evidence of practical viability • Strengthening of peer review/mutual learning programs • Efforts by EU institutions to promote greater openness, stakeholder participation, and ‘mainstreaming’ of OMCs into domestic policy making

19. Advancing the European knowledge economy through OMC: a failure? • Weak performance of innovation/information society initiatives within Lisbon Strategy • Lack of progress towards 3% R&D target • Limited impact/visibility of eEurope policies • ‘Lite’ OMC recipes and fragmentary architectures • European Action Plans, objectives, targets, indicators, benchmarking/scoreboards • But no agreed National Action Plans, systematic monitoring/reporting, peer review, or country-specific recommendations; weak mutual learning mechanisms • External evaluation (Tavistock Institute et al. 2005): OMC in these areas ‘cannot yet be said to be a success or failure’: ‘simply has not been fully implemented’

20. IV. The OMC and the Lisbon Strategy relaunch • 2004-5 mid-term review sharply criticized both the overarching design of Lisbon Strategy and the role of OMC within it • Kok Report (2004) • Slow progress towards Lisbon goals • Too many objectives, targets, indicators, processes • Weakness of OMC in mobilizing MS commitment and providing incentives for policy delivery • Called for refocusing Lisbon Strategy on growth and jobs, supported by intensified peer pressure on MS (naming/shaming/faming, league tables)

21. Commission Lisbon New Start (2005) • Endorsed Kok critique of OMC & Lisbon I • Rejected naming/shaming/faming in favor of new reform partnerships between Commission and MS, and between national governments and domestic stakeholders • Proposed shift from sectoral, multilateral policy coordination (OMC) to integrated, bilateral dialogue on national reform programs

22. The mid-term review as an evidence-based process? • Kok High Level Group • Lacked expertise on social and employment policies • Did not review available evidence on OMC performance in these areas • Commission Lisbon New Start • Ignored both internal & external evidence on successes/failures of different OMC processes

23. Integrating the economic and employment guidelines • Architectural core of relaunched Lisbon Strategy: fusion of EGs and BEPGs into 24 Integrated Guidelines, in 3 chapters (macroeconomic, microeconomic, employment) • Main thrust of EES preserved, including links to overarching objectives (full employment, quality & productivity at work, social cohesion), but at cost of increased complexity and overlap • NAPs/empl and Joint Employment Report replaced by sections within MS Lisbon National Reform Programs (NRPs) and Commission Annual Progress Report

24. Saving and streamlining the social OMCs • Social cohesion/inclusion reinstated within Lisbon II by European Council (2005-7) • Following a successful campaign by social NGOs • Social Protection OMCs reaffirmed • Inclusion, pensions, health/long-term care • 3 strands streamlined into a single process (OMC/SPSI) w/ both common and specific objectives • OMC and Lisbon: a mutually reinforcing dynamic • Social OMCs to ‘feed into’ growth/jobs at nat’l & EU levels; IGs/NRPs to ‘feed out’ to social cohesion goals

25. V. Closing the implementation gap through better governance? • Results of Lisbon II not encouraging • Erosion of employment policy coordination • Reduced visibility at both EU & national levels • Increased unevenness in national reporting and loss of EU-level monitoring capacity • Uneven/variable format of NRPs hampers feedback of mutual learning into MS policy making

26. ‘Feeding-in/out’ in practice • Limited effectiveness of mutually reinforcing dynamic, with wide variations across MS • Few NRPs include social cohesion/inclusion objectives among national priorities • Little reference to OMC/SPSI in NRPs • Little evidence of ‘feeding-out’ • e.g. through systematic impact assessment of effects of economic/employment policies on social outcomes

27. Enhancing national ownership and civil society participation? • A key objective of Lisbon II • Most independent assessments agree that 2005 NRP process did not realize these goals • A backward step for civil society participation compared to NAPs/empl, and esp. NAPs/incl • Big push from Commission for increased national ownership in 2006-2007 NRP implementation process • Leads to creation of new consultative/coordination bodies, upgrading of Lisbon coordinators, wider involvement of national parliaments, social partners, local/regional authorities • But still little involvement of civil society actors (e.g. social NGOs) and low public visibility in most MS

28. Simplification or specificity? • Growth & jobs closely linked to other policy areas with separate coordination processes • social protection/inclusion, education/training, environment/sustainable development • Loss of specificity & detailed reporting against common indicators needed to monitor, evaluate, and coordinate complex policy areas • e.g. employment • Incorporating key objectives & indicators from other sectoral processes is not like adding ornaments to a Christmas tree, but rather using full range of instruments to avoid flying blind

29. VI. Reorienting the relaunch • New cycle of IGs (2008-2011) • An opportunity to correct deficiencies of relaunched Lisbon governance architecture revealed by experience of past three years • 2 key areas of proposed reform • Strengthening Lisbon’s social dimension • Reviving the European Employment Strategy

30. Strengthening Lisbon’s social dimension • European Council has repeatedly affirmed that greater social cohesion & fight against poverty/social exclusion remain core Lisbon objectives • But this political commitment has not been reflected in guidelines to MS for preparation of NRPs, nor in their assessment • 2007 Spring Council resolved that ‘common social objectives of MS should be better taken account within the Lisbon Agenda’

31. Improving policy coherence and discovering synergies • European systems of social protection need ongoing reform to ensure their adequacy, sustainability, and adaptation to new risks • OMC/SPSI designed to pursue these multiple, indispensable goals in a balanced, coherent way, incorporating both social & economic views • But Lisbon II has returned to one-sided coordination of MS social policies in pursuit of economic & employment goals, which OMC/SPSI was created to overcome

32. Policy options for a stronger social dimension • Incorporate both EU’s common social objectives and OMC/SPSI into IGs and NRPs • Incorporate EU social objectives more explicitly into the IGs, while retaining the OMC/SPSI as a distinct policy coordination/reporting process • Leave existing structure of IGs and OMC/SPSI unchanged, while improving arrangements for ‘feeding-in/out’ at both national and EU levels, through enhanced participation, reporting, and impact assessment requirements

33. Option 1: full incorporation of social objectives & OMC/SPSI into IGs/NRPs • Advantages • The cleanest and most coherent solution • Would place EU’s social objectives on equal footing with pursuit of growth & jobs • Would create an integrated institutional framework for reconciling conflicts/discovering synergies between objectives at both national and EU levels • Disadvantages • Risk of weakening EU social policy coordination by reducing its autonomy & visibility

34. Option 3: advantages & disadvantages • Advantages • The simplest and least risky solution • Reinforced social participation, reporting, & impact assessment requirements are both desirable per se, and necessary for effective working of Options 1 & 2 • Disadvantages • Experience under Lisbon II suggests that proposed improvements in ‘feeding-in/out’ will remain ineffective without changes in the structure of IGs • Most MS have ignored exhortations from the EC to highlight ‘feeding-in/out’ in their NRPs, as has the Commission in its own Annual Progress Report

35. Option 2: incorporating social objectives but not OMC/SPSI into the IGs • Advantages • The most promising approach to strengthening the social dimension of the Lisbon Strategy while preserving the visibility and autonomy of EU social policy coordination • Disadvantages • Still some risk of reducing autonomy of OMC/SPSI • But retaining procedural autonomy while sacrificing political influence is the greater risk, since MS are already subject to one-sided coordination of social protection reforms under the IGs for Growth & Jobs

36. Restructuring Lisbon governance • Incorporation of social objectives into the IGs should be accompanied by broader organizational changes to Lisbon Strategy governance, aimed at safeguarding the integrity of OMC/SPSI as a distinct sectoral process • IGs & NRPs should be reconceived as twin apexes of an overarching policy coordination process built up from sectoral OMCs • Sites where conflicting priorities can be reconciled, not centralized replacements for sectoral coordination processes themselves

37. Reviving the EES • Such organizational changes would be beneficial for the Lisbon Strategy as a whole, and should be extended to the EES to correct the problems experienced under Lisbon II • Loss of visibility, monitoring capacity, participatory impetus • As with the OMC/SPSI, would be desirable to revive the EES and NAPs/empl as distinct policy coordination processes and planning documents preceding and flowing into NRPs

38. Maximizing opportunities for mutual learning • To maximize opportunities for mutual learning, MS should be obliged to report consistently on progress towards each objective/guideline, using common European indicators as far as possible • Common indicators should be outcome-oriented, responsive to policy interventions, subject to clear/ accepted normative interpretation, timely, & revisable • Indicators should also be sufficiently comparable & disaggregable to serve as diagnostic tools for improvement & self-correction by national/local actors, rather than as soft sanctions/shaming devices to ensure MS compliance with European targets

39. VII. Post-mortem and future prospects • Following a year of public debate, the March 2008 European Council endorsed a 4th option for the new cycle of the Lisbon Strategy • Leaving the current set of Integrated Guidelines unchanged, in order to focus on national implementation of commitments to structural reforms • Strengthening the social dimension of the Lisbon Strategy by revising the explanatory text accompanying the Guidelines

40. The social dimension of the new Integrated Guidelines • IGs designed to contribute to social cohesion objectives as well as sustainable growth and employment • Need for strengthened interaction with the OMC/SPSI • MS should ensure that developments in economics, labor, and social affairs are mutually reinforcing through broad stakeholder partnerships and systematic follow-up • Modernization of social protection systems should support their access and adequacy goals as well as financial sustainability • Active inclusion of all through promotion of labor force participation and fight against poverty & exclusion • MS encouraged to monitor social impact of reforms

41. A flawed solution • 2008-10 Lisbon Guidelines have attracted wide criticism from EP, ETUC, social NGOs, & others • Disconnect between old guidelines and new explanatory text does nothing to improve the intelligibility of EU policies to MS citizens or enhance ownership by national actors • Remains to be seen how commitment to promote greater synergy between IGs and OMC/SPSI will be followed up and monitored • E.g. through guidance to MS on preparation of NRPs and development of ‘feeding in/feeding out’ indicators

42. Towards a post-Lisbon agenda • Structural reforms of the governance architecture of the Lisbon Strategy will now have to await the next cycle of IGs, beginning in 2011 • But preparations for the ‘post-Lisbon’ era are already underway, in the form of planning for the EU’s next five-year Social Agenda • Charged with strengthening the social dimension of the Lisbon Strategy • Reviewing governance instruments and policy tools in response to new social risks and realities

43. Promoting active inclusion • Modernizing social protection for greater social justice and economic cohesion through active inclusion for those furthest from the labor market • A holistic strategy combining minimum income support with job opportunities/vocational training and better access to enabling social services of high quality • Common EU principles to be adopted, as with flexicurity • Commission to update 1992 recommendation on minimum income schemes for MS • Follow-up and monitoring through reinforced OMC, with participation & integration of all relevant actors, and establishment of a network of local observatories

44. Enhancing mutual learning through OMC • Ongoing proposals for enhancing mutual learning through OMC (EMCO, SPC) • Focus of peer review/mutual surveillance of national strategy reports on key policy themes • E.g. flexicurity, active inclusion, child poverty • More context and process-oriented approach to peer review of good and bad practices • Stronger analytical framework for understanding relationship between policies and outcomes • Better linkages between EU and national debates through improved dissemination, wider stakeholder participation, and development of ‘learning networks’

45. An alternative pathway to realizing Lisbon’s original promise? • Comprehensive reforms to the governance architecture of EU social, economic, and employment policy coordination remainout of reach, at least for the moment • But new integrative strategies such as active inclusion and flexicurity, coupled with reflexive reform of OMC processes, may meanwhile offer an alternative lower-profile pathway to realizing Lisbon’s original promise • Helping to create a mutually reinforcing relationship between the EU’s core social, economic, & employment policy objectives: greater social cohesion, faster sustainable growth, and more and better jobs