Varieties of Welfare-to-Work Policies: Denmark, Germany and the US Michaela Schulze

1. Varieties of Welfare-to-Work Policies: Denmark, Germany and the US Michaela Schulze Goethe University Frankfurt Second ASPEN/ETUI-REHS Conference March 20-21, 2009 Stream 5: From Workfare to Activation – and back (to workfare)? Changing European Policies for Uninsured Workless People

2. Table of Contents • Introduction • 2. Frame for the Study of Welfare-to-Work Reforms • 3. Emerging Welfare-to-Work Paradigms • 4. Welfare-to-Work Reforms in Comparison • 5. Conclusion: Convergence or Divergence

3. 1. Introduction • “Work in return for your benefits” – popular slogan for the reforms • term: welfare-to-work • is a new social policy paradigm • an international comparison will show some common features ( convergence) •  welfare-to-work trajectories in Denmark, Germany and the US • some convergence, but more divergence • every country has found tailor-made solutions • according to problem definition and suggested solutions (on a national level) • Denmark and Germany were not following the US model

4. 2. Frame of the Study of Welfare-to-Work Reforms • welfare-to-work discussions: • 1980s (US) and 1990s (Europe) • 2 research gaps: • ambiguity with the used terms • workfare (Peck 2001, Quaid 2002; Shragge (ed.) 1997; Lødemel/Trickey (eds.) 2000) • activation (Drøpping/Hvinden/Vik 2002; Hvinden 1999; Barbier 2001, 2004) • enabling state (Gilbert/Gilbert 1989) • “aktivierender Staat” (Lamping/Schridde 2003; Merkel 2005; Mezger/West (eds.) 2003; Opielka 2003a) • ambiguity of the dimensions covered by the used terms • unemployment benefits • social assistance • programs of active labor market policies

5.  there is a need for an umbrella term • no associations (negative connotations) • broad and encompassing concept • useful for an international comparison • My suggestion for an umbrella term: • welfare-to-work (reforms) • Elements of welfare-to-work reforms or policies • is a compulsory welfare state element (for recipients of benefits) • it is about work (in return for benefits) • located at the interface of social policy and labor market policy • result in a change: understanding of social policy (taking benefits, giving work – conditionality instead of passivity)

6.  some convergence with regard to the elements • - no new welfare state type is emerging • - persistent divergence • result: varieties of welfare-to-work reforms and policies • paradigm shift + policy change -> welfare-to-work reforms Table 1: Time Frame for Welfare-to-Work Reforms:

7. 3. Emerging Welfare-to-Work Paradigms • paradigm shift as a precondition for welfare-to-work reforms and policies • policy paradigms according to Peter Hall • as a set of ideas that specify policy goals and useful instruments •  aim is to show how welfare-to-work paradigm appeared in the discussions about the welfare state

8. Emerging Welfare-to-Work Paradigm inGermany • (1998-2001): • „German problems“ (defined by politicians & scientists): • long-term unemployment • insufficient incentives to take a job, lack of qualifications • ineffective administration • 1998: election campaign of the Social Democratic Party • Bodo Hombach (Federal Minister of the Chancellery) called for reforms • Fördern und Fordern was the main slogan • individual initiatives to take a job, re-balancing rights and duties • Schröder-Blair Paper (1999) - idea of activation • German discussion was inspired by Anthony Giddens

9. Emerging Welfare-to-Work Paradigms • in Denmark (1988-1993) • Danish problems: • unemployment as a matter of structural problems of Danish economy • lack of qualifications, insufficient incentives to take a job • several reports: • Economic Council (1988) • Government (1989) • Social Commission (1991-1993) • Zeuthen Commission (1992) was established to elucidate the problems - active measures of labor market policies as solution • obligatory participation in activation programs, job search courses, education and job training • improvement of qualification and social integration

10. Emerging Welfare-to-Work Paradigms • In the US (1981 -1988) • discussions of scientists and politicians: • Charles Murray, Michael Tanner (better off without the welfare system, work supersedes welfare) • Lawrence Mead (illegitimate birth, amount of welfare benefits that results in dependency) • Ronald Reagan (welfare is wasteful and counterproductive) • “black lazy welfare queen” • 1981: OBRA (Omnibus Reconciliation Act) • 1988: FSA (Family Support Act)  “problematic” group: recipients of AFDC (not: the unemployed)

11. 4. Welfare-to-Work Reforms in Comparison • from ideas to reforms • policy change means here that reform(s) were passed that establish welfare-to-work ideas - different timing and duration •  Major reform steps

12. Welfare-to-Work Reforms in Germany (2001/2-2005) 2 major reform steps: • Job-AQTIV Law (2001) • main elements: activation, qualification, training, investment, job placement • aims: improving job service, active integration of the unemployed, education and training for unskilled workers • slogan of “Fördern und Fordern” established

13. Welfare-to-Work Reforms in Germany (2001/2-2005) • Hartz Reforms (2003-2005) • Hartz 1 – Hartz 3: • reforming and improving job service, • reducing bureaucracy, • job placement as “service for clients”, • self-employment for unemployed was fostered, • possibilities of sanctioning unemployed were expanded • Hartz 4: final step towards welfare-to-work policies, • unemployment benefits were reduced to 12 months, • unemployment benefit II (replaced former unemployment assistance and social assistance for able-bodied persons), • people who do not take an appropriate job will lose their benefits, • creation of job centers (to end former double responsibility)

14. Welfare-to-Work Reforms in Denmark (1993/4-2005) • longer reform path, reforms aimed at social assistance (a) and unemployment insurance and programs of active labor market policy (b) a) reforms aimed at unemployment benefits: • First, Second and Third Labor Market Reform (1993/4; 1995;1998) • duration reduced to seven years (1993/4); to five years (1995); to four years (1998) • right and duty to be activated after two years • duty to accept an appropriate job • b) reforms aimed at social assistance: • Law on Active Social Policy (1998) - right and duty to activation • duty to accept an appropriate job • “More People to Work” 2002 • sanctions for social assistance recipients • fostered control of work obligations • “A new chance for all” 2005 - life-long learning for social assistance recipients (and the whole population)

15. Welfare-to-Work Reforms in the US (1988-1996) 1988: FSA (Family Support Act) - created JOBS-Program (Job Opportunity and Basic Skills Program) • states had to establish workfare-programs, support for AFDC-families, job placement, obligatory “on the job training”, states could establish time limits 1996: PRWORA (Personal Responsibility Work Opportunity Reconciliation Act) AFDC was replaced by TANF (Temporary Assistance for Needy Families) • carrots and sticks: • further strengthening of workfare-principles (work as soon as recipients are job ready but no later than 2 years after coming on assistance) • life time limit of 5 years (after 5 years states can give financial assistance) • EITC further extended, public childcare and transportation •  no major changes since 1996!!!!

16. 5. Conclusion: Convergence or Divergence • Criteria of welfare-to-work show some convergence: • a compulsory welfare state element (for recipients of benefits) • it is about work (in return for benefits) • located at the interface of social policy and labor market policy • result in a change: understanding of social policy (taking benefits, giving work – conditionality instead of passivity)

17.  BUT a lot of divergence: - timing and duration of paradigm change and of reforms - problems and suggested solutions • - programs affected by reforms (social assistance, UI, labor market policy) • (sanctions, time limits, strictness of work requirements) •  tailor-made solutions!!! • result: varieties of welfare-to-work reform paths (paradigm change and policy change)