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This chapter is concerned with the labor market policies that governments in Austria, Denmark, the Netherlands, and Sweden pursued after the emergence of high unemployment. It attempts to explain why these countries followed different reform paths, and why political conflicts over labor market reform played out differently. In the 1990s and 2000s, Denmark and the Netherlands made a series of reforms in the areas of unemployment insurance and active labor market policy, introducing a model of labor market regulation that has become known as “flexicurity.” The chapter's main argument is that this was a result of two factors: the early onset of unemployment and the renegotiation of postwar political arrangements in Denmark and the Netherlands that began in the 1980s. Political circumstances and economic policy choices in the 1970s and 1980s continued to matter to labor market policymaking in the 1990s and 2000s.

This chapter turns to the social democratic reforms of the 1940s and 1950s, rooted in cross‐class alliances that were ultimately to distinguish Sweden as the world's paragon social democratic welfare state. Looking first at its People's Pension and universal health insurance reforms, it shows how the Social Democratic government assisted organized employers in their efforts against welfare capitalism by relieving pressure on individual firms to use private social benefits to attract and retain labor under the labor scarcity associated with solidarism and strong expansionary macroeconomic pressures. It then looks at Sweden's renowned “active labor market policy” and its controversial pension legislation of 1959 to show how additional social democratic reforms directly served employers’ solidaristic interests in wage restraint, labor mobility, and the rationing of labor made scarce by collectively administered underpricing – all the while preserving capitalist domination of the investment process.

This chapter focuses on those employment measures commonly known as active labour market policies (ALMPs). It starts by providing a comparative historical analysis of ALMPs, suggesting that these measures effectively date back to the early 20th century. However, in recent years their content has been altered to encompass a higher proportion of supply-side measures, typically accompanied by more stringent qualifying criteria for the receipt of unemployment benefits. ALMPs have now become an effective mechanism for the control of the labour market. In light of these trends, the chapter questions the compatibility of some of the current forms of ALMPs with some notions of ‘right to work’ underpinned by human rights and decent work concerns.

Chapter 9 considers Denmark and Sweden, two countries that exemplify the universalistic welfare state. Denmark’s unemployment rate was similar to that of the United States in the 1980s, rose above it in the 1990s, but by 2002 was again well below it. Sweden’s unemployment rate was far below the U.S. rate until the early 1990s, and although unemployment shot up to almost 10% in the middle of the decade, by 2002 Sweden was again outperforming the United States. This impressive employment performance has been achieved without changing the fundamentals of the Scandinavian Model: high tax rates, a comprehensive social security system, and among the lowest levels of wage and income inequality in the developed world. The authors argue that much of the explanation can be found in a strong commitment of both countries to active labor market policies, such as job placement and work-related education and training programs. Danish and Swedish government interventions have acted to facilitate both labor market flexibility and the transition to the “new economy” of services and high technology. These state policies have helped promote a flexible and innovative “high-road” economy without abandoning the universalistic welfare state.

The chapter provides an account of the changing role played by active labour market policies (ALMPs) in Europe since the post-war years. Focusing on six countries (Sweden, Denmark, France, Germany, Italy, and the United Kingdom), it shows that the role of ALMPs is related to the broad economic situation. At times of rapid expansion and labour shortage, like the 1950s and 1960s, their key objective was to upskill the workforce. After the oil shocks of the 1970s, the raison d’être of ALMPs shifted from economic to social policy, and since the mid-1990s, we see the development of a new function, well captured by the notion of activation, which refers to the strengthening of work incentives and the removal of obstacles to employment, mostly for low-skilled people. The adequacy between economic context and policy is not always optimal, though. Like other ones, this policy domain suffers from inertia, with the result that the countries that have led the way in one period have more difficulty adapting to the economic conditions prevailing in the following one.

This chapter reconstructs policy trajectories in the field of active labour market policy in seven European countries: Sweden, Denmark, the Netherlands, Germany, France, Italy, and the UK. The period covered varies from country to country, as the chapter tries to uncover relevant antecedents of active labour market policy. In most countries, the post-war model of labour market regulation is briefly described. Then an important focus is on the policy responses to the employment crises of the late 1970s and 1980s. Finally, country sections focus on the ‘activation turn’, i.e., the adoption of a clear pro-employment orientation in social and labour market policy that is at the centre of this book.

Having mainly focused on the issue of activation in cash benefit systems alone, many recent analyses of labour market policy reform have failed to adequately grasp the fundamental transformation of core foundational principles and structures of the industrial-era welfare state that are evidenced by developments in this policy field in recent decades. This chapter documents this multi-faceted process of institutional realignment in the face of changing risk structures—which it calls ‘triple integration’—in the labour market policy reforms of a number of European countries since the 1990s. It argues that while a combination of institutional constraints, vested interests and the risk aversion of political actors have slowed processes of fundamental labour market policy realignment in some cases, these changes are also being driven forward by political opportunism and institutional spillovers. The chapter concludes that policy development in the field of labour market policy is less bound by historical legacies than has often been assumed.

In this chapter, Herbert Obinger, Peter Starke, and Alexandra Kaasch analyze various policy responses to labor market divides in three small open economies (Austria, New Zealand, and Sweden). They argue that different welfare state regimes generate distinctive patterns of insider-outsider divides and that the three countries developed quite different, albeit mainly path-dependent coping strategies. In other words, none of the three countries significantly departed from previous labor market policies in response to growing labor market inequalities.

This chapter provides a historical and comparative examination of employment services in the light of their ‘public service’ nature and vocation as developed through the 20th century. It also provides a reasoned taxonomy of the various activities and functions performed by public employment services in Europe, and in particular of job-intermediation, unemployment benefit management, skills formation, the provision of active labour market policies, and the management of ‘making work pay’ initiatives. This is followed by an analysis of the various modes by which PES have been providing their services, ranging from public monopoly arrangements to public-private coexistence systems, to market and quasi-market systems. It is argued that in recent years, and particularly with the demise of monopolistic regimes, the role of private employment services as providers of employment services has been bolstered just as the relevance of PES has progressively faced a decline and reconfiguration.

The final chapter re-examines the hypotheses discussed in Chapter 4 in the light of the empirical evidence presented in Chapters 5 to 7. It argues that the activation turn is best understood as a response to changed socio-economic conditions that was facilitated by political factors. Active social policy lends itself to credit-claiming exercises, and it developed faster in countries where the conditions were particularly favourable for political parties to be able to use active social policy as a credit-claiming tool. This was the case in countries where the late 1990s saw a return to power of a left-wing government after a prolonged period of conservative government. The chapter concludes by looking at the impact of the 2008 financial crises and subsequent economic turmoil on active social policy.

This chapter discusses various attempts to capture recent change in social policy. These make reference to various labels, including ‘flexicurity’, ‘social investment’,andthe Third Way. These notions are discussed on the basis of the literature and found to be similar, though with different emphases. Active social policy can be seen as another label which tries to describe the current transformation. Because it is more neutral than the alternatives available, it is been selected for this book.

The objective of this chapter is to put forwarda range of hypotheses capable ofaccounting for the observed patter of development of active social policies, observed in Chapter 3. It relies essentially on existing scholarship, by adapting theories developed to explain the expansion or the retrenchment of Western welfare states to the current reorientation movement. The chapter discusses different hypotheses on the theoretical level, leaving for later the question of how well they fit with empirically observed developments.

This chapter analyses the political support for unemployment benefits. The traditional view, which focuses on their insurance value, is reformulated. We qualify it by introducing positive effects of unemployment benefits on wages, which may overturn the traditional predictions. For example, an increase in exposure to unemployment may reduce the support for employment protection, rather than increase it, as is predicted when insurance effects dominate. The chapter also discusses the determinants of active labour market policies.

This chapter motivates the search for explanations to the economic success of the Nordic countries, summarizes how they improved performances from the 1990s until the financial crisis of 2008, and offers a reinterpretation of what is new about the global economy in terms of innovation dynamics. Then it shows that their national innovation systems are highly different, yet all seem to have developed learning organizations that make frequent organizational role-changes easy. This similarity is explained by the character of their welfare states which provide citizens with high levels of education and assist families with social services in order to make a highly demanding working life possible. Furthermore decentralization and corporatism provide a constitutional order that makes it possible to constantly create new complementarities between institutions, labour markets, and firms so they simultaneously are able to reconfigure roles and identities in the search for new positions in the global economy.

This chapter considers means-tested employment and training programs in the United States. We focus in particular on large, means-tested federal programs, including the Job Training Partnership Act (JTPA), its successor the Workforce Investment Act (WIA), that program’s recent replacement, the Workforce Innovation and Opportunity Act (WIOA), the long-running Job Corps program, and the Trade Adjustment Assistance (TAA) program. The first part of the chapter provides details on program history, organization, expenditures, eligibility rules, services, and participant characteristics. In the second part of the chapter, we discuss the applied econometric methods typically used to evaluate these programs, which in the United States means primarily social experiments and methods such as matching that rely on an assumption of “selection on observed variables.” The third part of the chapter reviews the literature evaluating these programs, highlighting both methodological and substantive lessons learned as well as open questions. The fourth part of the chapter considers what lessons the evaluation literature provides on program operation, especially how to best allocate particular services to particular participants. The final section concludes with the big picture lessons from this literature and discussion of promising directions for future research.

This chapter presents the main puzzles addressed in the book. These include the fact that, contrary to expectations based on mainstream theory, the past ten to fifteen years have seen an expansion in policy areas such as active labour market policy and childcare; the fact that we witness a convergence towards an active welfare state across welfare regimes; and finally, the fact that Southern European countries are lagging behind in this development. It then discusses the methodological approach followed in the book, and concludes by highlighting its structure.

This chapter provides an overview of active social policies across the OECD world. The policy areas covered are active labour market policy, childcare, and other policies that help parents reconcile work and family life (particularly parental leave). It relies mostly on quantitative evidence, provided by OECD spending data, and by other sources. It concludes with a picture of the extent of development of active social policies throughout Europe. Active social policies are most developed in the Nordic countries, but the UK and continental Europe have invested significantly in this field in recent years. Southern Europe, instead, seems to lag behind.

This chapter draws together the empirical material of the preceding chapters and some additional quantitative evidence on labour market policies and reforms to answer the questions of the book: has labour market policy retrenchment or expansion taken place and if so, in what form? Has there has been a shift in the logic of activation policies? How have retrenchment and expansion of protection been distributed across the well-protected and the less well-protected labour market populations? Looking at the big European picture, do we see a convergence or a divergence in labour market and unemployment policy trends and outputs? Do the patterns of change vary across member states and, if so, how? The chapter also explores the evolution of labour market insecurity and examines whether there seems to be convergence or divergence in that respect. Finally, the chapter also discusses any emerging questions for future research.

In this chapter explores whether the direction of labour market reforms in France has changed since 2010 by comparison with the previous two decades. It looks into broad labour market policy areas, namely, income support for the unemployed, active labour market policies and employment protection legislation before and after 2009 and asks the following questions. What form has retrenchment taken under the recent fiscal pressures and how has it been distributed across these policy domains? Has the emphasis of active labour market policy instruments changed? How have policy changes affected insiders and outsiders in the labour market? It is shown that during economic crisis and the subsequent fiscal austerity period there were no paradigmatic changes in French labour market policies, which continued to develop along a path pursued since the early 2000s. Successive governments, both centre-right and centre-left, have implemented flexicurity à la française, with a focus on flexibility at the expense of security. External flexibility – firms’ ability to hire and dismiss workers – has been developed for both core workers and more precarious forms of employment (temporary work). Furthermore, new measures also introduced important changes in the field of internal flexibility (working-time organisation, wages).