Institutional Competitiveness and its Analytical Foundation

Transcription

1 Institutional Competitiveness and its Analytical Foundation Henning Jørgensen Professor, Aalborg University Former Director ETUI-REHS Research Department CBS, Celebration - Ove K. Pedersen,

2 Discursive changes: Convergence From Socialization of risks To Individualization of risks Collective responsibility Individual responsibility Protection against risks Capacity to adapt to change Equal distribution Equal opportunities Lack of jobs Lack of employability 2

3 The reversal of the order of established causalities in the discourses Unemployed people victims of the market Themarketis thevictim of unemployment Flexibility causes problems in relation to social protection Social protection is a cause of regidities in the labour market 3

4 One-dimensional developments? from regulating markets to activation of citizens from compensatory to active social policy from public social policy to market-oriented policy from social citizenship to private responsibility from normal employment relationships to precarious employment relationships NO: more path-dependent developments more political strategies followed diversity of regimes, regulations and results 4

5 International competitiveness: Denmark the best case 9 8,5 8 7,5 7 6,5 5 Denmark USA Netherlands Finland UK Ireland Sweden Belgium France Germany Norway Austria Spain Portugal Business environment score Source: The Economist, Press Release, March 30th, 2005

6 Unemployment developments : Danish success in fighting unemployment Percentage Denmark Germany EU Source: Eurostat 6

7 Unemployment developments in the Nordic countries Percent Denmark EU (15 countries) Finland Norw ay Sw eden Source: Eurostat LFS-data 7

8 Employment rate 2003 (percentage) Schwitzerland Norway Denmark Sweden Netherlands UK Canada USA Japan Austria Finland Portugal Ireland Germany France Spain Belgium Greece Italy Poland Source: OECD: Employment Outlook

9 Employment rates, women, 2003 (%, aged 15-64) 80 employment rate 2003 FTE 2003 Lisbon target MT IT GR ES PL HU BE LU SK IE CZ FR SI LV LT DE EE CY PT AT UK FI NL DK SE EU EU EU BG RO 25 9

10 Older workers employment rate, EU15, 2003 (% population aged 55-64) 80 older workers' employment rate 2003 Lisbon target SI SK PL BE HU LU IT AT FR DE ES GR CZ LV LT NL IE FI CY PT EE UK DK SE EU EU EU EU BG RO 10

11 Flexicurity Job protection Low High Social protection Low UK USA Italy High Denmark Germany 11

12 The Danish flexicurity system Strong rotation between jobs The primary axe of the Flexicurity model Flexible labour market Lowjob security Quick structural adaptation Social security The social partners Active labour market and educational policies Income security High percieved job security Employment security 12

13 Job turnover and shift of employment 2001, Denmark Number of jobs/ employment Number of jobs/ employment Job turnover Job creation Job destruction Shift of employment New jobs Dismissals Number of wage earners Source: AErådetonbehalfofIDA Number of jobs Number of persons Percentage 12,1 11,4 Percentage 30,8 30,2 13

14 Italy Greece Average tenure Source: Auer & Casez, Japan Portugal Sweden France Luxembourg Belgium UK Denmark The Netherlands Ireland Finland Spain Germany USA Year

15 Protection for people in ordinary employment ,5 4 3,5 3 2,5 2 1,5 1 0,5 0 Source: OECD: Employment Outlook Sweden USA UK Denmark Ireland Belgium Italy Finland Greece Japan France Spain Germany The Netherlands Portugal Index

16 Job-to-job mobility 2004 number of jobs per person 16

17 But: The Danes love it 17

18 Level of economic well-being Source: Gallie & Paugam (2000) 18 Portugal Greece Italy Spain UK France Germany Ireland Belgium Netherlands Denmark Employed Unemployed Level of economic well-being

19 Unemployment insurance system Net compensation ratio 2002 Source: OECD (2002) 19 Italy Greece Spain France Ireland Portugal Germany Austria Finland UK Belgium Luxembourg Netherlands Sweden Denmark NRR

20 Expenditures for active labour market policy 2005 Denmark Net herlands Belgium Germany Finland France Sweden Spain Portugal Austria Switzerland Active Passive Norway Ireland Italy Canada UK Japan USA Spending as percent of GDP 20

21 Some basic figures for Danish flexicurity: the security of the wings 20 procent of the workforce experience unemployment each year Flexible labour market 30 procent change jobs each year 13 percent of the workforce complete a CVT-courses each year CVT Social security ALMP 11 procent in ALMP each year 21

22 The Labour Market Steering System in Denmark until 2007 Parliament Central Minister of Employment National Employment Board Arbejdsmarkedsstyrelsen Labour Market Administration Evaluations Goals Resources Regional Arbejdsformidlingen (AF) Employment Service Regional Labour Market Board County Municipalities Educational Institutions Unemployment Offices Firms 22

23 Denmark: the Phillips curve flattened out! 25 Wage increase (percentage) Labour market policy reform Source: ADAMs databank Unemployment (percentage) 23

24 The basics of flexicurity The starting point: Flexibility and security are not contradictions, but can be mutually supportive Flexicurity arrangements can be important components in achieving a high level of institutional competitiveness => Link to Lisbon Strategy Denmark is now the role model of the EU in its flexicurity strategy decided upon in

25 The new EU flexicurity chart of Europe Source: Employment in Europe

26 Economic security and employment employment rate EE LT LV GR US CZ SK HU SI PL IT JP UK PT ES AT IE DE LU 0,5 0,6 0,7 0,8 0,9 1 FR BE NL DK FI SE y = x R 2 = economic security index Source: Andrew Watt: Transfer no. 4,

27 Economic security and unemployment unemployment rate PL SK y = x R 2 = CZ LV EE GR IT DE ES BE FR FI 5 US SI JP UK IE AT PT NL LU DK SE 0 0,5 0,6 0,7 0,8 0,9 1 economic security index Source: Andrew Watt: Transfer no. 4,

28 Works better with a safety net! 28

29 Trade-offs or win-win-situations? First, there is not only a trade-off between flexibility and security. The flexibility gains of employers do not necessarily mean a loss of security among employees; similarly, security gains of employees do not necessarily have to go along with flexibility losses among employers. Therefore, the talk about a balance between flexibility and security usually thought of as a compromise between employers and employees does unduly simplify the nexus. (Leschke et al, 2006, p. 3) 29

30 Is institutional competitiveness the explanation? As a normative concept institutional competitiveness is highly productive As an analytical conceptitmight need more clarification 30

31 Competing explanations of competitiveness Neo-liberals: structural competitiveness is weak * deregulation * structural reforms of labour markets * retrenchment policies * economic incentives * wage moderation Ove K. Pedersen: institutional competitiveness strong * institutional regidities * over-regulated labour markets * comprehensive welfare systems * high taxes * neo-corporatist structures 31

32 Ove K. Pedersen: Definition of IC What makes nations successful? Institutional competitiveness = a system s capacity to achieve socioeconomic success as a result of its political and economic institutions (Campbell and Pedersen 2005) Traditions in public policy coordination Institutional arrangements Strong leadership 32

33 Ove K. Pedersen: Elements of IC Conditions: discoursive, institutional, organizational + an element of gambling Elements: learning (common perceptions) leading (dissemination of knowledge) linking (coordination of activities) Institutional complementarities are produced (cases in which the presence of one institution increases the returns from the other ) 33

34 Ove K. Pedersen: Construction principles of IC The entrepreneur (heroic efforts of actors to take action, leading is the key to learning and linking) The return of classical politics (partisan politics, new coalitions and new policies) The public sector as the most important societal arrangement (the welfare state is functional to the enterprices) 34

35 Critical remarks: The elements will only solve information and coordination problems but not cooperative problems! Collective decision problems omitted, social traps are at stake: rationality rests on institutional conditions and the strategies of collective actors Coordination mechanisms only synchronize understandings and actions in ongoing processes - you need cooperative games 35

36 cooperation mutual trust learning coupling mechanisms norms coordination resources motivation institutional set-up incentives goals understanding (cognition) actors political system

37 Critical remarks as to institutional competitiveness : Competitiveness can mean more things: investigating conceptualizations - a competitive firm - the whole economy -marketcompetition - productivity - motherhood and apple pie 37

38 Competitiveness = a firm What is a competitive firm? Maintains, increases market share (or sales, or profitability) Uncompetitive firms forced out of market Different ways to compete Product quality Low wages and poor working conditions Market dominance/entry barriers 38

39 Competitiveness = economy? What, by analogy, is a competitive economy? Maintains, increases world market share Look at trade data Uncompetitive economies not forced out of market Role of exchange rate, theory of comparative advantage Different ways to compete similar to firm Product quality Low wages and poor working conditions Market dominance/entry barriers 39

40 Firm = economy? No +differences Firms in an economy primarily compete with each other Depending on size of economy/sector Uncompetitive economies not forced out of market Not all countries can post export surpluses Unlike companies, countries benefit from faster growth by competitors : for countries not a zero-sum game Who owns companies? Role of multinationals 40

41 Competitiveness = market competition * Competitiveness = extent of market competition Implies that econ/social model that most closely approximates to economic-textbook model of perfect competition is most competitive This reading represents an important focus of Lisbon strategy Complete internal market, liberalise network industries, etcetera But makes an end out of a means (cock-up or conspiracy?) * Serious doubts as to whether means suitable way to reach ends (depends on belief in neo-liberal economics!) 41

42 Competitiveness = productivity Link is that higher productivity enables goods to be produced more cheaply No clear link to competitiveness in sense of trade performance (unit labour costs, wage trends, exchange rates) Rules out low road to competitiveness General link in terms of living standards, general welfare Fits better with capable of sustainable economic growth Link to more jobs and social cohesion plausible but weaker Productivity and more employment can also be substitutes 42

43 Competitiveness = Motherhood and apple pie General prosperity/economic growth potential/low unemployment/lots of welfare * If not a measurable target, a warm-sounding general goal * Helps sell more technical concepts such as potential growth, GDP/capita * But vague, no clear measure of success ( most competitive ) * Risk of privileging neo-liberal world view and strategies 43

44 Tentative conclusion as to IC: Competitive(ness) an ambiguous concept Potentially misleading: By Ove K. Pedersen institutional competitiveness has been created as a macro concept by false/problematic analogies with private firms Perhaps an ideological Trojan horse (in reality giving marriage to social democratic and neoliberal policy agendas: warm institutionalized welfare and keen market competition) Societies do not have a goal! The negotiated economy might not bring Wohlstand für Alle (Ludwig Erhardt) 44

45 An alternative interpretation: Cooperative adaptation (H. Jørgensen) is the hidden DNA pattern of the good governance of the Scandinavian countries Both information, coordination and cooperation problems must be solved: heroic leaders cannot substitute mutual trust and learning (collective memories are decisive) The political-administrative system must define and develop institutional frames and interventions: innovative policies, norms and coupling mechanisms 45

46 But: It is important to develop Institutional competitiveness further and to bring innovation into the Varieties of Capitalism literature And it represents an important alternative to the bankrupt neo-liberal view of welfare regimes and labour markets 46

47 Congratulation to Ove K. Pedersen! If you can dream it you can do it! (Walt Disney) 47