The strange non-death of ALMPs

The strange non-death of ALMPs 2017-08-29T17:38:24+00:00

The old debate concerning the need for a distinct European social model has never been more topical. Trump, Brexit, and the unsurprising rise of Marine Le Pen in the second round of the French presidential election, show that our actuality may indeed be repeating key elements of the ‘Weimar moment’ some 80 years ago. To the political economist Karl Polanyi, writing when the world was in flames, the rise of totalitarian and xenophobic ideologies and states was a logical culmination of a ‘double movement’ of, on the one hand, the free market reforms of past decades and, on the other, the disorganised attempts of societies to protect themselves. However, Polanyi also anticipated a more progressive response – not too far from what occurred in the post-war welfare state of social rights, and backed by Keynesian economics. The trentes glorieuses are long gone. The big question today thus lies within the kind of double movement being developed by the current protectionist and authoritarian tendencies.

Since the 1980s, the Keynesian post-war settlement has gradually been challenged by a political project of globalisation and Europeanisation of national economies. Along with economic reforms − backed by a coalition of centrist parties from right and left, the European Commission and the OECD, as well as economists and sociologists − European welfare states have slowly but consistently been reconfigured into what in modern policy-making lingua is labelled activation, describing a drive from passive to Active Labour Market Policies (ALMPs): these cover a great variety of instruments including job placement with basic training courses, targeted and temporary hiring subsidies, start-up support, public work schemes, upskilling and training, and economic incentivising and sanctioning. The common denominator is a will to reintegrate ‘excluded’ people in the labour market rather than compensating them (which is seen as merely ‘passive’ support), often with a special attention towards the ‘high risk’ category of youth. ALMPs can have positive effects where they provide new employment opportunities after upskilling or training, or as an outcome of labour market experience through incentivised employment, in particular.

On a European level, these policies have been intensively encouraged since the mid-1990s, notably through the European Employment Strategy (EES). After the financial crisis and the recession, many commentators expected a return to stimulus and demand-side policies. Just like Polanyi, they anticipated a ‘second’ movement. The Keynesian economist Skidelsky envisioned ‘the return of the master’, and leftist movements speaking against ‘finance’, ‘greed’ and ‘austerity’ reached the governmental offices in countries such as France and Greece.

However, the return of stimulus and demand-side reforms was only a short and interim visit consisting of dousing immediate fires in the aftermath of the crisis. Similarly, improvements in unemployment benefit schemes to more comprehensively cover groups such as young people who were formerly under-represented were short-lived. Instead, the reform track of introducing more ALMPs, in spite of mixed evaluation results, has continued at pace in EU countries. The same holds true at the European level, where in the aftermath of the crisis the Commission has tried to strengthen the social dimension through initiatives − in particular, for young people − such as with the ‘Youth Guarantee’. Most recently the ‘European Pillar of Social Rights’ framework has continued to recognise ALMPs as one of the panacea to current socio-economic problems in Europe.

The resilience of ALMPs after the recession thus coincides with ‘the strange non-death of neoliberalism’. One explanation lies in the ability of the EU to constrain the budgetary space for manoeuvre for national governments by means of the Euro and stability criteria, keeping them on an ‘austere’ track. But while this helps to explain the lack of demand-side policies (in spite of the new 2015 package of Employment Guidelines, which reflect the new – but somewhat contradictory − approach to economic policy-making built on investment, structural reform and fiscal responsibility), it is insufficient for understanding why European countries have continued to ‘activate’ their welfare states and labour market policies.

Here, it is important to look at the moral economy underpinning the reform tracks in many countries. In an ALMP logic, unemployment is predominantly taken to be a ‘supply-side’ or ‘structural’ problem. Unemployment is, in other words, not caused by economic recessions and insufficient demand, but by mechanisms that somehow relate to the unemployed person, whether due to inadequate jobsearch efforts and unwillingness to be mobile, skills mismatch, insufficient incentive to take a job or a lack of self-control. ALMPs are thus inherently behavioural in their approach to unemployment and, in that regard, do not recognise a recession in a Keynesian demand-side sense.

A recent study of justifications of ALMP reforms in Denmark and France pre- and post-crisis shows that one of the most effective legitimations is the way in which national populations are divided into two moral categories. Whereas the post-war settlement organised all its efforts around the division of capital and labour, ALMPs divide the population into a worthy group of active (hard-)working tax-payers, and a less worthy group of unemployable, disincentivised and potentially irresponsible and lazy non-working recipients. ALMPs serve a paradoxical double purpose in relation to these two groups. They seek both to redeem the less worthy by making them active, and they implement various obligations and control mechanisms to ensure that these people choose the path towards redemption by punishing those who do not. The preoccupation with ‘rights and obligations’ and the threat of sanctions thus serve to reassure the ‘hard-working’ tax-payers of their worthiness. This is perhaps the greatest moral cost of ALMPs. In place of the citizen with universal rights, they view the recipients of benefits as partakers in a behavioural experiment, aiming to redeem them by ‘activating’ them in a variety of ways. Even in supposedly ‘egalitarian’ countries like Denmark, ALMPs, supported by the vast majority of political parties as well as by the population, have led to intensified control and sanctions, and public mistrust towards benefit recipients, and have gone hand-in-hand with reductions in benefit generosity. Rather than questioning the diagnosis, the recent recession seems merely to have led policy-makers to increase the dosage.

The relation and tensions between the centrist programme of more ALMPs and the rise of the populist right could not be more evident than in the second round of the presidential election in France. On the ‘ALMP’ side, the globalist Emmanuel Macron claimed to be neither on the right nor the left. He proposed to ‘modernise’ the French labour market by bringing it closer to the Scandinavian model, which implies tackling the problem of unemployment by increasing skills and strengthening the control and obligations of the unemployed. On the other side, stood a protectionist, xenophobic, authoritarian nationalist in Keynesian clothes who replaces the ‘blaming of Frenchmen’ with an ‘economic patriotism’ that blames the immigrant (and the EU) for all malaises.

Compared to the latter, the ALMP stance is certainly preferable, but the proposed programme implies several limitations. The first is the individualistic rather than solidaristic interpretation of unemployment as residing in the behaviour and morality of the unemployed. This risks turning the governing of unemployment into a technical problem of how to make the jobless do the right thing. The second danger is that ALMPs see redistributive issues as a problem that can only be solved indirectly by reintegrating people into the labour market. Finally, there are future social and economic challenges to which ALMPs seem of little value. What about, for instance, the growing geographic inequalities within countries in between thriving centres and the de-industrialised periphery, as well as between North and South in Europe? These trends exist in spite of the 60th anniversary of the European Social Fund, which targets disadvantaged regions. Can mobility within and between countries and upskilling as propagated by the European Commission solve these challenges? Another risk concerns the phenomenon of automation, which radically calls into question the assumption of all ALMPs that more work is the self-evident key to a better life as well the key component of the social cohesion of societies. Despite its many inherent moral and pragmatic problems, the growing interest in Universal Basic Income provides a space for questioning the benefits of the pathway along ever more active labour market policies.

 

This article was first published in Social Europe on 13 June 2017: www.socialeurope.eu/2017/06/strange-non-death-almps