Generating legitimacy for labor market and welfare state reform-the role of policy advice in Germany, the Netherlands, and Sweden.

VerfasserEichhorst, Werner

1 Introduction (1)

Policy advice can help inform policy makers on societal problems, their causes and potential solutions, thus contributing to appropriate institutional reforms and effective societal problem-solving capacities. The relationship between scientific research and politics, however, is a delicate one, with the effective supply and transfer of policy advice depending on institutional prerequisites in both the science sector and the political system so that policy-relevant information can be generated and provided which can influence the choice and implementation of appropriate policies.

This paper first lays out some theoretical considerations on the potential of policy advice with special reference to the area of labor market and welfare state reform, emphasizing the role of policy advice in the generation of legitimacy or - at least-acceptance of often unpopular decisions on institutional reforms.(2) We then present empirical evidence on the role of policy advice provided by research institutes, expert committees and other think tanks in social and labor market policy reform in three countries: Germany, the Netherlands, and Sweden. All three are developed welfare states with strong consensus requirements stemming from minority or coalition governments and a strong position of social partners. All faced the need for institutional change but reacted in different ways. Part of this variation can be explained by the role of policy advice. We therefore analyze the structure of policy advice and its actual function in recent labor market and welfare state reforms. In our analysis we focus particularly on the relationship between 'independent' expertise, social partner bodies and government. The paper shows to what extent the structure of policy advice in Germany inhibits the realization of its full potential regarding the design and legitimization of effective policies and why this is different in Sweden and the Netherlands.

2 The Potential of Policy Advice in Labor Market and Welfare State Reform

Welfare state and labor market reforms aiming at institutions that are consistent with sustainable economic activity and social policies often imply cutbacks on social policy programs, budget consolidation and increased flexibility of the labor market. In general, these issues are unpopular since they imply distributional effects with shortterm losses to be experienced by powerful societal actors and social groups, whereas positive effects may take time (Pierson 1994). Therefore, welfare state and labor market reforms are risky and difficult in political terms and can only be adopted and implemented with sufficient legitimacy so that immediate opposition and allocation of blame is avoided (Weaver 1986, Pierson 1994). Otherwise, political actors may suffer from loss of political support. Status quo orientation of important segments of the electorate stabilizes existing institutions and forms barriers to reforms, thus contributing to strong 'path dependence' (Pierson 2000).

Science is fundamentally different from politics as it does not deal with acquiring or defending power in electoral campaigns but is autonomous and mainly oriented towards the academic discourse. It focuses on the identification of causal relationships between different factors, with economic and social science research into the labor market and the welfare state mainly exploring the effects of institutions on labor market and social outcomes.

In order to analyze the role of policy advice in welfare state and labor market reforms, it is useful to differentiate between the concepts of 'puzzling' and 'powering' (Heclo 1974, Hemerijck/Schludi 2000). Puzzling points at the process of identifying problems and possible solutions, whereas powering means the struggle for political support needed to safeguard the acceptance of reforms. In principle, policy advice from science can provide valuable input for both the puzzling and the powering phase in policy-making. Regarding puzzling, research can help detect economic or social problems and the main causal factors responsible for them. This, in turn, can help identify potential remedies and effective policy solutions. Scientific policy advice can inform policy-makers about the probable effects of maintaining institutional status quo as opposed to different reform scenarios. Through exploring the preconditions of institutional change, it can also help formulate policy reform strategies. Political advice, however, can be most effective if it is based on a sufficiently broad consensus among experts. Often, this is not the case as researchers frequently apply diverging theoretical frameworks, and research findings are often ambiguous. A virtual monopoly in policy advice or a unified analytical framework on certain issues may therefore raise the effectiveness of policy advice. This, however, may be problematic if 'monopoly providers' of policy advice lose track of the scientific debate or if consensus is generated by ignoring new findings or competing approaches. Hence, the appropriateness of advice crucially depends on policyoriented researchers taking part in the academic discourse, with their work being inspired, but also discussed and evaluated by other, more 'academic' researchers.

With respect to powering, political actors can benefit from policy advice to the extent that it helps legitimizing decisions in political and substantial terms. Political actors can use policy advice in an opportunistic way to justify decisions taken for other reasons with selective reference to experts' statements. But they can also use policy advice to legitimize more far-reaching reforms that are painful for major parts of their constituency at least in the short run. Policy advice can be used to bind hands and avert demands to water down reforms and avoid blame. The extent of political and substantial legitimacy to be gained from policy advice depends, in turn, upon the extent of consensus among experts (Dyson 2005). Policy advice can play a crucial role if government faces high consensus requirements, i.e. government formed by coalitions, in situations of minority government or in political systems with social partner involvement. In such settings, policy advice can provide potential focal points for compromise and legitimize policy decisions.

The logic of policy-making, however, is not only dominated by the aim of problem solving but also, and maybe to the major part, by the goal of acquiring or defending political power (Lompe 2006). It may be the case that implementing an effective policy raises the chance of political success, but substantial labor market and welfare state reforms are often controversial and risky in political terms since they imply losses to be experienced by major groups in the electorate with positive effects resulting only in the long run. Policy advice aiming at relevance with regard to political decisions cannot remain completely 'academic'. It has to take into account the institutional restrictions of the status quo, the institutional incentives of the political system and the necessity of political actors to gain sufficient political support and legitimization for decisions.

Therefore, in order to become effective, policy advice has to be organized in a way that facilitates the provision of expertise on policy reforms that is aware of the institutional status quo and the political economy of reforms. (3) Since this moves beyond the analysis of policies, it may require the creation of a segment of policy advisors either through research institutes specializing in more applied research and policy analysis or temporary or permanent expert committees. However, to achieve broader and more sustainable legitimacy of policy reforms or more ambitious reform strategies, the creation of a "matter-of-fact" public discourse that allows for the adoption of pragmatic problem solutions seems crucial. This, in turn, may be facilitated by longstanding structures of policy advice that are highly reputable in both science and the public as opposed to expert committees created ad hoc upon initiative by government in a more "Machiavellian" style in order to generate short-term acceptance of policy proposals.

Policy advice may play a specific role in a corporatist setting with strong social partner involvement in the formulation and administration of labor market and social policies. Here, institutional infrastructure favoring bi-or tripartite talks can help overcome political deadlock and exploit policy complementarities in particular if institutional settings favor the convergence of policy concepts and broad political exchange (Ebbinghaus/Hassel 2000). But social Therefore, the structure of policy advice will be related to its effectiveness. In the next sections we will analyze the provision of policy advice and assess its role in recent welfare state and labor market reforms in Germany, the Netherlands, and Sweden. We particularly focus on the relation between the structure of policy advice and the potential for effective influence on the adaptation of social and labor market policies. In doing so, we aim at empirical evidence on the capacity of policy advice to legitimize reform policies and further societal problem-solving capacities.

3 Germany: Multiple Forms of Policy Advice, Limited Effectiveness

The German landscape of policy advice in economic and labor market policy is both rich and highly differentiated (Gellner 1995, Thunert 2001, Cassel 2004, Eichhorst/ Wintermann 2006). We can distinguish five types of providers of policy advice: 1. public research institutes, 2. social partners' think tanks, 3. private think tanks and research institutes, 4. permanent expert committees, and 5. temporary committees with either corporatist or noncorporatist composition.

Regarding the first group, six leading economic research institutes can rely on stable basic funding from Federal and Land...

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