Continuities within paradigmatic change: Activation, social policies and citizenship in the context of welfare reform in Slovenia and the UK

The contagious spread of activation policies amongst the welfare states of Western Europe and the English-speaking world has been well documented (see Barbier and Ludwig-Mayerhofer 2004). However, the introduction of active labour market polices as part and parcel of the reform of social protection systems in Central and Eastern European Countries (CEECs) has commanded less attention in international academic debate. In this article, we examine the development of activation¹ in the UK and Slovenia during the late twentieth and early twenty-first centuries in order to identify the rationales for its introduction, to plot the direction of reforms and to consider the outcomes of policy implementation for citizens. At first sight, this may appear a rather unlikely comparison. However, we argue that these are two cases that sit as ideological outliers in Europe and, moreover, in these countries the move to activation is unusual in as much as it has been associated with a broader process of third-order (Hall 1993) welfare state change. Activation may be seen as especially significant because it has followed paradigmatic change in the goals of the economy, the labour market and social policy. It is the extent of this change that differentiates the UK from other western and northern European countries (c.f. Lewis 2002) and to an even greater extent characterises the experiences of CEECs. Slovenia is a particularly interesting example among the CEECs because of the unique nature of its social policy tradition. Below we explore the connections between third-order change and the development of activation.

Notwithstanding significant differences in their welfare traditions, labour markets and the character of welfare state change, both the UK and Slovenia have engaged purposefully in the activation trend. This undeniable collective movement towards active welfare states has not been accidental. Active labour market policies have been defined and promoted enthusiastically by supra-national bodies including the European Union, OECD and World Bank, despite the over-simplistic assumption that they provide an alternative to ‘passive’ income maintenance (Sinfield 2001). Importantly, the UK and Slovenia differ in their relative positions of power in relation to these demands. To take the example of the European Employment Strategy (EES), the UK has played a role in its formation, but at the same time takes a rather ambivalent stance, highlighting conformity only to those aspects that fit with domestic policy stances. Slovenia, by contrast, is in a much less powerful position, being encouraged to modify the language and operation of welfare arrangements as a requirement of its membership of the EU from 2004. Active labour market policies have been justified as an indispensable element in the solution to challenges facing European welfare states (Esping-Andersen et al. 2002), but how applicable is this set of solutions to the economic and demographic profiles of post-socialist² societies? Here we examine the emergence of activation in the context of third-order change, comparing and contrasting the differing key challenges of welfare systems and labour markets in the UK and Slovenia in order to better understand the relationship between continuity and change and the influences of historical, political and ideological legacies in shaping the configuration of activation.

The UK and Slovenia present interesting contexts in which to examine the shift to activation, given that both experienced an intense break in the goals of policy-making, structure and operation of the economy in the late twentieth century, what Hall (1993) refers to as ‘third order change’. This is to be distinguished from mere changes in the setting of the policy instruments (first order) or the introduction of new policy instruments (second order). Rather, it signifies a fundamental shift in the aims of policy making and the introduction of a new policy paradigm.

In the UK, this break clearly occurred with the election of the first Thatcher Conservative government in 1979, with its wholesale rejection of the underlying principles of the post-war economic and welfare settlement and the application of New Right thinking, emphasising the importance of individualism and the primacy of the market in meeting social needs. This fundamental shift in policy making led to the development of a liberal welfare (Esping-Andersen 1996) and unemployment (Gallie and Paugam 2000) regime that has already been subject to analysis for patterns of continuity, change and contradiction (Pierson 1994; Wood 2001). However, as we argue below, these developments did not entail the emergence of a coherent activation strategy. Instead, they provided a context for its subsequent emergence in the late 1990s, a move largely justified under New Labour by the perceived failings of Conservative policies.

In Slovenia, the shift in welfare policy and subsequent move towards activation was precipitated by the rapid transition to capitalism. Of the CEECs, Slovenia is distinct, not because of its small size (population 2 million), but due to its affluence and outward-looking stance. Having gained independence in 1991, Slovenia has undergone tremendous socio-economic transformation, including the restructuring of a labour market heavily dependent on traditional forms of industrial employment. Despite dealing with tensions between internal issues related to the communist past and external pressures to adapt and compete within global capitalism, Slovenia managed a ‘soft transition’, mainly due to a favourable initial economic position and pre-existing social policies, able to act to absorb economic shocks (Ignjatović et al. 2002).

These experiences of political, ideological, economic, labour market and welfare state change have created policy-making possibilities not present in many other European countries. Arguably, both the UK and Slovenia had the opportunity to introduce forms of activation that cut deeper through the lines of continuity with previous arrangements, allowing it to develop a new, or at least reformed, character. These junctures may also have created the opening for activation to gain more rapid momentum and affect a wider range of policy areas than in other countries. However, before examining this issue in greater depth, we first consider the context in which activation has developed.

The rapid switch in policy aims and instruments that followed the election of the Thatcher government in 1979 created an enduring legacy for the UK. A key shift in focus was the decisive move away from the goal of full employment to a narrow anti-inflationary policy, under which unemployment had a functional role in squeezing inflation out of the economic system–unemployment came to be seen as a ‘price worth paying’ as a later Conservative Chancellor put it. The resulting severe recession of the early 1980s exposed longstanding weaknesses in the industrial system, leading to rapid deindustrialisation (Nolan and Slater 2003). In some areas of the country this led to a collapse in employment opportunities altogether. At the same time, however, the unemployment benefit system was changing to reflect the notion that unemployment was largely a supply-side problem of the individual, exacerbated by insufficient job search and over-optimistic expectations regarding available wages. This thinking led to an abandonment of the link between earnings growth and the value of unemployment benefit, to be replaced by indexation to prices, with the result that the already comparatively low income replacement ratio fell even further.

At the same time, the rhetoric of the free market was used to justify a raft of anti-union legislation and the erosion of statutory labour market rights and protections. Given the voluntaristic tradition of much of labour market regulation in the UK, employment conditions had come to be shaped largely by individual union agreements. While these were always uneven in coverage, the Thatcher governments’ avowed anti-union stance and resulting weakening of union influence did much to erode employment protection. Together, the interplay of labour market deregulation and the erosion of the social safety net for the unemployed formed incentives for the creation of low-paying, low quality jobs (Rubery 1997; Gregg and Manning 1997).

Following the second sharp recession in the space of a decade, by the mid 1990s the legacy of these developments had become clear. Despite a relatively strong recovery in aggregate employment, concerns came to be voiced about the changing nature of employment in the UK and the numerous groups left out of labour market recovery. Economic inactivity reached alarming proportions in certain parts of the country, a relative lessening in differences at the regional level masking very sharp inequalities in employment at the local level, reflecting the decimation of industry in the 1980s (Webster 2000; Erdem and Glyn 2001). Although affecting older men in particular, joblessness came to affect all age groups in these areas, a legacy of evaporating employment opportunities in particular localities (Alcock et al. 2003). In addition, a worrying ‘low pay–no pay’ cycle emerged with those entering low-paying jobs tending to suffer a high degree of churning between short spells of work and joblessness (Dickens 1999). Moreover, the evidence pointed to a reduction in mobility from low to higher paying jobs from the late 1970s onwards, a feature contributing to the unprecedented rise in earnings-inequality and poverty in the UK.

The changes preceding the introduction of activation in Slovenia have clearly been of a different order of magnitude to those in the UK. Commentaries on CEECs at a collective level, have tended to present a picture of residual social protection and unemployment benefits, if they exist at all, that are ‘pitifully low and of increasingly short duration’ (Standing 1996: 238). Yet, contrary to this characterisation, a Bismarckian-style insurance scheme for unemployment was introduced in Slovenia in the mid 1970s. By contrast, most other CEECs, only introduced unemployment compensation schemes as part of the transition process in the early 1990s (see Clasen 1999). The structure, administration and regulation of Slovenia's two-tier system of unemployment insurance and unemployment assistance clearly echoes the German system: the qualifying conditions for unemployment insurance are governed strictly by the contributory principle and benefits levels are linked to previous earnings, thereby maintaining equivalence of status.

It is distinctly ironic that Bismarckian social insurance, so strongly associated with a capitalist logic of tying workers into paid employment and quashing revolutionary urges (Rosenhaft 1994), found a contemporary home within a socialist state. However, in reality, the significance of the system was limited during communist times since ‘social employment’ (Standing 1996) formed the basis of the whole welfare system. The right to life-long employment, guaranteed by law, altered the fundamental assumptions underlying the insurance system since unemployment insurance only had to deal with the relatively rare contingencies of those marginal to the labour market, the hard-to-place unemployed and people incapable of work (Svetlik 1992; Ignjatović et al. 2002).

Under socialism, social employment had been achieved in practice through a ‘silent partnership’ (Županov 1983) established between the working class (to which both jobseekers and employers were said to belong) and the party oligarchy (nomenklatura), who thereby secured political legitimacy. The labour market was substituted by direct agreements between employers and employees. Every employee was ensured an individual income, rather than a family wage, making it necessary for both men and women to participate in full-time paid employment, regardless of unpaid caring responsibilities (Svetlik, 1992). Thus, the challenges to welfare as Slovenia entered transition to a market economy were of a rather different nature to both other CEECs³ and other European states.

Common to Slovenia and these other states, however, has been the experience of recession and deindustrialisation. In the early years of transition, significant job losses led to a decline in labour force participation and the employment/population ratio and the emergence of structural unemployment problems. Yet, this experience was relatively short-lived in Slovenia, with unemployment peaking in 1993/94. Despite the rise of the service economy, Slovenia remains a relatively industrialised economy, with over a third of employment accounted for by this sector and a relatively large population (one-tenth) in agriculture (Ignjatović et al. 2002). As a result of these relatively rapid changes, skills problems have emerged as a key feature of the Slovenian labour market. More striking, perhaps, was the emerging discrepancy between the official count of the registered unemployed and the numbers identified by the Labour Force Survey (using the ILO definition of unemployment). In contrast to patterns usually found in Western Europe, the ILO measure has typically been outweighed by the count of registered unemployment in Slovenia, reflecting the fact that many people registered as unemployed were engaged in work in the informal economy (Ignjatović et al. 2002).

Against this, activation was introduced in the context of social and employment policy clearly reflecting the legacy of past experience. Two lines of lasting continuity are discernable in Slovenian policy: the first, rooted in the pre-World War I Austro-Hungarian Empire, explains the social insurance principle; the second is located in the more recent socialist past (post-WWII – 1991), and brings an emphasis on egalitarianism. Slovenian welfare arrangements therefore defy conventional categorisation. Early predictions of movement in a liberal direction (Deacon 1992: 182) were ill-founded, since the insurance principle of social protection was socially and institutionally embedded in ways more allied with the conservative/corporatist model exemplified by Germany (Esping-Andersen 1991). However, the existing socialist welfare arrangements were very far from any known form of welfare capitalism and patterns of female labour market participation were at odds with the gender roles implicit in conservative regimes. It is in this unfamiliar and uncertain welfare context, and under the ‘directional’ (Standing 1996) influence of the organisations like the EU and OECD, that Slovenia introduced activation.

The causes and effects of third-order change were very different in the UK and Slovenia. The parallel is that both experienced profound political, economic and labour market change, providing a distinctive context in which activation has been pursued. Here, we aim to understand the extent to which the character of the emergent activation strategy reflected continuity with the preceding welfare configuration. Tables 1 and 2 illustrate the levels of unemployment and the composition of the unemployed in both countries preceding and during the introduction of activation.

Labour market activation has a short history in Slovenia because full employment was absolutely central to the socialist endeavour. However, the balance between rights and responsibilities was almost the inverse of that aimed for in activation policies, with the burden of responsibility falling firmly on the state to guarantee full employment (mainly consisting of secure, life-long industrial employment) and social citizenship. In contrast, recent activation efforts have been directed towards individualising responsibility and promoting employability. This has been associated with attempts to make the labour market more flexible and to facilitate job creation. Yet, flexible forms of employment remain rather uncommon, where the most important form is self-employment amounting to around 12 per cent of the employed workforce.

The break with the socialist system revealed the problems of under-employment (which manifested itself as open unemployment), low productivity and an inflexible labour market (Svetlik 1992; Ignjatović et al. 2002). Recent activation reforms have been designed to address these problems and to increase competitiveness in the context of adjusting to the demands of globalisation and the knowledge-based society. However, a strong political commitment to the value of equality remains and this has ensured that policy responses have avoided jettisoning strong social rights and, instead, have sought to secure economic growth through a new balance between equality and efficiency, moving from egalitarism towards equity (cf. Antončič 1992). Movement in this direction has re-orientated Slovenia towards its more corporatist welfare origins, albeit flavoured with a more socialistic attitude towards inequalities.

From the mid 1990s onwards, the system of unemployment protection came to be criticised internally and externally (by the OECD and World Bank) as over-generous (creating disincentives), rigid, bureaucratic and, above all, inefficient (Vodopivec 1996). Employers’ contributions⁴ made labour costs high and discouraged the creation of low-paid jobs. As such, the system was able to deliver cash benefits to the rising number of unemployed when transitional turbulence started, but came under severe financial pressure as unemployment increased and, at the same time, was unable to offer tailor-made employment programmes or efficient job search assistance.

High unemployment had a particularly harsh effect on those without qualifications and older workers seem to have lost out during the transition, having failed to benefit from the general stabilisation of the unemployment rate in 2001 and 2002 (see Table 2). Long-term unemployment has remained persistent, accounting for a larger proportion of the total number of registered unemployed as the rate has dropped. Young people have fared relatively better in recent years (halving as a proportion of all unemployed over the decade, although the current rate is still high by international standards), as have the related group of first-time job-seekers.

The activation strategy of the mid 1990s focused first on reducing the duration and level of unemployment benefits and, later, the introduction of new responsibilities, increasing surveillance and tightening conditions through activity testing (including individual action plans). This decisive shift towards more ‘active’ measures was enshrined in the reforms brought in under the Employment and Unemployment Insurance Act 1998, the government making an explicit commitment to switch expenditure from ‘passive’ benefit payments to ‘active’ employment policies (Government of Slovenia 1999). Yet the EU has gone further, recommending that these policies become more narrowly concerned with work as the first option and more targeted towards particular groups. At present, Slovenian activation focuses primarily on the individual unemployed person, rather than the inactive population as such, or the system as a whole. Activity testing and ‘raising employability’ were the first measures to be introduced to discourage ‘passivity’ among recipients, mainly being directed at those deemed capable of work. In 2001, the general social assistance scheme was also reformed through an amendment to the Social Protection Act. This introduced activity testing for those persons in need but who are capable of work, the government emphasising the subsidiary nature of cash benefits and intention to remove any disincentives to work.

There have been few moves towards ‘system activation’, so far, with little sign of major alterations to the structure of benefits and taxes. High labour costs have been reduced through the subsidisation of social contributions or wages for the hard to place (ESS 2002) and, to a much lesser extent, by offering unemployed people who are seeking full-time work the possibility of accepting (rare) part-time contracts without losing their unemployment benefit entitlement. The system for unemployment has been reprioritised to stress work first, employability second, basic re-distributive social security third and full insurance last. Accordingly, the focus of active labour market policies has shifted gradually from demand-orientated support for employers in the 1980s to a more supply side concentration on raising the employability of individuals through training (Ignjatović et al. 2002). The intention is to create a social investment type of programme in order to boost the ‘adaptability’ of the national economy.

In addition to addressing the problem of unemployment, activation strategies also aim to stimulate the overall labour force participation rate. In Slovenia, women have traditionally had a high rate of participation, usually in full-time jobs, supported by comprehensive state provision of care for children and the elderly, provision which has become taken for granted. There has been no major challenge to these arrangements, although the recent trend has been to assure home care instead of institutionalisation for older people. Some steps have also been taken to reconcile work and family responsibilities, especially to stimulate women's part-time work.⁵ Instead, focus has settled on the problem of early retirement and pension reform. An early exit strategy was used in the early 1990s to stem a dramatic rise in open unemployment, enabling men to get a full pension at the age of 57 and women at the age of 52 if they had 40 and 35 years of service, respectively (Ignjatović et al. 2002). This fulfilled the short-term goal of masking unemployment but low retirement ages (at 58 for men and 55 for women) and high dependency ratios (1.23⁶) have contributed to concerns about longer-term decreases in labour force participation. One of the primary goals of pension reform was to raise the retirement age and to narrow the possibilities of early retirement but the activation of older workers has been slow and policy change has been largely incremental.

Following the third-order changes of the 1980s, activation developed gradually in the UK. The Conservative governments (1979–1997) were concerned with cost-cutting and an ideologically driven commitment to end welfare dependency. This formed the rationale for the piecemeal efforts that were directed narrowly at the unemployed, serving to individualise the responsibility to work, increase compulsion, promote and monitor active job search and requiring young people to participate in low-quality training schemes (Finn 1998). The outcome was a reduction in the proportion of people seeking work who also claimed benefit (Gregg 1994). The most concerted move in the direction of activation came in 1996 when Unemployment Benefit was replaced by Jobseeker's Allowance (JSA). This further undermined the role of insurance-based benefits in the UK system and meant cuts in the duration and level of benefits, particularly for young people. The key step towards activation was the condition that a Jobseeker's Agreement (an individual employment action plan) had to be signed before a claim for JSA would be accepted. In addition to this, activity testing was strengthened, sanctions were made tougher and surveillance and control increased. These and later efforts have been connected with the USA brand of ‘work first’ workfare programmes and strategies introduced in Australia (Theodore and Peck 1999). Whilst not constituting activation in the broad sense used in this edition (see Barbier and Ludwig-Mayerhofer 2004), these initial steps were very important in determining the character of activation that emerged in fuller form after the election of New Labour in 1997.

Activation measures (although not named as such for internal purposes – the preference is for slogans like: ‘work as the best form of welfare’) are now seen as the most appropriate solution for a variety of social problems including unemployment (particularly for the young and long-term), inactivity and worklessness. Contemporary UK welfare arrangements tend to be presented as liberal in character because of the combination of low benefit levels, low pay (with no minimum threshold until recently), poor quality work in the flexible labour market and a high degree of compulsion. However, the policies pursued by the New Labour governments (1997–present) are hallmarked by ambivalence (Lister 2001), as we explore below, and are more complex in nature than those adopted by their predecessors. Activation therefore reflects both continuities and breaks with the past policy agenda.

On the one hand, there has been a strengthening of employment rights and conditions following the adoption of the Social Charter, which has benefited part-time and temporary workers who previously had very few employment rights. The quality of the employment relationship has also been improved in terms of pay, with the introduction of the National Minimum Wage in 1999, although the rate is low in European terms, particularly for young people. However, the development of activation has followed the co-ordinates set by the previous Conservative governments in several important respects. In power, New Labour embraced the Jobseeker's Allowance regime that they had made such vitriolic condemnation of in opposition. There was strong continuity in the mandatory and punitive elements of the much-hyped New Deal programme that had been billed as innovatory (Tonge 1999). This signifies a consensus (Tonge 1999) or ‘permanent revolution’ (Bryson 2003) on how to deal with the unemployed. The novelty of New Labour's approach was to provide relatively generous funding (in comparison to anything that the Conservatives had tried) through a windfall tax on the privatised utilities and to organise it in partnership with local organisations (the Employment Service, now Jobcentre Plus, as well as voluntary and private organisations).

With the introduction of the New Deal, the young unemployed once again bore the brunt of a compulsory work-first approach (a continuity with the preceding Conservative governments). The new aim of providing positive advice, guidance, support and solutions tailored to the individual unemployed person's needs is juxtaposed with the fact that the system simultaneously threatens the toughest benefit sanctions to date. Yet, the outcome of this sophisticated intervention more often than not amounts to possible access to the lower end of the flexible labour market (Tonge 1999). Indeed, of those leaving the New Deal between January 1998 and September 2002 only 40 per cent had secured ‘sustained’ jobs (defined as those lasting 13 weeks or more) (ONS 2002), with concerns remaining about the lack of support once entering employment and the resulting problem of labour market churning. From the government's perspective the programme has reasonably positive overall effects with a rise in the ‘employability’ of young people and increased job entry (NAO 2002). The structure of the scheme means that long-term youth unemployment has become officially impossible.

Similarly, the New Deal for those aged over 25, who have been unemployed for more than 2 years, offers little beyond the compulsion to accept either a job or a training placement. Other voluntary New Deal schemes exist for lone parents, people with disabilities, partners of the unemployed and Jobseeker's Allowance claimants over the age of 50. These are less considerable in size and in scope (cf. Millar 2000). However, they are significant because they represent a broadening of scope in active labour market policies, much beyond anything conceived of by the previous Conservative governments. Compulsion has also increased in certain geographical areas operating more devolved and marketised Employment Zones, where greater incentives and more focused interventions are directed at encouraging unemployed people to find a job quickly.

Yet for all this, the fall in the UK unemployment rate and decline in problems of youth and long-term unemployment mask the fact that one in five of all 16–64-year-old men are no longer in employment (Alcock et al. 2003: xiii). So, it is the economically inactive, rather than the registered unemployed, who are increasingly likely to be the target for activation measures. The large groups of lone parents and people of working-age claiming disability benefits are of particular interest to the UK government. The work-conditionality of insurance-based disability benefits has therefore been increased. In 2002 the Employment Service (which dealt with unemployed people and others looking for work) and the Benefits Agency (which administered benefits to all other types of recipients) were merged to create Jobcentre Plus – a single gateway organisation for all benefit recipients of working age. This means that almost all benefits are conditional on participating in a compulsory ‘work-focused’ interview. This covers existing recipients and all who wish to make a claim, including those that previously had no work-related criteria to fulfil before application or during receipt (such as lone parents with full-time caring responsibilities for young children and sick or disabled people incapable of work). However, it is not clear exactly where this ‘creeping compulsion’ is heading and, despite some initiatives (e.g. the National Childcare Strategy) the necessary underpinning support system to ‘make work possible’ has not been completely constructed (Millar 2002). There is still a need for development of high quality and affordable childcare, particularly if lone parents are to be regularly encouraged or even required to seek paid employment.

However, the UK approach to activation does not fit entirely with a liberal model. The commitment to end child poverty is dramatically inconsistent with the previous Conservative approach and the evolution of tax credits move aspects of the social protection system away from needs-based, means-tested residualism. The best example of this is the increased investment in the new high profile Child Tax Credit, brought into operation at the same time as the Working Tax Credit in April 2003 (superseding the Working Families Tax Credit that came into operation in 1999). Here there is a change in the goals of policy. Whilst the Working Tax Credit (WTC) is an evolved and rebranded version of Family Income Supplement (an in-work benefit to supplement low wages, introduced by the Conservatives in 1971), the function of the Child Tax Credit (CTC) cannot be equated with that of the US Earned Income Tax Credit, especially since it operates in tandem with universal child benefit. In the UK, some amount of CTC can be claimed by parents who earn up to twice the level of average earnings. This broad target group (predicted to cover 90 per cent of children, including those in work and those receiving benefits) and the relative generosity of payments (administered by the Inland Revenue rather than through the benefits system) make CTC distinct (Dilnot and McCrae 1999). It is a credit for those with children, regardless of whether they are in employment, unemployed or inactive for another reason. This seems to be a move that goes against the flow of a purely liberal activation strategy, because it contains no work-incentive (serving only to ‘make work possible’ by compensating for child care costs), no compulsion and no punitive element. The effect is a more social democratic strengthening of social rights for people with children. That said, the present UK government tends to emphasise the employment effects of the schemes, yet it is too early to tell what their impact will be in this regard. Earlier assessments of Working Families Tax Credit can, however, shed some light on the issue. The findings indicate that while income gains for those in entry level jobs were modest for many qualifying groups, lone parents saw a sharp increase in their employment rate and the number of children in workless households fell sharply. The perennial problem with assessing schemes of this type, though, is establishing the counterfactual. Analysis suggests weak evidence that lone parents saw an increase in employment beyond that predicted by economic recovery, but analysis remains tentative at this stage (Brewer and Gregg 2001).

Two different characters of activation can be identified in the UK and Slovenia, according to outcomes for social citizenship. The Slovenian type of activation is much more concerned with the development of human capital and social investment than the predominantly work first approach (despite some recent small steps toward social investment) found in the UK.

Benefits in Slovenia remain proportionate to previous earnings and their generosity has not been undermined for those who are eligible to join the insurance scheme. The average monthly rate of insurance-based unemployment benefit in 2001 was equivalent to 388 EUR, worth 40 per cent of the average monthly salary, 969 EUR (MLFSA, 2003b). In contrast, Jobseeker's Allowance, worth only 299.26 EUR,⁷ amounted to only 10 per cent of the average monthly salary in the UK (2891.37 EUR) (Bulman 2002: 644). This is a crude comparison, which nevertheless reflects the structure of the two systems and highlights discrepancies in the extent of income inequality between the countries. Contributions-based unemployment benefits provide less income and status protection for people in the UK than those in Slovenia. However, in the Slovenian system there is a much clearer distinction between the two tiers of insurance and assistance benefits. Activation reforms have led to decreases in the level of unemployment assistance⁸ rates in Slovenia, worth an average of 163 EUR in 2001 (17 per cent of average salary). This highlights the clear divisions between levels of insurance and assistance benefits, where the former favour those with longer contributions records. Only 23 per cent of unemployed people receive contributory-based benefits and this proportion is decreasing, mainly because of the high share of long-term claimants (52 per cent of the unemployed) and incidence of unemployment among the young (24 per cent of all unemployed), who are disadvantaged because of their lack of contributions. The UK system might, therefore, provide a more secure safety net for the long-term unemployed.

It seems that the quality of the activation intervention offered in Slovenia is more in-depth and comprehensive than that in the UK. In the UK, the absence of any meaningful employment programmes before 6 months of unemployment means that, in the first instance, the primary purpose of the Jobseeker's Agreement is to monitor and modify the behaviour of the individual.⁹ The main forms of support in existence before that point are job search assistance (but only of notified vacancies, thought only to account for about a third of all vacancies) and access to some of the facilities provided by Programme Centres (e.g., advice about how to write a job application). The New Deal seems to have benefited some, but there remains a lack of good quality training and assistance for the broad target group now under the scope of activation.

In addition to job search assistance, as offered in the UK, unemployed people in Slovenia have access to vocational guidance and ‘active’ employment policy measures and programmes. Job counselling and job placement services have been developed in Slovenia on a more individualised and professional basis. Within the group of unemployed the priority is set for younger unemployed, long-term unemployed, disabled persons, unemployed persons who are in receipt of unemployment benefits or assistance. A range of ‘active’ employment programmes are available, falling into four groups: education and training programmes, support for self-employment of the unemployed, public works (job creation schemes or work experience schemes), and other programmes, such as subsidies and the payment of contributions for new jobs, or programmes focused on disabled workers, e.g., training, sheltered workshops and labour funds (Ignjatović et al. 2002). In Slovenia, the loose definition of target groups for active labour market programmes has both advantages and disadvantages. It means that unemployed people have a greater choice and a wider range of opportunities than in the UK, but the downside is that specific groups (e.g., young people) do not have tailor-made assistance. However, activation certainly seems to have impacted upon the experience of citizens, since 55 per cent of unemployed people now participate in these ‘active’ schemes.

The prominence given to engagement in paid work in the UK contrasts with the low quality of work that is available via Jobcentre Plus offices, where high turnover, low paying service job vacancies are over-represented. The move away from full-time employment towards more temporary and part-time work in the UK has been associated with lower pay prospects, fewer training and promotion opportunities and greater instability for workers (Stewart 1999; Gregg and Wadsworth 2000; Booth et al. 2002; Nolan and Slater 2003). Coupled with the finding that the likelihood of moving up the wage distribution has also fallen over this period (Dickens 1999), the picture is one of worsening job prospects for those unfortunate enough to lose a job or indeed those starting out in low-paying occupations.

The Slovenian labour market, on the other hand, still remains relatively highly regulated and strong social partners act to protect pay. In general, employment protection has been weakened, in comparison to the permanent employment relationship guaranteed by pre-transition social employment. However, while activation in Slovenia has greater scope to promote access to good quality jobs, young people are less likely to benefit, since they rely more heavily on temporary jobs. Flexibilisation is growing, with 72.4 per cent of all new jobs offering temporary contracts in 2001, equating to 10 per cent of the employment stock.

In both countries, availability for work and actively seeking work conditions have been tightened in an individualisation of the responsibility to work. In Slovenia, unemployment benefit recipients must seek ‘suitable’ and ‘appropriate’ types of work. ‘Suitable’ employment is acceptable for the first half of entitlement to unemployment benefit and thereafter people must look for ‘appropriate’ work. The legal definition of these types of work are specified in law, covering: the nature of employment relationship (fixed term or permanent employment), the job classification in a salary bracket under the relevant collective agreement (it should be the same as prior to unemployment, or in case of an appropriate job, up to one grade lower) and commuting distance (up to one-hour's journey from home by public transport for a suitable job, or in case of an appropriate job up to one and a half hours). This acts to secure the labour market position and free choice of unemployed people. In contrast, unemployed people in the UK are only able to limit their search for work in their usual occupation for a maximum of 13 weeks. After this point, subject to some minimal safeguards, they are obliged to look for and accept any type of work deemed suitable. This increases the likelihood that unemployed people will be pushed into low quality jobs.

The UK has more advanced procedures and centralised administrative structures for the surveillance and control of the unemployed, increasingly being marshalled for a much wider range of benefit recipients. A wide range of sanctions are threatened and used to discipline benefit recipients. Data from 1999 shows that 138,189 JSA recipients received sanctions that year (Dhillon 2000). In July to September 2000, 13 per cent of New Deal participants were sanctioned, rising to as much as 45 per cent for the Environmental Taskforce option in certain geographical areas (Dhillon 2000). In Slovenia, because of the socialist tradition, there are fewer checks on the fulfilment of responsibilities of the unemployed, which has allowed the prevalence of informal work to continue. Slovenian activation reforms have therefore failed to meet the central goal of explicitly connecting the status of unemployment (and the right to income maintenance) with the responsibility to engage in paid work in the formal economy. Activity testing is backed-up by sanctions and the right to cash benefits is also lost if an unemployed person is found to be engaged in informal work. However, in practice job counsellors do not use their power very often. The numbers of discovered violations is quite low (in 1999 – 11 per cent of unemployed were deleted from the register and 1.4 per cent lost the right to cash benefits; in 2000 this percentage share rose to 21.4 and 2 per cent, respectively) (ESS, 2002).

A characteristic shared by the UK and Slovenia is their experience of third-order change in policy making. For Slovenia, change was abrupt and fundamental. But in the UK too, the decisive break with the largely social democratic post-war settlement from 1979 had a profound impact, and has bequeathed a long-lasting legacy. As we have argued, the extent of this paradigmatic shift in welfare provision provided an unusual context for the introduction of activation. We have examined the nature, character and scope of the activation that has emerged from this change.

The political and ideological changes in both countries opened the way for activation to break further with the practices of the past. However, despite the highly centralised political system in the UK, and the series of reforms introduced by the Conservatives in the 1980s and 1990s that increased the conditionality of benefits, introduced the actively seeking-work test and toughened sanctions, it was not until the election of New Labour in 1997 that the language of activation really took hold, and the scope of activation widened beyond the claimant unemployed. In many respects, the ‘Third Way’ for activation has retained the liberal characteristics of the preceding welfare configuration, with the emphasis on means-testing, low and declining levels of social transfers and individual responsibility to work. New Labour have gone further than might have been expected in introducing heavier compulsion, further increasing work-conditionality and applying even harsher sanctions. In addition to this the target population for activation is widening. However, on closer inspection, there are some hints that recent reforms contain murmurs from the social democratic past. Principally this has occurred through the commitment to end child poverty, to which is allied the introduction of the relatively generous Child Tax Credit, which strengthened the social rights of most parents.

In Slovenia, by contrast, coalition governments have, along with strong social partners and deeply embedded popular support, protected the social insurance systems from radical change (as in Germany). There has been broad-based political commitment to the value of equality, which has survived, alongside meritocratic social protection, to shape the nature and extent of activation. Although Slovenia was more vulnerable to supranational and international pressures to activate, the strength of these internal interests have resisted radical change in the direction of reform, an outcome consistent with the importance of institutions and interests in the policy making process highlighted by Hemerijck and van Kersbergen (1999).

While in both countries a common language of activation is now apparent, it is certainly not true to say there has been convergence at a substantive level. Slovenian activation continues to be organised around meritocratic unemployment insurance, social status, meaningful training and good quality jobs. It is therefore closer to the ‘social investment’ type of activation than any other. In the UK, whilst it is easier to see overlaps with the stylised view of liberal activation, adopting the wider definition here highlights the deep ambiguities in New Labour's approach to social and labour market policy.

Whilst third-order change in the UK and Slovenia provided the opportunity and context for a wholesale implementation of the activation agenda, what emerges from our comparison is that, in contrast to some rather apocalyptic interpretations of welfare reform, activation continues to play out very differently in particular contexts. Lines of continuity were not cut in either country, although it is true to say that the UK engaged in more determined fraying.

Sharon Wright is Lecturer in Social Policy at the University of Stirling, UK. Her research interests are in social policy making and implementation, unemployment, the delivery of employment services, social security and poverty.

Anja Kopač is researcher at the Organisations and Human Resource Research Centre, Faculty of Social Sciences, University of Ljubljana. Her key fields of work are social and employment policy, welfare state, EU social policy issues.

Gary Slater is Senior Lecturer in Economics at Nottingham Trent University, UK. His research interests include policies for full employment, the connection between unemployment and temporary work and political economy in general.