Welfare, innovation and the role of cities in Europe: a dialogue with Prof. Yuri Kazepov

Since the 1980s, welfare systems in Europe have been transformed by various reforms defined as structural, modernising, or even as retrenchment or dismantlement of the existing security protection systems. Lately, an acceleration occurred as a consequence of the 2008 financial crisis. In those Member States where welfare structures were already not solid, austerity measures have been particularly hard for inhabitants who had their wages frozen, benefits capped and jobs lost. Growing unemployment, under-employment, working-poor, and precarity, together with a lack of basic support, turned into a ticking bomb for the end of an integrated Europe, polarising southern countries and the others. Even today, many people in Europe still have difficulty accessing affordable homes and a wide range of public services. On top of this, Europe also needs to deal with an increasing complexity of uncoordinated national responses on social security, especially in the face of new migration waves and uneven consequences of the financial crisis. Understanding how the different welfare regimes in Europe address these challenge is of vital importance in shaping better urban policies at local, national and EU level (see for example Esping-Andersen, 1990, or Hemerijck, 2012). In particular, at local level, URBACT cities know from experience that welfare is a crucial factor shaping many challenges confronting cities, such as residential segregation, and access to jobs and health services.

We asked Yuri Kazepov, expert on welfare, segregation, urban regeneration, and multi-level governance - and Professor at the University of Vienna - to share his view on the relation between welfare, poverty and the state of European cities.

Prof. Kazepov what is the current picture of welfare in Europe and how has it been changing over the last 10 years? 

The paths of national welfare systems are differentiated and are taking directions which we may not have been foreseeing 10 years ago. In the 1990s and 2000s there was a widespread trend towards decentralising social policies. The crisis brought about a trend of re-centralisation. This was more than expected in the Nordic countries, but less in southern European countries where decentralisation patterns were emerging quite strongly over the last quarter of the century. It might be argued that the fiscal compact and austerity measures have – through the necessity of budgetary control – an inherent tendency of promoting implicitly or explicitly re-centralising policies.

Despite this apparently converging trend, however, my impression is that there are no strong converging tendencies among the different welfare regimes in Europe. There are indeed some converging elements, but the answers to this crisis and its impacts in the different local contexts brings about diverging outcomes. This is true even when similar social policies are adopted in all EU Member States (like for instance the youth guarantee, the social innovation package or social investment package), given the different contexts within which these policies may be implemented, the impact will still be very different.

Currently, the four South European countries are struggling the most from many different points of view, especially in redesigning their institutional architecture. In times of crisis, this may be more difficult because there are no resources available for political compromises and more inclusive (and potentially costly) reforms. For instance, countries like Greece, Spain, Portugal and Italy have more difficulties in facing poverty also because their poverty policies were not designed in a more inclusive way in the past, when there was more financial room for manoeuver. Therefore, developing this kind of policies now is extremely difficult because resources are only available to deal only with the most problematic cases. The transition to stable working conditions – if still at all possible – takes much longer and is more precarious than ever. This brings about a widening intergenerational gap about which not many talk. Having a precarious and delayed entry into the labour market implies the payment of less contributions, which conversely bring about lower pensions in the future. This shifts the problem in time to younger generations whose risk of poverty will dramatically increase when they will retire.

Can you tell us about the pros and cons of decentralisation or re-centralisation strategies?

Decentralisation has very often been portrayed as positive by international agencies like the IMF, the OECD or even the EU. But decentralisation is not intrinsically positive. Again, its impact depends on the contextual conditions and the institutional architecture within which it takes place. If the scope is to equalise the living conditions of people in the country or even in the European Union, than European or national policies are better positioned for achieving this goal. This is out of reach for local policies so if you decentralise redistributive policies you might increase inter-regional inequalities, coordination problems and inter-institutional conflicts. Conversely local policies might play a major role in fine-tuning and valorising local specificities when it comes to activation policies. They might also foster policy legitimacy when they involve in the decision making process those who are affected by the decisions. There is – in general – a lack of awareness of the importance of how the different measures regulated at different territorial levels interact and produce specific effects.

Also, the EU is playing a very relevant, but very indirect role, especially in relation to welfare policies. Through austerity policies, by keeping deficits under control, and more, the EU modifies the contextual conditions within which national and local welfare policies have to be implemented. Nation states may or may not “pass the buck of retrenchment” to lower levels of government, most prominently to cities. But cities are embedded in very complex multi-level governance arrangements and different socio-economic contexts.

To become aware of the interaction effects among policies regulated and managed or implemented at different territorial levels and the different socio-economic contexts might help disentangle the potential impact of reforms on living conditions of people in cities and the resources they might have available. Governing this complexity in a more integrated way to find “the right mix” will become more and more important in the future, especially for social policies.

What is the role of administrations at different territorial levels (cities, regions, states, and EU level)? 

In order to understand the roles of different administrations at different territorial levels, it is necessary to distinguish between the type of policies and the type of impact envisaged. For instance passive and active measures pursue different goals within different welfare systems. Passive measures (e.g. unemployment benefits) are regulated in most countries at national level, while activation measures (e.g. requalification training measures) are usually regulated locally. However, both passive and active measures can be local, regional and/or national. Federal countries such as Germany and Austria, but also countries with important roles of Regional administrations, such as Italy and Spain, have their intermediate levels playing an important role in designing and implementing active measures.

This picture becomes more complex when we consider that passive measures usually do not require an action from the claimant: a typical example is benefits related to the payment of contributions. Activation measures, conversely, imply an activity from both the claimant and the institution providing a certain service, such as training, or psychological support. They may be designed to bring an unemployed person back to the labour market immediately through a compulsory measure. This is a rather punitive approach because in a way it blames him or her for not being in the labour market. It is like saying “if you don´t accept this job we will cut down your benefit by 50% in the first three months”. Or it can be designed to provide training, resources and a series of tools which allow you, in the medium-long term, to go back to the labour market but without being punitive, because there is a recognition that the problem of unemployment is a “social problem”, not the individual’s fault. Underlining this latest approach, there is a recognition that unemployment is also a structural problem characterising our late capitalist society. The way these measures are designed make a difference and affects the roles of different administrations: “the devil is in the detail”.

Until now, we have been talking mostly about northern and southern countries, what about the eastern countries?

Understanding these countries is not an easy task. The dynamics of change are very complex, in particular for the scholars who are studying western European welfare regimes. Eastern countries started from a relatively homogeneous point, but after the fall of the iron curtain they went in different directions. This is very evident if you compare Poland to the Czech Republic or Slovenia. My impression is that welfare scholars still tend to group East-European countries in one cluster. I did this error too, because the common socialist legacy brings us to overlook existing differences. Now this is actually not anymore the case. East-European countries still have commonalities, but the differentiation trend started already 10 years ago, and the transition period is over. Somehow, all EU countries are now in transition, so we cannot call Eastern countries “transition countries” any longer. For instance if we look at city level, the segregation patterns are still relatively lower than the rest of Europe, but these patterns are increasing faster (Tammaru et al., 2016). Further studies are therefore needed to understand the linkages between those patterns and comparing the impact of the different policies adopted.

There is a growing debate about new forms of welfare provisions that could help combat poverty, such as universal basic income (UBI), negative income tax, and guaranteed minimum income (GMI). Some cities are testing the introduction of those provisions, such as Utrecht and Barcelona. What are the conditions for introducing them at city level?

I would personally very much welcome a “minimum income”, or a “guaranteed minimum income”, or a “universal basic income”, Europe-wide. I think it is not easy, given there are too many lobbies working against. If established, such a measure would imply that other parts attached to a lot of interests, are dismantled. Switzerland voted against an unconditional basic income in a recent referendum. In Finland there are some experimentations, but Finland is a very small country with a few million inhabitants. The conditions which may enable any form of UBI or GMI to take place in Finland won't be in place in many other countries. The experiments at city level are interesting, but they demand a very strong political backup and adequate resources. The point is how minimum income schemes are designed and what kinds of rights and obligations are attached to them. Again, the “devil is in the detail”! For instance in many countries which have a last safety net based on social assistance like arrangements there is the principle of the “suitable job” (in Germany it is called “angemessene Arbeit”). Up to a certain period, people being on social assistance could refuse job offers and maintain the benefit, because these were not matching their professional profile or educational background. Now, increasingly, it is possible to refuse up to a maximum number of jobs, afterwards benefits will be cut. In some countries jobs cannot even be refused. This is a problem especially were the skills of unemployed people are much diversified and there are no matching job offers. My impression is that we can go toward a minimum income scheme in every country, even in south European countries, but it´s politically not so easy and it won´t be a very generous one. What will be crucial is to understand the trade-off with other measures which will be cut to finance it and this might be very different from context to context.

The current debate on social innovation is heralded as the new formula for tackling many social issues. It often substitutes the concept of social inclusion in current policy debates and it is slippery when used in different contexts. Which are the advantages and drawbacks of supporting social innovation to satisfy the needs not covered by welfare-policies?

Also social innovation is strongly context sensitive. In our “Improve” research we investigated 7 EU countries and analyzed many innovative initiatives. The result was that we were unable to understand the innovative character of the initiative if we were not embedding it in the specific contextual conditions. For instance in Italy we considered an initiative of counseling for over-indebted people who were facing a downward spiral in terms of social mobility towards poverty. It was the initiative of this kind in Italy and it was established through an interesting mix of non-profit organisations and local government. Throughout the research, it became clear that what was considered to be very innovative in Italy was an established policy in most continental European countries since decades! We had the opportunity to investigate also how the “Housing First” initiative has been implemented differently in different countries. “Housing First” (HF) is considered to be a very innovative format of intervening on homelessness, which provides the homeless with a housing solution first. The interesting result was that the different HF initiatives interact with completely different institutional architectures: from Stockholm to Vienna and Bologna. What we found out is that people in Stockholm had also access to a minimum income and they were able to pull resources in a very specific way which at least were providing more opportunities to get out of that extreme condition of need. While in the case of Bologna people did not have a minimum income to rely on for securing the basic living conditions. This demanded to pull other kinds of resources from no-profit organisations and other institutions to guarantee the survival of people in extreme conditions of need. Exactly the very same format of the Housing First project but implemented in two very different contexts, interacting with local policies in different ways, demanding to rely on very different resources. This, in a way was also modifying the meaning of innovation: in the case of Bologna it was an innovation for survival, it was not innovation for exploring new ways to solve a problem, as was the case for Housing First in Stockholm. And Bologna and Stockholm are embedded in two very different welfare states, which brings us back to the importance to consider the multilevel governance arrangements within which the initiatives are embedded.

Following this line of thinking, innovation can happen because of survival or can be transformative, improving the existing situation. How do states and cities relate to different forms of innovation?

We are precisely working on this in a new forthcoming book with the colleagues involved in the project. One of our hypotheses was to understand what the relation of local innovation with the institutional architecture of the different states is. What kinds of institutional complementarities (or mismatching) were existing in different countries? What is the support the state is providing for innovation? Are institutions transforming themselves into “learning institutions” thanks to social innovation, which is taking place locally?

One of the answers is that innovation exists everywhere. We cannot assume that social innovation is more concentrated in one country or a city than in another. Of course there are differences, but the crucial aspects to be considered are the interaction these social innovations have with the different institutional arrangements, the resources they are making available, the actors involved and the passive measures which are available to build upon social innovation. We may have policies which institutionally build a frame which fosters innovation by including new actors such as civil society, no-profit and third sector organisations. However, civil society alone is not the solution, because it is not able to take up the role which the state has, namely to redistribute resources. Civil society and the state should interact by reinforcing the positive elements they are able to provide – the state in terms of redistribution, the civil society in terms of innovation – thus creating new synergies. The point is, as I mentioned before, the “right mix”. How are the actors involved? Under which conditions are they involved? What kind of degree of freedom do they have and what resources are they able to rely upon?

There is the need to have a stronger alliance between different actors and different level of governments including the national and European ones. From this point of view also the relation between member states and EU has to be rethought, especially in reference to the social policies, and Europe should contribute to guarantee its citizens minimum decent living conditions. Also, cities can (or should) network even more, get more visibility, resources and establish lobby institutions (Eurocities is a good examples for this) to foster social innovation. But fragmentation may increase if cities are becoming more important without multi-scalar coordination. I fear the negative consequences of these decentralisation processes if not adequately backed up by processes of institutional learning taken up at higher levels of government. The local level can play a very relevant role in providing and feeding this process, but I think that our aim should be to guarantee the right to decent living conditions to people because they are members of a larger community beyond the local trap.
 

I am personally very thankful to Prof. Kazepov for his kind collaboration. 

This article written by Laura Colini is based on an interview with Prof. Yuri Kazepov conducted by Laura and Ivan Tosics in relation to the EU Urban Poverty partnership.

About Prof. Kazepov

Further reading

• Andreotti, A., & Mingione, E. (2016). Local welfare systems in Europe and the economic crisis. European Urban and Regional Studies, 23(3), 252-266.
• EUROSTAT http://ec.europa.eu/eurostat/statistics-explained/index.php/People_at_risk_of_poverty_or_social_exclusion
• Hemerijck, A., 2013. Changing welfare states. Oxford University Press
• Johansson, H., & Panican, A. (2016). Combating Poverty in Local Welfare Systems: active inclusion strategies in European cities. Work and Welfare in Europe. Palgrave.
• Pierson P. (1994) Dismantling the Welfare State? Reagan, Thatcher, and the Politics of Retrenchment, Cambridge University Press.
• Kazepov, Y. ed., 2010. Rescaling social policies: towards multilevel governance in Europe (Vol. 38). Ashgate Publishing, Ltd.
• Kazepov, Y. ed., 2008. Cities of Europe: Changing contexts, local arrangement and the challenge to urban cohesion (Vol. 2). John Wiley & Sons.
• Oosterlynck, S., Kazepov, Y., Novy, A., Cools, P., Barberis, E., Wukovitsch, F., Sarius, T. and Leubolt, B., 2013. The butterfly and the elephant: local social innovation, the welfare state and new poverty dynamics. ImPRovE Methodological Paper, (13/02).
• Tammaru, T., Musterd, S., Van Ham, M., & Marcińczak, S. (2016). A multi-factor approach to understanding socio-economic segregation in European capital cities. Taylor & Francis.
• Theodoropoulou S. (2014) Has the EU become more intrusive in shaping national welfare state reforms? Evidence from Greece and Portugal, ETUI Working Paper, 2014.10, Brussels, ETUI.
• Vanhercke B., Natali D. and Bougetavailable D., (2016) Social policy in the European Union: state of play 2016, OSE, ETUI at http://www.etui.org/Publications2/Books/Social-policy-in-the-European-Union-state-of-play-2016