Download The Limits of Europeanization

The Limits of Europeanization:
explaining low reform capacity in
Greece?
[Work in Progress]
Kevin Featherstone
LSE
Greece & Europeanization
• ‘Europeanization’ is everywhere: recent
growth of studies of domestic change
attributed to ‘Europeanization’.
• Risk of normative bias.
• Looking at cause & too readily accepting
the effect. Convincing empirical evidence?
Europeanization as the frame
• Such studies face major challenges in
establishing rigorous causal explanations:
identifying
– ‘linking mechanisms’ (Goetz, 2000) between EU &
domestic sphere;
– key intervening variables (e.g. actors, institutional
capability, discourse, policy structure: Radaelli, 2003);
– significance relative to other stimuli (external,
domestic).
– Non-deterministic outcomes.
Europeanization frustrated?
• Despite:
– high public support for EU membership in Greece;
– Declared commitments of successive governments for
EU’s EMU; Lisbon 2000 Agenda & ‘modernisation’.
• Greece has been one of the worst in
•
implementing EU laws, adopting single market
legislation & Lisbon reforms.
Why?
How to explain relative failure?
• Europeanization perspective helps to explain
agenda & identify response, but there are limits:
– Greece displays a paradox of capability: ‘integrated
political leadership’ condition (a simple polity: unitary;
centralised; unicameral; majoritarian) appears to be
met, but ‘reform capacity’ is low.
– To explain non-adaptation, we should not start from
‘Europe’: accounting for actor interests & ideas in
domestic setting requires other conceptual frames.
• What are we missing in the domestic system to
deepen our explanation of low reform capacity?
Structuring interests…
• How does domestic ‘system’ structure
rational interests, behaviour?
• Modelling the domestic ‘system’: mode of
interest mediation (unions-employersgovernment); politics of the welfare
regime; interests derived from economic
model.
What model? Interest mediation
• Unions: ‘parentela pluralism’ (Pagoulatos, 2003):
•
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diverse but ‘rent-seeking’ behaviour from state.
‘Disjointed corporatism’ (Lavdas, 1997):
corporatist structures lacking compromise &
trust, unable to sustain stable pacts.
Historically, ‘statism’ has structured expectations
of each of the social partners (including the
government)
Conflictual: e.g. tripartite social dialogue in 1997,
2000 failed.
What model? Welfare regime
• Mediterranean-type (Ferrera, 1996): highly
•
fragmented provision. Peaks of generosity (e.g.
public sector pensions); lack of coverage (e.g.
unemployment benefit). Affects rational
interests: undermines labour mobility.
‘Late-comers’ agenda (Pierson, 1998): provision
still being created alongside defence of
privileges: ‘immovable objects’ versus agenda on
equity. Powerful vetoes.
• High fiscal burden of pension privileges with
social inequity – result of political interests, as
well as available resources.
Politics of pensions
• To some significant extent, technocratic
•
•
consensus on need for reform.
Yet, sub-optimal outcomes: slow, piecemeal.
No ‘crafted’ social model to defend, bare
interests rather than social choice.
• Actors defend interests in knowledge of welfare
gaps & vulnerabilities in provision, and
expectations of reform weakness. System
encourages them to be ‘risk averse’ & ‘rentseeking’.
What model : varieties of capitalism
• More ‘state capitalist’ (Schmidt, 2002) than LMEs
•
(UK), CMEs (Germany) (Hall & Soskice, 2001),
but state’s impact varies.
Mixed Market Economy (Molina & Rhodes,
2005): more corporatist than in LMEs, but more
fragmented & less able to coordinate than CMEs
or deliver collective goods.
– Lacks complementarity: low social protection, high
jobs protection. Strong domestic veto points, low
reform capacity. Prisoners’ dilemmas.
Modelling interests in the Greek
Self-employed % more than double
economy
EU15 av. Family workers 3x EU15
• Company structure: very few large
•
•
enterprises and very many micro- and smallfirms
Employment structure reflects late
industrialisation: importance of services;
disproportionate size of agriculture; relatively
small manufacturing sector; Services 65%; Agric12%
Participation: low participation of women &
part-time workers; significant problem of
long-term unemployed. Female % one of lowest in OECD;
part-time a third of EU15 average
Structuring representation:
Product market regulation 2nd most restrictive in EU15;
worst in ‘ease of doing business’ (World Bank).
Total
Employers’
organisation
density is half
that of EU15
average
• Business voice favours few large firms (SEV), rather than
myriad of very small enterprises . GSEVEE, not representative
of small and medium size businesses in Greece. A fragmented
coalition with no clear agenda. Thus a consensus emerges in
the business community for a domestic market of anticompetitive regulation, barriers to entry, relatively cheap
labour & stable product demand. Business constituency for
liberal market measures is thus limited and shallow.
• Union voices over-represent the public (and ‘wider’ public)
sector (GSEE, ADEDY), favouring the interests of a highly
protected core group of workers, rather than temporary &
irregular, informal workforce. Prioritises rigidity over flexibility
& irregularity.
Ratio labour cost/ hours almost half EU15
Overall, union density is
above EU15 average,
but unionisation in
private sector is low
Split rationality & differential
political voice
• VoC: follow ‘median voter’. But where is the median
•
•
•
voter?
Split rationality & differential political voice (private
sector versus public sector workers) (few large firms &
myrid of small enterprises)
Affects rational actor interests towards privatisation;
labour mobility & pensions.
A problem of governance: low reform capacity from a set
of structural conditions – distorted representation,
conflictual interests, skewed & limited public provision.
Bringing the State back in:
ovt sector cost highest in EU15; one of
lowest in effectiveness scores
2nd worst in EU in Global
Corruption Index
1. A long-term statist tradition (a ‘developmental
state’) but its effectiveness and efficiency is
comparatively low, undermining the capability to
deliver public goods.
2. Perceived corruption and tax evasion is very high,
undermining competition and the effective delivery
of public services and functions. Large informal
economy.
Shadow economy (28% of GDP?) largest in EU15
3. State spending on social protection is relatively
high, but skewed and this affects actor rationality
on welfare & employment. Total Social Expend as % of
GDP close to EU median
Addressing the puzzle: modelling
responses
• There is a weak domestic constituency for
market and welfare reforms, with the rational
interests of key social actors defined by (a)
the limitations of current (welfare) provision
and compensating employment protection;
(b) protected markets with stable product
demand.
• Stop-go, incremental policy reform is the
most likely outcome across such sectors.
Limits of VoC
• Not a simple problem of selfish unions & inertia
•
of few big firms (nor of party or personality).
Wider systemic conditions need to be
incorporated: e.g.
– Inefficiency, low resources of state administration:
low implementational strength.
– Conflicting interests of clientelism: undermines will to
reform.
– Cultural factors: corruption, mistrust,non-compliance.
– Limited public space for debate on options.
• Above consistent with Simitis, 2007.
Reform deficit in a conducive
economic climate
• Period here is not one of economic difficulty
•
(with higher adaptational costs), but one of
exceptional growth (with more scope for side
payments);
Thus: strength of opposition indicates (a) the
embedded strength of the current system; (b)
the failure of new social forces to emerge in the
boom years; (c) failure of government to
advance ideas to win support from potential
‘winners’ & build a reform coalition.
Yet: Greek contrasts
• Capability: Greek performance has varied between
•
•
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sectors.
Very good macro-economic performance since 1996:
high GDP growth; convergence in inflation, deficit & debt
levels. Distinctive features here: external commitment
device of EMU; relative autonomy & exclusivity of
domestic policy management in this area.
Contrast with problems in enacting ‘supply-side’ reforms
& welfare modernisation: weaker EU leverage; a more
open and diffuse domestic policy process.
Testifies to: nature of EU policy instrument (adoptionimplementation); how contrasting domestic settings
structure actor access & interests.
So: limits to Europeanization
• For Greece, domestically, a systemic problem of
governance. Low reform capacity from both state
weakness & structure of interest mediation.
• For EU: issues of its ability to coordinate a
programme of economic & social reform – weakness
of Lisbon process in face of domestic opposition.
Capability-expectations gap?
• Conceptually: ‘Europeanization’ & ‘VoC’ approaches
need not be incompatible. One extends limits of the
other. Delve deeper into structures of rational
interest, vetoes to explain EU effects & domestic
response; contrasting Greek sectoral performance.