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Governance reforms and their impacts on the effects of activation policies Willibrord de Graaf, Tomas Sirovatka,
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Governance reforms and their impacts on the effects of activation policies
Willibrord de Graaf
Department of Interdisciplinary Social Science, Utrecht University, Utrecht, The Netherlands, and
Tomas Sirovatka
Faculty of Social Studies, Masaryk University, Brno, Czech Republic
Governance reforms
353
Abstract
Purpose - The purpose of this paper is to deal with the question of whether the expectations of improved effects due to governance reforms have been met in nine European Union (EU) countries and how they are associated with the specific characteristics of the governance of activation. Design/methodology/approach - The paper distinguishes three types of effect: first, the process effects, like the treatment of unemployed people, their voice and choice when involved in activation and the individualized nature of the service provision process. Second, the paper looks at output effects (policy effort), which include the range (scope) and variety of the programs, the coverage and outreach (targeting) of programs and services to specific groups and service content and quality. Last, the paper is interested in the outcome/employment effects (gross and net) on job placement. Findings - The authors conclude that the effects of the governance reforms are not unequivocally in favour of the reforms. This is a remarkable finding since all the countries that have been studied show similarities and to some extent converging trends in activation reforms. The reasons for this discrepancy between aims and effects are not easy to detect; nevertheless, implementation difficulties are one explanation and problems with adequate financing may be another.
Originality/value - The complex model of the effects of activation is combined with a governance perspective. This makes it possible to disentangle the effects of governance reforms to some extent. The findings may stimulate further research and orient policy making in activation.
Keywords Governance of activation policies, Process effects, Output effects, Outcome effects, Governance, Europe, Government policy
Paper type Research paper
Introduction
Most reforms in the governance of activation policies stem from the expectation that changes in the governance process will contribute to a more effective and qualitative provision of services. In line with our earlier research project on the governance of activation (van Berkel et al, 2011) we make a distinction between substantial (level of content of policy) and procedural (level of governance) reforms in activation, but we think that both forms also may presuppose each other: policy changes lead to revisions of governance, and vice versa. But substantial policies are not our main concern here, we concentrate on governance changes, and are especially interested in their effects. We take four main forms of governance reform as our starting point: decentralisation,
This paper was supported by the Czech Grant Agency (Project No. P404/11/0086), Modernization of the Czech Social Policy.
International Journal of Sociology and Social Policy Vol. 32 No. 5/6, 2012 pp. 353-363
© Emerald Group Publishing Limited 0144-333X
DOI 10.1108/01443331211237041
marketisation and competition, new public management and interagency cooperation. Each of these reforms is connected to a set of expectations about their effects, some of which are specifically tied to the particular reform, and others are more or less loosely coupled to several reforms at the same time. Decentralisation is mostly associated with the possibility of policy flexibility, the adaptability and responsiveness to local needs and circumstances and the capacities of the local partners to develop a more integrated provision of services suited to the individual problems. From marketisation a greater efficiency and effectiveness is expected, which can contribute to lowering of the costs of activation on the one hand and to more innovation and quality than the traditional bureaucratic provisions on the other hand. New public management is supposed to deliver the mechanisms by which public policies can be designed more in terms of steering by targets and of accountability in results. This may also entail the stimulation of interagency cooperation, which by itself is deemed to be more effective by combating silo management and by enhancing a greater choice and voice for the clients.
The question arises to what extent the above expectations are met since from the start some serious pitfalls are known. First, the processes of decentralisation may lead to devolution and public administration failures, most common is unequal treatment. Similarly, marketisation may be accompanied with various market failures which may cause poor quality of the service, creaming or cost-ineffectiveness. Second, the problems arise in the process of implementation of activation policies. Governance models and practices are not always implemented as foreseen. A variety of factors may explain this: the local actors' interpretation of the official reforms in policy and governance, the circumstances under which they have to implement them, and their capacities to do so. Besides, institutional interests, ways of financing the services, the distribution of responsibilities between national and local actors,, etc. can have influence in the installation of new forms of governance. So in dealing with the study of effects of the governance of activation, the situation is rather complex and dynamic: it is not just the formal changes that have to be taken into account, but also the (sometimes messy or whimsical) practices of implementation.
We attempt here to examine the question about the consequences of the governance reforms for the effects of activation policies; however, we are aware of the serious limitations of our effort. A first limitation is the circumstance that substantial and procedural reforms often come in one package, which makes it difficult to distinguish the effects of each separately. Second the systematic or overall evaluation of reforms is scarce. A clear evaluation of the pre-reform situation and of the new reform is lacking, and the studies done are mostly oriented towards one aspect and are rather short-termed. There are also differences between countries in the emphasis on the need for evidence based reforms (some countries like Czech Republic or Italy collect little evidence on the effects of the policies). Similarly, some reforms, like marketisation, are more extensively studied than others such as decentralisation, and the same counts for some effects, where gross employment effects are studied more than the effects on clients.
Third, the objectives of the governance reforms are often many and not always clear: are they about cost effectiveness or quality, about short term placements or long-term job retention? Finally, the results (especially in terms of job placements) seem to vary with the economic tides: when unemployment is rising due to economic crisis the effects are also diminishing.
Taken together this implies that our analysis of the effects has to be modest and explorative. We will concentrate on the reported studies of nine countries[l] and try to entangle the effects of governance changes on three levels (Table I).
Process effects are pertaining to the individualised treatment of the unemployed people, the voice and choice involved in the activation and the rights and duties of the unemployed. Output effects deal with the range and scope of the programmes, their coverage and reach, and the quality of the services. Outcome effects are the gross and net results in terms of job placement, the lasting effects of placements and the levels of costs[2].
The article is structured in three steps. First, we briefly outline some of the main changes in governance in the nine countries and delineate their importance for the analysis of effects. Second we assess the effects of these changes according to our scheme of process, output and outcome effects, and third we discuss the implications of these effects in the context of activation.
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The governance reforms in nine countries
We will not discuss the reforms for each country separately, because we have reported these reforms elsewhere (van Berkel et al, 2011). We will try on the contrary to group the countries according to some main characteristics, in terms of what we have called types of governance regimes (Considine, 2001).
The first governance type is referring to the measure in which countries are characterised by procedural regulations, that is laws and rules at the national level, aiming at reliability and universal treatment. This governance type may be more or less centralised. In general one can observe a decline of the procedural governance in most countries although in some of them it is still rather strong like in the Czech Republic, France or Italy (see Ehrler, in this volume). The second trend is a decrease in central regulation and more emphasis on decentralisation to local or regional levels. Some countries like the UK and Sweden are strong in more centralised governance of activation, while others like The Netherlands, Switzerland and Italy know a much stronger decentralised administration of activation. Other countries like Finland, Germany, France and Czech Republic show different forms of decentralisation, where for instance unemployment benefits are more strongly organised on the national level, activation both on the national and local level depending on the group of the unemployed (except Czech Republic where PES are responsible for activation of all groups) and social assistance benefits on the local level.
Type of effect Indicator
Process effects Voice and choice
Individualised service provisions
Rights and responsibilities Output effects Coverage and reach
Service content and quality
Range and variety
Outcome effects Job placements (gross and net) Table I.
Job retention and quality Potential effects of
Cost effectiveness governance reforms
IJSSP The second and third type of governance regimes relate to market and corporate
22 5/g governance forms. Market governance refers to a cost-driven form of outsourcing public
' services to market actors which can compete on prices and quality, and corporate
governance entails the steering on goals and targets. These types of regimes are mostly seen as belonging to a combined strategy and have become more dominant in all countries. There are of course differences, with France and Czech Republic for instance 356 as countries with less prominent corporate governance, and Switzerland with more
- corporate governance, and with some countries like Sweden that show weaker forms of
market governance. But surprisingly, independent of the welfare state type, be it liberal or more social-democratic, all countries share a development towards these two governance regimes.
The fourth type of governance regime is network governance, where on the one hand the cooperation between public and private partners in policy making and implementation is central and on the other hand the mutual involvement of clients and service providers is implicated. Especially in the first variant differences between countries can be observed in the participation of social partners (employers and employees): some countries like the UK and the Czech Republic have no tradition in this corporatist governance, while in others such a tradition was existing but has weakened, like in Germany, The Netherlands, and France. In the second variant interagency cooperation has been developed, like in Finland, Germany or The Netherlands, sometimes with forms of empowerment of clients by vouchers or individual action plans, but also with stricter conditionality of benefits related to participation in activation.
Although it is possible to discern some main trends in the nine countries, like a decrease in procedural governance and a growth in market, corporate and network governance, each country offers specific forms of hybrid governance, with different mixes of decentralisation or recentralisation, with more or less development of quasi-markets in activation and so on. It is thus hardly possible to relate the effects in the changes in governance to some "hard" or "fixated" independent variables that run across the countries.
We do not aspire to solve the above problems in the overview of effects we present here: the existing studies do not provide sufficient grounds for it. Rather we are interested in mapping the existing reflections on the various kinds of effects of activation policies and their link to governance reforms and implementation. Outcome effects (employment or employability effects) represent the key concern in activation. Nevertheless, we assume that these outcome effects depend (beside other factors) quite heavily on the changed procedures of treating the unemployed (process effects) which typically emerge due to governance and social policy reforms and the changed characteristics of activation measures like their scope, their targeting and quality (output effects). For this reason we are interested very much in the process effects and output effects which are sometimes more accessible to the inspection of the researchers than outcome effects considering the methodological limitations.
The effects of governance reforms on the effects of activation
Process effects
We can distinguish several groups of countries: in the first and greatest (Finland, Sweden, The Netherlands, Germany, the UK, Czech Republic and Switzerland) we have some indications about process effects. In the other, smaller group (France and Italy)
data about process effects are not available and cannot be examined. The greatest group can then be divided in countries where some modest positive effects can be discerned, and in countries where more negative results prevail. We shall discuss what positive and negative effects can be pointed at. In most countries, due to the "substance" and sometimes to the governance forms of the activation, duties put on the unemployed increased while their rights did not expand at all.
We start with the, mostly modest, positive effects of governance reforms in terms of an increasing voice for users and a greater flexibility in services. The countries where this can be documented involve The Netherlands, Sweden, Finland, Switzerland and Germany. In The Netherlands (van Berkel and de Graaf, 2011) the Individual Reintegration Agreement is the most conspicuous example of a positive result: it seems that both in terms of placement rates (20-40 percent higher than for regular trajectories), sustainability of jobs and user satisfaction the IRA's outperform the other activation trajectories. Also in Switzerland IRA's have locally been introduced, but the effects are unknown. In Finland (Karjalainen and Saikku, 2011), Sweden (Minas, 2011) and Switzerland (Ehrler and Sager, 2011) and even the UK (Wright, 2011) there is in general an increased satisfaction of the users. They feel treated more individually, and with greater care for their needs especially when the caseloads of the unemployed per one officer are not high.
For example, in Finland LAFOS succeeded to integrate services for hard to place unemployed, among other with the principle of "working pairs" (employment advisor and social worker work together to solve the individual cases) and to increase the choice and voice options for the unemployed through "network of organizations" which also include NGOs in great extent (Karjalainen and Saikku, 2011). Germany represents a case of the comprehensive reforms of the governance with expected significant gains in individual treatment (Dingeldey, 2011) since the number of clients per one officer diminished due to the implemented "specialized case management approach". But even in these countries this satisfaction does not translate itself in more placements: the results remain more or less the same over the years. In Germany the voucher system is not very much used: only 1.8 percent of the clients used the services purchased through the vouchers in 2008 (Bundesagentur fur Arbeit, 2010; calculation by Dingeldey, 2011). But it proves difficult to give the users more choice in specialized services, which also seems to play a role in Switzerland (Ehrler and Sager, 2011; Pfister, 2009).
More negative or a lack of effects can be demonstrated for the UK and the Czech Republic. In the UK the voice of the users is hardly recognizable: the expansion of activation measures to other groups like lone parents or disabled persons has not been accompanied by more choice or diversification in services. Rather the GATEWAY applied by personal advisors in Jobcentres (which represent the central elements of governance reform) assumes that all target groups are treated the "same way"; the principle of individual service rather declined since the job placement targets implied rather standardized work-first focused information and advice (in work focused interviews) (compare Wright, 2011). In the Czech Republic (Sirovatka and Winkler, 2011) the official establishment of IRA's has remained a dead letter because of lack in capacity of available staff, and has become more of a tool to increase pressure on the applicant. In Italy, the insufficient personal and financial capacities for ALMPs especially in the Southern part of the country also implied limited application of the individual approach. Second, due to the insufficient implementation capacities voice of some groups of the unemployed (outsiders-temporary workers) has been left aside (Graziano and Raue, 2011).
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All this runs counter to the expectations of more individual and more tailor made solutions in the process of reintegration in the labour market. Besides, all countries report that due to the substance of social policies and the reforms in governance of activation[3] there has been a considerable change in rights and duties: in most cases income protection has been connected to requirements of participation in activation and this leads to reduction in benefits, stricter conditionality for benefits, more pressure to accept standardized offers in activation trajectories and to accept short term placements.
It appears that one crucial intervening variable behind the above mentioned distinctions concerning choice and individualization are the sufficient implementation capacities: either these capacities existed before the governance reforms were implemented (Sweden) or the emphasis has been put by policy makers also on building the appropriate capacities during reforms (like in Finland, Germany, The Netherlands, and Switzerland).
Output effects
Output effects regard the scope, variety and quality of the activation services. We will discuss the effects under these three headings.
As far as scope or reach of the services are concerned, not all countries report on this matter. Those that produce material on the subject show mostly an increase of participants in activation trajectories. This is the case for The Netherlands, Switzerland, Finland, the UK, with the Czech Republic as an exception: initially there was a rise in the number of participants from 2005 to 2008, but this was due to ESF projects, but later, the number decreased and fell back to the level of 2005 while ESF projects only substitute the national measures. For Sweden, Italy and France no data are available. Of course, there is evidence that Sweden and France are leading countries concerning the numbers of the activated while Italy lags behind (OECD, 2010). However, when an increase in participants in activation is demonstrated, this is not only an effect of governance reforms, but also of the content of social policies. And, still, a greater coverage does not tell anything about the number of placements, as we will discuss in the outcome effects part.
Also in the variety of the activation services countries show differences. The growth in private providers has in most countries certainly led to a greater and more flexible offer of services, but at the same time this has produced difficulties in transparency: the complexity of services makes it hard to choose between them as is the case in the UK, Germany, Czech Republic and due to regional differences in the implementation in Switzerland and Italy. Variety also exists in the content of the services. In some countries the effort is aimed especially at competences to apply for jobs (Czech Republic, The Netherlands, the UK) while in others, like Finland, Sweden or Switzerland, qualification for jobs is more central. But, although variety and diversification may have increased, service standardization can be noticed in countries like the UK, The Netherlands or France because private providers try to uniform their offer in activities because of price competition. So competition seems in some cases to block processes of innovation.
This leads to the question of the quality of the services, and especially if there is difference between public and private providers. As already indicated, it is very hard to establish this because comparable data are missing between before and after the introduction of private parties. In The Netherlands one can see a development where social assistance recipients are more activated than unemployment benefit recipients (probably due to financing conditions), while in Switzerland this is the reverse.
Quality is often improved thanks to interagency cooperation. In a number of countries (like France, Finland, The Netherlands, Germany, Czech Republic, the UK) these forms of cooperation have been developed, but in general one must conclude that difficulties remain between the division of national and municipal/regional responsibilities, between the coordination of professional expertise, between different goals like income distribution and activation.
All in all, although in some countries the reforms have led to an increasing scope and variety of the activation policies applied, at least in support to job search and advise, the gains for the vulnerable groups of the unemployed did not appear while creaming-off effects were sometimes quite strong. In Finland, for example, between 2005 and 2007 the number of unemployment recipients in activation measures grew from 10 to 35 percent. Nevertheless, if we focus on the LAFOS potential clients - long-term unemployed - data documents coverage of about 20 percent only (Karjalainen and Saikku, 2011). In The Netherlands with the reforms between 2001 and 2005 the numbers of the participants in activation increased from 23,000 to 46,500 among unemployment benefit recipients and from 11,000 to 98,000 among social assistance recipients. Nevertheless, in general municipalities focused above all on those quickly to re-integrate into the labour market among social assistant recipients, thereby offering more job mediation but less education (van Berkel and de Graaf, 2011; Divosa, 2009). In the UK with activation programs like New Deal, many of the unemployed formerly considered as "inactive groups" have been activated like lone mothers, disabled persons or youth; this means that the scope and coverage of the activation measures was expanded thanks to low cost information and advice rather than to participation in ALMPs (Wright, 2011)[4]. On the top of that, for example, in France new providers challenge non-profit associations specialized in the reintegration of the unemployed, creating precarious conditions for traditional subcontractors (Beraud and Eydoux, 2009).
Further support for the creation of permanent jobs and for educational measures and labour market training diminished in some countries while increased in others. This is due to cost containment and contracting-out when private providers incline to risk minimizing strategies by using positive pre-selection - this allows them cheaper activation measures to be used. In general, creaming-off and positive pre-selection was a prevailing trend. The quality of the measures did not improve in general while low cost measures (job search advice) clearly prevailed in some cases. Nevertheless, we still find remarkable differences between countries in the scope, coverage, variety and quality of the measures, which are - similarly as process effects - largely dependent of the financial and personal capacities.
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Outcome effects
Evaluation of the outcome effects is a particularly demanding exercise. We face several limitations: often only gross effects of activation are evidenced which include considerable dead weight, and net effects were established very rarely. Experimental studies which would compare the outputs as "net effects" before governance reforms and after were not carried out in any of the countries in focus. Similarly, the studies mainly focus on job placements (direct employment effect in the short-term horizon) while not much attention was paid to employability effect, job retention and job quality.
In general the overall picture in terms of placements seems rather bleak. Although in some countries improvements have been made, the gains of including more private
IJSSP providers are mostly not recognizable. Some countries report that public providers
22 5/g perform slightly better (France) in reintegration into the labour market, while others
' (eg. Germany, Sweden) cannot assess a difference between public and private providers.
There may be differences between groups and types of content of services: in Germany ARGE is better in labour market integration, while municipal providers are better in employability, while private providers were not proven to be performing better than 360 public providers. In some cases (The Netherlands, the UK) there is a decrease in claimants
- for benefits (unemployment or social assistance), but it is not clear that this is a consequence
of more (private) activation programs or of stricter conditionality of the benefits. The most common feature is that efforts are aimed at short term placements, without much concern for sustainability or quality of the jobs. This may have negative effects for the most vulnerable groups, who find themselves forced to accept jobs without much prospects, and who have to return to social and activation services. This is explicitly assessed for the UK, Germany, Sweden and Finland, where studies find that activation in combination with more conditionality is not producing more employment but is contributing to a kind of dualisation in the workforce. In Sweden municipal programs for social assistance recipients did not bring much positive effects (Carling and Larsson, 2005). The probability of employment during 120 days after intervention slightly increased but disappeared during time. This indicates that these programs work rather as a threat than support. Similarly in Finland the results of the reform which implemented the LAFOS network aiming at diminishing the structural unemployment are rather disappointing in terms of labour market entry: in the long-term only about 10-11 percent of the participants of activation entered the labour market and 20-21 percent subsidized employment (Ministry of Employment and the Economy, 2008, p. 2). In the UK between 1998 and 2007,1.8 million people entered employment from a New Deal program (NAO, 2007, p. 7). The independent effects of programs for disadvantaged groups are difficult to establish, since at the same time a thriving economy offered job opportunities, which paid better because of minimum wages and in-work tax credits and were made more possible through help with the costs of childcare, which increased in availability (Gregg et al, 2006). The results in terms of keeping a job were however more disappointing. Although we must admit that it is impossible to disentangle the effects of new programmes from the effects of governance reforms, marketization was the increasing trend and might influence the outcomes: several longitudinal studies (Griffiths and Durking, 2007) show that sometimes half of the participants left programs without work, or repeated their claims within half a year. In the Czech Republic employment effects of the ESF measures (which mostly contain training programmes) were apparently better than the effects of the national vocational training measures in 2006. Nevertheless, analysis of the implemented measures one year later, in 2007 (Hora etal, 2009), has documented a converging trend in effectiveness due to the increasing scope of the ESF measures implemented in the form of "projects" which has reduced the significance of creaming-off in selecting the most suitable participants.
Conclusion and discussion
The assessment of the impacts of governance changes on the effects of activation is difficult to make. It is not only sometimes hard to distinguish between substantial and procedural reforms, there is also the difference between the official governance reforms and the practice of their implementation that has to be taken into account. Furthermore, the studies on the effects suffer from a lack of pre- and post-reform data: it is thus
impossible to tell what the effects imply about the expected gains of the reforms. Added to this comes the fact that most studies are partial and concentrate only on some aspects of the reforms, and are accumulating data about a succession of reforms rather than about one reform: the reforms are rapidly following each other. Finally business cycles and characteristics of the unemployed persons play also a role in the established effects.
Although there are some main trends in the governance reforms such as a diminishment of the procedural governance regime, and the increase of market, corporate and network governance regimens, each country shows its own particular form of hybrid governance. This makes it hard to present comparable effects between countries. Nevertheless, with all these problems in mind, we can see some patterns in the studied effects.
The outcome effects show in terms of gross job placements some positive results, but this seems to be only a superficial gain, while the net effects appear to be more disappointing, especially in terms of sustainability of jobs and in terms of the proportion of the target groups that succeeds in finding a job. Overall there seems to be a focus on quick reintegration, without delivering much effort in education or other long-term investments in unemployed people. This seems to be connected to the cost containment at the one hand, and the difficulties in professional quality and case loads.
The output effects as regards the variety and quality of the services are in line with the described outcome effects. The numbers of persons reached may have been growing, but the effects of the provided services seem to vary for different groups. Some programs show better results for unemployed persons, other for social assistance recipients, but especially the most vulnerable groups are suffering from the emphasis on quick reintegration. Pre-selection of groups, resulting in creaming processes, seems to be manifest in most countries. Also the quality of the services is not as adapted to the needs of clients as promised, while investments in qualifications and other labour market capacities are lacking. It is difficult to establish the differences between public and market actors; there are mixed results in this respect.
This pattern is translating itself in the process effects: processes of decentralisation and marketisation are aiming at a more tailor made approach of clients and at empowerment in the choice of the measures to be taken. Although some countries have developed a more individualised treatment by vouchers, individual action plans or professional case management, in most countries the governance reforms have also been accompanied by a stricter conditionality of benefits and more duties for clients. The greater attention for clients results in more client satisfaction, but it remains unclear in what ways this is also associated with effective job placements.
Taken together we may conclude that the effects of the governance reforms are not unequivocally in favor of the reforms. This is remarkable since all the countries we studied show comparable and to some extent converging trends in activation reforms. The reasons for this discrepancy between aims and effects are not easily to detect, but implementation difficulties associated with several kinds of market failures like lack of information and competition in price leading to standardization and preference for low cost measures, creaming and pre-selection are one explanation. Problems with adequate financing and staffing may be another explanation. Besides, political convictions (also stimulated by the EU) can have had the upper hand in this governance reform. Anyhow, the developments in some countries counteracting the dominant trends in governance reforms by recentralization, by mitigating marketisation or by allowing experimentation may indicate that a process of learning is underway.
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IJSSP Notes
32 5/6 1- ^e studies have been undertaken within the EU project reconciling work and employment
' (RECWOWE) during 2008-2010.
2. The available information is not enough to assess the effects for job retention and quality. For similar reasons we also omit cost effectiveness.
362
3. For example, due to merging unemployment benefits and social assistance administration and activation of the recipients.
4. This was rather an effect of expanding the New Deal programmes to these groups than effect of governance. Nevertheless, strong trend to marketization accompanied this expansion and might influence the outputs (scope and profile of activation policies).
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About the authors
Willibrord de Graaf is Associate Professor at Utrecht University, Department of Interdisciplinary Social Science. His research is in welfare state developments, especially labour market and activation; also, the theme of multicultural society, and especially the transition of school to work of young migrants interests him. He is also occupying himself with homelessness.
Tomas Sirovatka is Professor of Social Policy at the Faculty of Social Studies, Masaryk University in Brno, closely cooperating with the Research Institute of Labour and Social Affairs. He has carried a number of national as well as international research projects on social policy and employment policy. He publishes regularly in international journals such as fournal of Comparative Policy Analysis, European fournal of'Social Security', International Review of'Sociology\ International fournal of Sociology and Social Policy, Social Policy and Administration, fournal of Marriage and the Family, Czech Sociological Review, Prague Economic Papers and Central European fournal of Public Policy. He also contributed to several comparative books on employment and social policies, more recently he co-edited a book, The Governance of Active Welfare States in Europe, published by Palgrave/Macmillan in 2011 and he has published several monographs in Czech. Tomas Sirovatka is the corresponding author and can be contacted at: sirovatk@fss.muni.cz
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