How do major reforms occur in notoriously resilient welfare states? This book argues that ‘ideational leaders’ have had an important impact on structural social policy reforms in Germany. The argument is based on in-depth case studies of individual reforms in health care, pensions and unemployment insurance since the early 1990s. Moreover, the book offers a long-term perspective on policy change in these elds and in another area which has recently seen considerable reforms, family policy. The study concludes that this traditionally Bismarckian welfare state has embarked on a path of ‘hybridization’ that confronts German politics with growing societal divisions. Ideational Leadership in German Welfare State Reform provides new insights into how policy ideas and leadership have shaped social policy trajectories and the state of the German Sozialstaat. Sabina Stiller is assistant professor in Comparative Politics at the Department of Political Science of Radboud University Nijmegen in the Netherlands. “This is a first-rate book that lends great insights into the transformation of social policy in Germany. It uses an innovative theoretical approach that highlights the role of ‘ideational leadership’ in explaining institutional change, an important new concept in the literature.” Vivien A. Schmidt, Jean Monnet Professor of European Integration, Boston University .. A U P Sabina Stiller Ideational Leadership in German Welfare State Reform Ideational Leadership in German Welfare State Reform Sabina Stiller H P P I T R I A U P omslag sabina stiller_156x234mm.indd 1 19-11-09 09:29 CHANGING WELFARE STATES Advanced welfare states seem remarkably stable at fi rst glance. Although most member states of the European Union (EU) have undertaken compre- hensive welfare reform, especially since the s, much comparative wel- fare state analysis portrays a ‘frozen welfare landscape’. Social spending is stable. However, if we interpret the welfare state as more than aggregate so- cial spending and look at long-term trends, we can see profound transfor- mations across several policy areas, ranging from labour market policy and regulation, industrial relations, social protection, social services like child care and education, pensions, and long-term care. is series is about tra- jectories of change. Have there been path-breaking welfare innovations or simply attempts at political reconsolidation? What new policies have been added, and with what consequences for competitiveness, employment, in- come equality and poverty, gender relations, human capital formation, and fi scal sustainability? What is the role of the European Union in shaping na- tional welfare state reform? Are advanced welfare states moving in a similar or even convergent direction, or are they embarking on ever more divergent trajectories of change? ese issues raise fundamental questions about the politics of reform. If policy-makers do engage in major reforms (despite the numerous institutional, political and policy obstacles), what factors enable them to do so? While the overriding objective of the series is to trace tra- jectories of contemporary welfare state reform, the editors also invite the submission of manuscripts which focus on theorizing institutional change in the social policy arena. Gøsta Esping-Andersen, University of Pompeu Fabra, Barcelona, Spain Anton Hemerijck, the Netherlands Scientific Council for Government Policy (Wetenschappelijke Raad voor het Regeringsbeleid − ) Kees van Kersbergen, Free University Amsterdam, the Netherlands Kimberly Morgan, George Washington University, Washington, USA Romke van der Veen, Erasmus University, Rotterdam, the Netherlands Jelle Visser, University of Amsterdam, the Netherlands Ideational Leadership in German Welfare State Reform How Politicians and Policy Ideas Transform Resilient Institutions Sabina Stiller Cover illustration: J.M.W. Turner, War. e Exile and the Rock Limpet, ex- hibited , oil on canvas, , x , cm, Tate Britain, London Cover design: Jaak Crasborn , Valkenburg a/d Geul Layout: V-Services, Baarn e- / © Sabina Stiller / Amsterdam University Press, Amsterdam, All rights reserved. Without limiting the rights under copyright reserved above, no part of this book may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (elec- tronic, mechanical, photocopying, recording or otherwise) without the written permission of both the copyright owner and the author of the book. Table of Contents Acknowledgements Introduction . Sources of Welfare State Persistence . Major Welfare State Reforms Do Occur . Ideational Leadership and Structural Reforms . Structure of the Book Ideational Leadership: Key to Overcoming Welfare State Resistance to Change . Situating IL Among Reform Explanations . Contributions from the Leadership Literature . Contributions from the Ideational Literature . IL as a Joint Concept . Aspects, Mechanisms and Effects of IL . IL and Theorizing on Gradual Institutional Change . Conclusion A Bird’s-Eye View of the German Welfare State . Germany as Prototype of the Bismarckian Welfare State . Sources of Resilience: Political Institutions and Policy Legacies . How Have German Governments Responded to Pressures? . General Patterns of Change in Major Programmes . Conclusion Transformation of Health Care Policy? The Legacy of Minister Seehofer . A Sketch of Statutory Health Insurance in the Early s . The Structural Health Care Reform Act . Seehofer’s Role: A Minister ‘Taking on the Sharks’ . The Health Care Reorganization Acts . The Role of Minister Seehofer: Fighting Against the Tide . Conclusion Transforming Public Pensions: the Riester Pension Reform . The Reform Process: Chronology, Actors and Policy Positions . Tracing Ideational Leadership . Assessing the Role of Ideational Leadership . Conclusion Transforming Unemployment Policy: The Hartz IV Reform . The Reform Process: Chronology, Actors and Policy Positions . Tracing Ideational Leadership . Assessing the Role of IL . Conclusion Conclusion . Family Policy: From Familialism Towards Reconciliating Work and Family Life . Transforming Bismarckian Principles . Towards a New Hybrid Welfare State Edifice List of Abbreviations List of Interviewees Notes Bibliography Index TABLE OF CONTENTS Acknowledgements This book started out as a (much lengthier) doctoral thesis at the Depart- ment of Political Science of Radboud University Nijmegen. In its present form, it is a shorter yet extended story of how ideational leaders have managed to transform the German welfare state. This conversion pro- cess was not simple at times, but as one of my thesis supervisors, Kees van Kersbergen, told me some time ago, ‘schrijven is schrappen’: writing means cutting down on words. The result is an account of reform pro- cesses that reflects much more on the contemporary shape of the German Sozialstaat than I could do in my thesis, and which also sheds light on recent developments in family policy. It is impossible to acknowledge everyone who has been of help in the process of preparing a book, but I will give it a try. I am particularly grate- ful to Jelle Visser and Anton Hemerijck for encouraging me to rewrite my thesis for the ‘Changing Welfare State’ series published by Amsterdam University Press. Anton, I am indebted to you for your insightful com- ments on how to turn my thesis into more of a ‘story’. And I appreciate your patience during the whole process, which took place during a rather unpredictable time period: before, during and after my maternity leave for my son Simon. When working on a book, you surely benefi t from a supportive working environment and I could consider myself fortunate in this respect, both with my former colleagues at the Centrum voor Duitsland-Studies, and my current colleagues at the Department of Political Science and Administra- tive Science at Radboud University Nijmegen. Let me thank you for your collegiality at all times, intellectual stimulation, and helpful comments and suggestions all along. My thanks also goes to my thesis supervisors, Michiel de Vries, Kees van Kersbergen, and Bob Lieshout for their support, encour- agement, and constructive comments on the main arguments of my thesis, which still form the core of the present book. Moreover, I am grateful to Monique Leyenaar, Karen Anderson, Vivien Schmidt, Herbert Obinger and others for their comments and constructive criticism of my thesis. ACKNOWLEDGEMENTS As it would have been difficult to write about the context of German reforms while being in the Netherlands, I spent a fair amount of time in Germany: mostly for interviews but also as a visiting researcher during a two-month stay at the Zentrum für Sozialpolitik (ZeS) of the University of Bremen. I would like to thank all the people I interviewed for sharing their thoughts and inside knowledge about reform processes in their of- fices in Berlin, Hannover, Bochum, Frankfurt, Düsseldorf, Bonn, Bremen, Leipzig and Nuremberg. At the ZeS, I would like to thank Gisela Hege- mann-Mahltig for enabling my stay, as well as Eric Seils, Herbert Obinger, Petra Buhr and others for making me feel welcome and discussing Ger- man social policy developments and scholarship. I would like to acknowledge a diverse group of people who helped me to do the research underlying this book in one way or another. Amit Das Gupta and Mona and Cesar Pastor for their hospitality during my trips to Berlin, and my friends in Bavaria and elsewhere for their support ‘at a dis- tance’. My Dutch colleagues and friends: Minna van Gerven, for continu- ing to share good and bad times since we have finished our PhDs; Gerry van der Kamp-Alons, Barbara Vis, and Angela Wigger for their ongoing companionship and encouragement; Nishavda Thullner-Klossek, Laura Gerritsen and Annemarie Gerritsen for your unfailing ability to listen; my English friend Simon Shaw for the proof-reading of the earlier version of this book. Finally, I thank my parents for their encouragement and for supporting whatever I chose to do in life, even if this means writing ‘yet another book’. Martin, my loving companion and source of realistic optimism, I dedicate this book to you. Sabina Stiller September 2009 Introduction ‘Partisan confl ict, political stalemate and, more recently, major reform eff orts – for example, on questions of labour markets, economic policy- making and social policy – for the time being leave open the question of whether we are witnessing a recalibration or a dismantling of Ger- many’s semisovereign state.’ (K : ) From today’s perspective, there is at least one conventional wisdom in welfare state studies: mature welfare states have been facing major strains for several decades. During the s, scholars started to investigate the responses of welfare states to those strains. What they found, though, were not fundamental policy shifts but an intriguing contradiction: al- though structural pressures for change could no longer be ignored, welfare state programmes had remained relatively stable. The main approaches that tried to explain such stability despite increasing demands for major change were historical institutionalism (Pierson , ), and welfare regime theory (Esping-Andersen , ). In those perspectives, pow- erful institutional and electoral mechanisms and regime-specific charac- teristics prevented comprehensive reforms of European welfare states. Ever since, these explanations have been increasingly called into question, as numerous substantial reforms have taken place across Europe from the late s onwards. Apparently, welfare state institutions were not those immovable objects – like oversized oil tankers – they were thought to be. Given these developments, an enormous research interest in how and why welfare state reform occurs has ensued. Even in the Federal Republic of Germany, the well-established Sozi- alstaat has undergone significant reform efforts, as the above quote by senior observer Peter Katzenstein underlines. This is remarkable since Germany is certainly not an icon of policy flexibility: on the contrary, it was long considered the example par excellence of institutional and po- [...]... the empirical findings, traces how policy principles have changed in another policy area, family policy, and asks what kind of welfare state Germany has become as of 2009 How have its underlying principles changed and can we still characterize Germany as an exemplary Bismarckian welfare state? What kind of welfare state edifice has emerged following the adoption of several structural reforms with the... evoke these principles when legitimizing and explaining a reform initiative In Chapter 7, we return to the changes in principles at the level of individual reforms and at the level of the welfare state as a whole 1.4 Structure of the Book Chapter 2 introduces the concept of ideational leadership (IL) It explains the rationale behind considering the role of ideas and leadership in combination, and the mechanisms... politics in changing the status quo of welfare state institutions The ensuing literature on welfare state politics has highlighted various factors explaining welfare state reform and restructuring (see for an overview Green-Pedersen and Haverland 2002) They include economic explanations, including studies of macro-economic challenges (Huber and Stephens 2001; Castles 2001), internationalization and globalization... actors explains the adoption of major reforms and define the latter as structural, i.e producing shifts in policy programmes and changing their underlying principles Finally, we preview the structure of the book 1.1 Sources of Welfare State Persistence Esping-Andersen: Focus on Policy Substance In his seminal work The Three Worlds of Welfare Capitalism (1990), Gøsta Esping-Andersen distinguishes three... Distinction between causal mechanisms that link IL and structural reform Ideational mechanisms 1) policy failure or loss of effectiveness brings on the search for alternatives (and new policy principles) 2) creating insights into the logics of appropriateness and necessity behind the innovation helps to lower switching costs and to re-define old policy principles Interest-related mechanisms 3) reform- critical... to transforming its traditional welfare state edifice In 2008, the long-standing Bismarckian principles that underpinned the German Sozialstaat are no longer intact In what follows, we present the puzzle that inspired this book Discussing the work of two prominent welfare state theorists, Gøsta Esping-Andersen and Paul Pierson, we argue that predictions of relative stability do not help us explain why... coherence’ and ‘it entails not just taking others along a path, but doing so in a fashion sufficiently informed to achieve lasting policy redirection’ (Moon 1995: 3) As with policy leadership, this leadership type requires ‘an understanding of cause and effect in the policymaking process which might assist innovation’ While its aspects of commitment and cognitive insight in bringing about innovation... new information, and experience across time and place’ and ‘is about the mobilization of ideas and expertise to identify problems and propose solutions’ (Hemerijck and Schludi 2000: 131) Therefore, for policy learning, human insight into failures is a necessary condition for bringing innovation onto the political agenda Ideas and Social Policy Reform How to conceive the link between ideas and key policy- makers... key policy- makers to transform such resistance into acceptance of a particular reform initiative, but also as a combination of abilities These include a number of aspects: exposing drawbacks of old policy principles and policies built on them; legitimizing new policy principles by using cognitive and normative arguments; framing reform resistance as problematic for societal welfare and stakeholders’ interests;... IDEATIONAL LEADERSHIP AND STRUCTURAL REFORMS the IL argument – we also define major reforms in qualitative terms, as ‘structural reform Our definition draws on two existing concepts in the welfare state literature First, welfare state institutions or ‘structures’ can be divided into financing, benefit (provision and eligibility rules), and management or regulatory structures (Bonoli and Palier 2000; . confronts German politics with growing societal divisions. Ideational Leadership in German Welfare State Reform provides new insights into how policy ideas and. Sabina Stiller Ideational Leadership in German Welfare State Reform Ideational Leadership in German Welfare State Reform Sabina