The responsiveness of social policies. Explaining institutional change in three policy domains

Abstract

This article analyses and explains the responsiveness of social policies by comparing the impact of institutional logics, public preferences and external conditions on the evolution of three social policy domains in the Netherlands. It focuses on the institutional development of the policy domains of social assistance, labour market regulation and sheltered work over the last 15 years. The article integrates exogenous and endogenous explanations for institutional change. It shows that the analysis and explanation of processes of institutional evolution require in-depth analysis of the interaction between public preferences, the institutional logic and external conditions of the policy domains.

Points for practitioners

Many countries in the world are currently reforming their welfare states. Often these reform processes are designed according to institutional logic: the ideas and opinions of important internal stakeholders. Moreover, the decision to start a reform is also taken from the internal institutional perspective. This article highlights the importance of taking external conditions into account in processes of institutional reform. It shows how three different logics can and should be combined in designing and implementing reform processes and illustrates this by comparing three cases of institutional reform in the Dutch welfare state.

Keywords

institutional change labour migration responsiveness sheltered work social assistance social policies

Introduction

An emerging stream of literature that analyses processes of incremental institutional change has recently supplemented the existing literature that accentuates the stability and continuity in highly institutionalized policy systems (cf. Mahoney and Thelen, 2010; Streeck, 2009; Streeck and Thelen, 2005; Widner, 2010). However, several authors claim that more insight is needed into the forces that drive institutional change (see Béland, 2007: 20; Pfau-Effinger, 2005). Linking exogenous and endogenous institutional change is regarded by several authors as the next challenge for institutional theory (see for instance Campbell (2004), Crouch and Farrell (2004), Olsen (2009) and Sarigil (2009)). This article tries to respond to this challenge by focusing on the responsiveness of social policies. The purpose of this article is to analyse and explain the responsiveness of social policies by comparing the impact of institutional logics, public preferences and external events on the evolution of three social policy domains in the Netherlands.

This article analyses and explains the institutional development of the policy domains of social assistance, labour migration policies and sheltered work over the last 15 years. These domains have been selected to maximize the explanatory value of this analysis, as they represent three different processes of institutional development in the Dutch welfare state. The domain of social assistance is characterized by intensive formal reforms, whereas the institutional design of sheltered work has remained remarkably stable over time. Labour migration policy has been confronted with significant external developments, most importantly the free traffic of workers from Central and Eastern Europe. It has, however, remained rather stable in its formal design. In this article we choose to follow authors like Baldock et al. (2007) who develop a broad perspective on social policies, including labour market regulation. Labour migration policies in the Netherlands are used as an important tool to combat unemployment and regulate competition on the labour market, thus directly affecting the policy domains of social assistance and sheltered work, as we will also discuss below.

The article is structured as follows. The next section reviews the available knowledge about institutional responsiveness and formulates theoretical assumptions. Then, we describe the institutional development of three social policy domains in the Netherlands. After that, we analyse these cases from a comparative perspective and reflect on the theoretical and empirical implications of our findings.

Institutional responsiveness: forces and challenges

Historical institutionalism focuses on the impact of long-term institutional legacies on policy processes. It starts from ‘the assumption that a historically constructed set of institutional constraints and opportunities affects the behaviour of political actors and interest groups in the policy process' (Béland, 2007: 21). But many authors have acknowledged the possibility of path-deviant institutional change. This has resulted in several attempts to integrate change in the institutional framework. We can distinguish two important streams in this (see also Pierson (2004: 132–166) for a more elaborate discussion). The first stream focuses on exogenous explanations of institutional change, whereas the second explains change from endogenous developments.

Exogenous explanations of institutional change usually consider change as a ‘sudden collapse of institutional equilibriums, stability or patterns, usually caused by externally driven dramatic events such as wars, economic crises, dramatic technological developments, epidemics or natural disasters' (Sarigil, 2009: 123; see also Crouch and Farrell, 2004). However, not all changes in institutions' external environments need to be of the dramatic nature that the critical juncture theorists seem to presuppose.

Recently, an international community of scholars has developed theoretical and conceptual accounts of endogenous institutional change over time (see Mahoney and Thelen, 2010; Streeck, 2009; Streeck and Thelen, 2005; Thelen, 2004). Endogenous processes of gradual change alter institutions in subtle but significant ways, through self-reflexive actors that ‘gradually adjust their institutions in ways that are constrained by already-given institutional practices, rules, routines, and cognitive schema’ (Campbell, 2004: 34). According to Streeck and Thelen (2005), five types of gradual institutional change might be identified: displacement, layering, drift, conversion and exhaustion. Displacement occurs when existing rules are replaced by new ones. Layering is a form of institutional change in which new rules are attached to existing ones, thereby altering the ways in which the original institutional rules structure behaviour. Layering, therefore, involves amendments, revisions or additions to existing rules. Drift refers to situations in which rules remain formally the same but their impact changes as a result of shifts in external conditions. Conversion occurs when rules remain formally the same but are applied in new ways. Exhaustion concerns the gradual breakdown or withering away of institutions over time (see Mahoney and Thelen (2010) for an elaborate discussion of each of these strategies).

According to Mahoney and Thelen (2010) the type of institutional change that occurs is related to the administrative and political characteristics of a country. They offer a series of hypotheses on the relationship between the characteristics of the political context, the institutions that are subject to change, the change agents and the modes of institutional change. They state that there are two broad questions that might characterize the political context in which institutional change takes place. The first question deals with the extent to which the political context affords defenders of the status quo strong or weak veto possibilities. In the case of the Netherlands, this includes not only formal veto points in the legislative power, but also informal veto points that are created by the tripartite consultations between the government, trade unions and business associations. The second question is concerned with the degree to which the targeted institution affords actors opportunities for exercising discretion in interpretation or enforcement (Mahoney and Thelen, 2010: 18, 20–21). These two dimensions are closely related to Knill's (1998) concept of administrative culture, which may be characterized by the regulatory style and the regulatory structures. The regulatory style refers to the mode of state intervention and the patterns of interaction between administrative and societal actors. The regulatory style affects the strength of veto points. The regulatory structures relate to the vertical and horizontal distribution of administrative competencies. This has an impact on the level of policy discretion, as we will show in our case studies. Table 1 summarizes the assumptions.

Table 1.

Four forms of gradual institutional change

	Level of discretion in interpretation/enforcement
Strength of veto points	High	Low
High	Conversion	Drift
Low	Displacement	Layering

Source: Mahoney and Thelen (2010: 18).

Mahoney and Thelen's approach forms an important contribution to institutional theory as it enables the explanation of gradual processes of institutional change and complements the theory of exogenous critical junctures. In the next section we will try to integrate the forces of exogenous change with Mahoney and Thelen's approach.

The dynamic environment of institutional change

The basic idea for conceptualizing the forces that trigger institutional change starts from the idea that there needs to be a ‘fit’ between an institution and its environment, or that institutional arrangements should match ‘the defining features of the problems they address’ (Young, 2010: 20). Several authors have attempted to conceptualize the idea of institutional fit, although these conceptualizations usually lack specificity (see Cox, 2012). Campbell (2009) introduces the concept of institutional interconnectedness, showing that the stock of external conditions in which the institution is supposed to fit is seemingly endless. Therefore, our analysis is aimed at determining more precisely which parts of the seemingly endless stock of external conditions determine institutional evolution and how actors deal with the often ambiguous and divergent character of external conditions. Partially based on Oliver (1992) we have identified the following three logics that might affect the development of highly institutionalized policy domains (see also Dacin et al., 2002; Howlett, 2009; Scott, 2001).

The logic of the socio-economic and societal environment. Changes in socio-economic and societal-cultural conditions create pressures on policy domains to adjust policies to the new conditions. Although processes of social construction affect the way these conditions are translated by policy makers and politicians, we assume that there is a set of more or less objective conditions that might trigger institutional change.

The logic of public preferences. Some authors limit the concept of responsiveness to this logic (see for instance Brooks and Manza (2006); Hobolt and Klemmensen (2005)). More specifically, the concept of responsiveness refers to the extent to which policy decision follow public preferences (see Soroka and Wlezien, 2005).

The internal institutional logic of the policy domain. In this logic, the policy domains' internal paradigms, characteristics and administrative procedures guide institutional evolution. Some of these will be specific for a certain domain, whereas other refer to more general administrative cultures and traditions. The logic of the policy system consists of the attempts of politicians and policy makers from within the system to optimize the results of the policy within the context of the current policy domain. This logic also refers to policy makers' and politicians' importation of new policy ideas from other domains or countries.

The logic of public preferences, the logic of the policy environment and the institutional logic might be regarded as forces that attempt to push or pull social policy programs in a specific direction. To understand the backgrounds of institutional change in social policy domains it is, therefore, necessary to analyse these three logics in detail and reflect on their ambiguous nature and their complex interactions. Figure 1 depicts these three logics and their relations.

Figure 1.

Three logics and their relations

Synthesizing institutional change and institutional responsiveness

Building upon the notion of an ‘institutional fit’ we can distinguish three different situations with regard to institutional responsiveness. The first situation occurs when the developments in the institutional logic, the logic of the public preferences and the logic of the external conditions are convergent and supportive of the status quo. In this case, there is no reason for institutional change. There is a fit between the institution and its environment.

The second situation may be observed when the institutional logic, the logic of the public preferences and the logic of the external conditions are convergent but disruptive of the status quo. Following the propositions that an institution needs to fit within its environment, a process of institutional responsiveness will restore this fit. We assume that the institutional development will be characterized by radical displacement. The institutional logic, socio-economic conditions and public preferences may either gradually evolve or change suddenly, as in the instance of an economic crisis or other external events.

For the third situation, in which the logics of the institutional environments diverge, theoretical assumptions are less clear. First, following from the proposition of a fit, it is clear that if the logics of the institutional environment diverge, the institution is unstable. In the long run, this situation is not sustainable. However, in the case of diverging logics, this situation might be very persistent and might require a decade or more to be resolved. In the meanwhile, processes of gradual institutional evolution will probably occur to restore the fit between the institution and its environment. The processes of gradual institutional change as identified by Thelen and her colleagues – drift, layering, displacement, conversion or exhaustion – will occur. Which form occurs depends on the specific line-up of institutional logics, veto points and policy discretion, following the hypotheses from Table 1.

Table 2 briefly summarizes our theoretical framework. It defines the key elements in our empirical analysis and shows how the data for each of these elements have been gathered. In the remainder of this article, we will apply these theoretical expectations to three social policy domains: social assistance, sheltered work and the regulation of labour migration.

Table 2.

Analytical framework

	Sort description	Method of analysis
Institutional logic	The evolution of policy approaches, paradigms and ideas that are internal to the policy domain	Description of policy reforms Description of policy debate Expert interviews
Logic of public preferences: media discourse	Evolving trends in media discourse in the policy domain	Content analysis of daily newspapers
Logic of public preferences: public opinion	Evolving trends in citizens' opinions in the policy domains	Secondary analysis of public opinion data
Logic of socio-economic and societal conditions	Trends in the external environment in the policy domain	Expert interviews Document analysis
Level of convergence	The extent to which the developments in the three logics converge or diverge	Analysis by the authors based on the previous logics
Strength of veto points	The extent to which the political context affords defenders of the status quo strong or weak veto possibilities	Analysis by the authors based on descriptions from the cases
Level of discretion	The extent to which stakeholders have opportunities for exercising discretion in interpretation or enforcement in the implementation stage	Analysis by the authors based on descriptions from the cases
Process of institutional change	The mode of institutional change that can be observed in the policy domain	Analysis by the authors based on descriptions from the cases

Institutional responsiveness in three social policy domains

This section provides an overview of the institutional developments in the policy domains of social assistance, labour market regulation and sheltered work. We present detailed analyses of the developments of the three ‘logics’ in each of these cases, analyse the level of convergence between these logics and reflect on the implications for institutional development. To explore the relations between the logics of the institutional environment, the political structure and the implementation regime, we present the results of a comparative analysis of three social policy domains in this article. The case studies are based on secondary analyses of national and international survey data and content analyses of articles in daily newspapers, expert interviews, policy documents, parliamentary debates and interviews with policy officials. We have identified all formal policy changes since 1995 and have classified these as minor revisions, institutional adaptations and institutional innovations. Minor revisions are aimed at the fine-tuning of policy tools, institutional adaptations involve the introduction of new policy tools or organizations and institutional innovations involve adapting the goals of the policy or the introduction of new goals (cf. Pollitt and Bouckaert, 2009).

Institutional responsiveness in social assistance policies

Social assistance policies are aimed at providing income to people who do not have other means of income. They are considered to be the final resort of the Dutch welfare state. In this section we describe the institutional evolution of this policy field in the Netherlands.

The institutional logic of the Social Assistance Act

The starting point for analysing the institutional logic in each of the three cases is tracing continuities or discontinuities in the formal law. A detailed analysis revealed that the formal law has been revised 130 times since 1995 (Table 3). The majority of these revisions were minor revisions, aimed at changes in the level of benefits or made necessary because of changes in other laws.

Table 3.

Changes in social assistance policy 1995 to 2010

	Minor revisions
	Changes in height and conditions of benefits	Adaptations because of changes in other policy domains	Changes in the content of policy instruments	Adaptations of implementation structure	Total minor revisions	Institutional adaptations	Institutional innovations
1995 to 2010	33	55	15	7	110	17	3

Since 1995, three institutional innovations can be identified: the introduction of the New Social Assistance Act in 1995, the replacement of the New Social Assistance Act with the Work and Assistance Act 2003 and the introduction of the Invest in Youth Act. The New Social Assistance Act focused on improving the quality of the implementation process. The Work and Assistance Act 2003 increased financial incentives for municipalities to reduce the number of people receiving social assistance and increased the possibilities for activating those on social assistance. The Invest in Youth Act excluded young people under the age of 27 from social assistance and introduced the obligation for this group to either follow education or have a job. According to the different stakeholders whom we have interviewed, these formal changes reflect the European or even worldwide shift towards activating welfare states.

The logic of public preferences and social assistance policies

To identify the media discourse, a content analysis has been performed on 700 articles in daily newspapers for the period 1995 to 2009. The following three important lessons can be drawn from this analysis:

There is an ongoing debate concerning the eligibility of specific target groups. Former prisoners who have been released or former illegal foreigners who were covered by general amnesty and received a permit to stay legally all triggered debates on their eligibility. The steady stream of articles on this subject reflects a continuous worry on whether social assistance is received by ‘deserving’ beneficiaries.

After the introduction of the Work and Welfare Act, the number of articles on activation policies significantly increased. Out of the 78 articles that dealt with activation, 33 were neutral and described new policy measures aimed at activation, 25 were negative, accentuating the limited success of activation policies, and 18 were positive, accentuating the successes of activation policies.

There is continuous attention paid to the issue of poverty while living on social assistance. Although benefits are rather generous in comparison with other countries, media discourse reflects worries whether the benefits are generous enough to ensure a life with dignity.

The second source to identify public preferences is the representative survey ‘Cultural Changes' performed by the Dutch Social and Cultural Planning Office (Sociaal en Cultureel Planbureau [SCP], 2010). This survey is held bi-annually among a representative random selection of approximately 5000 citizens. In it, there are three items that are related to social assistance. The answers clearly point in the same direction: continuity in support for social assistance. From this, we might conclude that public opinion on social assistance policy is rather clear: there is support in written media and from citizens for the importance of social assistance as a safety net but public opinion seems to express its concern about easy access to benefits. This logic of public opinion dominates the period 1995 to 2010.

The logic of external developments and social assistance policy

There are many external trends that affect social assistance policies. However, from a careful reading of the literature and interviews with experts, two distinctive trends on the macro level can be identified that have been crucial for the institutional development of social assistance policies. The first trend is related to the ageing of the population and the expected scarcity of workforce as a consequence. Both developments create an urgency to increase the participation rate. The expected scarcity of workforce both accentuates the urgency to increase the outflow of social assistance recipients to the labour market and improves the accessibility of regular labour for those living on social assistance.

The second trend partially contradicts the first: there are developments that limit the possibilities for social assistance recipients to find regular jobs. Three developments are specifically responsible for this. First, people who currently receive a social assistance benefit have characteristics that significantly limit their qualifications for the labour market, such as a lack of education, a history of drug abuse or problematic debts. Second, the trend towards ‘upskilling’ of employment even further limits the activation capacities of social assistance beneficiaries. Finally, the EU's enlargement has increased competition for the remaining low-skilled or unskilled work. Therefore, the logic of the external environment might be summarized as a dual trend: on the one hand, stressing the necessity to integrate social assistance recipients into the labour market but, on the other hand, limiting the labour market possibilities of this group.

Political context

In the field of social assistance veto possibilities are rather weak. In the first place, this is due to the absence of a strong, well-coordinated coalition that has an interest in the status quo. Welfare recipients are weakly organized, and there are no organizations that clearly represent their interests. Trade unions in the Netherlands have for long been accused of serving the vested interests of employees rather than the interests of the unemployed (cf. Van der Meer et al., 2009). Secondly, local municipalities implement the social assistance policies, among many other tasks. It is almost impossible to create a consensus between the 430 municipalities. This lack of consensus limits their veto possibilities.

The level of discretion in this case might be assessed as moderate. On the one hand, the rules of social assistance benefits offer a variety of rather arbitrary and ambiguous conditions and criteria that might be taken into account when assessing a client's eligibility. At first sight, this leaves space for extensive discretion in the interpretation and enforcement of institutional rules. However, since the introduction of the New Social Assistance Act, efforts have also been invested in limiting differences in interpretation and enforcement between autonomous municipalities. Even the budgetary discretion of municipalities that came with the introduction of the Work and Assistance Act 2004 did not open up new possibilities for discretion in rule interpretation.

Explaining institutional responsiveness in social assistance policy

Although there are subtle differences between the institutional logic, the logic of public preferences and the logic of the institutional environment, we might conclude that they converge towards one opinion: tightening eligibility and increasing the activation of people on social assistance to work. This convergent logic might be considered as disruptive for the institutional status quo. Therefore, we have a situation that we have labelled under our second expectation: with convergent but disruptive logics, Mahoney and Thelen's hypotheses on institutional development apply.

Concerning the weak veto points and moderate policy discretion, we would expect displacement to be the dominant strategy of institutional evolution. Indeed, the development of social assistance policies in the Netherlands makes an almost ideal case for confirming Mahoney and Thelen's hypothesis. There have been clear elements of institutional displacement, both in the form of disruptive change that follows the idea of ‘critical junctures’ and, in the form of minor revisions, gradual changes and innovations that all follow the same direction: tighter eligibility for fewer people.

Institutional responsiveness in labour migration policies

Since 1995, the influx of foreign employees on the Dutch labour market has been regulated by the Act on the Employment of Aliens (AEA). The AEA has a dual goal: it limits the entry of ‘unwanted’ foreigners on the labour market, while it also attempts to attract highly skilled foreign workers to the Dutch labour market. In this section, we first describe the developments in the AEA, according to the three logics that we have defined in the earlier sections of this article. Next, we discuss the political context of the AEA. Finally, we reflect on the processes of institutional change that have taken place in the AEA.

The institutional logic of the AEA

Table 4 shows the changes in the AEA from 1995 to 2010. The AEA has mostly been adapted through minor revisions. Such interventions were necessary to keep the AEA aligned with changes in other important policies, but did not have substantive consequences for the AEA policy itself. Most of the substantive changes in the AEA were revisions in the area of implementation structures and procedures.

Table 4.

Formal changes in the AEA 1995 to 2010

	Minor revisions					Institutional adaptations	Institutional innovations
	Changes in height and conditions of benefits	Adaptations because of changes in other policy domains	Changes in the contents of policy instruments	Adaptations of implementation structure	Total minor revisions
1995 to 2010	0	26	0	17	43	2	1

With regard to the first goal of restricting ‘unwanted’ foreign workers, the institutional logic has been that of enforcing compliance. Here, the AEA has been a dynamic policy domain. Ever since its introduction in 1995 it has been subject to various minor changes, mostly in the many exceptional dispositions that are included in the AEA. At the level of institutional adaptations only two changes have taken place. First, the introduction of the so-called principle of chain liability, which automatically assigns the responsibility for acquiring work permits for all labourers at a specific site (including labourers who were hired by subcontractors) to the main contractor. Second, the introduction of administrative fines, which makes it easier for the enforcement agency of the AEA, the Labor Inspection Authority (LIA), to impose considerable fines on non-compliant employers.

Over the years, the enforcement regime has changed radically, with important consequences for the AEA as a policy. Choices in the allocation of enforcement capacity by the LIA have changed the aims and scope of the AEA. Every year since 2005, the LIA has allocated more inspectors to the AEA. Interviewees claim that the introduction of administrative fines and the strict enforcement by the LIA has restored the strength of the AEA: non-complying employers are hit hard by the fines and are more serious than ever in complying.

The logic of public preferences and the AEA

For the media discourse analysis, all articles on issues regarding work by foreigners in the five leading daily journals have been identified and analysed. In total, 900 articles have thus been analysed. First of all, the analysis of the media discourse shows that few news items deal with the AEA or labour immigration as such. Most of the news items about the AEA involve critical incidents that concern the details of the Act. Moreover, the analysis reveals that many issues discussed as AEA issues are hardly related to it at all. In the media discourse, the AEA is sucked into broader debates about immigration, ‘failed multiculturalism’ and negative experiences with the influx of non-AEA foreigners in older city neighbourhoods. That debate is interesting because the AEA has no authority over the workers it concerns, most of whom come from Poland or other Eastern European countries. All in all, from this media analysis we may conclude that public opinion about the AEA is generally supportive of it. ‘Unwanted’ foreigners are indeed referred to as such, just as news items generally support the welcoming approach to highly skilled ‘wanted’ labourers.

The logic of external conditions and the AEA

According to the experts, the dominant logic of the external conditions in the area of labour migration is that of internationalization. The economy and the labour market have internationalized and so has the planning of labour market regulation within the EU. Labour migration is formalized in new EU laws for immigration that regulate ‘free traffic of labour for all EU member states’. As a consequence, the scope of the AEA has been greatly diminished: labourers from qualifying member-states are allowed to work in the Netherlands without a work permit. The AEA itself has been sharpened and strengthened, but it comprises a diminishing part of the total labour market and smaller streams of foreign labour. Because of this, the AEA has lost its capacity to act as a valve for the labour market. EU regulation is not disruptive or supportive of national policy: for internal EU labour traffic it bypasses and overrules the AEA.

Political context

According to the interviews with stakeholders from the Ministry of Social Affairs and the largest trade unions of the Netherlands, the political context of the AEA is characterized by a rather limited number of veto points. There are relatively few vested interest groups active in this domain. Employers and unions have an interest, but for them labour immigration is merely a secondary issue. Furthermore, an important group – the unwanted foreign workers – does not have a strong voice in the system. Since they are not in the country they are not able to initiate a debate about the system, and remain outsiders.

Moreover, discretionary authority seems to be rather high. As has been stated earlier, the LIA is responsible for the enforcement of the AEA. This agency has a large amount of discretionary power in the tools it uses to enforce the law, the way it sets priorities and the way that it sanctions obstructers of the law. In addition, the public employment agency is responsible for granting work permits based on the AEA. Again, this agency has large discretionary powers, as has also been observed in an evaluation of the AEA (Siesling and Pranger). The public employment agency appeared to be in close contact with the employers who asked for permits, and responded to pressure from these employers.

Explaining institutional responsiveness in labour migration policies

The AEA is a clear example of external conditions that strongly affect the development of institutions. European treaties clear foreign workers from EU member-states of the obligation of a work permit under the AEA. Therefore, large groups of employees can now enter the Dutch labour market without the control of the AEA. The institutional system never really responded to this development other than merely accepting and enabling the shrunken domain. In a sense, this is an example of exhaustion. However, for the remaining labour market domain – that of labour migration from outside the EU – it remains ever more intact. Exhaustion is partial and does not affect the AEA for non-EU members.

The dynamics in the remaining policy system of the AEA to some extent resemble what the literature on institutional reform calls layering. That is, the policy adopted many small changes that were not explicitly connected with the fundamentals of the Act. The dynamics of exceptional dispositions is an example of that process. Over the years, the AEA has effectively been ‘created’ in such exemptions. The accumulated changes of these small layered steps are fundamental, but none of the individual steps are.

This case to some extent confirms the theoretical expectations, but also diverges from our expectations. To a great extent this is caused by the external conditions that ‘hollow out’ the AEA. This case, therefore, illustrates the importance of taking into account external conditions when analysing institutional change and institutional responsiveness.

Institutional responsiveness in sheltered work policies

Our third case considers sheltered work in the Netherlands. The Dutch Sheltered Work Act (SWA) is a voluntary facility introduced in 1969 aimed at providing jobs for people with physical, mental and/or intellectual disabilities. The goal of this act is to develop or maintain the labour skills of disabled people. In this section we start with a discussion of the developments in the three logics in the SWA. Next, we discuss the characteristics of the political context. Finally, we reflect on the institutional responsiveness in this case.

The institutional logic of sheltered work policies

The SWA has been a policy domain that could be positioned in the periphery of public and political attention since its introduction in 1969. After 1995 this policy domain seemed to gain somewhat more political attention, although the SWA still remains the case in which relatively small formal changes have taken place when compared with the other two cases in this article. Table 5 provides an overview of the formal revisions to the SWA between 1995 and 2009.

Table 5.

Changes in SWA 1995 to 2009

	Minor revisions					Institutional adaptations	Institutional innovations
	Adaptations because of changes in other policy domains	Adaptations of implementation structure	Improvement of legislation	Adaptations due to changes in tax laws	Total minor revisions
1995 to 2009	8	2	4	4	18	3	0

From Table 5 it can be seen that the number of minor revisions was limited and institutional innovations (or paradigm shifts) were absent. Formally, the SWA provides sheltered work opportunities to develop or maintain the labour skills of disabled people, and continues to do so. Informally, however, the focus of the SWA has increasingly evolved into offering regular jobs to disabled people instead of offering sheltered work at a sheltered work company (sw-company). Various second-order changes contributed to this, like the introduction of the policy instrument ‘supported work’ and the introduction of wage subsidies.

According to the experts, these policy changes were responses by policy makers to perceived flaws in the performance of the SWA. Because of the attractiveness of sheltered work, and especially because of its relatively high wage, waiting lists formed. Moreover, people in sheltered work positions hardly ever managed to find jobs with regular employers. Therefore, the institutional logic on the consecutive changes might be summarized as follows: sheltered workplaces are becoming too expensive and make disabled people too dependent on the state.

The logic of public preferences and sheltered work

To analyse the public preferences on sheltered work we used three sources. First, we conducted a content analysis of all articles concerning sheltered work in five national daily newspapers. A total of 317 articles were analysed for the period 1995 to 2009. Moreover, we used insights from various studies concerning attitudes towards disabled people. Finally, we generated insights from the various interviews with professionals in the field of sheltered work. The findings may be summarized as follows.

Firstly, the content analysis of the newspaper articles showed that sheltered work gets relatively little attention in the newspapers. The lack of political and public attention upon sheltered work was also mentioned by the interviewees. Secondly, from the interviews and the content analysis we can observe a gradual increase of critical opinions about the SWA by politicians and professionals in the field since 2002. Pleas for major reforms of the SWA can be heard from then. A third conclusion is that disabled people are viewed as a group that, in public opinion, needs to be supported. Disabled people have a high ‘deservingness’ with regard to government support in the opinion of the citizens (Achterberg et al., 2010). Slightly in contrast with this supportive view of disabled in general, we also may observe a lack of social acceptance of disabled people in their roles as employees. Research shows that employers often have a negative image of disabled people as employees. Employers often think that disabled people are more often sick and are less productive than regular employees (Van Petersen et al., 2004; Verveen and Van Petersen, 2007).

From the previous findings we might conclude that in the public's opinion the performance of the SWA is increasingly being criticized. In contrast, support for the ultimate goal of the SWA – to provide adapted jobs for disabled people who cannot find a job by themselves – remains high. Many citizens consider disabled people to be a group that should be supported and protected.

The logic of external developments and sheltered work

Considering the external developments of the SWA, the experts have indicated three developments were determinative for the revisions of the SWA: (1) the desire from society to include disabled people in society and let them work as regularly as possible; (2) a deterioration of the labour market position of disabled people due to the increasing importance of skills and the increased competition ‘at the bottom of the labour market’ resulting from the labour migrants from Eastern Europe; and (3) a more difficult target audience, in particular due to the increase of people with severe and mental disabilities and an increase in average age. The deterioration of the labour market position of disabled people and the more difficult target audience of the SWA makes the demand to include disabled people in the regular labour market hard to realize. Summarizing the external developments, we may conclude that there is a great tension between the demand to include disabled people in society and the decreasing possibilities of realizing that goal.

Political context

The political context of the SWA is characterized by strong veto possibilities. Defenders of the status quo have various means to block change, most importantly through mobilizing members of parliament and mobilizing public opinion. Disabled people who make use of the SWA are a group that cannot be easily ‘touched’ by politicians due the positive image of disabled people in society. The image of people who, despite their severe mental or physical impairments, are doing useful work for society is very strong and persistent. Moreover, as employees in sheltered work have a formal collective labour agreement and are rather well-organized in the largest Dutch trade union, the reform of sheltered work is a subject of tripartite consultation. Initiatives to reform the sheltered workplaces create a lot of societal resistance.

Local municipalities are responsible for the implementation of the SWA. In most cases they have outsourced the implementation to sw-companies that actually provide the services, although some municipalities provide the services themselves. Municipalities and sw-companies have a rather high level of policy discretion in shaping the services that are delivered to the disabled. As long as they comply with the requirements of the SWA, they are free to develop their own policy priorities, for instance in the type of work they offer to disabled clients. This is also reflected in large differences between sw-companies in the Netherlands.

Explaining institutional responsiveness in sheltered work policy

In the case of the SWA, we clearly see that the institutional logic diverges from both public preferences and the external logic. Following the institutional logic, more disabled people should work at regular employers while the external developments make it harder to realize regular jobs. General public opinion reflects a demand for support and protection of disabled workers by the government. This implies that we are dealing with a case in which the logics of the institutional environments diverge.

As discussed earlier, the SWA is characterized by strong veto points and a high level of policy discretion. According to the assumptions of Mahoney and Thelen (2010), this will lead to conversion. The development of the SWA only partially confirms this assumption. Its development can be characterized as a process that combines elements of ‘conversion’ and ‘layering’. On the one hand, the formal design of the SWA remained stable for a rather long time although the goals shifted in the implementation stage from internal work at sheltered work facilities to supported work at external employers. However, these changes were enabled by the addition of various new elements to the existing ones. This is where layering may be observed. Strong veto possibilities made it impossible to displace the institution as a reaction to its disappointing policy results. This mixed process of institutional evolution may be considered to be a consequence of the divergence in external developments and public preferences.

Discussion and conclusions

After having discussed three cases of institutional development in detail, we can now return to the central aim of this article: to analyse and explain the responsiveness of social policies. Table 6 briefly summarizes the main findings of the cases. These cases clearly illustrate how the path-dependent structure of highly institutionalized policy fields interacts with external developments, more specifically changes in public preferences and changes in socio-economic conditions.

Table 6.

The interaction between institutional logics, public preferences and socio-economic conditions

	Social assistance	Labour migration	Sheltered work
Institutional logic	Tightening eligibility.Decreasing inflow.Increasing outflow.Combating fraud.	Protecting internal labour market.Attract complementary foreign labour.Make the system more selective.Increase compliance.	Stricter admission to the SWA.Higher priority to offering disabled people a regular job.
Media discourse	Worries about implementation failures.Attention to fraud.	Attention for poor working conditions.Consequences of more harsh enforcement for entrepreneurs.Intertwining of labour migration with more general issues about immigrants.	Relatively little attention to sheltered work.Old-fashioned image of sheltered-work companies.
Public preferences	Doubts about ‘deservingness’ of beneficiaries.Everyone who can work, should work.Support for deserving.	Intertwined with generally negative public opinion about immigrants.Be more selective: keep ‘unwanted’ immigrants out and actively invite wanted immigrants in.	Support for sheltered-work facility for disabled people remains high.Discontent with the performance of current SWA and desire reforms of the regulation.Low social acceptance of disabled people as employees.
External environment	Expected need for workforce because of aging.Increase of skills levels on the labour market.Increased competition for low-skilled jobs.Culmination of personal problems in the group of social assistance recipients.	Increased labour migration.Creation and further integration of European ‘internal’ labour market.‘Struggle for talent’ and increased competition for ‘wanted’ immigrants.	Inclusion of disabled people in society.Deterioration of the labour market position of disabled people.More difficult target audience of the SWA.
Convergence	Rather high	High	Rather low
Veto points	Low	Low	High
Discretion	Moderate	High	High
Process of institutional change	Displacement	Layering (for non EU-members) and exhaustion (for EU-members).	Conversion and layering

These three cases illustrate the value of an approach that takes into account the interaction between the institutions and their environment. Whereas most theories building upon historical institutionalism either focus on internal drivers of institutional evolution or on exogenous explanations, in our view in these cases the confrontation of endogenous and exogenous developments provides a better understanding of institutional evolution.

The case of social assistance policies follows the institutional strategy of displacement. Not only does this case confirm Mahoney and Thelen's hypotheses on the impact of the political context, but it also indicates the importance of taking the external conditions into account. By combining an analysis of the external conditions with an institutional analysis, in this case the drivers for institutional change could be clearly identified.

The other two cases even more clearly illustrate the value of our theoretical approach. In the case of foreign labour migration policies, the external conditions to a large extent have been responsible for the institutional evolution in this field. We have identified the mode of institutional evolution in this case as a combination of ‘layering’ and ‘exhaustion’, with the accent on the latter. The exhaustion in this case has been caused by the EU's extension to countries originally for which a work permit was required. In this case, we can observe divergent logics.

The case of sheltered work policies clearly shows how the institutional logic, public preferences and socio-economic conditions can diverge and what consequences this has. The institutional logic has evolved through a process of layering and conversion, but it evolves in a direction that does not restore the fit between the policy field, public preferences and socio-economic conditions.

In this article, we have contributed to the emerging theories of institutional development by focusing on the relation between the institution and its environment. The central claim in this article is that responsiveness is aimed at restoring the fit between an institution and its environment once this fit has been distorted. The findings of our analysis show that this addition to the existing theoretical framework increases the explanatory power of the recent literature on institutional evolution. With this approach, we are able to more precisely indicate ‘why’ there is a need for institutional change. Without mitigating the importance of endogenous explanations, this article clearly shows that the interaction between the institutional logic and the dynamic policy environment explains institutional evolution. We are convinced that progressing institutional theory, therefore, involves conceptualizing this interaction between the institution and its environment. This has two important implications.

First, the concepts of institutional fit and institutional sustainability need to be incorporated into the theories of institutional development. Streeck (2009) has formulated the basis for a dynamic perspective on institutions, by framing the institutions of the modern welfare state as a balancing act between self-interest and solidarity. This dynamic perspective might be regarded as a driving force behind institutional change. Building upon that, theoretical and empirical work on institutional fit may reveal the causes and directions of institutional evolution in different policy domains in more detail.

Second, progressing institutional theory based on the interaction between the institution and its environment facilitates the empirical recognition of situations of limited or distorted fit. The case of Dutch sheltered work clearly shows how the process of layering in the institutional path towards the participation of people in sheltered work facilities in labour increases the gap between policy goals and socio-economic developments. Scientific insights in the impact of distorted fit and responsiveness may contribute to the development of policy programs that are responsive to their environment and actually work, rather than programs that attempt to combat unfavourable and immobile long-term processes in the external environment.

Footnotes

Menno Fenger is associate professor of Public Administration at Erasmus University Rotterdam. He studied public administration and organizational sciences at the Catholic University Nijmegen. He received his PhD from Twente University in 2001. He has published numerous articles and chapters on policy dynamics in the area of social policies. His research focuses on processes of long-term policy change, specifically in social policy. Menno is currently the overall project manager of the INSPIRES research project, an EU-FP7 funded research program about labour market resilience in Europe.

Martijn van der Steen joined the Netherlands School for Public Administration (NSOB) in 2002, where he is co-dean and deputy director and director of NSOB's Think Tank. His research interests include network management, the use of forecasting and scenarios in policy making and public sector strategy and the relationship between the media and government. Martijn received his PhD from Tilburg University in 2006. He has published widely in international and national academic journals, professional publications and books.

Lieske van der Torre studied public administration and art and culture studies at Erasmus University Rotterdam. Currently, Lieske is working as a PhD student at Erasmus University Rotterdam in the Department of Public Administration. Her PhD research focuses on the strategies, implementation practice and results of Dutch sheltered work companies. She has published several articles and book chapters on sheltered work policies and the management of hybrid organizations.

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