Analyzing Modes of Contracting in the Dutch Private Reintegration Market
16 Pages Posted: 13 Nov 2008
Date Written: October 24, 2008
Over the last decade many of the Western welfare states have found themselves under pressure to reform due to both exogenous factors, such as globalisation and the aging of society, and endogenous factors, such as a shift in focus from welfare to workfare. An important aspect of these reforms concerns the introduction of processes of privatisation. One of the elements of the welfare state that has been subject to privatisation is the provision of reintegration services. The Dutch reintegration market is regarded as a prototype of this form of privatisation. Since the implementation of the Work and Income Implementation Structure Act (SUWI) in 2002, the Institute for Employee Benefit Schemes (UWV) and the local councils are obliged to purchase reintegration services for their clients on the market through the use of tender procedures.
During the last five years, the Dutch reintegration market has been investigated extensively. What we know from this research is that the privatisation of reintegration services has gone hand in hand with quite a few problems such as creaming and parking. Problems regarding the contracting out of activation services have been attributed to several factors, of which the failure of the quasi market structure is one of the most important. However, a clear and more complete understanding of all factors that have contributed to the failure of the market mechanism to live up to its expectations seems to be still lacking. Indeed until now, most research exploring the introduction of the market mechanism in the provision of activation services, has examined possible effects and problems related to this new way of policy delivery on the macro level by examining the functioning of the (quasi) market in relation to factors such as the existence of sufficient competition and the availability of suitable providers. Moreover, the assumptions are that when these aspects are fulfilled and a suitable provider has been selected, that subsequently many of the problems that surround the use of the market mechanism are overcome. However, even when the market functions well and a good provider is contracted there remain plenty of obstacles that can complicate service delivery. We believe that a better understanding of the choices that are made in the process of contracting out and the challenges this brings can contribute to help assess the value of expected improvements in efficiency and flexibility. In our paper, we therefore choose to explore the introduction of market mechanisms in to public bureaucracies in relation to activation policies on a different level, as we focus on the process of contracting out The goal of this paper is to identify some theoretical starting points for examining the process of contracting out in the delivery of activation services.
Keywords: Privatisation, reintegration market, contracting-out, welfare reform, Netherlands
JEL Classification: I3, I38, L33
Suggested Citation: Suggested Citation