GASPP OCCASIONAL PAPER NO 9/2002

Caroline de la Porte and Bob Deacon

CONTRACTING COMPANIES AND CONSULTANTS: THE EU AND THE SOCIAL POLICY OF ACCESSION COUNTRIES

This series of Occasional Papers on Global Social Policy is designed to provide early access for a wider readership of research work being undertaken in association with the Globalism and Social Policy Programme. GASPP is concerned with the globalisation of social policy and the social content of global politics the impact on the making of national social policy of supranational organisations such as the IMF, World Bank and WTO, the UN Agencies (WHO, UNICEF, ILO, UNDP, etc), and regional organisations (EU, NAFTA, Asean, Council of Europe, etc). the field of policy making that embraces global social redistribution, global social health and labour regulation, and global social provision and empowerment. the role of international civil society (transnational social movements and international NGOs) in shaping a global discourse on social policy and in contributing to the making of social policy in developing, crisis-ridden, wartorn, and post-communist societies. Further details of GASPP may be found at http://www.stakes.fi/gaspp

ISBN 951-33-0788-3 STAKES, Helsinki Finland 2002

Preface and Acknowledgements

This Occasional paper presents for wider dissemination parts of the report recently submitted by GASPP to the Finnish Ministry of Foreign Affairs entitled A Critical Assessment of the Role of Consulting Companies as agents for the transfer of EU Social Policy Advice to Eastern Europe. That report and this Paper address the following questions. Does the EU have a coherent and consistent approach to social policy that it seeks to transfer to other countries through its assistances schemes? Does the use of subcontracting through consulting companies enable the EU to transfer any such messages in a consistent way? Is the social policy advice offered to other countries via such technical assistance influential? How does this influence compare with the role of others internal and external actors in the policy making process? What kinds of companies are operating in this field and what are their motivations? How important are the individual experts contracted to these companies in the social policy transfer process? What lessons can be drawn from this review for the EU and individual countries that use subcontracting as a means of implementing international assistance? The paper is based on research undertaken into the EUs PHARE programme, into the Consensus Programme that operated within the PHARE programme from 1995, into the companies who sub-contracted to undertake technical assistance programme within the framework of these programmes and into the impact of these programmes on social policy making in Lithuania. Caroline de la Porte did the research under my supervision. The paper is based on several papers produced by Caroline. The final editing was completed by myself and I am responsible for any errors. Both Caroline and I would like to acknowledge the large number of people who have helped in different ways with this work. These thanks are extended to the consultants, EU officials, politicians and academics who gave their time in interviews as well as to those who supported or inspired the work in other ways. Among those deserving of particular thanks are Seppo Heikkil, Evaldas Bacevicius, Lauri Leppik, Katri Targama, Andrew Latto, Hubertus Arndt and Johannes Pakaslahti. There are a number of ways in which the EU and its subcontracted agents seeking to influence social policy in other countries may be studied. Some studies of international actors have focussed on the formal policies of the EU compared with those of other global actors such as the World Bank and compared and contrasted the content of the explicit policy advice being proffered (Deacon et al 1997), others have adopted a more anthropological approach examining the societal impact and the impact on the policy process of the presence of foreign experts in recipient countries (Stubbs 2000, Wedel 1998). This report takes a middle road examining the ways in which the formal EU policies as expressed in its social acquis are mediated through subcontracted agencies. It is presented for wider readership as a small contribution to the growing literature on international social policy analysis. Bob Deacon. December 2001.

Contents
1. The EUs External Dimension of Social Policy: The Discourse 1.1. Introduction 1.2. History of the Enlargement Process of the EU to the CEEC 1.3. The EUs External Dimension of Social Policy 1.4. Perception of the Social Acquis by Different Institutional Players 1.5. Conclusions The EUs External Dimension of Social Policy: The Practice 2.1. Introduction 2.2. Community Instruments for the Provision of Social Policy Advice to the CEEC 2.3. Brief History of the PHARE Programme 2.4. Implementation Modalities 2.5. How the EU evaluates PHARE 2.6. PHARE Programmes in the Social Policy Area 2.7. Conclusions The Consensus Story. 1995-2000 3.1. Introduction 3.2. Consensus I 3.2.1. The Beginning 3.2.2. The Structure of the Programme 3.2.3. The Involvement of the European Commission 3.2.4. The Operation of the Programme 3.3. Consensus II 3.4. The Demise of Consensus 3.5. Conclusions Implementing Consensus: Subcontractors and Expert 4.1. Introduction 4.2. The Process of Selecting the Contractor 4.3. The Active Contractors 4.4. The Role of Contractors and Experts in Project Implementation 4.4.1. Contractors 4.4.2. Foreign Experts 4.4.3. Local Experts 4.5. The Framework Contractors 4.5.1. Framework Contractors up to 1999 4.5.2. Framework Contractors from the Year 2000 onwards 4.6. Conclusions International and National Actors and Contractors in the Shaping of Lithuanian Social Policy 5.1. Introduction 5.2. The Story of Social Policy Making in Lithuania 7 7 8 10 12 15 17 17 17 18 21 25 27 28 31 31 32 32 32 34 36 38 40 42 43 43 43 46 52 52 53 55 55 56 58 60 61 61 61

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3.

4.

5.

5.3.

5.4.

5.5. 5.6. 6.

5.2.1. Overview 5.2.2. Political Parties 5.2.3. Media and Other Players 5.2.4. Government The Social Security System in Lithuania 5.3.1. Introduction 5.3.2. Social Insurance Component of Social Security System 5.3.3. Social Assistance Component of Social Security System International Co-operation, Eurointegration and Bilateral Advice 5.4.1. Introduction 5.4.2. World Bank 5.4.3. United Nations 5.4.4. The International Labour Organisation 5.4.5. EU Accession 5.4.6. The PHARE and Consensus Programme 5.4.7. Bilateral Advice from Denmark 5.4.8. Sweden 5.4.9. Germany 5.4.10. Ireland 5.4.11. Norway 5.4.12. The Baltic Council of Ministers Co-ordination of International Assistance Conclusions

61 62 63 63 64 64 65 67 68 68 69 70 72 73 75 85 86 86 86 86 87 87 89 93 93 96 98 98 99 103

Implications for Future Use of Consulting Companies as Agents of Social Policy Transfers 6.1. Some Conclusions 6.2. Some Recommendations 6.2.1. 6.2.2. 6.2.3. Bibliography and Sources by Chapter

CONTRACTING COMPANIES AND CONSULTANTS: THE EU AND THE SOCIAL POLICY OF ACCESSION COUNTRIES 1. THE EUS EXTERNAL DIMENSION OF SOCIAL POLICY: THE DISCOURSE
1.1. Introduction
The role of the EU in the provision of social policy advice externally has been the subject of interest to both of us. Comparing the interventions of the World Bank, ILO, UNDP and the EU in relation to the shaping of post-communist social policy in several Central and East European countries one of us (Deacon 1997) concluded that the interventions of the EU were far less focussed and far less effective than those of the World Bank. This contributed to the greater interest shown in the region towards neo-liberal social policy strategies involving an increased role for the market and a reduced role for the state in social provision. Subsequently a review of the extent to which the EU was making a sustained contribution to articulating a socially responsible globalisation in its foreign policy concluded negatively that the EU had no consistent view on the question (Deacon 1999). This chapter develops this line of enquiry and updates the analysis by focussing on the recent development of the EUs externally oriented discourse on social policy in the context of the future accession of countries from Central and Eastern Europe. EU social policy in its discursive aspect consists of the hard and soft legislation, the former referring to the legal provisions of the Treaty (regulations, directives, decisions) and the latter referring to the non legally-binding provisions (recommendations, communications, other papers, and activities in which Member States are engaged through the open method of co-ordination). In the Social Agenda for 2000 2006, it has been recognised that Enlargement and external relations are, in several respects, a challenge and an opportunity for Community action in the social field. Furthermore, the Union is encouraged to resolutely support the efforts already made by the applicant countries to adjust and transform their social security systems and to encourage the establishment of a process of convergence in making progress. 1 The thesis in this chapter is that due to the complex structure of the European Union and its institutions, including conflicts of interest and power between and within the different institutions, and the national interests and practices of the EU Member States, a comprehensive united view of EU social policy has not up to now been possible to attain. However, through soft law, the EUs social dimension has progressively been extended. In discourse, this is being transposed to the external dimension of social policy as well. This chapter, firstly, begins with a brief historical account of the enlargement process, which sets the overall framework for understanding how the discourse on the social dimension has developed. Secondly, the development of the EUs discourse on the external dimension of social policy is described. This is followed, thirdly, by an analysis of the view of different
1

Contribution by the Council to the Nice European Council with a view to the adoption of the European Social Agenda, paragraph 23.

actors on the EUs external dimension of social policy, after which a brief conclusion will be made on the current shape of the EUs externally oriented discourse on social policy.

1.2. History of the Enlargement Process of the EU to the CEEC (Central And Eastern European Countries)
Before entering into a full analysis on the social dimension of enlargement, it is useful to recall the milestones of the process that led to the decision to enlarge the European Union to close to 30 members. In the aftermath of the fall of the Berlin Wall in 1989, the European Community swiftly established diplomatic ties and concluded trade agreements with the CEEC. During the 1990s, Association Agreements, more often referred to as the Europe Agreements, were concluded by the European Community and its Member States with 10 CEEC, providing the legal basis for bilateral relations between these countries and the EU. In sum, the Europe Agreements cover trade-related issues, political dialogue, legal approximation and other areas of co-operation, including industry, environment, transport and customs. Under these agreements, trade between the EU and the CEEC grew rapidly. For other provisions, such as the free movement of workers, the Europe Agreements facilitated the conclusion of bilateral agreements between EU Member States and the 10 CEEC, but there was no over-arching provision. In retrospect, the Europe agreements are considered as precursors to EU membership 2, as they are based on shared understanding and values, and prepare the way for the EU and the partner countries to converge economically, politically, socially and culturally3. The integration of the CEEC to the EU could be conceived as an ongoing process in the framework of the Europe Agreements, consisting of a step-wise removal of trade barriers, whereby the CEEC have had to make institutional adjustments to match EU standards. However, it is important to keep in mind that this has to a great extent been limited to the areas of trade and capital movements. As pointed out by the European Economic and Social Committee, the social dimension was hardly visible in the Europe Agreements and social convergence was not an objective in the same way as economic co-operation4. In 1993, at the Copenhagen European Council, the Member States selected an important route, from the Community perspective. They agreed the associated countries in central and eastern Europe that so desire shall become members of the European Union as soon as an associated country is able to assume the obligations of membership by satisfying the economic and political conditions required. The Council also decided that, in addition to having to comply with the acquis communautaire, prospective members would have to adhere to specific political and economic criteria, notably: instituting democracy, the rule of law, human rights and respect and protection for minorities ensuring a functioning market economy and the capacity to cope with competitive pressure and market forces within the Union taking on the acquis fully, including economic and monetary union5.

2 3

Legally and politically, however, the door for EU membership was not opened by the European Agreements.

European Commission, Enlargement, Pre-Accession Strategyy. The Europe Agreements?, 2001, (http://www.europa.eu.int/comm/enlargement/pas/europe_agr.htm). 4 European Economic and Social Committee, Engaged in Enlargement, Task Force Enlargement, Brussels, 2000. 5 European Council, Copenhagen European Council, Council Conclusions, 1993.

It was the first time that additional criteria had been included in the conditions for membership. This was due to the particular nature of the Central and Eastern European candidates, which had to re-build their political and economic systems after the collapse of the Soviet Union. Applications for membership to the EU were submitted by the 10 CEEC between 1994 and 1996. In 1994, it was for the first time specifically set out that technical assistance principally the PHARE programme6 - should be provided to the CEEC for approximation with EU law7. A particular feature of this enlargement is that it has proved to be a process in the making or a piecemeal decision process8 and other criteria have progressively been included among the membership requirements. Indeed, at the Madrid European Council, in December 1995, the importance of ensuring the implementation of the acquis, through appropriate administrative and judicial structures, was highlighted. The Luxembourg European Council, in December 1997, highlighted that the operation of the institutions should be strengthened. Moreover, the decision was also taken to launch an overall enlargement process for all countries wishing to join the EU. Accession negotiations were formally opened with six countries on 31 March 1998: the Czech Republic, Estonia, Hungary, Poland, Slovenia and Cyprus, referred to as the first-wave countries or the forerunners. The accession negotiations consist of the terms under which candidates adopt, implement and enforce the acquis communautaire, which are divided into 31 chapters. Following the Commissions initial set of Opinions evaluating the situation of each country in relation to the accession criteria, a follow-up system, via annual regular reports on the progress of each candidate country, was created. These reports the first set submitted to the Council in November 1998 are intended to serve as a basis for the Council to take decisions on the conduct of negotiations, and on including new countries in that process. The apparent apolitical and technical manner of embarking upon this enlargement is notable9. In its composite paper of the 1999 regular reports, the Commission recommended opening negotiations with Malta, Latvia, Lithuania, Slovakia, Bulgaria and Romania, and to consider Turkey as a candidate country. In the Helsinki European Council of 10 December 1999, the recommendation to extend the process was followed: The European Council reaffirms the inclusive nature of the accession process, which now comprises 13 candidate States within a single framework. The candidate States are participating in the accession process on an equal footing10. At the door to the 21st century, the prospect of the European enlargement eastwards, referred to as an historic opportunity by Gunter Verheugen, Commissioner responsible for enlargement, shifted from the realm of the virtual to that of the real. Historically, the Helsinki Council will be remembered for opening the enlargement of the Union further, and for introducing two important principles, that of differentiation and that of transition. Concerning the former, it is the measurement of progress by each country individually, becoming member upon having fulfilled all requirements. Concerning the latter, it consists of transition periods upon membership in certain delicate areas, to ease the process for the Union as well as for the forthcoming members.

See Paper 2 for a historical analysis of the development of the PHARE programme. KIRSCHBAUM, C, presentation of TAIEX, Eastern Enlargement of the European Union: strategies for optimising the accession of the Candidates from Central and Eastern Europe conference, 29-30 October 1999, Trier, Germany. 8 FALKNER, G. and NENTWICH, M., Enlarging the European Union: The Short-Term Success of Incrementalism and De-Politicisation, MPIfG Working Paper, No. 00/4, July 2000. 9 FALKNER and NENTWICH, op. cit. 10 European Council, Helsinki European Council, Presidency Conclusions, 10 and 11 December 1999.
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The six-monthly meetings of heads of state have contributed considerably to the overall development of the enlargement process, fine-tuning the process and progressively rendering it more concrete. However, it is only recently that the social dimension has been extended to more than the limited legally binding acquis, to encompass the essence of the European social model. However, the degree to which the wider social acquis are enforceable is still relatively weak. The progressive shift to a broader scope of social acquis in the Community strategy, and the role of different players therein, will be analysed below.

1.3. The EUs External Dimension of Social Policy

The chapter on social policy and action of the White Paper of 3 May 1995 concerning preparation of the CEEC for integration to the EU includes the legislative aspects that cover equal opportunities and equal treatment of men and women11, co-ordination of social security schemes12, health and safety at work13, labour law and working conditions, labelling of tobacco products, social dialogue14. A high level of employment and social protection is also part of the hard acquis communautaire. In this respect, the Union sets out to promote employment, to improve life and working conditions, to develop human resources (through education and training) and to fight social exclusion. To meet this aim, the Community and the Member States are held to implement measures that take account of the diversity of national practices, while maintaining the competitiveness of the economy of the Community15. However, there are no associated criteria for enforcing a high level of employment and social protection, contrary to the extensive acquis communautaire in the economic area. In the area of social security, there are to date no legal provisions, and the Council is still held to adopt measures by unanimity in this area (art. 137). The European Employment Title has been integrated into the Treaty of the European Union, and is therefore part of the soft or political acquis of the European Union, since, although Member States are required to participate in the Employment Strategy, it does not consist of legally-binding provisions per se. The acquis communautaire in the social protection area is even softer. Up to 1999, when there was a decision to activate the social protection dimension of Europe, the social protection policy of the European Union had to a great extent limited to documents of symbolic policy, that did not include means of action to render the principles set out in those documents concrete. These figurative policy documents are: the Community Charter of Fundamental Social Rights of Workers, laying down the principles for the European model of Labour Law and the place of work in society; in 1992, the Council adopted the Recommendation on the convergence of objectives and policies in social protection, consisting in essence of identifying common held objectives among the Member States; Green Paper on European Social Policy (1993) White Paper on European Social Policy (1994)

11 12

Article 141 CE, Amsterdam Treaty. Article 39 CE, Amsterdam Treaty, Regulations 1408/71 and 574/72. 13 Article 138 CE, Amsterdam Treaty; the framework directives 80/1107 and 89/391 and the directives under these. 14 Articles 138 and 139 CE, Amsterdam Treaty. 15 Article 136, Amsterdam Treaty.

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 the 1995 Commission Communication The Future of Social Protection: A framework for a European Debate, which touched upon labour market, demography, gender and mobility issues; the 1997 Commission Communication Modernising and Improving Social Protection in the EU, in which the modernising referred to conceiving social protection as a productive factor, thus contributing to economic and political stability, and to making better use of the resources available. From 1999 onwards, there was a shift in the development of the social dimension within the European Union, by the instigation of the Commission communication A concerted strategy for modernising social protection. The EU Member States decided to set up a Social Protection Committee (officially instituted in the Treaty of Nice) and to co-operate in the view of the common challenges that they face in their social protection systems. The need to confirm the place of social protection within the common values of the European Union in the context of enlargement is underlined in the communication16. The four axes of the communication make work pay, render pension systems sustainable, ensure quality health care for all and combat social exclusion are, according to the Directorate General of Employment and Social Affairs, now officially part of the political or soft acquis, to be adopted by the candidate countries17. However, the extent to which this is taken into account by the actors responsible for the actual negotiations is questionable. In addition to the different elements of social protection mentioned up to now, the Commission formulates Social Action Programmes regularly, to plan actions for the social policy area in the medium term. This practice goes back to 1974. In the social action programme for 1998 - 2000, reference was made to the fact that the CEEC should ensure the full adoption and implementation of EU law and practice in the social sphere. In that Social Action Programme, the Commission also set out to present a communication on the development of the external dimension of social policy. However, due to lack of agreement within the Directorate General for Employment and Social Affairs, and the Commission as a whole, the Communication was never published. A draft version circulated in the Commission for several years, but agreement was unfortunately never reached. In the Social Agenda for 2000 2006, there is an indication of the broad scope of the social acquis as far as the enlargement of the European Union eastwards is concerned: Not only do they face the major challenge of adjusting and changing their systems but they are also confronted with most of the problems that beset the existing Member States of the European Union. The prospect of enlargement therefore needs to be taken into account in all areas of social policy... More precisely, It is necessary to develop the sharing of experience and strategy with applicant States, particularly so as better to face together the challenges of full employment and the fight against exclusion. It specifically proposes to Prepare for enlargement with the aim of promoting economic and social progress in the enlarged Union, to organise regular exchanges of views on all aspects of social policy linked to enlargement and, in conjunction with the social partners, help the applicant countries to take on board the European Employment Strategy, implementation of the objectives of combating poverty and social exclusion, and strengthened cooperation on social protection18. However, the idea of

European Commission, Communication from the Commission A concerted strategy for modernising social protection, COM (1999) 347 of 14 July 1999. 17 CLOTUCHE, G., Social protection in the CEEC in the context of the enlargement of the European Union, Belgian Review of Social Security, Special Issue on the social dimension of Enlargement, 2001. 18 Social Agenda 2000 2006.

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preparing a communication of the Unions external dimension of social policy was not taken up again.

1.4. Perception of the Social Acquis by Different Institutional Players

Overall, the social acquis has progressively been extended, to encompass more than the limited legally binding acquis. Moreover, the different institutional players the European Commission, the European Parliament and the European Trade Union Confederation - seem to share the extended vision of the acquis communautaire in the social area. Towards the end of the 1990s, a focus on employment and the need to have viable social protection systems emerged. Whenever addressing a public including CEEC representatives, the Commission speeches always tend to include the same elements, in which the Union is presented as strong and united, with an extensive social structure: Our social structures are based on shared values of equality and are distinguished by their universal nature and by the extent of their social support systemsEuropean social standards are higher and stronger than those of all other comparable economies social transfers in EU Member States help us to prevent poverty the importance of achieving a balance between economic and social policy and between flexibility and security - lies at the heart of the process of European integrationsocial policies are vital for greater and more widely shared prosperitysocial policy is a productive factor that brings benefits for the economy, for employment, and for competitivenessThe more work becomes flexible, the more people will demand security through social protection, as a means of ensuring their health and safety, lifelong employability, social inclusion, equal opportunities and fair treatment we think it is important that all the candidate countries pay particular attention to how social partner organisations develop and to encourage active, autonomous dialogue between them the legal acquis also covers provisions relating to freedom of movement of workers, and regulations ensuring social security co-ordination for migrant workersthe legal acquis includes the case-law of the Court of Justice the Amsterdam treaty extends the scope for Community (social policy) acquis, particularly as regards employment, public health, the fight against discrimination, and the fight against exclusion. 19 According to the Strong Social Europe externally oriented discourse of the European Commission, social policy priorities of the EU are: to achieve a balance between economic and social policy; to assure a high level of social protection, defined through the binding legal factors, namely, health and safety at work, lifelong employability, social inclusion, equal opportunities and treatment; to ensure that social partners play an active role; active employment policies, public health, the fight against discrimination, the fight against exclusion. The CEEC are encouraged to invest in social policy in their country, as it is a productive factor20, and the EU prescribes that they become aligned with European Social Policy by
19

QUINTIN, O., Presentation in a meeting with PHARE co-ordinators from the 10 candidate countries, The Development of European Employment and Social Policy, DGV, European Commission, 2 March 1999. 20 LARSSON, A., Speech, Consensus Programme Advisory Board (PAB) Meeting, 14 December 1998, p. 4.

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taking on the Unions acquis. The legally binding or hard acquis make up the core of EU social policy, and the soft acquis are progressively becoming an integral part of the discourse. The development of a wider understanding of social policy is also reflected in the most recent regular report series on the progress of the 13 candidate countries in the view of enlargement (October 2000). The need to progress in the social policy and employment area has been highlighted by the Commission in its strategy paper of 2000: adoption of the acquis continues to be slow in the social policy and employment sector social cohesion is at risk if progress is not made in these areas in parallel with (other) reforms. It is, therefore, essential that candidate countries accelerate their efforts21. In its timetable, the Union has set out a road map for progressing in the negotiations on chapters that remain open. Chapter 13 on social policy and employment was scheduled to be closed for all candidate countries in the first half of 2001. At the end of the July, Chapter 13 was closed for eight out of ten CEEC. It has not yet been opened for Bulgaria and Romania. The next meeting of accession negotiations is scheduled for 25 and 26 October 200122. The employment situation in each candidate country unemployment rate, proportion of active population in employment, wage level, etc has been reviewed by the Commission in its regular reports on a yearly basis. Employment in the CEEC is now being accorded even more attention, particularly in the light of the quantitative benchmark set for the Union as a whole to increase the overall employment rate to 70% and that of women to 60% by 201023. Although an improvement of the situation was reported in 2000, the overall result was not encouraging, but performance varies considerably from country to country. Indeed, the present situation is somewhat alarming in that the typical situation faced is one of slow, in some cases negative, employment growth coupled with persistently high levels of unemployment, particularly for the young and unskilled. Informal and undeclared work is commonplace24. A novelty in the year 2000 has been the involvement of the CEEC in the EUs soft policymaking processes insofar as the employment policy is concerned. As part of the Luxembourg process, national action plans (NAP) for employment were developed by most CEEC, in which targets were set, according to the needs of their particular contexts, in view of the European level objectives and benchmarks. In the regular reports of the year 2000, the Commission praised the CEEC having developed ambitious NAP, based on the four pillars of the European Employment Strategy (employability, adaptability, development of entrepreneurship, equal opportunities). Like the European Commission, the European Parliament (EP) also encourages the CEEC to develop, or develop further, the NAP on employment, which are conceived as tools for a more rapid structural change. In this light, it encourages the CEEC to adapt their qualification profiles and education and training arrangements to adapt to the new knowledge-based European context. The European Trade Union Confederation (ETUC), too, conceives the involvement of the CEEC in the European Employment Strategy as crucial, and highlights the role of trade unions at national level, to follow-up the national employment policies and to contribute to the promotion of a high level of employment at their specific levels (in enterprises, sectors and branches). In line with the Commissions discourse, the ETUC emphasises the need for the candidate countries to
21

European Commission, Strategy Paper Regular Reports from the Commission on Progress towards Accession by each of the candidate countries, 8 November 2000. 22 EurActiv, Accession Negotiations: Current Status, 21 August 2001. 23 European Council, Lisbon European Council, Presidency Conclusions, 23 24 March 2000. 24 European Commission, Social Protection in Europe 1999, DG Employment and Social Affairs, Social security and social integration, Office for Official Publications of the European Communities, Luxembourg, March 2000, p. 109.

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strengthen actions under the four pillars of the employment guidelines. Taking into consideration the employment guidelines for 2000, it insisted on the importance of improving professional integration, in the framework of the employability pillar and of modernising the organisation of work in the framework of the adaptability pillar25. At the European Council of Stockholm, the heads of state and government reiterated that the CEEC were invited to participate in the European Employment Strategy26. The inclusion of the European Employment Strategy among the acquis is positive, but it is not particularly surprising, as the Employment Title is integrated into the Treaty of the European Union. The real novelty is the explicit reference to the need to implement the objectives of combating poverty and social exclusion and to strengthen co-operation in the area of social protection. In its report Social Protection in Europe in 1999, the Commission illustrated that the social protection systems of the EU Member States and the candidate countries are confronted with similar problems, and that their systems should be built on the same underlying principles. However, although underlined in the discourse, there are no criteria to enforce this provision. Nevertheless, 1999 was the first time that one out of five chapters of the Commission report was devoted to describing the state-of-affairs of the social protection systems in the candidate countries. More attention was also devoted to this topic in the Commissions yearly regular reports on the progress of the CEEC in complying with the European Unions membership criteria. There is not yet an indication of how the fight against poverty and social exclusion should be tackled in the CEEC or how co-operation in the social protection field should be strengthened. The Commission expects candidate countries to adhere to the principles shared by all Member States: wide coverage of risks, solidarity based system, high involvement of the State27, access to high quality health care for all, rendering pension systems sustainable, making work pay and promoting social inclusion. The EP, too, encourages the candidate countries to invest in their social infrastructures. Mirroring the crux of the Commissions discourse on social protection, the EP conceives investment in social protection as a productive factor. It stresses that the social protection objectives for the Union should also apply to the CEEC. Similarly, the ETUC also emphasises that the CEEC should build social protection systems. The essential principle is that of solidarity, which underpins all social protection systems, and includes social partner participation in setting up and running such systems. The principles of the welfare state underpin the European social model and so must be considered as building blocks of the process of change in the applicant countries. More specifically, in the case of economic growth, the ETUC highlighted that it should not only benefit the labour market, but must also help strengthen the social protection systems in cross-border regions, particularly focusing on infrastructure and structural policies for regional development and employment promotion. The ETUC also encourages the CEEC to put in place adequate social protection systems in order to decrease the risk of social exclusion and to enhance social cohesion. It notably encourages the CEEC to invest part of the profit from the private sector in social protection28.

25

European Trade Union Confederation, Role des syndicats dans le processus de lelargissment de lUE, Press Report, No. 23-00, 2000. 26 European Council, Stockholm European Council, Presidency Conclusions, 23 24 March 2001. 27 Minutes of the 7th PAB Meeting, 15and 16 June 1998, Ljubljana, Slovenia. 28 LOURDELLE, H., Livre Blanc sur la Protection Sociale dans les pays dEurope Centrale et Orientale, Rapport 62, Brussels, October 1999, European Trade Union Institute.

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1.5. Conclusions
To conclude, the EU discourse on the external dimension of EU social policy is in fact rather broad, encompassing not only the rather limited legal acquis, but also the wider principles of European social policy, in the soft acquis. Legally-binding acquis and the Employment Strategy are emphasised. The principles concerning the organisation of social protection systems and the recently launched activities in the area of social exclusion and pensions have been prioritised, and appear, in the Social Agenda, to be part of the acquis. In general, however, the strictly legal acquis tends still to be emphasised. At the level of rhetoric it seems therefore that the EU has fashioned an external dimension of social policy in its dealings with accession countries. Subsequent chapters examine how, if at all, this rhetoric is converted into action in the context of the PHARE programme and its implementation through subcontracted consulting companies. Does the rhetoric become diluted in practice not least because of the involvement of such intermediary players?

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2. THE EUS EXTERNAL DIMENSION OF SOCIAL POLICY: THE PRACTICE; The PHARE Instrument for the Provision of Social Policy Advice to Central and Eastern Europe (CEEC)
2.1. Introduction
This chapter analyses the PHARE programme, the Communitys principal financial instrument for provision of policy advice to the Central and Eastern European Countries (CEEC). The aim is to analyse the different reforms of PHARE, and whether these have succeeded in rendering the programme more effective. The central question to be addressed is the extent to which the external dimension of EU social policy is taken into account and put into effect by the programme. The thesis is that the different reforms to the PHARE programme have not rendered it more effective, and that the widened social policy dimension of the EU is not fully reflected in the social policy actions of the PHARE programme. The chapter begins with a review of the existing Community instruments for the provision of social policy advice to the CEEC. It then tells the story of PHARE, followed by some details on its implementation and evaluation. Thereafter, a brief analysis of the social policy priorities of PHARE is made, followed by some concluding remarks.

2.2. Community Instruments for the Provision of Social Policy Advice to the CEEC
The Commissions instruments for external social policy actions in the CEEC are the following: The main instrument for external action is the PHARE programme, established in 1989, in which social policy is not a priority area. From 2000 to 2006, 1,5 billion EUR per year has been allocated to the PHARE programme. Consensus (1995 2000) focusing specifically on social protection is part of PHARE (see Chapter 5). From 2000, the CEEC have had access to a special structural aid programme, reminiscent of the EUs Social Funds - Structural Funds for Development in Social Policy Issues (ISPA). Until the year 2006, 1 billion EUR has been set out per year for this instrument, in order to help the CEEC develop their social infrastructure. It is also to help them progressively adapt their systems for access to the Structural Funds upon membership to the EU. TAIEX (Technical Assistance Information Exchange office), managed by DGXV, sets out to help the CEEC adopt the EU policies and legislation (legal acquis) through the exchange of information and know-how through workshops, study tours, and short-term missions of experts from Member State administrations to the corresponding CEEC administrations. TAIEX focuses on institution building, which refers to the development of the structures, human resources and management skills needed to implement the acquis29.
29

Enlargement strategy, Europa website: DG1A

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 Since 1999, twinning of Member State civil servants to national administrations in the CEEC was identified as the priority instrument for institution building, to which 30% of PHARE funds are reserved. TAIEX is responsible for the overall management of this facility. Social policy is one of the eight areas where it has been the most active30. For the year 2000, the social sector has been identified as a medium-term priority in twinning. A medium-term priority refers to actions to be taken in the 12 months to come.

2.3. Brief History of the PHARE Programme

The PHARE programme has undergone several changes since it was first set up in 1989. Two broad periods can be identified: the first is from 1989 1997, when building democracy guided its activities; the second is from 1997 to present, when the accession agenda guided and continues to guide its activities. PHARE was first set out in 1989 to eradicate poverty in Poland and Hungary. More countries were progressively included in the scope of the programme, finally embracing 14 CEEC altogether. Its objectives changed throughout the lifetime of the programme. Initially, democratic principles were a priority of the Communitys external dimension, and this was transposed to PHARE. From 1989 to 1993, the Commission drove the PHARE programme. Thereafter, from 1993 to 1997, it was driven by the recipients31. At the time, the programme was defined as a European Union initiative, which supports the development of a larger democratic family of nations within a prosperous and stable Europe. Its aim is to help the countries of central and Eastern Europe rejoin the mainstream of European development and build closer political and economic ties with the European Union. PHARE does this by providing grant finance to support the process of economic transformation and to strengthen newly created democratic societies32. The demand-driven logic implied that PHARE acted more as a policy-taker than a policy-maker, largely accepting policies and programmes as proposed by the recipient countries governments. PHAREs main activity consisted of providing know-how from a wide range of non-commercial, public or private organisations to its partner countries, and focused on stimulating investment, as well as investing in infrastructure. During this first phase of the lifetime of PHARE, the objectives were very vaguely defined, as were the expected outcomes. The tangible results were few. In retrospect, only a general contribution was traceable33. Different players, notably beneficiaries and stakeholders, were involved in the design of the individual projects. PHARE works in close cooperation with its partner countries to decide how funds are to be spent, within a framework agreed with the European Union. This ensures that PHARE funding is relevant to each governments own reform policies and priorities. Each country takes the responsibility for running its own programme34. The decision of how to use technical assistance and expertise was consensual35.

TAIEX meets the challenge, Europa website: enlargement. Interview EC Delegation Lithuania 1, 10 April 2001. 32 European Commission, PHARE infocontrat no. 1, 1994. 33 European Commission: DG1A/F5, The PHARE Programme: an interim evaluation report, June 1997, pp. 1718. 34 European Commission, PHARE infocontract n 1, 1994. 35 GAUDE, J. et al., (COTA Consortium), An Evaluation of PHARE financed Labour Market and Social Sector Programmes, Final Report, January 2000, p. 29
31

30

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In 1995, the logic of the PHARE programme remained demand-driven, and its management was decentralised to the partner countries. Specific guidelines were prepared - the PHARE Decentralised Implementation System (DIS) - to assure that the Programme Management Units (PMUs36) in the partner countries would follow the Commission procedures. The decentralisation also led to a limitation of the Commissions control and participation in the actions carried out in the framework of PHARE. Indeed, little of the knowledge at local PMU level was communicated back to the PHARE task managers at Commission headquarters. Moreover, at the Commission, there was a rapid turnover of the staff dealing with the administrative and management aspects of the programme. This partly explains why there were no systematic follow-through mechanisms for the projects carried out and why there was such a fragmented and incomplete collective memory of the programme as a whole. It is this loss of central control that contributed to the earlier assessment (Deacon 1997) of the ineffectiveness of the programme up until 1997 for exporting EU social policy thinking. A positive aspect in 1995 was however the introduction of multi-annual indicative programmes (MIPs), which created a long-term policy framework (based on multi-annual political and financial perspectives) and programme selection criteria focused on pre-accession strategies. The Europe Agreements concluded between the CEEC and the European Union between 1994 and 1996 represent the policy context in which the PHARE programme was to be restructured. In 1997, the orientation of the programme was explicitly re-focused; to help the candidate countries comply with the acquis communautaire. In this framework, 70% of PHARE funds were set out for technical assistance and 30% for institution building. The programme shifted from demand-driven, where the Commission was the policy-taker, to accession-driven, where the Commission aimed to increase its role as a policy-maker, according to the acquis communautaire37. In this accession-orientated context, the bulk of the PHARE programme is steered by the Accession Partnerships (AP) and the National Programme for the Adoption of the Acquis (NPAA). The AP38 is a document agreed by the Council setting out the Unions view of priorities in accession preparations in the short and medium term for each candidate country. The NPAA39 is the candidate countrys own timed and costed action programme for accession preparation. An additional tool created to help guide the manner in which PHARE funds are spent is the European Commissions Regular Reports, which assess the progress of the candidate countries in complying with the acquis communautaire on a yearly basis. Moreover, PHAREs management was integrated further into applicant country government structures through the creation of the National Fund40 and a limited number of Implementing Agencies41.

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Once a countrys financial envelope is determined by the Commission and an overall sectoral allocation agreed upon between the Commission and the partner countries, a PMU is set up by the relevant partner institution or ministry. The Contractors are selected by the PMUs to carry out projects by competitive tendering. (The PHARE Programme: an interim evaluation report, op. cit., June 1997, p. 17) 37 The PHARE Programme: an interim evaluation report, op. cit., p. 17. 38 European Commission, PHARE 2000 Review: Strengthening Preparations for Membership, Communication from M. Verheugen, Glossary 39 PHARE 2000 Review: Strengthening Preparations for Membership, Glossary, op. cit. 40 The National Fund is the central treasury entity through which the Community funds are channelled into the candidate country. (PHARE 2000 Review: Strengthening Preparations for Membership, Glossary, op. cit.) 41 An implementing agency is an agency in the candidate country responsible for tendering, contracting and payment for projects assigned to it. The Central Financing and Contracting Unit is responsible for these activities for Institution Building projects. (PHARE 2000 Review: Strengthening Preparations for Membership, Glossary, op. cit.)

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In the re-orientation of PHARE in 1997, several guiding principles for project design were agreed upon. These guiding orientations include the following: PHARE should act as a catalyst for an accession-driven aspect which would otherwise take place later; All PHARE projects must receive co-financing from national public funds. The Community contribution to the project concerned may amount to 75% of the total cost of the project; There must be co-ordination with the European Investment Bank and other International Financial Institutions, so that there is no overlapping and so that other donors wishing to contribute to the reconstruction process in the CEEC are not crowded out; The project must result in a verifiable output; The investment actions to be supported should be sustainable beyond the date of accession. Moreover, all projects must comply with EU norms and standards and be coherent with the sector policies of the EU. All projects must also be financially sustainable to cover maintenance and overrating costs. All actions financed must respect competition and state aid provision of the Europe Agreements42. These principles were agreed upon following the interim evaluation of the PHARE programme in 1997. In addition to the technical assistance provided through PHARE, twinning of civil servants from the EU Member States was introduced for institution building under PHARE (30% of PHARE funds). It became fully operational in the year 2000. This twinning takes the form of a long-term mission (24 months), where the civil servant is required to be present in the recipient country on a permanent basis43, and is therefore fully integrated into the organisational structure of the CEEC. The underlying philosophy of twinning consists of making a longer sustainable relationship between CEEC and Member States that have similar structures...to build long-term relationships44. However, a permanent presence could cause disruption in the local organisational structure: The long-term Pre-Accession Advisor should not take a place in the organigramme... It is up to the Ministry to identify the tasks of the newcomer45. Ideally, the relationship should be longer-term 10 to 15 years whereby the CEEC can contact the twinning partner concerned as often as they wish, and the person would visit the country on a regular basis for short periods of time, according to a schedule prepared in advance, and according to needs... The EU expert would go to the recipient country periodically for short-term missions, and for concrete tasks46. Different actors, notably officials from the local EC delegation, EU Member States, and Ministries in the recipient countries, conceive this formula as ideal47. For 2000 2006, the PHARE programme remains accession-driven. It was re-structured again to increase effectiveness but the guiding principles adopted in 1997 for the PHARE programme remain valid. The activities planned for 2000 - 2006 have a three-fold overall objective:
42 43

PHARE Review 2000, Annex 4: Project Design, op. cit. PHARE Review 2000, op. cit. 44 Interview Member State Civil Servant 2, 7 March 2001. 45 Interview EC Delegation 1, Lithuania, 10 April 2001. 46 Interview Member State Civil Servant 2, 7 March 2001. 47 Interview Member State Civil Servant 2, 7 March 2001; Interview Representative Ministry of Social Affairs 2, Lithuania, 13 April 2001; Interview EC Delegation 1, Lithuania, 10 April 2001.

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 To strengthen their public administrations and institutions to function effectively in the Union institution-building (30%); To promote convergence with the European Communitys extensive legislation and reduce the need for transition periods; To promote economic and social cohesion. Increasingly, PHARE will also be steered by the problems emerging in the course of negotiations. To meet these objectives effectively, and to raise the impact of the projects, one strategy consists of progressively moving to multi-annual programming. This had not been done to a full extent in 1995, when the idea was first introduced. Another strategy consists of increasing the size of the contracts, in the context of which the administrative costs would theoretically decrease and the effectiveness of the project would increase. Between 1997 and 2000, the average contract size increased three-fold48. However, other sources of data show that project size does not necessarily increase the effectiveness of the project49. The restructured PHARE programme also sets out new instruments and structures to tackle the lack of impact and sustainability of PHARE projects and to prepare for implementation structures needed after accession (notably with regard to the Structural Funds, for economic and social cohesion). The Decentralised Implementation System (DIS) has been replaced with the Practical Guide for Services (PRAG), to improve the effectiveness of the PHARE programme. It is actually more decentralised than the DIS. Within the framework of PRAG, it is up to the recipient Ministry to make the key decisions of the manner in which they select to spend the PHARE money that has been allocated to different sectors. This is subject to approval by the EC50.

2.4. Implementation Modalities

The implementation of PHARE programmes is a long process, of which the principal steps will be re-traced here. A few words are mentioned about the actors implementing the programmes and the database in which their expertise is recorded and maintained. Then, the process of writing the Terms of Reference (TOR) of the project is reviewed. Thereafter, the launch of the tender and the process of selecting the tendered are explained, followed by a few words on the project implementation itself. PHARE projects are implemented mainly by sub-contracted external actors, partly because of the insufficient staffing level of DGV, and partly because of the culture of Commission officials, who believe their role is not to give technical assistance, but to make policy and legislation51. The actors interested in participating in PHARE programmes send in a rather general questionnaire. Areas and types of experience are taken into account, but not previous experience in PHARE projects, of which there is no full record within the Commission. Even the PHARE/TACIS information centre (contracted externally to ECHO, the European Commissions Humanitarian Office) does not have a complete record of company participation in projects, or of projects per country. The data on these potential Contractors is centralised in the PHARE/TACIS database.

48 49

PHARE Review 2000, op. cit. Interview Expert 3 Lithuania, 12 April 2001; Interview Contractor 7, Consultant 2, 23 March 2001. 50 Interview EC delegation 2 Lithuania, 10 April 2001. 51 Interview Commission Official 1, 4 February 1999.

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Every project begins with its conception. Once a project idea is born, the Terms of Reference defining the aims, means of action, expected output must be drafted. Until recently, the European Commission was responsible for this task. As the Commission officials did not have sufficient time or expertise for such a task, it was outsourced to an external expert. This helps to explain why the quality of the TOR varied from project to project52. For specific technical projects, the TOR tends to be quite clear. The broader the project, the worse the TOR53. The TOR tends to take the Western model as the ideal-type, and the project in such cases consists of applying it to the context of the transition economies, which is very different. Indeed, many projects have been based on a misconception of the situation or development in the recipient country54. The solution to problems identified in the CEEC should fully take their specific context and policy priorities into account. Another problem of the TOR is that they are often too detailed. In some cases, the TOR makes reference to particular outcomes, which can be entirely unrealistic in the view of project design. The link between the TOR and the expected result is not always clear!55 The TOR often have to be adapted in practice, as certain contextual elements have not been taken into account, or have changed between the writing of the TOR and the actual beginning of the implementation of the project. In many cases, not enough time is set out to produce the output planned in the TOR of the project.56 Since 2000, the recipient Ministry has been responsible for drafting the TOR, with the help of the EC delegation. In this respect, the TOR are now more adapted to the needs and priorities of the recipient country. Once the TOR have been drafted and agreed upon, the project is launched for tender. It is posted on the Internet for all interested consultancies to be able to send in a letter of expression of interest. Sometimes, the task manager or other persons involved contacts certain companies or experts with the relevant expertise and with whom they had formerly had a positive working experience, to try and encourage them to submit a tender for the project. Their approach can be characterised as pro-active try and find out which Contractor matches the project best57. Following the expression of interest, the candidates that seem the most adequate are invited to submit a tender within a certain period of time, which varies according to project size. Once the project proposals have been submitted by the tenderers, all members of the evaluation committee evaluate the project proposals independently. The technical evaluation (70%) is made independently of the financial evaluation (30%). The technical evaluation committee is made up of PHARE representatives, sector and/or country specialists, representatives of Ministry in the recipient country, and eventually other actors. Different factors are taken into account in the technical evaluation: interpretation of the Terms of Reference by the tenderer; the project design, work method proposed and practical organisation; the curricula vitae of the proposed project team (foreign and local experts); letters of temporary leave of absence for civil servants participating in the project; exact timetable for how the project will be implemented, and when the different members of the project team will intervene. The members of the team each have one vote, which is sometimes weighted differently.
52 53

Interview Expert 4, 8 March 2001; Interview Expert 5, 22 March 2001; Interview Expert 6, 24 April 2001. Interview Expert 5, 22 March 2001. 54 Interview Expert 7, 3 May 2001. 55 Interview Ministry of Social Affairs of Estonia 1, 23 March 2000. 56 Interview Expert 5, 22 March 2001; Interview Expert 6, 24 April 2001 . 57 Interview Contractor 4, 27 February 2001.

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The financial expert is responsible for the financial evaluation; the tenderer that makes the proposal that is the cheapest scores highest. The tenderer that has the highest score overall (70% technical evaluation + 30% financial evaluation) is the one that wins the tender. Prior to the most recent reform of the PHARE programme in 2000, the selection of the tenderer was centralised at the European Commission. As a member of the evaluation committee, the recipient Ministry only had one vote. The principal achievement of the most recent reform is that the recipient Ministry participates more in the selection of the Contractor than previously, and the process of selecting the tenderer is organised in the recipient country. Indeed, the recipient agreeing on the chosen consultant is fairly fundamental58.A typical evaluation committee now consists of two representatives of the Central Financing and Contracting Unit (one votes, the other does not) four representatives of the relevant Ministry of the recipient country, and one EC representative59. In spite of this improvement, most players involved in the process would still agree that there are good experts and bad experts, good Contractors and bad Contractors, and that there appears to be a (varying) degree of randomness in the selection of the tenderer60. For foreign experts, a crucial characteristic is to understand the local situation. For project managers, it is to be organised, flexible and pragmatic. There is a consensus among Contractors of the lack of transparency61 in the tendering procedure. Moreover, they would typically characterise the process of bidding as a huge rush to produce enormous amounts of paper long and tedious62. The tenderers that do not win the bid are not informed of the reasons that they lost. For the experts that are recruited by the tenderer to participate in the project, there is also a considerable amount of confusion. Moreover, when they are contacted to partake in a certain project, they have to sign a letter of commitment to indicate that they will only act as experts for one company. In practice, it is the company that is the quickest to contact the good experts that reserves his/her participation in the case that it wins the bid. In many cases, the experts are not familiar with the company before hand, and they feel somewhat uncomfortable to work with an unfamiliar company63. Once the Contractor has been selected, the project implementation is due to begin. The Contractors have to carry out the project in the manner that they proposed in their project proposal, and have to illustrate this in various documents, principally the inception, interim and final reports. As to the Contractors role in policy reform, although they most often do not actively contribute to actual reform - because the Terms of Reference (TOR) set out for the Contractor not to include policy recommendations of a tight nature in the project reports64 their informational advantage allows them, to some extent, to drive the future course of action through their work programmes65. The work of the experts is to feed structured ideas and questions into the decision-making process and delivery systems, rather than to write policies or agendas66. In general, the projects consist of providing information on the weaknesses and strengths of the CEEC, and on their overall capacity to sustain reform and to be able to adopt
58 59

Interview Contractor 7, Consultant 2, 23 March 2001. Informal information, Representative Ministry of Social Security and Labour Lithuania, July 2001. 60 Interview Representative Ministry of Social Affairs Lithuania 1, 10 April 2001; Interview Expert 1 Lithuania, 10 April 2001; Interview Expert 3 Lithuania, April 2001; Interview Expert 4 Lithuania, April 2001; Interview Contractor 4. 61 Interview Expert 5, 22 March 2001; Interview Expert 6, 24 April 2001. 62 Interview Expert 5, 22 March 2001. 63 Interview Expert 4 Lithuania, April 2001. 64 Interview Contractor 1, 5 November 1999. 65 The PHARE Programme: an interim evaluation report, op. cit., p. 18. 66 Interview Contractor 1, 5 November 1999.

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and implement acquis in relation to accession67. Due to the decentralised implementation approach for PHARE, the Commission has in some cases lost a grip on the substance and impact of the projects, in some cases leading to Contractor-driven projects68. However, since the accession-orientation of PHARE, and the AP and the NPAA, which guide the manner in which PHARE funds are spent, the risk of Contractor-driven projects is not as great. Moreover, the increased involvement of the local Ministries in the writing of the TOR, the selection of the Contractor, and in monitoring project implementation also helps to avoid such deviations. The enhancement of the recipient Ministrys participation results in the local counterparts greater sense of ownership of the projects, making the project more likely to succeed69. It is particularly important for the recipient Ministry to participate in the selection of local experts70. Once the project is finalised, a final report, which is subject to amendments, is submitted to the Commission (since 2000, the evaluation committee is in the CEEC; it consists of representatives of the EC Delegation and the Ministry concerned). In some cases, the Contractor is required to make substantial changes71. However, in most cases, the project report is accepted without the requirement to make many substantial changes. A brief ex-post evaluation is made (See chapter 7: The Contribution of the EU to Social Policy in Lithuania), but in most cases, no in-depth assessment is made of the long-term effects of the project. However, as will be explained in more detail below, for each sector, some projects are selected for a more detailed evaluation.

2.5. How the EU Evaluates PHARE

Concerning the actual impact of the PHARE programmes implemented, those rated as satisfactory or above in the Commissions assessment increased from 39% in 1999 to 56% in 200072, which is far from adequate. The Commission recognises the need to increase the impact of the projects. It has set up an evaluation scheme for the assessment of the PHARE programme. Evaluations are carried out for PHARE programmes for each sector. The programmes to evaluate are selected by the Evaluation Unit of the European Commission, located in Brussels. For the social sector and labour market programmes, a full-fledged evaluation was done for Lithuania and Slovakia. These countries were selected because the officer responsible for this activity had asked around about the projects to the diverse task managers and other Commission officials involved in the project73, to ensure that the results were acceptable. Below, the management-type manner in which PHARE programmes are evaluated will be described. Post-programme evaluation of PHARE-sector programmes is done according to the European Commissions Logical Framework approach and is conceived as a manner in which to determine the Historic Individual project impact. This logic is set out in the diagram 2.1.

67 68

Interview Contractor 1, 5 November 1999. The PHARE Programme: an interim evaluation report, op. cit., p. 53. 69 Interview Representative Ministry of Social Affairs Lithuania 1, 10 April 2001; Interview EC Delegation, Lithuania, 10 April 2001. 70 Interview Representative Ministry of Social Affairs Lithuania 1, 10 April 2001. 71 Interview Commission Official 6, 26 February 2001. 72 PHARE Review 2000, op. cit. 73 Interview Commission Official 4, 2 February 1999.

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Diagram 2.1. Logical Framework and Derived Evaluation Criteria Project Logic Sustainable over time Sustainability Wider objectives Impact Immediate objectives Effectiveness Outputs Efficiency Inputs Technical assistance inputs Equipment and materials Trained human resources; legal and organisational proposals; installed and operational equipment Effective application of proposals & trained human resources and operational equipment Changes in performance of the target institutions Evaluation criteria Indicators for institution building/reform projects Long-term viability factors

Beginning from the bottom of the diagram, a brief explanation will be given on the evaluation criteria for each level of assessment. The inputs are the personnel, equipment, materials and other resources required for project implementation. They are typically in the form of technical assistance (policy advice and legal advice) provided by foreign and local experts of the international Contractors and local companies, and the supply of equipment for building up the infrastructure in the recipient country. The efficiency criterion takes account of the manner in which the input was provided, and whether or not it was done in accordance with the Terms of Reference of the project and the project implementation plan prepared by the Contractor. The inputs are associated with outputs, that should in principle be measurable in that tangible outcomes (set out in the Terms of Reference of the Project) should be achieved in the project. The Commission distinguishes three types of outputs in the process of institutional reform: trained human resources; structured legal and organisational proposals; installed and operational equipment. The evaluator identifies these from comparisons and crosschecking between direct observations, analyses of TA inception, progress and final reports, and interviews with beneficiaries. Contractors, to whom the efficiency criterion applies, have the end responsibility of making sure that the specified outputs are delivered. The effectiveness criterion measures the degree to which the outputs were provided. The impact criterion, associated with meeting the immediate objectives, consists of assessing how the output impacts the performance of the beneficiary institution. In other words, the extent to which: newly acquired skills are used by the trainees in their every day work;

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 proposals made by the experts taken on board; is newly acquired equipment used? If the impact lasts for a significant period (without technical assistance inputs), the project is said to be sustainable. In other words, if the project results have been integrated into the local reform agenda or have been included among the national policy priorities after the end of the project, then the project is sustainable. The Commission's vague definition of this concept is indicative of the little emphasis that is laid on it. Moreover, the sustainability of a project tends to be assessed in a depoliticised fashion, having recourse to performance standards and benchmarks that emanate from the business world. A benchmark is a point of reference against which things may be compared or assessed. Benchmarks are chosen by reference to the objectives of an organisation, whether it is commercial or public. Benchmarking is a tool by which an organisation assesses how well it is meeting its objectives and how they could be met even more effectively (de la Porte et al., 2001). In this case, the Commission selects the benchmarks, principally with respect to the project objectives. In addition to evaluating individual projects against efficiency, effectiveness, impact and sustainability, the evaluation also comprises an assessment of the sector concerned as a whole. In this respect, the Logical Framework analysis applies a relevance criterion that assesses the extent to which the various components of a programme fit into the countrys needs, policies and strategies. This assessment consists of a three-fold analysis of the policy needs as set forth by the recipient country in the NPAA and the AP: an overall assessment of PHARE programme concerned, including its project level components, with respect to the needs, policies and strategies of the country; an assessment of the appropriateness of the programme and its projects, how the key components were approached, and how the local counter-part was involved. the comparative advantage of PHARE in carrying out the programme. The programme evaluation process is based on interviews of main players, intensive checking carried out between inputs such as reports analyses, field visits, interviews of Contractors and stakeholders, equipment delivered and outputs (quantity, quality) in comparison to project duration. In practice, the interviews are carried out with the interlocutors who are available, which often exclude local experts and most key experts. Despite the intention that the PHARE programme, since 1997, should focus more on the outcome of the projects, the Logical Framework Approach focuses most on the input and direct output, rather than on the impact, sustainability and relevance to the overall social policy reform of the CEEC. In other words The Commission does not care about the output, as it is not what is at stake. Rather, what are at stake is that the payments are made fairly and that the selection process is fair... Basically, the evaluation indicates that the countries are left quite much liberty to do what they want with the money... Emphasis is on procedural and administrative aspects, the manner in which the process is managed, as well as how the Commission handles payment... this is by far prioritised over the results, which are secondary...The experts are paid for the input, and not the output74. The complex and intricate matrix set out for programme evaluation deviates the attention away from the sustainability of the results and the overall policy implications for the sector concerned. The overall assessment of the usefulness of the evaluations made of PHARE programmes is that There is no real interest. Nobody reads them. In fact, the most avid readers of the reports

74

Interview Commission Official 4, 2 February 1999.

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are the Contractors, as it gives them an overview of how there competitors perform, and what the Commission looks out for when making the evaluation75. Besides selected Commission-driven evaluations (also externally contracted), there is generally no post-project surveillance or requirement for the country to implement certain policies. However, the political conditionality of complying with the acquis communautaire for EU membership has, since 1997, put considerable pressure on the candidate countries to integrate the legal or policy recommendations into their legislation. Also, other institutional players make occasional analyses of the PHARE programme. The Court of Auditors 1999 sector letter on PHARE was critical of the disruption caused to the candidate countries and the Commissions own services by the simultaneous introduction of many changes, some of which had not been sufficiently worked out in advance. The letter also drew attention to the need for continued improvements in project design. Reference was also made to the lack of an effective PHARE management information system, the performance of Contractors and experts, and the results of the projects.

2.6. PHARE Programmes in the Social Policy Area

In the area of social security and the labour market, a few national PHARE programmes have been carried out throughout its lifetime, most of them dealing with reforming the administrative infrastructure. Fundamental public administration reform is not part of the legally binding acquis communautaire and there is no standard EU model of effective public service. The justification to intervene in this area is that general public administration problems are repeatedly cited in regular reports and negotiations as constraining applicant countries capacity to meet EU accession requirements. In the social sector, there have been no projects that focus on contributing to the actual reform of the social policies, besides those linked with the social acquis communautaire. A justification for more attention to this similar to the one used for public administration reform could be used. However this has not proved possible due to the sensitivity of this area where there coexists four different models of social protection (Nordic, Conservative-corporatist, liberal, southern) within the EU76. Besides administrative reform and the legally binding acquis communautaire, the focus of PHAREs social policy programmes has often been on employment. Within the EU, there is more consensus on labour market policies than on social policies. Moreover, with the sharp rise in unemployment in the CEEC following transition from the planned to competitive markets, the pressure to develop an effective social safety net and to restructure labour market institutions became more intense.77 Local labour offices of the ministries of labour have been transformed, from their previous role as regulators of the mobility of the employed to their new role: serving the unemployed and responding to the demands of entrepreneurs for manpower. Several projects pursued training objectives, for example for social workers and for minority groups previously excluded from the labour force due to disabilities or other types of social handicap. Such projects are seen as a fundamental means for obtaining changes in attitudes, values and behaviour as well as providing occupational and management skills, to adapt to the Western ethos.

75 76

Interview Commission Official 4, 2 February 1999. Interview Contractor 1, 5 November 1999. 77 The PHARE Programme: an interim evaluation report, op. cit., p. 46.

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With regard to the social protection systems themselves, some PHARE programmes, often in conjunction with World Bank projects, have aimed to modernise social benefit systems (normally ensuring minimum assistance for the unemployed). And concerning the health care sector, it is the only sector in the PHARE Programme where a coherent policy framework was formed at the outset. The programmes were consistent with this policy framework, of which the overall aim was to reform the health care system in its administrative and organisational structure and to more effectively target the delivery of services to the population78. The present priorities of the PHARE programme in the social sector include the legal requirements, the Employment Title, and to a lesser extent the social protection area, in line with the Strong Social Europe discourse (see chapter 3). The legal requirements refer to the elements mentioned in the hard acquis aspect of the externally oriented discourse, and the soft acquis refer to: functioning social protection systems, active role of social partners, economically and socially sustainable social protection systems79. The place of social policy projects has, compared to other PHARE mainstream projects, been rather small. For the period 1990 1998, a total of 5,589.10 million EUR was paid out in the framework of the PHARE programme. Out of this, 202.37 million (or 3.6%) was for social development and employment80.

2.7. Conclusions
Throughout its lifetime, the PHARE programme has been restructured several times to reflect the policy priorities of the European Union beginning with a loose promotion of democratic principles at the beginning of the 1990s to helping the candidate countries comply with the acquis communautaire in view of their future membership to the European Union in 1997. Other changes made to the programme were to render it more effective. Despite the fact that PHARE has increasingly been guided by the accession agenda, particularly since 1997, it does not necessarily increase the policy influence of the programme. This is due to several factors: The fact that the TOR were often written by experts who were not aware of the political context and priorities of the recipient countries. In such cases, the project often addressed the wrong questions, and was therefore not integrated into the overall policy reform process of the recipient country. This situation has improved with the recent transfer of responsibilities to the Ministries in the recipient countries. It is now up to them to select how they would like to use the PHARE money earmarked for their country in different sectors, although this is subject to approval by the local EC delegation. Poor project design and the selection of inappropriate experts for implementing the projects. The Commissions focus on input rather than on the long-term sustainability and relevance of the project in the evaluation of PHAREs sector programmes. In theory, this should improve with multi-annual programming that seeks to conceive the contribution of PHARE to the reform process in a long-term perspective.

78 79

The PHARE Programme: an interim evaluation report, op. cit., pp. 48 - 49. PHARE: Social Sector Strategy Paper, jointly prepared by Birks Sinclair and BBI, June 1998. 80 PHARE Review 2000: Annex 1 Review of Progress Since 1997, Table 4: Total PHARE commitments, contracts and payments by sector (1990-1998).

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Due in part to the accession agenda, focused in particular on the Copenhagen criteria, the political and economic acquis and institution building, the social policy dimension of PHARE is limited. The legally binding acquis make up the core of the social policy programmes, while those relating to the soft acquis communautaire are often concerned with the provision of information and training. The consensus that has emerged among the different institutional players on the broader interpretation of the acquis communautaire in the social policy area is not reflected in the PHARE programme. As the social sector was not a priority in the PHARE programme, the idea of having a separate social protection programme - to become the Consensus programme - was conceived in 1994. An in-depth case study of this programme is now turned to in chapters 3 and 4.

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3. THE CONSENSUS STORY. 1995-2000.

3.1. Introduction
The Consensus Programme was launched to respond to the gap in addressing social protection issues in PHARE mainstream projects. The account of the programme is divided into two parts. The first part in this chapter of the paper tells the story of Consensus. The second part in chapter 6 analyses the manner in which the aid is provided, through competitive tendering. The theses of the chapters taken together are that: the Consensus Programme is exemplary of the Commissions way of functioning in that it is conceptualised by a few experts, without taking account of the situation in the recipient countries and without fully conceiving its implementation modalities in advance; none-the-less whereas the PHARE Programme as a whole had not been an effective instrument for the advancing of the external dimension of EU social policy the CONSENSUS Programme had become such an instrument. It also facilitated an effective dialogue between accession country Ministries of Welfare and DG Employment and Social Affairs officialsand between EU country Ministries of Welfare and CEEC Ministries of Welfare. Its demise in the face of a concerted campaign to retain it is indicative of a lack of consistent external policy thinking on the part of the Commission. the role of specific individuals is crucial in the major strategic decisions of the Commission both in terms of establishing Consensus and closing it down; the selection of Contractors through competitive tendering favours private sector players, rather than aiming to achieve a balance in the project implementators (private sector players, public sector players, non-governmental organisations, academic organisations/research institutions); the heavy tendering procedures are not necessarily correlated with the selection of the most appropriate Contractor for the project; the role of the Contractor is important in project implementation, but the role of the experts is even more crucial. The first part of the paper begins by recounting the story of Consensus I, including its conceptualisation, its structure, the involvement of Commission officials, and the operation of the programme. It then goes on to tell the story of Consensus II. It covers the management of the programme, the manner in which the money was spent, and how the decision was taken to discontinue the programme.

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3.2. Consensus I 3.2.1. The Beginning

Consensus was first launched as a pilot programme in 1995 for a two-year period. Prior to that, a Commission official had prepared the terrain, defining the underlying philosophy of the programme. The projects under Consensus were to be in line with the priorities of the PHARE programme at the time: promoting democracy in the Central and Eastern European Countries (CEEC). In this respect, an inter-institutional reform commission (IIRC) was established in each CEEC. The IIRC was democratically to represent different actors in the social protection field: trade union and employer organisations, the Ministry (-ies) involved with social protection reform and the insurance institutions. Three external international experts were appointed to assure that IIRCs were set up, and 12 CEEC81 were accepted to participate in the programme. There was no vision of how the social protection systems in the CEEC should be reformed in the Terms of Reference (TOR) that initially defined the guiding principles and organisation of the programme. Consensus was supposed to supplement, rather than substitute, PHARE-funded social protection projects at national level. And in the event that Consensus, as a mechanism, would prove to be successful, a possibility for the programme to entirely replace national PHARE programmes in the social protection area was foreseen82.

3.2.2. The Structure of the Programme

The operation of the programme was divided into two separate parts: the management and the expertise. MEDE, a public administration consultancy company based in Houten, The Netherlands, was awarded the contract for the management of the programme. The company had received the information about the future programme through an informal channel, from one of the experts preparing the terrain for Consensus in the CEEC. After receiving this information, the future programme director sent a letter of expression of interest to the Commission. MEDE was surprised to be included on the short-list. Its main motivation to participate was to manage the programme, as it was a management consulting company. The company had had no former experience in the area of social protection or social policy83. The contract for the expertise, the technical assistance part of the programme, was awarded separately. MEDE, selected prior to the expertise arm of the programme, did not participate in its selection, which was conducted exclusively by the Commission. The Mercer, CAN Veneto, EISS consortium was awarded the contract. The actors making up the technical assistance arm of the programme each had a different profile: William M. Mercer, one of the four components of the Mercer Consulting Group, is one of the leading worldwide consulting firms, specialised in strategic and operational human resource consulting and implementation. Its focus is on employee benefits, compensation, communication, and actuarial services84;

81

Albania, Bulgaria, Czech Republic, Estonia, F.Y.R.O.M (Former Yugoslav Republic of Macedonia), Hungary, Latvia, Lithuania, Poland, Romania, Slovak Repbulic, Slovenia. 82 European Commission, TOR Consensus I, 1995. 83 Interview Contractor Consensus I, 7 October 1999. 84 Presentation Mercer, Mercer website.

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 CAN Veneto is also a consulting company, with very wide interests and priorities, of which social policy is not the main priority85; The European Institute of Social Security (EISS) is a research institute, specialised in social security issues. It had previously participated in numerous projects on social protection reform in the CEEC. The motivation factor of the first two is most probably to obtain financial profit, whereas the latter has more policy-oriented motivations, consisting of contributing to the reform of the social protection systems in the CEEC86. The aim of the EISS was to helpCEEC in the provision of information, to enable them to thereafter be able to make autonomous decisions. Social protection in the CEEC needed to be systematised87. The design and structure of the Consensus Programme is, as indicated above, in fact rather complex, including management structures, a technical assistance facility and interinstitutional counter-parts in the CEEC. In addition to these structures, a Programme Advisory Board (PAB) and a Programme Management Agency (PMA), made of the administrative team and a technical assistance team, were set up. The PAB was established as an advisory and policy making body, to provide advice to the European Commission. It consisted of representatives from the participating PHARE countries, EU Member States and the European Commission Its role as a forum to discuss policy issues increased throughout its lifetime. The PAB met on a six-monthly basis. During the meetings, the CEEC and EU representatives engaged in bilateral discussions, building on existing relationships or creating new ones. Another function of the PAB was to monitor the work of the PMA and the overall implementation of the Consensus Programme, which was done by a smaller Evaluation Group (EG). The EG was a six-member (3 CEEC and 3 EU representatives) group, changing members every six-months. It dealt with the evaluation project proposals, thus fulfilling the function of monitoring the work of the PMA88. More importantly, the work of the PAB as a forum to discuss social policy helped to raise the profile of social protection reform in the CEEC89. The administrative team of the PMA dealt with the day-to-day administration and management of contracts for projects and budget lines. It also disseminated information to all programme stakeholders in the CEEC, EU Member States and the European Commission, and organised the six-monthly PAB meeting. The technical assistance team of the PMA provided a high-level of social protection expertise to the CEEC90. It consisted of three long-term experts, which helped the CEEC in identifying their social protection needs, assisted them in the drafting of project proposals. The technical assistance team also evaluated tender proposals, monitored project implementation and evaluated the final reports. The IIRCs that were established in each CEEC participating in the programme were supposed to identify needs, initiate project proposals and discuss social protection reform. They did this together with experts from the Consensus PMA. In practice, the composition

85

In fact, the expert from CAN Veneto did not have the expertise required in social protection at EU level and in the CEECs and was, with considerable difficulty due to PHARE rules, replaced by another expert, who Veneto subcontracted from Mercer. 86 Interview Expert 2, 22 August 2000. 87 Interview Expert 2, 22 August 2000. 88 Consensus PMA I, Final Report Consensus I, August 1998, Houten, p. 9. 89 Interview Expert 1, 9 March 2000. 90 Consensus PMA,Final Report Consensus I, op. cit, pp. 7 8.

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and the activities of the IIRCs varied from country-to-country91. The IIRC was a sort of idealtypical democratic concept, aiming to involve different actors in the making of social policy. Experience has proved that these multi-actor bodies do not correspond to the existing work ethos in the CEEC. In the CEEC, the IIRC was often conceived as a vehicle for administering PHARE funds, aiming to get as much money out of the programme as possible. It was above all just a project management body and did not influence or report on social policy92. It is only the EU countries that seemed to conceive the IIRC as a policy-making body93. Concerning the representation of different parties, only the priorities of the Ministry in which it was physically located were represented94. At the end of Consensus II, the IIRC was dissolved in most CEEC. Other structures replaced it for the co-ordination of international aid95.

3.2.3. The Involvement of the European Commission

The Commission officials involved in the Consensus Programme until the reform of the Commission were from DG1A (Directorate General for External Relations/Europe and the New Independent States, Common Foreign and Security Policy and External Missions)96 and DGV (Directorate General for Employment and Social Policy). DG1A provided the task manager for the Consensus Programme and held the responsibility of the decisions taken from a procedural perspective. DG1A was accountable towards the Court of Auditors and the PHARE Management Committee97. In practice, it had to approve all decisions taken by the PMA through a decentralised mechanism. From the inception of the Programme until July 1998, the task manager was a person who was committed to the programme and closely involved in its monitoring. From July 1998 until the end of Consensus II, in the beginning of 2000, another task manager, with a more distant approach towards the programme, was appointed. Although both task managers applied the PHARE tendering rules in a flexible manner, this was particularly true for the second task manager98. Since the approach was more distant, the experts of the technical assistance team of the Consensus Programme had more flexibility to orient the programme. One Commission official ascertained that they had much liberty and explained that This is not astonishing because if one creates a body outside the Commission and delegates to this body certain tasks, you have to give the persons involved some room for their work99. DGVs role became more active throughout the lifetime of the Consensus Programme. Before Consensus I was launched for tender, DGV was contacted to give its opinion on the
91 92

Consensus PMA, Final Report Consensus I, op. cit., p. 13. Interview participant in framework contract consortium, 4 November 1999. 93 Interview Representative of Ministry of Social Affairs of Estonia, 23 March 2000. 94 Interview participant in framework contract consortium, 4 November 1999. 95 Interview Ministry of Social Security and Labour of Lithuania, 10 April 2001. 96 Before the re-organisation of the Commission in the latter part of 1998, DG1A had three overall tasks: It handled relations with non-EU member European countries, the New Independent States of the former Soviet Union, and Mongolia. It dealt with the European Unions Common Foreign and Security Policy It managed the delegations and external offices of the European Commission around the world. In the framework of these tasks, it held the overall responsibility of preparation of enlargement of the European Union with the CEECs, Cyprus and Malta. It administered the European Unions PHARE programme. (Presentation of tasks of DG1A , Europa website: 1998). 97 Interview Commission Official 5, 9 February 2000. 98 Interview Contractor 4, 27 February 2001. 99 Interview Commission Official 6, 26 February 2001.

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Financing Memorandum of the Consensus Programme. At the time, it responded that it did not have enough human resources to be able to do that100. A little later, in 1996, one Commission official became particularly interested in the programme. The task manager informally asked for his opinion on many technical issues. An informal relationship was developed. In July 1997, the status and role of DGV increased: DGV obtained an obligatory technical visa, which meant that they officially had to endorse all the decisions101. DG V aimed to contribute to the success of the projects102. It gave a view on all relevant proposals that come forward. It comments on whether the scope of the project is appropriate, given the requirements for accession and in the light of other priorities for assistance funding in the social field, and also on more detailed aspects such as the detailed objectives and content of projects103. Its influence increased even more when the second task manager, less committed to the programme, took over its management. Towards the end of Consensus II, DGV integrated its own priorities, such as MISSOC and Regulation 1408/71 into the activities of the programme. In sum, DGVs intervention developed throughout the lifetime of the programme, from disinterest to informal consultation, then to a technical visa and finally to including its priorities in the projects of the Consensus Programme104. In this way those responsible for the social policy of the EU found a way of influencing albeit briefly the external dimension of the EU in relation to the accession countries. Regarding the areas covered and the type of policy support provided to the CEEC, the Commission had not, at the outset, defined a specific scope for the programme. General reference was made to policy development, without giving further specifications. The thread tying together and defining the programme was an ideal-typical operational mechanism to enhance democratic principles - a high degree of intersectoral and interinstitutional coordination is essential if sustainable social protection reform is to be achieved105 rather than a social policy orientation. The objective of Consensus was to bring people involved in the social protection area together to enter into dialogue. The aim of DG1 was NOT to promote a certain model of social protection or social policy106. The fact that there was no defined vision of social policy is due to the variety of systems and traditions in the Member States. The programme nevertheless tried to promote the respect of certain values all Member States share, such as a high level of solidarity with those who cannot help themselves107. However, within DG1 there was a disagreement on what these shared values were. Some conceived social policy in the wider understanding of the term, while others did not recognise the soft law aspect of social policy108. Following a brief period of trial-and-error during the inception of the programme, after which it became clear that the CEEC counter-parts that submitted the projects did not implicitly conceive social protection as it was understood by the Commission, a significant part of resources were committed to defining the scope. The experts of the Consensus PMA and the Commission in the person of the task manager at the time - eventually came to an

100 101

Interview Commission Official 5, 9 February 2000. Interview Commission Official 5, 9 February 2000. 102 Interview Commission Offical 6, 26 Feburary 2001. 103 Interview Commission Official 8, 6 March 2001. 104 Interview Commission Official 5, 9 February 2000. 105 European Commission, TOR Consensus I, op. cit., p. 5. 106 Interview Commission Official 5, 9 February 2000. 107 Interview Commission Official 6, 26 February 2001. 108 Interview Commission Official 5, 9 February 2000.

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agreement on the scope in July 1996, with additional elements of clarity added in December 1996: Social Protection should include all compulsory schemes or voluntary arrangements made for the purpose of providing individuals and/or households with benefits intended to relieve or to assist them upon occurrence of specified social contingencies (term broadly equivalent to social risk) and/or social needs. The relevant social contingencies should include: old-age, disability, death of the breadwinner, occupational accidents and diseases, a condition requiring health care in connection with illness, maternity or injury, family responsibility for bearing children, involuntary unemployment, the lack of minimum resources for subsistence. The specific functions performed by social protection as defined above are income maintenance, income support, and guaranteed access to health and medical care regardless of individual income109. Besides the basic elements of social protection above, the definition (see Annex 1 for full definition) is long and technical. It is also neutral in the sense that there are no elements indicating preference for a certain orientation of social policy, whether closer to the liberal safety net conception promoted by the World Bank or to a more social democratic model such as the one in Scandinavia. Many players consider this as a strength, as it gives the CEECs the freedom to design the kind of system they want110. On the other hand, it leaves the possibility for other players with a more specific vision to impose their model of social policy in the CEEC.

3.2.4. The Operation of the Programme

In this section, the procedures that the Consensus Programme had to follow are explained, followed by an explanation of the manner in which the Project Fund of the programme was spent, and finally, some details on the evaluation of Consensus I. The Consensus Programme had to follow the heavy PHARE procedures (Decentralised Implementation System: DIS) and to select Contractors via competitive tendering. This was a surprise to the management arm of the programme. The Financing Memorandum, had, instead, indicated that Consensus should work on the basis of the same underlying logic as the framework contractors. The Commission in 1996 set up the framework contractors by sector, for particular regions, to avoid the complex and resource-consuming tendering procedures111. Sectoral framework contracts are used for all technical assignments less than 300,000 EUR. On paper, one specificity of Consensus was its flexibility, in order to be able to respond quickly to urgent needs. A majority of Consensus projects was worth less than 300,000 EUR, and yet, the implementator had to be selected by competitive tendering. To follow the DIS, a database had to be constituted. It was drawn up from a relevant sample of the PHARE/TACIS database. Additional actors were registered in the Consensus database throughout its lifetime. In practice, the PMA was not on the distribution list for the DIS manual and was thus not kept up-to-date on adaptations in the DIS, although it should have been since the Consensus programme was a part of PHARE and was required to follow the procedures strictly. This non-information prevented maximum efficacy. Throughout the 2 years of the first phase of the programme, 6.6MECU out of a total of 7.6MECU of the project fund (money set out for the implementation of projects) had been
109 110

Consensus PMA, Final Report Consensus, op. cit., pp. 3 - 4. Interview Commission Official 6, 26 February 2001. 111 Interview participant in framework contract consortium, 4 November 1999.

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spent. The rest of the money (13% of the Project Fund) was returned to the general PHARE funds 112. Although there were certain factors - such as the unstable political situation in Albania - that helped explain this rather significant non-spending, a general explanation is the long and difficult adaptation of the Consensus PMA to the heavy DIS procedures. Under Consensus I, 89 projects had been carried out at the end of the programme, in the form of country and multi-country projects. The country projects aimed at providing support to social protection reform and responding to country specific issues. The country projects consisted to a great extent of administrative (such as setting up the infrastructure of an IIRC) and instrumental support (for example translation of key EU documents into local languages). The multi-country projects, upon agreement between the task manager and the Consensus experts, focused on informing the CEEC of the EUs legal standards and requirements, in the light of future accession to the Union. For the multi-country projects, an umbrella strategy was set out by the team leader, and adopted for the legal acquis in the form of conferences, consisting of organising conferences in each country and then having an overall comparative conference to tie the strings together and exchange experiences and knowledge. 25% of projects under Consensus I were conferences on the legal acquis: protection of rights, equal treatment, coordination of social security systems. Another multi-country project, the country policy paper (making up 13% of projects) was also implemented. The aim of the country policy papers was to describe and analyse the social protection system in each CEEC. Overall, 42 % of the projects dealt with provision and dissemination of information (i.e. all the conferences (25%) and translation (17%)). 29% of the projects focused on reform, consisting of the preparation for or implementation of a reform. 16% of the projects dealt with setting up structures for the operation of Consensus in the partner countries (IIRCs)113. The projects in Consensus I mostly consisted of preparing the ground for social protection and social policy reforms in the CEEC, and favoured exchange of information and know-how between the EU and CEEC and among the CEEC. Under Consensus I, evaluation of the programme was performed in two manners: evaluation by an external expert, on the initiative of the Consensus team; evaluation by OMAS, the auditor contracted by the Commission. The external expert performed an evaluation on a project-by-project basis, taking account of the success of the project and the satisfaction of the beneficiary. On a scale of 5, project success overall - in terms of main objectives, coverage of immediate objectives, achievement of objectives, pre-accession relevance, and project design - was 4,5. The overall satisfaction of the beneficiary was 4,35. Quantitatively, the projects seem to have been successful. However, there was no qualitative evaluation to supplement the quantitative assessment. The main criticism in the evaluation performed by OMAS was that the projects were too small incurring administrative costs that were too high. It seems that the aim of the programme to implement small projects upon short notice, according to immediate needs was not taken into account114.

112 113

Consensus PMA, Final Report Consensus I, op. cit., August 1998. DE LA PORTE, C., Annex 3, phd proposal The manner in which the EU, through its external aid programmes, contributes to building the social protection identity in the CEECs, March 1999. 114 OMAS, Final Evaluation Consensus Programme I, 1997.

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3.3. Consensus II
After the pilot phase, Consensus was launched for tender a second time for another two-year period, in 1997. The notice for the call for tender was posted on the Internet. Five proposals for the management of Consensus II were submitted115. The contract for the programme was awarded to the BBI, GVG, IPS consortium. The tender process did not take place according to the rules, by a neutral and independent evaluation committee. Two experts from the framework contractor for the social sector, Birks Sinclair that had been involved in projects from Consensus I were on the committee. Moreover, MEDEs collaboration with Birks Sinclair had been somewhat negative. In terms of representativity, the rules also required that the recipient be present, which had not been the case116. However, the PHARE Management Committee had agreed on this issue in advance on the basis that it would have been very complicated to include a representative from each CEEC participating in the programme in the tender evaluation. As had been the case for Consensus I, the profiles and the motivation factors of the actors that were selected to implement Consensus II were diverse: Bernard Brunhes International (BBI), part of the Bernard Brunhes group, based in France, is the consulting arm involved on social policy reform in the CEEC and CIS. The group has implemented other PHARE projects and projects financed by other donors; GVG is a German NGO, aiming to defend a specific type of social model; The UK-based International Policy Studies (IPS) is an academic think-tank that carries out research in diverse policy areas. There was some improvement in the structure of Consensus II, in that there was only one contract in which the technical assistance and management arms of the programme were united. However, the fact that there were three dissimilar actors involved in its management led to conflicts of interest and operational difficulties comparable to those in Consensus I. The experts from the different companies were seen as representing the financial and strategic interest of their employer. Thus, the conflicts between the representatives of the company, most often regarding the sharing of profit and the balance of power, also determined the relationship that was to emerge between the experts contracted by the company for the Consensus Programme. The operation of Consensus II was smoother because many things had already been established under Consensus I: the scope of activities, the database, the procedures, and the contacts with the CEEC. Despite this, the start-up phase was very much of a learning process for the whole team. In particular, contacts with the CEEC had to be reestablished, and the result was that one fourth of the lifetime of Consensus II was used for coming to terms with a functional procedure and building trust with the recipients. The criteria for determining whether a project would be accepted was, as for Consensus I, based primarily on whether it was in the framework of social protection, as defined for the programme. Since 1997, the PHARE programme had become accession-oriented, which also applied to the Consensus Programme. The project fund of Consensus II was partitioned into country and multi-country projects. Two of the multi-country projects - Monitoring the development of social protection reform in the CEEC, parts 1 and 2117 - were a continuation of the Country Policy Papers carried out
115 116

Interview Commission Official 5, 9 February 2000. Interview Contractor Consensus I, 7 October 1999. 117 Part 1 focused on the main sectors of social protection: the pension system, health care, unemployment protection. Part 2 focused on employment injuries (work-related accidents and occupational diseases), short-term

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under Consensus I. The projects resulted in National Surveys for the 12 CEEC participating in Consensus, and a cross-country sectoral report, including: basic facts and figures on social protection legislation, financial organisation and management; review and discussion of the ongoing reform process, highlighting proposals and achievements, and the positive contribution of social protection to the maintenance of acceptable living standards; analysis of the impact of the financial transaction of social protection on public finances and on related macro-economic aggregates118. The sector analyses were to be used to identify needs, to better be able to respond to them in the future. Three other multi-country projects focused on the co-ordination of social security systems. The first took the form of an international conference, and the second (for the first wave countries) and the third (for the second wave countries) focused on the preparation and planning for the implementation of the EC co-ordination rules at national level. Another Mutual Information System on Social Protection in the Central and Eastern European Countries (MISSCEEC) set out to prepare the first wave countries for integration into the EU MISSOC programme. These projects were included in the Consensus Programme as it was a priority for the Directorate General for Social Affairs and Employment. Officials from the Directorate General for Social Affairs and Employment were on the evaluation committee of the multi-country projects. Another multi-country project consisted of organising an International Workshop on Aspects of Financial Management of Social Protection, in order for the CEEC to fulfil the soft law requirement of financially sustainable social protection schemes. And finally, a multi-country information project provided the CEEC with a pragmatic instrument to approach EC social protection law: Glossary and Dictionary on Social Protection Terms119. Overall, 53 projects, compared to 89 projects under Consensus I, were implemented. Using the same criteria to classify the projects carried out under Consensus II the results differ slightly from Consensus I. 38% of the projects primarily had an information function, comparable to 42% under Consensus I; 58% of the projects were reform-targeted, almost doubling (29%) the reform-oriented projects under Consensus I; only 4% were devoted to Consensus-specific projects, compared to 16% under Consensus I.

cash benefits, family benefits, social assistance. 118 Terms of Reference: Monitoring the Development of the Social Protection Systems in the CEECs, pp. 2 - 3. 119 Several of the national projects under Consensus I had already provided some CEECs with a dictionary and glossary on social protection terms.

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3.4. The Demise of Consensus

Consensus was not repeated a third time in the same form, as the assessment of the programme within the Commission was not positive. The official reason was because the European Parliament had set a threshold of 5% for management and administrative costs, which was exceeded by the Consensus Programme. It is of interest to note that the different actors involved in the programme perceived the results of Consensus II in a positive light, after a relatively long and somewhat complicated teething period, and saw the merits of continuing the programme. Indeed, the first task manager of the Consensus Programme had prepared a Financing Memorandum for Consensus III with a representative from DGV and experts from the Consensus PMA in July 1998. The Head of Unit of DG1, securing the future of the programme, approved it. However, during the meeting of the PHARE Management Committee, in September 1998, the decision to continue Consensus was taken back, as funds were needed immediately for an emergency operation. At this time, the Head of Unit of DG1A had changed. He took the decision to discontinue the programme together with another highly influential person. As expressed by one Commission official: when it comes down to it, the future of the programme depends on one person, and that even if it should not be that way, it is possible to go back on decisions that have already been taken120. Despite this decision, DGV and various other committed persons involved in Consensus put in efforts for the programme to be continued. Extensive lobbying was done and proposals for a financial memorandum had been re-drafted late 1998 by Consensus and submitted to the Commission for discussion in the first half of 1999. A working group121, given the mandate by the PAB to represent the whole body, sent a letter (together with the proposal for a Financing Memorandum) to Mr. LAMOUREUX, the Deputy Director General, in which it was clear that there was a demand for a continuation of the Consensus Programme: We think it would be helpful to develop an operational strategy which favours projects which will produce concrete, tangible and sustainable results in terms of policy development and/or of institution buildingleading towards the achievement of EU good practicesupports the comparative dimension of social policy analysis and reform and of implementation strategies, and encourages active co-operation and interchange between candidate countries for the pursuit of common goals122. Moreover, the breakdown of prices included a reduction of the running costs, to be within the threshold set by the European Parliament. The overall objectives were much more specific and policy orientated than had been the case of the initial financial memorandum of the Consensus Programme: In its accession orientation Consensus deals with the specificity of the social policy acquis of the Union: Partly it supports directly the implementation of the acquis (e.g. in the areas of labour law, social dialogue, equal treatment, social protection and public health). More often, however, it needs to address issues of sustainable social and health protection that are fundamental to social security in the EU and on which the existing acquis is based, but are not governed by EU law explicitly123.

120 121

Interview Commission Official 5, 9 February 2000. The working group, referred to as the Group of 8 included representatives from: Austria, Finland, Germany, United Kingdom, Czech Republic, Estonia, Hungary, Slovenia. 122 Group of 8 comments on the draft financing memorandum provided to the PAB on 14/15 December 1998, February 1999. 123 Consensus PMA, Draft financial memorandum, 1998.

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Clearly, both the hard and soft acquis would have been in the scope of the programmes activities. The work of the Group of 8 was also distributed to other key players in DG1A, as well as being disseminated widely at Desk Office level. However, the lobbying movement did not go high enough in the hierarchy. The Commission ignored the demands of the Group of 8 to engage in a dialogue on the best way to optimise Consensus as an instrument for the future. In fact, the Group of 8 never received an official response to the letter they had sent124. However, the Commission launched a Consensus III programme. The means of action of the new Consensus (20MEUR) is long-term twinning of EU civil servants to corresponding ministries in the CEEC. With regard to twinning, Member State and CEEC representatives at the 9th PAB meeting, held on 14 - 15 June 1999, expressed their concerns as to the success of the mechanisms. The concerns included: lack of availability of civil servants from the EU for longer periods of time; twinning not being able to play the same role as technical assistance in the reform of CEEC social protection systems125. The Commission did not take these concerns into account. Proposals were submitted from the CEEC to the Commission for evaluation on 24 September 1999 The experts from the Consensus PMA made a first evaluation of the preliminary proposals. The PHARE Management Committee approved these proposals on 12 November 1999. The PMA and the PAB, which had been the strong points of Consensus I and II, ceased to exist. Twinning focuses more on the institution-building aspect of the acquis than on policy development. The aim is to strengthen the institutional and administrative capacities of the CEEC to apply the acquis (legally binding provisions only) in practice. By the summer of the year 2000, all the fiches projects prepared by the CEEC had been approved. From May to September 2000, Member States proposed candidates for twinning. The CEEC selected the candidates. After this, the twinning covenants detailed description of the tasks that will be worked on during the twinning mission were prepared. The preparation of the twinning covenants was expected to end by the end of the spring of 2001. The preparation of each twinning covenant takes approximately six months. Altogether, 17 twinning arrangements had been prepared under Consensus III. Long-term advisers were found for all projects. Like for Consensus I and II, the DG for external affairs is responsible for the overall management of Consensus III. However, DG EMPL is involved in all stages of the process, from the preparation of the fiches projects to the monitoring of the project and its evaluation. Consensus III is the last phase of the programme. Thereafter, all activities related to the social acquis will be done under national PHARE programmes126.

Interview Member State Civil Servant 3, 23 March 2001. Minutes of the 9th Programme Advisory Board (PAB) Meeting of the Consensus Programme, Prague, 14 - 15 June, 1999. 126 Interview Commission Official 7, 1 March 2001.
125

124

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3.5. Conclusions
The concept of the Consensus Programme is one example of the interesting ideas - in its multi-actor and democratic principle - of the Commission. However, there were many elements that had not been thought out carefully in advance, which is why it took Consensus a long time to gain momentum. The decision to change its format - favouring twinning as the main instrument - is exemplary of a more general trend, namely that of the Commission being able to re-invent its own wheels, partly because of the moving around of persons and changes of structure of the Commission. Once the sponsors or patrons of some activities change - in this case, the first task manager of the Consensus Programme - they are discontinued and others are created. The role of specific individuals in the discontinuation of and creation of activities is central. Moreover, due to this functional norm, there is an overall non-responsibility among Commission officials when changes occur for which there are not necessarily follow-through actions127. In effect whereas the PHARE Programme as a whole had not been an effective instrument for the advancing of the external dimension of EU social policy the Consensus Programme had become such an instrument. It also facilitated an effective dialogue between accession country Ministries of Welfare and DG5 officials. Its demise in the face of a concerted campaign to retain it is indicative a lack of consistent external policy thinking on the part of the Commission. How far in practice the programme was as effective as this concluding suggestion is a matter we turn to in the next chapter where the modalities of implementation through subcontracting are reviewed and assessed.

127

Interview Contractor 1, November 5, 1999.

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4. IMPLEMENTING CONSENSUS: SUBCONTRACTORS AND EXPERTS

4.1. Introduction
Chapter 4 aims to shed some light on the implementators of Consensus projects. First, the process of selecting the tenderer or subcontractor is described. Secondly, the companies who have been active in the Consensus Programme are described and their characteristics identified, including their motivation to participate in the projects, and their social objectives. Thirdly, the role of the contractors and the experts in project implementation is clarified. Finally, one section is devoted to a specific type of contractor, the Framework Contractor.

4.2. The Process of Selecting the Contractor

Consensus, as a part of PHARE, had to comply with the DIS, which meant that the contractor had to be selected through competitive tendering (See chapter 2 for more details on the DIS procedure and PHARE). Following the launch of the programme, a database was set up, in which interested companies could register, specifying their professional expertise and country experience. Once the TOR of a project had been finalised and approved by DG1A, the process of selecting the contractor was launched. The options for selecting a contractor were: direct agreement: for local contracts not exceeding 1000 EUR (Service Order). In such a case, a tender was not launched. informal consultation: for contracts not exceeding 50 000 EUR. Three actors were selected for the short-list, and were invited to submit a written offer within 4 weeks. Of the tenders submitted, a contract would be concluded with the tenderer having obtained the highest score in the tender evaluation. restricted tendering: for contracts exceeding 50 000 EUR. The number of players (minimum five) chosen for the short-list, and the time allocated to the tenderers to prepare their offer (between six and eight weeks) depended on the size of the project. A contract would be concluded with the tenderer having obtained the highest score in the tender evaluation. Framework Contractor128: under the DIS system of PHARE, all contracts under 300 000 EUR were concluded with a Framework Contractor. The recourse to Framework Contractors was allowed from the second half of the lifetime of Consensus I onwards129. One Framework Contractor was set up per sector. A standard request for supply of services was sent to the Framework Contractor of the social, health or administrative sectors, when the planned start of the project did not allow a long tender procedure. For the labour market and social policy sector, the framework contract had been awarded to Birks Sinclair from 1996 to 1999. The company had won the framework contract for the social sector after having scored
128

Officially, the Framework Contractors were set up by the Commission to carry out PHARE and TACIS projects worth < 300.000 EUR. 129 Consensus PMA, Final Report Consenus I, op. cit., p. 11.

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the highest through a competitive tendering process. Under Consensus, the framework contract was generally only used in the case of a shortage of time, since less time was required for preparing the offer. In most other cases, this option was not used because it was more expensive than contracts concluded with contractors selected through competitive tender. Experience has shown that in many cases, the procedure was not actually speeded up with the use of a Framework Contractor130. For options 2 and 3, short-lists were made on the basis of the companies registered in the database. Moreover, the policy in making short-lists was to have an equal geographical balance, representing different parts of Europe: the North, the South, the West and the East. In practice this meant that more often than not, the inclusion of one or more of the companies on the short-list was merely symbolic. Another factor involved was the personal contacts of the Consensus experts, integrated into the database a posteriori of having been short-listed for a tender. Besides the official database that had been transferred from Consensus I and updated to include new companies under Consensus II, each expert thought of contacts they knew that would be capable of carrying out a project, and who would be likely to submit a tender131. Experience has shown that the inclusion of tenderers on short-lists through informal channels does not affect the project results adversely. The approach can be described as pro-active, and consists of trying to find out which contractor matches the project best132. According to the formal rules, a company had to be registered in the database before being able to be included on a short-list. Interested companies could register in the Consensus database through the website. Most projects (80%) for both Consensus I and Consensus II were implemented by contractors that had been selected by competitive tendering. The project proposals sent in by companies participating in the competitive tendering involved technical (70%) and financial (30%) evaluation. The technical evaluation was divided into different categories: 24,5 %: criteria related to the TOR133; 14 %: criteria related to the qualification and experience of the tenderer134; 31,5%: criteria related to the qualifications, experience and skills of the staff proposed135. Two of the Consensus experts were selected for the technical evaluation of the tender proposal, each having one vote. The IIRCs made a local evaluation committee, which
130 131

Consensus PMA, Final Report Consenus I, op. cit., p. 21. Interview Contractor 4, 27 February 2001. 132 Interview Contractor 4, 27 February 2001. 133 Criteria related to the TOR consist of conformity with TOR, unserstanding of TOR, clarity and consistency of offer, quality of the contents of the tender, balance between various inputs and their timing, truly European charachter of the approach by the tenderer. (Standard Consensus tender evaluation form). 134 Criteria related to the qualification and experience of the tenderer consist of previous experience of the tenderer in the implementation of projects in the area of social protection in the CEECs, previous experience by Consensus/PHARE with the tenderer, previous experience by the tenderer in activities such as those object of the concerned tender, guarantees of close co-operations between all involved factors, complementary and truly European composition of the proposed staff, organisational support and back up and assessment of the reality of the effective input of the proposed staff. (Standard Consensus tender evaluation form). 135 Criteria related to the qualifications, experience and skills of the staff proposed include conformity of the presented experts/staff members with the requirements of the TOR, qualifications of the experts/staff members in the implementation of projects in the area of social protection in CEECs, previous experience by Consensus with experts/staff members, previous experience by the experts/staff members in activities such as those object of the concerned tender, capacity of experts/staff members to work with a truly European perspective, linguistic and communication skills of the experts/staff members. (Standard Consensus tender evaluation form).

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represented one vote in the technical evaluation. In some cases, DGV participated in the technical evaluation, if it had been closely involved in the conception of the project. The proposal with the highest score won the technical evaluation. The financial evaluation (30%) was performed by the financial officer of the Consensus PMA. The company proposing the least expensive proposal was the one that won the financial evaluation. The tender having achieved the highest score altogether was the one that won the tender. The results of the tender evaluation were then sent to DG1A for final approval, after which contract negotiations could begin (changes of experts, adaptations in timetable, budget, etc.). In principle, all parties did their evaluation independently. The scoring was particularly problematic, as the evaluators had different habits, and some systematically gave more points and other less. The Consensus experts were in general objective, although there were cases when personal contacts with the tenderers led to favouritism of certain actors. In cases of conflict, a third party did evaluation. In general, evaluation by the Consensus team was much more flexible than evaluation by the team(s) evaluating mainstream national PHARE projects. This allowed for a (relatively) wide scope of contractors to carry out projects. Under a stricter procedure, it would always have been the same companies that won, as there were specialists in preparing tender proposals136. A problem with regard to local evaluation committees was the tendency to be influenced by lobbying and sometimes even bribing by some of the tenderers. On the other hand, if the local counter-part had developed a constructive working relationship with a contractor, and wished to work with this contractor again, this could be reflected in their tender evaluation137. To sum up, although the evaluation was not always entirely independent, efforts were nevertheless made in this line. Some tenderers felt the evaluation was fair138, while others felt that there was a lack of transparency139. Contract negotiations take place with the company that wins the tender. From the Contractors perspective, the process can be rather complex. When putting together the project team, the companies often conclude contracts with external experts having the experience and expertise required for the project. The evaluators of the tender proposals assess that in some cases, experts do not have sufficient experience in the area and/or country concerned. The Consensus experts put particular emphasis on the country specific experience and qualifications140. In some cases, the contractor is requested to change the expert prior to the conclusion of the contract. Often, the contractor has made a virtual promise to the experts by explaining the tasks to be carried out, asking for their c.v, letter of commitment and, if necessary, letter of leave of absence from Ministry - assuring collaboration if the company should win the bid. Moreover, the contractor uses resources to put together a team. It is a diplomatically sensitive task to require the experts to be replaced141. Other issues dealt with in contract negotiations were the timetable of the project, the input of different experts, organisational and methodological aspects of the project.

136 137

Interview Contractor 4, 27 February 2001. Interview Civil Servants Ministry of Social Affairs of Estonia, 23 March 2000. 138 Interview Contractor 1, 5 November 1999. 139 Interview Expert 6, 24 April 2001; Interview Expert 5, 22 March 2001; Interview Contractor 7, Consultant 3, 23 March 2001. 140 Interview Expert 1, 9 March 2000. 141 Interview Contractor 1, 5 November 1999.

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4.3. The Active Contractors

At the end of the Consensus I, 298 companies were registered in the database, of which 126 had been short-listed. We established criteria for determining which were the active companies during Consensus I. Those companies that had been short-listed at least three times and had won at least one contract were regarded as active. 26 active companies were identified (see table 6.1 for country distribution). The PMA of Consensus II inherited the database of Consensus I. During the first six months of the programme, the start-up phase, the database was cleaned up. All actors not having sent back their registration form were excluded from the database. Others were included during the lifetime of Consensus II some sending in their registration form of their own accord and some being included upon the recommendation of the Consensus experts (often after having been included in a short-list). At the end of Consensus II, there were a total of 188 companies in the database, of which 129 had been short-listed. The process for the selection of active companies is the same as for Consensus I data. 21 active companies were identified. Table 4.1. Country of Active Consensus Companies. Country Austria Belgium Denmark Finland France Germany142 Greece Ireland Italy The Netherlands Portugal Spain Sweden United Kingdom Total Consensus I active actors 1 1 2 2 3 5 2 1 0 3 1 0 0 5 26 Consensus II active actors 1 3 1 2 1 3 2 0 0 4 0 0 0 5 21

The bias towards northern Europe is interesting though the non-involvement of companies from Sweden is also noteworthy. The fact that there were 20% less active Contractors under Consensus II can partly be explained by the fact that there were fewer, but bigger projects in the programmes framework. The active companies include the Framework Contractors. A questionnaire was sent to all active companies to identify their profiles, motivation for participation in social policy projects and their policy orientation. The questionnaire was also used as a complement to interviews when relevant. The response rate was 34%. A brief account of the results of the questionnaire follows. (See table 6.2 for summary of responses to the questionnaire) 44% of the contractors were consultancy companies. 25% were research

142

For the Consensus II data, one of the German actors was short-listed twice, and selected to implement both projects it had tendered for. This actor is considered as active, even though not short-listed three times.

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institutions. Only 13% were non-governmental organisations. Private sector actors were therefore dominant in the Consensus process. Table 4.2. Contractors Responses to Questionnaire
1 1. Category of Contractor. Research Institute X Consulting Co. NGO/NonProfit.Org International Assoc. X ParaPublicInstitution Other. 2 3 4 5 6 X X 7 X X X X X X X X 8 9 10 11 12 13 14 15 16 TOTAL X X X 4 7 2 1 1 3 % 25% 44% 13% 6% 6% 19%

3. Participation in projects funded by other donors. WB X X X UNDP ILO EBRD Other UN Nat. gov. X X X Other X

X X X X X X X X X

X X X X X

X X

X X

X X

X X

X X

8 2 4 2 2 11 6

50% 13% 25% 13% 13% 69% 38%

4a. Factor of motivation (Scale 1(low) - 5 (high)) Influence the Social Policy of Country Promote own country Social policy Promote Company Specific Social Policy Promote European Social Policy Financial Reward Fin Rew Concos Fin Rew Other 5 4 3 2 3 2 2 5 5 3 5 3 3 3 3 3 5 5 5 5 1 3 3 3 3 3 3 3 2 3 3 4 4 4 1 1 3 3 3 5 3 4 2 1 4 1 1 5 3 3 5 1 4 5 3 2.5 1 2 3 1 5 2 4 5 2 3 3 3 5 1 4 1 2 4 3 3 3 1 3 4 4 3.8 1.8 2.7 3.6 3.1 3.9 3.0

5a. Evaluation of Impact of PHARE projects (Scale 1(low) - 5 (high)) Did projects influence 2.5 social policy? Will they have 3 sustained impact? 1 2 4 3 3 3 2 2 4 5 3 4 4 4 3 3 4 4 4 4 1.5 2 5 4 3.5 3.5 2 4 3 3 3.1 3.3

6a. Assessment of Commissions social policy strategy (Scale 1(low) - 5 (high)) How strongly did Commission seek to influence SP of country via your projects 2.5 2 4 4 3 4 4 2 5 4 4 5 3 2 4 3.5

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Most contractors are not only active in EU-funded projects, but also in projects funded by other donors. The donor with which contractors participate the most frequently is national government (69%), followed by the World Bank (50%). The Contractors principal motivation for participating in EU funded social policy projects was to influence the social policy reform of the recipient countries, followed by the promotion of European social policy. The third motivation factor was to obtain financial benefit for the company. This motivation factor is on average higher for the consulting companies. In terms of motivation, there appears however to be a risk of having contractor-driven projects, since the contractors who participated in the survey indicated more often that it was their companys social policy approach that motivated their involvement in the process of policy transfer rather than their interest in promoting knowledge about their own country social policy. However, the possibility for contractors to drive projects was also likely to be determined by other factors including how specific the TOR are and how much space is left for the Contractors initiative in driving the project; whether the project was a priority in the policy agenda in the recipient country, which increases the chance of the policy recommendations being taken on board; and the degree of trust that has been built up with the recipient prior to and during the implementation of the project. Another factor of motivation to participate in a EU funded PHARE project was that of maintaining and building on professional networks143. The Contractors believed that the PHARE projects they participated in were somewhat in the line of the social policy reform of the recipient country. On average they had a fairly positive assessment that the Commission was, through the PHARE/CONSENSUS projects they were involved with, seeking to influence the social policy of recipient countries. The assessment of the Contractors regarding the estimated long-term sustainability of the projects that they participated in was in the medium range. However, in the interviews, the assessment of the sustainability of projects was less optimistic. In addition to the questionnaire, an analysis of the documents presenting the companies has been made in an attempt to assess the social objectives embodied in, for example, their mission statements. (See table 4.3 for full details). The overview confirms that there is a wide range of actors that participate in the implementation of social sector programmes. They range from classical consulting companies, which are dominant, to non-governmental organisations with social objectives. Several actors are, in one way or another, interested in social development, from a humanitarian perspective, or from an academic perspective. Among the private sector, some are generalists, while others are specialised in the provision of a specific type of service144. For some actors, the provision of consulting services in the framework of the EUs externally oriented social sector programmes is the principal activity, while for others it is complementary. No attempt is made to draw more specific conclusions on the social objectives of the companies since they are so diverse in nature. Certainly there is no sense in which the actors involved reflect in any systematic way best social policy practice within the EU or reflect in any systematic way the EUs external social policy as we described it in chapter 1. The participation of such a diverse range of actors can only have added complexity to any message the Commission might have been trying to get across about desirable social policy through the vehicle of CONSENSUS.

143 144

Interview Framework Contractor 3; Interview Contractor 4, 27 February 2001. See Interviews Contractor 7.

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Table 4.3. The Social Policy Objectives of EU Social Sector Subcontractors

Consultancy Social objective Company European Centre The European Centre is an international social science research, policy, training, (Austria) and information centre. It is an intergovernmental organisation of social welfare, affiliated to the United Nations. Its main purpose is to promote international cooperation in the field of welfare, health care and social development. It seeks to enhance social integration, security, care, health and well being by the provision of public goods and personal services. Its research and programme activities focus on welfare and social development in a broad sense. Its conception of social development is multi-dimensional, complex and dynamic. Social policies are analysed in terms of their interdependencies with economic policies, the labour market and other structural developments. Welfare is viewed as the outcome of complex interactions between four complementary sectors in society: the state, civil society (voluntary associations), the community and family/households. It is viewed as in need of permanent reorganisation, reform and innovation as a consequence of contextual changes. CARE Austria is a non-governmental organisation that focuses on reforming social CARE Austria and health systems. Department for It carries out projects in the reform of social security and health care systems, Humanitarian facilitated by its Austrian and EU expertise in social security. It also assists in the and Structural creation of local networks, local capacity building and civil society development, Assistance know-how transfer, training, conflict resolution and the promotion of inter-ethnic cooperation and dialogue. The primary target groups are vulnerable people, especially disadvantaged children, women, minorities and ethnic groups. AEDES AEDES is a non-profit cooperative company. It carries out projects in the public (Belgium) health, nutrition and social sectors. It works principally in Africa, the Caribbean, the Pacific Islands, and Central America. In addition to short term and long-term missions to deliver services to the recipient countries, one of the principal functions of AEDES is research, in order to improve activities in the area of health care. Its research activities are in the areas of epidemology, planning and management of health care systems, the economics of health care, nutritional safety. European The EISS is an international inter-professional and multidisciplinary scientific Institute of Social association. It aims to promote co-operation between social protection specialists. Security Its activities include the organisation of colloquia on social security issues, research (Belgium) in comparative social security, training and education. The research activities are carried out for different donors, including the Council of Europe, the European Commission and national governments. Pantheion Pantheions mission is to contribute to sustainable socio-economic development by (Belgium) offering advisory services and technical assistance. The team advises clients on how to define strategies aimed at influencing complex European or international decision-making processes. The services are geared towards advising the management of organisations on their European and international marketing strategies, as well as on how to set up and operate a successful international relations department or unit. Logistics LCG has been and is involved on National, Regional and Corporate bases in Consulting logistics, infrastructure, transport and social development projects and is Group experienced in planning, training, development and management in different (Denmark) countries. PLS (Denmark) Knowledge creating results is the groups motto, which develops, processes, and PLS International imports knowledge in collaboration with its clients. Danish experiences and traditions are the starting point, although the company believes that it is important

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STAKES (Finland) International Development Collaboration (Finland)

Oulu Deaconess Institute (Finland)

ADECRI (France)

to have an international outlook. Through the consultancy business, PLS International seeks to make a constructive contribution to the development of societys infrastructure and economy, as the company is conscious of the wider social impact of its work. It seeks to create sustainable results. Through its extensive international network of public institutions, NGOs and private companies, PLS Consult is proud of being able to provide a broad multinational background to the assignments. PLS Consult has worked in most of the CEEC in areas ranging from democratisation, social and labour market development, public administration reform, education and health to regional development, economic restructuring, small and medium enterprise development. The International Development Collaboration Unit of STAKES is a non-profit governmental agency. It operates in the transition countries in Central and Eastern Europe, the developing countries in Africa, Asia and Latin America, to support development in social welfare and health. It seeks to promote well-being and health for all and to secure equal access to highquality and effective welfare and health. It also aims to achieve social, economic and environmental sustainability. Through project implementation, it seeks to enhance co-operation between the health care and social sectors, to ensure participation of local counterparts in projects and to practice good governance, to enable local ownership. In its approach, the International Development Collaboration is particularly gender sensitive, and puts particular emphasis on co-operation with civil society. Its expertise lies in the development of social and health policy, reforms in health care and social protection, development of and financing of health and social service systems, information and monitoring systems, primary and preventative health care, human resource development, project planning, implementation, monitoring and evaluation. The Oulu Deaconess Institute is a key provider of private health care services in Finland. Its original purpose was to focus on teaching, which still plays an important role. The health care services branch is its biggest branch of activity, followed by social welfare services for the elderly and disabled. Its profits are invested in further development of its work. The Institute seeks to respond to needs in health care through an open-minded approach. The operation of the Institute is governed by Christian ideals of service and welfare, emphasising the offering of various forms of assistance to persons who are sick or otherwise in need of help. The international projects in which the Institute has participated have particularly been concerned with the health care and social sector. ADECRI is a non-profit making organisation. It provides an effective means to undertake large-scale actions and to help countries wishing to gain, to develop or to improve their own Social Security systems. Social Protection is conceived as the will to improve living conditions by protecting individuals from risks. ADECRI highlights that the French Social Security system has many original characteristics, as far as statutory benefits and social services are concerned. ADECRI participates in social security reform projects. Its expertise lies in conducting organisational, financial, social or training audits, creating training centres, drawing up training programmes and training trainers, organising study trips, organising seminars, setting up twinning arrangements between French and foreign Social Security organisations.

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Bernard Brunhes Group (France) Bernard Brunhes International (France) GVG (Germany)

The Bernard Brunhes Consultancy group has a social approach to economic problems at enterprise level and economic approach to social problems. Provides support to build social protection and employment policies in the CEEC and the CIS GVG is a non-governmental organisation that aims to improve and extend social security systems nationally, and globally as well. The underlying social philosophy is a multi-disciplinary approach combining academia, politics and practice. GVG conceives social security broadly. GVG sets out to carry out practice-related research projects, and to provide legal advice at the national, EU and international levels. It also seeks to draw attention to the interrelation and mutual influence between economic, social and welfare systems. Its activities include a wide range of information and consultancy work, which is always adapted to the individual needs of the co-operating countries. Remaco is a Management and Financial Consulting Company. It offers a wide range of consulting services to private and state companies, institutions, associations, local authorities, governmental and non-governmental bodies. One of its major activities is the administration of PHARE and TACIS Programmes. Its areas of activity are industrial policy and restructuring, SMEs, project management, social issues, banking and finance. Its activities consist of policy advice, project planning and implementation as well as management in the public and private sectors. The Ministry of Social Welfare provides consultancy support to international clients in all areas of social security business. Experienced social security practitioners are available to clients to assist them with the development of their social security systems/schemes. As an integral part of the Irish Ministry of Social, Community and Family Affairs, SWSI brings the institutional support of an EU Member State Social Security Ministry to a project with ready access to the broad range of skills and expertise required to address the needs of its clients. Skills held by many of its experts include policy advice to the Ministers and Government, many years of experience in the public sector, with extensive experience in the area of the administration of social protection, senior management knowledge of modern social protection systems in other EU Member States, previous/current high level official responsibility for meeting EU policy and delivery requirements, working experience on reform projects in PHARE countries. The MEDE Group is a management consultancy specialising in change within the public sector. MEDE European Consultancy is involved in both policy development and organisational change internationally. The projects generally relate to changes within and between organisations. Some projects concern an entire sector, such as primary care or social protection. Projects (in the Netherlands and in the CEEC) support central and local governments, professionals in the health and social sectors and NGOs. Project activities concern policy advice, infrastructure change, reorganisation and improvement of the management of organisations, conflictsolving and human resource management. Projects may consist of support for policy-development in a particular field or support for changes in legislation, institutions and staff. IPS is an independent consultancy company with academic partnership (University of Bristol and School for Policy Studies). IPS seeks to improve the situation of individuals and organisations involved in (inter-linked) social and economic transition. It focuses on context specific social sector (social services, health, education, public administration) development, and on the analysis, development and financing of social services and health care policy. It designs and implements preventative and

Remaco (Greece)

Social Welfare Services Ireland (SWSI) (Ireland)

MEDE MEDE European Consultancy (The Netherlands)

International Policy Studies IPS (UK)

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primary health care and community development programmes. It also provides support for the organisational and institutional development of ministries, governmental agencies and non-governmental agencies. Callund Callund Consulting offers international actuarial and consulting advice, particularly Consulting (UK) in state and non-state pensions. It provides advice concerning the interrelation between state and non-state pension funds in connection with public policy decisions. Aktus Consulting Aktus Consulting is a company of independent management consultants with (UK) extensive experience in the planning and delivery of major change management programmes in the public service. The work of Aktus Consulting is principally in social protection, labour protection and revenue collection, policymaking, administration and computerisation nationally and internationally. The company recognises that each country requires its own uniquely tailored solution, not a transplant of a national solution. In the implementation of administrative systems, the approach is to view the project from a citizen first perspective. It recognises the importance of understanding and documenting the administrative status of the country concerned, the prevailing culture and forces for change in the countrys own environment. NICO (UK) NICO is a private company formed by the Northern Ireland Government in 1991 to sell expertise and know-how of its public sector in overseas markets. NICO has available a full range of technical assistance, training and consultancy advice covering all areas of public sector activity. The areas of specialisation include education, development, health services, housing management. NICO provides overseas public sector bodies with assistance in project design and development and also expertise in the management and delivery of programmes. Note: The data in the boxes has been obtained form company profiles lodged with Consensus or from the internet or from documents attached to responses top questionnaires.

4.4. The Role of Contractors and Experts in Project Implementation

Here we review in more detail the role in project implementation of the companies and their experts and suggest the ideal characteristics of such companies and experts. The data and analysis is based on the first-hand experience of one of us (de la Porte) while employed as an information officer in the Consensus Programme, as well as formal and informal discussions with a number of Contractors and Experts. Overall it will be suggested that the role of Contractors is not as crucial as that of the Experts.

4.4.1. Contractors
Through their participation in Consensus projects, the Contractors: Design the project implementation plan; Select the foreign and local expert team; Decide how long it is necessary for foreign experts to stay in the recipient country; Report on the activities and the project outcome. In putting together a project team, the Contractor should check that there were no former clashes between the experts selected to implement the project, in order for the project implementation to take place smoothly. The Contractor should also ensure the experts spend a considerable amount of time in the recipient country, to enhance the possibility of success of a

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project. It is also up to the Contractor to ensure a good balance between expertise and management145. If the Contractor has former country experience and is familiar with the local experts and Ministry officials, it is a positive point. In project implementation, as much responsibility as possible should be delegated to local experts and to the recipients who will be making use of the end-product once the project has been finalised146. This should be integrated into the design of the project: it gives the local counter-part a sense of ownership and integrates the project into the on-going activities. The role of the Contractor is indeed important. However, what is even more important is the role of the experts on the ground. It is up to them to inspire the local team, and to ensure that the project is as visible as possible. The ideal characteristics of foreign and local experts are suggested below.

4.4.2. Foreign Experts

Interviews have been held with a variety of experts who have been particularly active in the PHARE social policy and/or Consensus programmes. They have different profiles, experiences and motivation factors, which makes it difficult to summarise how they contribute to the social policy reform process in the CEEC. The profiles range from project managers through experts in comparative social policy to experts in specific subjects. The motivation factors tend to be multiple, including strategic and personal, but their common characteristic is their long-term involvement in the programmes as well as their commitment to rendering the projects successful and to contributing to the reform process in their particular area of expertise (legally-binding provisions of the EU, comparative social policy knowledge, project management, etc.). The issues discussed in the interviews give an idea of the elements that are important for a successful project, including the rather crucial role of individual (both foreign and local) experts in EU-financed social policy projects. Most experts and Contractors would agree that the bureaucratic procedures involved in EU-financed projects are a disincentive to participate in such projects. Therefore, most the Contractors and experts that continue to participate in EU PHARE and Consensus projects are truly committed to contributing to the on-going reform process in the CEEC, and/or to EU social policy. There is no magic formula for a successful project, but it is important that the foreign expert has the will to contribute, in one way or another to the reform process. There are few good EU social policy experts, and throughout the years, they have become closely involved with each other, forming a network of social policy experts. All of these experts participated in projects of the Consensus programme and continue to be active in PHARE social policy programmes. Although many of the PHARE and Consensus projects merely provide information on the possibilities for reform, rather than actually ensuring that a reform is undertaken, this has been very useful for the recipient countries. Indeed, some countries have been astonished at the variety of systems. For many of them, it has been an eye-opener147. This has allowed them to think about the type of system that best suits their needs. The exposure to this information would not have been made available without the comparative knowledge of many of the foreign experts. However, there is a danger in such an approach: Different models are often espoused by different interest groups who recruit their own teams of foreign advisers to

145 146

Interview Expert 4, 8 March 2001. Interview Contractor 2, 21 March 2000. 147 Interview Expert 7, 3 May 2001.

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validate their chosen solution148. But, as highlighted by many of the experts, the EU has no right to intervene in the national social policy arrangements of its Member States, which makes it even less legitimate to intervene in the social policy arrangements of the candidate countries. Concerning the few legally binding aspects of social policy within the EU, there are only a handful of experts who are familiar with the intricate details of these measures and their successive amendments. To inform the CEEC on Regulation 1408/71 on social protection for migrant workers, the legal provisions on equal treatment of men and women, and the detailed rules on health and safety at work require a lifetime of work experience. The experts with such knowledge play a crucial role in helping the CEEC align with the legally binding EU requirements for membership. The success of a project often depends on making key local players aware of the importance of the project. There is no single solution on how to do this, although getting the local media involved in the dissemination of information on the project, and getting the attention of key Ministers are often indicative of the success of a project. In order for the project to gain support locally, the foreign experts extend their activities beyond the Terms of Reference in the strict sense of the term. In this respect, the involvement of local experts is crucial for the project to succeed. All foreign experts interviewed agree, and each has their own means of gaining the confidence of the local expert team. Most foreign experts are independent consultants, rather than being tied to a company or an institution. This is why it is their role, rather than that of the Contractors, that has been important on the ground. This does not exclude the development of good relationships with certain companies. On the basis of interviews with numerous contractors, experts and others involved in the CONSENSUS process we are suggesting that the ideal foreign experts in projects: Have to be open-minded and understanding and respective of local culture and practices149; Have knowledge of the language of the recipient country.150; Have to be committed for some it might be a social commitment, to be sensitive to the reform process of the beneficiary country, and for others it is an academic or other type of professional commitment151. Have to be dynamic and enthusiastic about their work152; Have to be imaginative, to come up with functional solutions for atypical situations153; Should be able to establish good collaboration with local people.154; Need to find out who the persons of trust and influence are among those who have a stake in the project. Have to be good communicators, and to have or to be able to establish a good relationship with the local Ministry; Have to understand the recipient government and what they are trying to achieve155;

148 149

Interview Expert 5, 22 March 2001. Interview Contractor 7, Consultant 3, 23 March 2001. 150 Interview Contractor 5, 7 March 2001. 151 Interview Contractor 4, 27 February 2001. 152 Interview Expert 7, 3 May 2001. 153 Interview Contractor 2, 21 March 2000. 154 Interview Contractor 3, 30 August 2000. 155 Interview Contractor 7, Consultant 3, 23 March 2001.

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 Have to be influential at a high level or find the means by which to have such an influence; Have to have experience in the recipient country156 and to know about the national situation, so that precious project time is not spent on this task; Have actually to be experts in their claimed area of expertise; Have a view of policy reform that is not limited to the reform experience of their own national context.

4.4.3. Local Experts

Similarly, a degree of consensus existed among those interviewed regarding the ideal characteristics of local experts from the recipient countries. They should: Have had experience working in international projects157; Be committed to the project and to be honest and reliable158; Be aware of the political priorities of the government, and seek to integrate the project into these priorities; Be familiar with and have access to channels of influence to give the project the political support needed for it to have an impact.

4.5. The Framework Contractors

Earlier it was noted that many of the CONSENSUS projects were handled by Framework Contractors commissioned to carry out a large proportion of the work within a particular policy area. For Consensus these areas were health, social protection and public administration. A brief analysis of the mechanism of selecting Framework Contractors under the PHARE programme is provided below. It begins with describing the history and functioning of the mechanism up to 1999, including a brief analysis of the companies implementing selected Consensus projects. It then goes on to explain how it has been modified from the year 2000 onwards.

156 157

Interview Contactor 7, Consultant 1, 23 March 2001. Interview Expert 6, 24 April 2001. 158 Interview Expert 6, 24 April 2001; Interview Contractor 2, 21 March 2000..

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4.5.1. Framework Contractors up to 1999

Framework Contracts as a mechanism were first set out under PHARE in October 1996, to: improve the efficiency and speed of contracting sectoral framework contracts are used for all technical assignments worth less than ECU 300,000 These (13) consortia bringing together close to 100 companies from across Europe were selected above all for their technical prowessThe excellence of these consortia is available to projects managed by both the partner countries themselves and by the Commission on their behalf159. The idea behind setting up Framework Contractors was to be able to provide technical assistance in particular sectors and at short notice without having to go through the long and tedious process of competitive tendering. For each sector, the Framework Contractor consisted of a pool of companies - between six and eight companies. Each company had their own pool of experts, in order to cover as many types of expertise as possible. In terms of procedure, the requests for the supply of services from the Commission or Consensus in Brussels and the PHARE Management Units (PMUs) or Central contracting and financing units (CFCUs) in the CEEC were always addressed to the lead company of the consortium. The lead company acted as a liaison between the Commission or other requesting bodies, and the members of the consortium. Once the request was made, the lead company had between seven and ten days to respond to a request. Each consortium set out its own internal management rules160. The fees practised were between 10% and 25% higher than those of other contractors, which was explained by the fact that they in principle had more management to do. Instead of the standard 500 EUR per day, the fees for an expert are 750 EUR per day161. Moreover, the tender proposals were less substantial, which was most often also transposed in the implementation162: the results are mostly rather average, mediocre163. It is interesting to note that since the Framework Contractors were set up, in 1996, the consortium responsible for the social sector, Birks Sinclair, carried out approximately 50% of PHARE social policy projects164. As with the Consensus Programme, adaptations had to be made at the initial stages of the operation of the Framework Contractors, as all implementation modalities had not been indicated in the TOR for the Framework Contractors. At the beginning, there were many complaints concerning the procedure to follow to use the expert pool. Indeed, an expert could not be selected for a project unless he/she was registered in the database. The CVs of the experts had a priori to be approved by the Commission. Initially, few experts were registered in this database, which is why a call for CVs was launched to all companies involved in framework contracts. The Commission had not foreseen the mountain of CVs that would be submitted for approval from the companies making up each of the 13 sectoral Framework Contractors. The Commission did not have enough resources to analyse all the CVs for approval, and it therefore put an embargo on the process. At a later date, the process was reopened in a more restrictive manner, allowing each consortium to submit 30 CVs per month. For each lead company of the Framework Contractors, there were often significant delays to have the CVs approved. Due to the fact that the TOR for the different projects were rather elaborate, requiring specific skills and expertise, the CVs sent in were equally specialised. In some cases, the expert perfectly matching the profile and skills required to carry out a project
159 160

Working with PHARE: Framework for service contracts, Europa website: European Commission:DG1A. Interview participant in framework contract consortium, 4 November 1999. 161 Interview Contractor 4, 27 February 2001. 162 Interview Contractor Consensus I, 7 October 1999. 163 Interview Contractor 4, 27 February 2001. 164 Several attempts were made to organise a meeting with Birks Sinclair. They were not willing to co-operate.

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could not carry out the project, because of the delayed approval of the CV165. This has prevented optimal preparation and matching of skills to the aims of the project. Generally, the assessment of the quality of projects carried out by Framework Contractors for Consensus is that they were of qualitatively less effective than projects where the contractor has been selected by competitive tendering. One of the factors that could explain the negative opinion of the quality of the Framework Contractors is that, in general, they did not invest in assuring appropriate management and administration of the projects166. Of the projects carried out by Framework Contractors under Consensus (I and II): 8 (5+3) were implemented by the Framework Contractor for the social sector: Birks Sinclair 8 (4+4) by the Framework Contractor for the health sector: BASYS 11(5+6) by the Framework Contractor for administrative reform: BerenschotEuromanagement. The general opinion of the Framework Contractor for the social sector, Birks Sinclair, is that it was a body shopper, meaning that they knew the requirements for making good technical and financial proposals, but once awarded the contract, were not particularly interested in the project167. There were also some positive assessments of Birks Sinclair: in Lithuania, the assessment of the performance of the Framework Contractor for the social sector was positive168. BASYS, the Framework Contractor for the health sector, had more scientific and policyorientated goals. Its main areas of activity, beyond its activities as Framework Contractor for the Commission, are research and reform of health care systems, social security systems and information systems. It has carried out national PHARE and Consensus projects, as well as projects financed by the World Bank and the national German government, often dealing with reforming health care systems, health insurance systems and health care financing169. The principal motivation for participation in PHARE projects is to establish or improve health insurance systems in the CEEC, to support the CEEC in the light of accession, and to promote the exchange of information. The assessment of the impact of the PHARE projects they have participated is very high.170. The quality of their projects is generally evaluated positively171. Berenschot, the Framework Contractor for administrative reform, is an international management consultancy, with wide areas of expertise. As the leader of the consortium, it receives the requests for supply of services, disseminated to the 6 other partners of the consortium, with 2 days to respond. This short delay puts very much pressure on the members of the consortium, and generates competition between them. For the Consensus projects, they have all been implemented by the same company, which was not a strategic choice, but occurred due to a correct match between CV and requirements172. The principal aim of the company is to obtain financial profit through the participation in the Commissions externally oriented aid programmes. The overall assessment of the results of the projects they implemented is positive. However, due to the financial ceiling of 300,000 EUR, their small size and their short duration, they have had no major long-term impact. In particular, the

165 166

Interview participant in framework contract consortium, 4 November 1999. Interview Contractor Consensus I, 7 October 1999. 167 Interview Contractor Consensus I, 7 October 1999. 168 Interview Ministry of Social Security and Labour of Lithuania, 10 April 2001. 169 Presentation documents, BASYS. 170 Questionnaire completed by BASYS. 171 Consensus PMA, Final Report Consensus I, op. cit., annex 11. 172 Interview participant in framework contract consortium, 4 November 1999

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political and economic climate was not mature enough to absorb recommendations made in the framework of most of the projects173.

4.5.2. Framework Contractors from the Year 2000 onwards

For the year 2000, the sectoral framework contracts were launched for tender a second time. A crucial difference was that each sectoral framework contract was not awarded to one group of companies, but to several. Apparently, this was not clearly spelled out in the TOR of the Framework Contracts174. The Commission sends each sectoral request for services to three consortia, which could choose whether or not to respond to the request. Of the proposals submitted, the Commission would select the one that appeared to be the most suitable. If only one offer were submitted, the contract would be awarded to that company. Due to the introduction of competition in the framework contracts, the companies make more efforts to render the projects as good as possible and/or only submit proposals for the projects for which they have the required expertise and know-how. This system came into effect on April 1, 2000 for an initial period of three years. The framework contract covers short-term assignments of less than 12 months and for amounts of less than 200,000 EUR. Compared to the former system, where the sector framework contracts were awarded for specific regions, the Framework Contracts that entered into force in 2000 were worldwide. This does not mean that the Commissions approach is the same for different regions. The Commissions approach to Latin America and Asia is centralised, and the Commission officials are very more aware of what is going on in the general socio-political context, and what the needs for development are. The approach for the ACP region, and the PHARE countries is much more decentralised. The new Framework Contractor for the social sector is made of 7 consortia of companies. As for the constellation of companies making up the Consensus programme, the profiles of the companies vary from non-profit organisations and research institutions to classical consulting companies. However, as for companies participating in Consensus, most are consulting companies. For most implementators of the framework contracts, one of the key motivations for participating, in addition to the financial one, is strategic. All the big companies are in the framework contracts. It is a way for keeping up to date on what is going on. It gives us a foot in the machine175. To maintain and develop networks is one of the positive effects of participating in the worldwide framework contracts of the European Commission. Another is to obtain financial benefit for the company176. The non-profit organisations tend to re-invest the profit obtained from EU projects into other activities, such as research177. The commitment to the work of the framework contract also varies from company to company. Some employ several people full-time for the duration of the framework contract, and aim to win as many of the tenders as possible. Others conceive the framework contract as a complementary activity, and respond only to those offers that they are interested in. In such cases, the experts are fully involved and committed178. The companies feel a lack of transparency in several respects. First, it is not clear which criteria are used to select the three consortia to which the offer is sent. Second, sometimes
173 174

Questionnaire completed by member of the consortium for administrative reform. Interview Framework Contractor 3. 175 Interview Framework Contractor 3. 176 Interview participant in framework contract consortium 1; Interview Framework Contractor 2. 177 Interview Framework Contractor 3. 178 Interview Framework Contractor 3.

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projects are cancelled when the consortia have already prepared their bid without much explanation. One of the principal weaknesses of the Framework Contractors is that the different experts and consultants that actually implement the projects are not informed of other similar EUfinanced projects implemented in the country prior to their intervention, which creates the risk of a certain degree of overlapping in the different projects. In addition, two independent experts in the same country may implement related projects simultaneously at the same time without their knowledge of the work of the other. The Framework Contract is merely an administrative and financial tool At the macro level, the Commission does not have a vision179. Indeed, There was no mention of the Commissions external dimension of social policy in the documents for call for tender180. For framework contracts for the PHARE countries, the accession agenda is supposed to guide the actions. As for the Consensus projects, the success of the projects is to a great extent dependent on the commitment of the experts that implement the projects.

179 180

Interview Framework Contractor 3. Interview Framework Contractor 2.

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4.6. Conclusions
The process of selecting a tenderer to implement a project is long and tedious. Among contractors and experts, there is a feeling that the process is not transparent, clear or coherent. More importantly, the tendering process does not imply that the most suitable contractor will win the bid. Most of the contractors for the Consensus Programme and Framework Contractors are consultancy companies. Indeed, Management consultancies are sometimes specialised in the presentation of tender dossiers. As to their performance: They produce glossy reports and charts based on data that seems to have appeared out of nowhere Then, they sometimes take up about 25 pages to say that they had a meeting. I have a feeling that the EC people are rather soft targets for this type of result181. On the other hand, consultancies tend to be more organised than academic actors. A starting point of this research was the question of the social vision of the Contractors and how it could influence the EUs externally oriented social policy programmes. From the analyses this chapter concludes that the social vision of the Contractors can play a role. However, what is even more important is the social commitment of the experts. The role of both the foreign and local expert teams is crucial. It is up to them to make the project visible, and for it to gain the political support needed for its results to be sustainable. In some cases, the Project Leader represents the Contractor, and in the case that this person has a particular social commitment, this can influence the outcome of the project. In most cases182, the Contractors and experts do not have a specific social vision. Instead, their commitment is to contribute to the social policy reform of the recipient country in a positive sense. In case the foreign experts are committed to a particular view of social policy reform, it is because of lack of comparative social policy knowledge. It is principally the experts who are on the terrain in the recipient country that have the possibility to shape policy issues through the projects that they participate in and through the contacts that they establish in the recipient countries, and it is partly because the EUs social policy acquis are so limited that the projects can be adapted to the needs of the recipient country183 and are open to the influence of the Contractors and experts vision.

181 182

Interview Expert 7, 3 May 2001. See interviews with Contractors and Experts. 183 See Paper 1: The EUs external dimension of social policy in discourse.

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5. INTERNATIONAL AND NATIONAL ACTORS AND CONTRACTORS IN THE SHAPING OF LITHUANIAN SOCIAL POLICY
5.1. Introduction
The first part of this chapter tells the story of social policy making in Lithuania and the influence of the different actors domestically. The second part consists of a description of the current social security system. The third part is the story of the contribution of external donors. This section includes a more detailed analysis of the contribution of the EU, through the PHARE and Consensus projects. Finally, the conclusion assesses the contribution of the different actors to the social policy reform process in Lithuania. The thesis is that the external donors including the EU contractors and experts do influence the form that social policy takes in Lithuania, particularly when it coincides with the dominant discourses propagated nationally.

5.2. The Story of Social Policy Making in Lithuania 5.2.1. Overview

Immediately following Lithuanias regained independence, concepts and ideas associated with the universal welfare state were popular. However, these were never put into practice, principally due to the economic situation as well as to the rise of liberal ideas. The former enterprise-based entitlement to welfare under communism led to the setting of employmentrelated insurance as the founding pillar of the system, supplemented by social assistance. In this context, the bilateral advice provided by Germany played an important role in the shaping of the social security system in Lithuania. Lithuanias work-based social policy, to a great extent inspired by the German model, represents continuity with the work-based communist system. Initially it was a conservative, corporatist welfare policy. Its development was also supported by the desire to establish a social basis for democracy, while preserving the loyalty of the rising middle classes by engaging in middle-class oriented, performance-related social policies184. The further rise of liberal ideas, propagated by different international and local players from the mid-1990s onwards, progressively led to downsizing of the Welfare State. 1995 represented a major turning point, particularly due to the pension reform, where conditions were tightened (number of contributory years increased, retirement age increased, basis of calculation of pension as a percentage of average earnings decreased). In 1999, the pension system was reformed further, on the basis of a three-pillar model. The first pillar seeks only to ensure minimum protection from poverty; the second pillar gained importance, to ensure higher than currently available compensation and was individualised more; the third pillar is devoted to those wishing to receive additional benefits aside from those provided in the first and the second pillar185. One of the aims of the overall reform of
184 185

Standing and Alber, 2000. Social Report 1999, pp. 66-67

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the social protection system was to try and increase its effectiveness186. The difficult economic circumstances exacerbated the contraction of benefits in pensions and social security in general. The trend towards an increasingly residual welfare state has determined the policy line of the latter part of the 1990s. Now, the most recent tendency has been to increase the role of the private voluntary social insurance, and to decrease the re-distributive dimension of the social security system. The GDP spent on social protection (including health care) is 16%187, comparable to the least developed Welfare State in Europe. The Anglo-American models are increasingly influential in the discourse and the practice of social policy in Lithuania. Poverty and social exclusion are increasing, and it is increasingly difficult to integrate the excluded, particularly the young188. The influence of different actors political parties, the media and other actors, as well as government on the development of social policy line in Lithuania is described below.

5.2.2. Political Parties

The social vision (or absence of vision) of political parties particularly influences the social policy line followed by Lithuania189. Until recently social policies have not been at the centre of the issues that concern political parties. During the first years following independence, there was more often than not an absence of political vision. In fact, until recently (1998), the political parties did not differentiate their programmes or identities in the area of social policy190. The Lithuanian Democratic Labour Party, which was in power from 1992 1996, is situated on the left spectrum in terms of the political ideologies that guides its discourses and actions. It favours an expansion of social programmes and an increase of the role of the State in social security. At the time, social policy was a marginal issue in the discourse and programmes of all political parties, including the Lithuanian Democratic Labour Party, which is why there was not a widely propagated discourse on this issue. From 1996 to 2000, the coalition of the right-wing Homeland Union and the Lithuanian Christian Democratic Party was in power. Upon a first analysis, it seems that the coalition favoured a contraction of social programmes, a decrease of the role of the state in social security and a more liberally oriented social security model. However, upon a more detailed analysis, it seems that in their discourse, both parties emphasised the role of the State in ensuring social protection, and the Homeland Union Party was in favour of an increase in social benefits, by expanding the tax collection base191. Despite this, the message that has been the most dominant in social policy reform is the right-wing vision: most influential political forces in Lithuania came out for the marginal (liberal) model. Indeed, most political parties are against the universal social-democratic model of social security192, and there is a growing trend to favour the voluntary pillar of social security. In year 2000, the liberal party was the most influential, which resulted in a certain liberalisation of social
186 187

Interview Expert 4 Lithuania, April 2001. Interview Expert 1 Lithuania, 10 April 2001. 188 Interview Expert 4 Lithuania, April 2001. 189 Interview Expert 1 Lithuania, 10 April 2001; Interview Expert 2 Lithuania, 11 April 2001; Interview Expert 3 Lithuania, 11 April 2001; Interview Expert 4 Lithuania, April 2001; Interview Ministry of Social Security and Labour 1, 10 April 2001. 190 Interview Expert 4 Lithuania, April 2001. 191 GUOGIS, A. et al., Lietuvos Politiniu Partiju Samprata Apie Socialine Apsauga, Eugrimas Leidykla, Vilnius, 2000, pp. 158 159. 192 GUOGIS A., et al., p. 160.

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policy193. Generally speaking, the liberal parties have been the most active in propagating their ideologies194. The role of key political players seems crucial in affecting what happens in terms of policy in Lithuania.

5.2.3. Media and Other Players

Another channel through which social visions are propagated is the media. There are two major newspapers, which are both right wing. The liberal Free Market Institute has also played and continues to play a key role in this respect. The Institute was established 10 years ago to promote a liberal economic approach (and a liberal social policy) influenced by the economic school of Chicago. Its ideas are situated on the far right of the political spectrum. In their discourse, the extreme right-wing position is, for example, reflected by the claim that there is no need for pensions at all195. Moreover, left-wing actors, such as trade unions, are weak and have a hard time making themselves heard196. There are several local experts, who are more oriented towards the left in terms of their vision of the reform of social security. They have been somewhat influential, however, they generally have a hard time getting their message across197.

5.2.4. Government
At the level of the government, the first two Ministers for Social Affairs had the necessary knowledge and skills to set up the bases of the system of social security in Lithuania. They had exposure to different manners of proceeding in social security organisation, particularly through EU and other international contacts. The second Minister of Social Affairs, Teodoras Medaiskis, notably had a very good contact with Danny Pieters, one of the key social security experts from the EU. Through this contact, there was a wider dissemination of the ways in which to reform social security, particularly through the translation of Introduction to Principles of Social Security (by Danny Pieters) into Lithuanian. The reform was very well organised during the first few years following independence. Teodoras Medaiskis stepped down from his post as Minister due to a disagreement with the Prime Minister, but remained active in social security. The subsequent Ministers for Social Affairs were not well prepared theoretically and made several mistakes in the design of social policy. They were not capable of taking decisions to adjust social policy adequately to new situations198. The core of the government strategy consists of developing the social assistance system further, reforming the pension system and decreasing the unemployment rate. Nevertheless, what is crucial reflected in the yearly Social Reports prepared by the Ministry - is the emergence and development of a collective capacity to critically reflect upon the social situation in Lithuania and to formulate a social policy strategy. Over the past decade, the strategy and capacity for action of different actors has improved qualitatively; however, the weak economic situation limits the possibilities for reform in the social arena199.
193

Interview Expert 1 Lithuania, 10 April 2001; Interview Expert 3 Lithuania, 12 April 2001; Interview Expert 4 Lithuania, April 2001. 194 Interview Expert 1 Lithuania, 10 April 2001 195 Interview Expert 1 Lithuania, 10 April 2001 196 Interview Expert 2 Lithuania, 11 April 2001. 197 Interview Expert 2 Lithuania, 11 April 2001. 198 Interview Expert 1 Lithuania, 10 April 2001. 199 Interview Ministry of Social Security and Labour 2, 13 April 2001.

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In the first Social Report, a mission statement was formulated in a management-type of logic, comprising the Ministrys goal, values and strategy, as well as its uniqueness and standards of behaviour. In subsequent years, the guiding principles of the work of the Ministry were formulated in a more pragmatic manner, focusing on the priorities and strategies in the principal policy areas: Labour policy, Social Insurance, Social Assistance. The essence of the Ministrys mission consists of formulating and implementing a labour and social policy, which should always guarantee a persons work rights and social security200. The Ministry seeks to create a social security system organised on the basis on universality, solidarity and social justice, and to develop supplementary non-state social insurance. It also aims to create more favourable conditions for farmers and self-employed individuals (increasing in proportion compared to employees on labour market) to be insured. It seeks to increase the employment rate and strengthen social guarantees. The administration of the system was progressively to be decentralised. In the Social Report of 1999, a reference to the EU principles of social security was made for the first time in the mission statement: to develop and implement an effective social insurance and social assistance system coordinated with European Union standards, ensuring social protection of state residents. This is why it directed all efforts and activities towards the formation and implementation of the social security and labour policy201. Moreover, in the Social Report of 1999, a section on international affairs was integrated into the section on the guiding principles of the Ministrys work.

5.3. The Social Security System in Lithuania 5.3.1. Introduction

The description of the social security system in the Social Reports is comprehensive. Legal acts that establish the different elements of the system are mentioned. The current situation is described, the underlying philosophy is highlighted, and the problems in the present system and recommendations on how to improve them are mentioned. The Social Security System is made up of a social insurance component and a social assistance component. The explicit principles guiding the Social Security System are universality and solidarity, which are an integral part of the European Union jargon on social policy (see Quintin, O. and Favarel-Dapas, B. (1999), L'Europe sociale - Enjeux et ralits, Coll. "Rflexe Europe", La Documentation franaise, Paris.).

200 201

Social Report 1997, p. 5. Social Report 1999, p. 16.

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5.3.2. Social Insurance Component of Social Security System

The social insurance component makes up the bulk of the system. It comprises pension, sickness, maternity (paternity), health, unemployment and work accident insurances. The system, based on the pay-as-you-go principles sets out to guarantee an income for insured persons in the case of loss of a job, for the aforementioned contingencies. The rights and benefits are based on the contribution rate and on the length of contribution. It is financed by contributions by the insured persons and by the insurer. In the year 2000, the contribution rate of employees to social insurance was 3% of their gross salary, and the contribution rate of employers was 31%202. The contributions are made to a Fund that is independent and separate from state and local government budgets: the State Social Insurance Fund. In 1997, it made up 9.1% of the GDP, and 40% of the national budget. The system is inspired by insurance-based systems in several continental EU countries. Problems that are under discussion with regard to the scheme include those of a demographic nature and those related to the functioning of the social insurance system. The former refers to the declining birth rate and the increasing mortality rate. The associated recommendation is to carry out a comprehensive reform of the pension system. The pension system was reformed in 1994 1995, introducing the pay-as-you-go pension scheme. In 1999, Lithuania experienced an economic downturn, in which the funding of the system, exacerbated by the ageing of the population, became threatened. At the beginning of 2000, the Government established a commission that drafted the Pension Reform Concept. The Concept consisted of establishing a three-pillar model of the pension system to ensure old-age income (higher than presently), to increase the systems viability and to expand its scope to embrace all groups of residents. The first pillar would be residual, consisting of merely protecting individuals from poverty. Its size would depend on the capacity of the State to provide assistance and on societys involvement in the solidarity-based system. The second pillar would constitute the core of the pension system. One part of the contributions of this pillar would be allocated to individual cumulative insurance; this component of the second pillar would increase over time. The third pillar would be the voluntary pillar, for those wishing to and being capable of increasing their income in old age203. The new concept of the pension system confirms the liberal ideology that underlies the pension reform, which began in 1995. The other problems related to the functioning of the social insurance system refer to four issues. First concerns the categories of people who have not yet been included in the system (persons working under patent, farmers, various categories of self-employed persons). Plans were therefore made to set out more favourable conditions for farmers to participate in the social insurance system, in particular taking account of their economic capacity. A law to this effect was passed in 1999, whereby farmers with economic difficulties would only have to pay a small insurance contribution; the rest would be paid from the State budget. Plans have also been made to involve more self-employed persons in the social insurance system, in particular to make social insurance mandatory for certain categories of self-employed persons. At the end of 1998, a resolution was adopted, according to which certain categories of self-employed lawyers and their assistances, notaries, patent holders and members of general and limited partnerships were equated to owners of personal enterprises, rendering their participation in the social insurance system obligatory; The second concerns the collection of contributions (the number of insured persons fell from 1,764,00 in 1991 to 1,325,000 in 1997). This problem is linked to widespread unofficial
202 203

Social Report 1999, pp. 10 11. Social Report 1999, pp. 66 67

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employment, the ageing of the population and an unfavourable economic situation. Recommendations to rectify this situation, made in the 1997 and 1998 Reports, included the introduction of an indexation system to approve an index to take account of variations in average insurable incomes, as well as setting up a more flexible system of sanctions for the delayed payment of contributions, and providing the possibility for companies to propose assets and shares to the State Social Insurance Fund, to restore the solvency of enterprises and help prevent bankruptcy. In March 1999, the Parliament approved an amendment allowing for companies to propose their assets or shares to the Social Insurance Fund. Another initiative proposed in this area was to re-enforce actions to prevent illegal employment. To this aim, state social insurance officials were endowed with the right, in 1999, to require explanations as to the presence of legal labour relations between the insurer and the insured and the payment of social insurance contributions and benefits; The third relates to the need to rebalance the budget of the social insurance fund. Factors influencing its negative balance are obligations assumed from the previous Soviet pension system, a decreasing number (for different reasons) of insured persons, a double accounting practice in enterprises, insufficient contributions to the state social insurance fund budget. Recommendations include the development of a uniform data system within the state social insurance fund, with a link to the State Revenue Department, the Labour Exchange and the State Patient Fund, in order to guarantee payment of social insurance contributions, and to prevent non-insured individuals from receiving social insurance benefits. Based on experiences in numerous Western European countries, one of the recommendations is to increase the part paid by the insured person to social insurance contributions and to decrease the part paid by the insurer. In December 1999, a provisional Law on the Structure of the State Social Insurance Fund Budget was adopted, to try and rationalise its functioning. Moreover, towards the end of 1999, the Ministry of Social Security and Labour proposed an action plan for balancing the State Social Insurance Fund budget; The fourth relates to the need to update legal acts regulating the system of State Social Insurance. The law on State Social Insurance was passed in 1991. Although it was amended several times since then, it remained fundamentally structured to the needs of the transition economy. A fundamental change of the Law on Social Insurance was proposed in 1998 (and is still on-going), to make the system more transparent, clear and reasonable and better adapted to market conditions. The new law includes the social rights and duties of individuals. In the reform, Particular attention should be paid to the unification of the legislation in the sphere of social insurance with the EU legislation204. Numerous fundamental changes were made to the Law on State Social Insurance and the Law on State Social Insurance Pensions, coming into force on 1 January 1999205. There is continuity in the Reports from year to year, in which the proposed solutions to the problems identified in the system are developed further, and in most cases, decisions are taken to rectify the situation (amendment to existing law or adoption of new law, action plan).

204 205

Social Report 1998. Social Reports 1997, 1998, 1999.

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5.3.3. Social Assistance Component of Social Security System

The social assistance system consists of financial and non-financial assistance, including services. It is targeted at people in need. Most of the system is made up of financial assistance, which was developed during the transition period to replace the Soviet system of the establishment of State child care institutions and employment guarantees for mother with young children. Some benefits are categorical, while others are means tested. The social assistance system is financed by state and local government funds, which come from the general income tax. Its implementation is decentralised, residing at the level of local government. The social assistance system includes benefits, compensations, tax benefits, employment guarantees for parents, assistance for purchasing a place of residence, and other factors. The guiding principle of social support is that it is not aimed at ensuring a long-term economic and social security for a persons; it just helps the person survive under extreme conditionsshould be organised so as to enhance the activity and individual responsibility of the individuals for themselves and their families206. In addition to the limited social assistance, the importance of the family as the main social institution is of significance during times of hardship. The system is developing on a continuous basis. In 1999, the system of social services was further developed along the following lines: social services have become increasingly decentralised, and the needs of different social groups are being taken into account and responded to through a network of social services, that is being created at community level; the provision of social services has become increasingly deinstitutionalised, through home assistance and other community services; different non-governmental organisations are increasingly involved in the social service system; the quality of the services rendered is progressively improving, in part due to more systematic assessment of the implementation of social service programmes, the professionalisation of social workers, the improvement of the activity of residential care institutions. It is of interest to note that the PHARE Consensus Programme The Strategy of the Development of Social Services in Lithuania was mentioned. The recommendations acted as guiding principles for the main trends in the development of social services in Lithuania: the creation of the social service market, support of non-governmental organisations, planning of community services, improvement of financing methods, the change of status of the institutions that render services. However, beyond mentioning their indirect influence, the proposed reforms of the project were not detailed207. One of the principal problems of the social assistance system is that the benefit levels are very low. One possible solution raised would be to limit the payment of family benefits, to those families that are the most needy, rather than to all families raising children under the age of three years. Foster child benefits were increased, to encourage families to take children and to ensure guardianship. (Social Report 1997). In 1999, MSSL, the Social Policy Group and the Department of Social Labour of Vilnius University conducted a survey on assessing the economic efficiency of social assistance to families raising children. The report included recommendations for reforms to improve the situation for families with many children. Contrary to the PHARE Consensus Programme The Strategy of the Development of Social
206 207

Social Report 1999, p. 68. Social Report 1999, p. 79.

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Services in Lithuania, the specific lines of the reforms proposed by the authors of the survey were taken on board in full form. In line with the recommendations of the survey, the Ministry set out to carry out a reform of the benefit system for families raising children. The minimum and most immediate proposals for reform were to pay benefits to families raising three children, irrespective of their income, and to provide a benefit for lone parents raising two children and not receiving alimony. The medium-term aim of the reform was to support families of the unemployed or disabled, depending on the number of dependents. The broader long-term reform seeks to provide different types of benefits across different policy sphere to poor families with many dependents, including allocations for compensation for medication and providing the possibilities for children from poor families to acquire higher education. The PHARE Consensus project Support to the Development of Social Assistance in Cash and Privileges and Strengthening of Administration contributes to the reform the social assistance system, to render it more efficient and effective. The project runs from February 2001 until the end of 2002. The Ministry counts on the project to help further improve the laws and other legal acts regulating the provision of social assistance to target populations208. Currently, the municipalities have broadly the same rules for the payment of benefits and privileges, but some municipalities run out of money, and are not able to pay the social assistance benefits. After the reform of the social assistance system, a single law should regulate all social assistance to low-income families, and the money should be ring fenced, so that people get the money that they are entitled to. The draft law on means-tested Social Assistance in Cash is in the process of being prepared by an official from the Ministry of Social Security and Labour together with a EU expert209. Another serious problem identified was that of the determining the real income of those claiming social benefits. A solution proposed was to create the Declaration of Family Income and Property Form, to help combat hidden income, and to develop a system increasingly targeted towards the assistance of the poorest families. A government programme (1997 2000) was set out to improve the social assistance system for poor families.

5.4. International Co-operation, Eurointegration and Bilateral Advice 5.4.1. Introduction

Besides the local actors, external actors also contribute to the making and reforming of social policy in Lithuania. These actors participate in different manners, and are influential to different degrees. The following section is divided into four parts. The first part is devoted to analysing how and to which degree different international actors influence social policy formation in Lithuania. There will be a particular focus on the World Bank, the United Nations, in particular the United Nations Development Programme (UNDP), and the International Labour Organisation. The second part is devoted to describing the manner in which the EU accession process has influenced the development of social policy in Lithuania, including the manner in which the Consensus and PHARE projects contribute to this process. The third part describes how bilateral advice has played a role in the social policy reform process in Lithuania. Bilateral advice has been considerable. One of its strengths is that it is based on building up a long-term working relation, in which the partners involved know and
208 209

Social Report 1999, p. 85. Interview Pre-Accession Adviser, 12 April 2001.

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trust each other. Finally, the fourth part gives some details on the strategy that has emerged for the co-ordination of international aid in the social policy area. It is of interest to note at the outset that one of the elements of added value of PHARE projects is that they provide the Ministry with bilateral contacts and the possibility to develop projects through these contacts. The twinning philosophy consists of making a longer sustainable relationship between CEEC and Member States that have similar structures210 and interests.

5.4.2. World Bank

As mentioned above, the World Bank is politically one of the most influential international players, in particular due to the financial conditionality on its loans. Two projects have been financed by a World Bank loan in the social policy area: 1. Strategic Planning in the Ministry of Social Security and Labour. It consists of supporting the Ministry in the formulation of a social policy strategy, which is a means by which to influence the policy direction. In this respect, the World Banks vision of pension reform is very popular in Lithuania, and seems to have been adopted in the formulation of the concept of Pension Reform (see Section 2.2, above). Up to present, Lithuania has not taken a loan with the World Bank for the reform of its pension system. However, the discourse of the World Bank in this area nevertheless seems to have been influential. Some local experts fear that Lithuania will agree on a loan with the World Bank for its pension reform. One of the problems with how to tackle pension reform is that, besides the World Banks clear-cut and widely propagated vision, there is a lack of information as to other ways to go about with the pension reform211. 2. Establishment of Community Social Service Centres (1996 2000). In the framework of the project, 14 Centres for Social Services and Education have been established nationwide. The aim is to provide an alternative to institutional care that was prominent prior to Lithuania regaining its independence by a decentralised approach to social services. The centres became were all fully operational in 2001, providing services to various socially vulnerable groups. This project is being implemented in the framework of a national programme for the Development of the Social Services Infrastructure, which sets out to strengthen the system of social services and to guarantee the provision of basic social services to the most vulnerable groups. The funds from the programme are obtained through loans from the World Bank and the Council of Europe Social Development Fund212. It is worth pointing to the characteristics of World Bank projects and the manner in which they are implemented, which are illustrative of its influence. Its projects tend to be very specific and well defined213, and are generally nation-wide projects,214 concerned with building the infrastructure. In project implementation, the World Bank hardly uses local experts, which limits the capacity of Lithuania to participate in the process. Moreover, it lacks a certain degree of flexibility in adapting the project to local needs and policies, due in particular to the conditionality attached to its loan. Moreover, it can place a conditionality for
210 211

Interview Member State Civil Servant 2, 7 March 2001. Interview Expert 1 Lithuania, 10 April 2001. 212 Social Report 2000. 213 Interview Expert 3 Lithuania, 12 April 2001. 214 Interview Expert 4 Lithuania.

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pension reform the World Banks priority area for granting a loan for another project, for example, in the area of social assistance215. However, in the last two to three years, the Lithuanians approach to negotiations with international donors has changed. Their negotiation position has become stronger, which means that the World Bank can no longer impose what they want without having to negotiate with the local counter-part.216 Moreover, in the EuroIntegration and International Co-operation section of the yearly Social Report, the focus on the contribution of the World Bank to the development of social policy in Lithuania has progressively been decreasing.

5.4.3. United Nations

The role of the United Nations (UN), particularly its Development Programme, is considered to be important. The role and instruments of the UN and thereafter of the UNDP will be explained briefly. The UN is conceived as the embodiment of the respect of human rights: Protection of human rights on the global scale is essentially implemented through the UN. Concretely, the countries that are members of the UN illustrate their commitment to the respect of human rights by the adoption of international documents. In Lithuania, the Ministry of Social Security and Labour ensures the implementation of several documents: 1. UN Convention on Childrens Rights; 2. UN Convention on the Abolition of Discrimination of All Types Against Women; 3. UN Convention Relating to the Status of Refugees; 4. UN International Covenant on Economic, Social and Cultural Rights. Lithuania has ratified the first three and signed the last one. For each of these documents, Lithuania is obliged to illustrate its respect of the provisions of the Conventions. A particular working group is set up for each Convention, and is subsequently examined by the United Nations. It is a tool that allows for the monitoring of the implementation of the principles of the conventions217. The United Nations Development Programme (UNDP) is more specifically targeted at social development. In this respect, it is considered as an important tool218. The UNDP works on poverty, gender issues, discrimination, child-care and childrens rights. It is of interest to note that the UNDP took up work on poverty before the World Bank could intervene in this arena219. The main outcome of the UNDPs work in Lithuania has been: 1.Setting up the Social Policy Unit; 2.Annual Publication of the Human Development Report; 3.Annual Publication of the Social Report. This initiative, together with the Ministry of Social Affairs and Employment of the Netherlands and the Maastricht University, sets out to render the Lithuanians autonomous in the formulation of their social policy priorities and strategies, and in the assessment of their effectiveness and relevance; 4.Support for the formulation of the National Poverty Reduction Strategy. This project, initiated in 1997, has been carried out in several stages. The first was to carry out a study Assessment and Elimination of Poverty. The second stage, in 1999, consisted of preparing a National Report on the Implementation of the Objectives agreed upon during the World
215 216

Interview Expert 1 Lithuania, 10 April 2001. Interview Ministry of Social Security and Labour 1. 217 Social Report 2000. 218 Social Reports 1997, 1998, 1999; Interview Expert 1 Lithuania, 10 April 2001; Interview Expert 3 Lithuania, 12 April 2001. 219 Interview Expert 1 Lithuania, 10 April 2001.

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Summit for Social Development220. The third stage, in February 2000, consisted of a meeting organised by the Baltic Ministers of Social Affairs and the UNDP on poverty issues, to discuss the formulation of Anti-Poverty Strategies in the three countries, and to exchange ideas and experiences. This resulted in, during the fourth stage, the formulation of the National Poverty Reduction Strategy, which was approved by the Lithuanian Social Committee in May 2000.221 In June 2000, during the extraordinary session of the United Nations General Assembly, Lithuanias national anti-poverty strategy was presented222. The National Poverty Reduction Strategy defines the concept of poverty adapted to the situation in Lithuania, and the means by which to measure it. The principal objective of the Strategy is to increase employment and to facilitate and promote training, as well as to allow for people to make life-choices, among different possibilities. Other priorities of the strategy are to develop the social security systems, to provide support for the most vulnerable groups, particularly located in rural regions, to strengthen work with the socially excluded populations, and to promote the social integration of the disabled. The Strategy underlines that it is important for different players, in particular non-governmental organisations and social partners, to be involved in the fight against poverty and social exclusion223. It is of particular interest to note that this strategy is in line with the European strategy to fight social exclusion and poverty, which was endorsed at the Nice European Council of December 2000224. There is an explicit reference to respect of the principles of subsidiarity and solidarity in the implementation of the poverty reduction strategy in Lithuania, which are the basis of social policies of many European countries225 Moreover, the Consensus project Support to the Development of Social Assistance in Cash and Privileges and Strengthening of Administration also supports the rationalisation of the social assistance system. It is integrated into the social policy programme of Lithuania. The UNDP projects also tend to be nation-wide (although smaller than WB projects226), and are not associated with a specific policy orientation, making them more flexible. The projects are also relatively easy to administer227. The local UNDP team fully integrates local experts and government in project implementation and the formulation of strategies228. Moreover, the projects are integrated into on-going policy activities. This is illustrated by the manner in which the Poverty Reduction Strategy was formulated.

220 221

Social Report 1999, p. 112. Poverty Reduction Strategy Lithuania, June 2000, pp. 10 - 11. 222 Social Report 2000. 223 Introductory Comments by the Chairperson of National Social Committee, Poverty Reduction Strategy Lithuania, p. 7. 224 There are four axes that define the common EU approach to the fight against poverty and social exclusion: 1. To re-integrate the socially excluded by promoting participation in employment and providing access to resources, rights, goods and services for all European citizens; 2. To prevent the risks of exclusion and to help the most vulnerable; 3. To define priority actions for specific target groups (such as minorities, children, the aged and people with disabilities). 4. To involve all relevant players in the implementation of these policies. (Labour and Social Affairs Council, 2000) 225 Introductory Comments by the Chairperson of National Social Committee, Poverty Reduction Strategy Lithuania, p. 7. 226 Interview Expert 4 Lithuania. 227 Interview Expert 3 Lithuania, 12 April 2001. 228 Interview Expert 1, 10 April 2001.

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5.4.4. The International Labour Organisation

The principal contribution of the International Labour Organisation has been though its labour standards, which often act as reference points for the drafting of legislation in the social arena in Lithuania. Different ILO instruments conventions, recommendations and protocols have been valuable in providing guiding principles for policy formation in Lithuania. The MSSL analyses the provisions of the provisions of the ILO conventions, their compliance with national legal acts, prepares recommendations for their ratification, and submits reports on the execution of the provisions of the conventions that have already been ratified. Every year, detailed analyses are made on the application of selected international labour standards. The ILO and the MSSL have worked together on identifying areas where the ILO could provide technical assistance for complying with certain labour standards, particularly in the view of EU integration229. The ILO has created and perfected highly effective supervision procedures for the implementation of international labour standards, including reports prepared by ILO members, as well as questionnaires through which Members can express preferences of agenda items for yearly meetings. As a body of the UN, the ILOs approach is similar to that of the UNDP, adapting the assistance to on-going processes. Moreover, the ILOs work is based on the principles of tripartite co-operation230. It has also contributed to the stimulation of dialogue on labour standards in Lithuania, with the involvement of key Ministry officials in its international meetings. Lithuania was first member of the ILO in 1921 and then renewed its membership in 1991. Since 1994, the Ministry of Social Security and Labour represents Lithuania in relations with the International Labour Organisation. A yearly International Labour Conference is organised in Geneva. 2 government representatives, 1 representative of the employers organisation, and 1 of the employees union attend it. The discussions are on the ILO standards and principles, and the eventual need to update them. Moreover, the yearly conferences also represent important opportunities for engaging in other multilateral and bilateral meetings. It is notably of interest to note that the Ministers of Labour of the countries that are candidate for membership to the EU organised a separate meeting as of this occasion to discuss possible ILO support to the objectives of accession to the EU, in particular in relation to the implementation of the EU employment policy231. Although the International Labour Organisation provides some technical assistance for the implementation of certain labour standards, it does not constitute an important part of its activity. However, the international labour standards, that are regularly reviewed, as well as the different monitoring tools that have been developed over time do incrementally influence the labour policies in the recipient country. Up to present, Lithuania has ratified 34 conventions of the ILO232.

229 230

Social Report 1999, p. 106. Social Report 1998, p. 127. 231 Social Report 2000. 232 Social Report 1999, p. 127.

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5.4.5. EU Accession
On June 12, 1995, Lithuania signed a Europe (Associated) Agreement with the European Union, and made an official request for EU membership. The agreement entered into force on February 1, 1998. Even prior to its entry into force, Lithuania began to harmonise its legislation with the requirements of EU law. In 1997, the focus in the field of social security and labour was on the legal acts on occupational health and safety at work and those on labour law and equal opportunities. The technical adaptations and institutional requirements associated with the co-ordination of social security systems, in particular regulations 1408/71 and 574/72, were analysed by Ministry officials, together with consultants from the PHARE programme, and specialists from EU Member States. In addition to the PHARE and Consensus programmes, which were accession-oriented from 1997 onwards, there are a multitude of more specific instruments that accompany the accession process. These include the Accession Partnership, prepared by Lithuania to illustrate the activities it planned to undertake during the coming year. Based on the Accession Partnership, Lithuania formulates a yearly National Programme for the Adoption of the Acquis (NPAA), which sets out the more specific planned steps for approximation with the acquis communautaire for the coming year. The National Programme for the Adoption of the Acquis (NPAA) is supplemented by the National Law Harmonisation Programme (NLHP), which deals mostly with the harmonisation of laws specified in the White Paper. Towards the end of every year, the European Commission prepares the Regular Report on the Progress of the CEEC (in this case Lithuania) towards accession in all areas of the acquis233. There are also Institutional Development Plans, which seek to ensure that Lithuania is prepared to and capable of implementing the acquis by 1 January 2004. The methodology for preparing the development plans is decided upon by the European Committee in Lithuania. A comprehensive analysis on the first stage of the Development of Institutions was finalised in December 2000. It identified the need for the establishment, reformation or extension of institutions required to ensure implementation of the acquis communautaire. The analysis revealed the need for institutional development in the areas of labour law, occupational health and safety at work, administration of the European Social Fund, recognition of professional qualifications, free movement of workers and co-ordination of the social security systems. In early 2001, the actions, needs and sources of funding for the development of institutions were identified. In the 1997 Regular Report, the Commission assessed that, concerning the social sphere, Lithuania was not ready for EU membership. The Commission held that Lithuania was to pursue social reforms, develop the social dialogue, pursue harmonisation with EU law in the spheres of occupational health and safety at work, labour law, and equal opportunities, and develop structures to ensure the effective implementation of legislation. Although the European Commission did not identify labour and social affairs as medium or short-term priorities, the Ministry wished to address these problems in the medium term. The Accession Partnership therefore included medium term priorities in the sphere of employment and social affairs. In the Ministrys subsequent social report, in 1998, there was a particular focus on the consequences of the Amsterdam Treaty for employment policy and on the report prepared by the European Commission on Lithuanias progress in approximating with the acquis communautaire. In the Commissions Regular Report, there was a particular focus on:

233

Social Report 1998, p. 120.

73

 the unemployment problem, the need to establish a supervisory institution for the implementation of the documents on occupational health and safety at work, the need to boost the participation of different partners in the framework of tripartite labour market agreements, the need to establish an ombudsmans institution in order to ensure respect of the recently adopted provisions of non-discrimination, the need to take measures for the adoption and the enforcement of the acquis communautaire in the areas of employment and social security, further development of health care activities. According to the Social Report of 1998, not all the observations made in the Commission report were well motivated. In the view of the MSSL, the employment councils carry out the functions that are assigned to them. The Social Report also indicated that the efforts made by Lithuania to train inspectors, in the view of creating a strong supervisory institution, had not been mentioned in the Commissions report. These observations illustrate that there was a tension between the Commission assessment of the performance of Lithuania, and its own internal assessment. Lithuania assessed that in one year, it had made considerable progress in adapting to the social acquis, and that it would be able to meet the social obligations of EU membership in the medium-term. It assessed its capacity to absorb the social acquis positively234. 1999 represents a turning point in that the decision was taken during the Helsinki Summit of December to begin negotiations with the former second wave candidate countries, including Lithuania. In theory, all candidate countries were thus on an equal footing. Concerning Lithuanias strategy to adopt new laws within a relative short period of time, the European Commission held that the schedule set out was too tight, particularly in the view of the insufficient administrative capacity of Lithuania. In the annual assessment made by the Commission of Lithuanias compliance with the acquis communautaire, several recommendations were made: the whole implementation of the acquis was insufficient in the sphere of bilateral recognition of professional qualifications in the Chapter n the Free Movement of Persons; the State Labour Inspectorate still faced problems, notably due to an incapacity to attract highly qualified staff; further harmonisation with EU law should be done, particularly focusing on the creation of a system of informing and counselling employee representatives; Lithuania needed to make more efforts to fully implement the acquis that had been adopted in the social arena; more attention needed to be devoted to the social dialogue in concluding bilateral collective contracts. Lithuania took these considerations into account in the preparation of the national programme for the adoption of the acquis. No traces of any tension between the European Commission and Lithuania were apparent in the 1999 social report, as had been the case in the 1998 report. Moreover, from 1999 onwards, it was increasingly clear that the principal political priority for Lithuania was integration into the European Union. Hence, the section in the Social Report devoted to integration into the European Union has been increasing yearly.
234

Social Report 1998, pp. 123 - 124

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In the year 2000, the situation in the area of social security and employment was considered by the EU to be satisfactory enough to begin negotiations on the Social Policy and Employment Chapter. Despite doubts raised by the experts of the European Commission, Lithuania provided clear and detailed answers to the questions raised. In March 2001, the Social Policy and Employment Chapter was provisionally closed. In practice, this means that Lithuania has fulfilled its membership obligations for this chapter and that no further negotiations are necessary. It has also made commitments to pursue the development of certain policies and activities, in particular the strengthening of administrative capacities. In the case that Lithuania would not live up to its commitments, the chapter could be reopened235.

5.4.6. The PHARE and Consensus Programmes

The contribution of the EU PHARE and Consensus projects to the development of social policy in Lithuania is recognised, and correspond broadly to the needs in Lithuania. Among all the externally funded programmes, PHARE is dominant, and is the most generous financially236. This section is divided into two parts. The first part traces the contribution of the PHARE and Consensus projects through different sources, and assesses the extent to which the results of the project were sustainable, as far as data is available237. It begins with an overview of all the PHARE and Consensus projects undertaken in Lithuania in the area of social security and labour market reform. It then reviews the contribution of Consensus projects, according to selected criteria, notably their sustainability. Finally, it assesses the contribution of the PHARE projects, based on an evaluation done for the European Commission by a consortium of consultancies led by COTA. It also sheds some light on recent efforts to effectively monitor PHARE projects. The second part assesses the extent to which the PHARE and Consensus projects contributed to social policy reform in Lithuania overall. The individual projects of all the programmes238, the type of support they provided, the budget that was ear-marked for their implementation, the percentage they represented of the overall budget and the contractors that were selected for their implementation are indicated in the Table 5.1.

Social Report 2000. Interview Ministry of Social Security and Labour 2, 13 April 2001. 237 GAUDE, J. et al., (COTA Consortium), An Evaluation of PHARE financed Labour Market and Social Sector Programmes, Final Report, January 2000; data on Consensus projects; data obtained from the Ministry of Social Security and Labour of Lithuania. 238 According to COTA, all the individual project components were part of the same programme:LI-9612. According to the list drawn up by the Ministry of Social Security and Labour, the project components belonged to two programmes, which has been the basis of table drawn up. The projects indicated in normal text are the ones that have been evaluated by the COTA consortium, while the ones that are in italics have not been included in the evaluation.
236

235

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Table 5.1. Overview of PHARE and Consensus Social Policy Projects in Lithuania
Programme Project (Contract number) Baltic States social sector - Labour Market Development and Adult Vocational Training Programme (93-0163) TA for Procurement and Logistics (94-0271) Country Policy Paper Lithuania (01-007)* Equal treatment of Men and Women in Bulgaria, Latvia, Lithuania, and Slovak Republic* (M) Co-ordination of Social Security Schemes in Estonia,Latvia and Lituania* (M) Explanatory Dictionary on Social Protection* (0151) Training of Social Workers* (01-52) Assistance for the Development of Additional (Voluntary) Health Insurance* ((01-56)
Support to SoDra* (State Social Insurance Fund Board) (96-0833)

Type Policy Training Infra. Inform. Inform. Inform. Inform. Training Policy
Policy

1 2 3 5 6
7 8 9 10

LI 9201

Budget (EUR) 2,000.000

% 26

Contractor Tecnecon, Ltd

LI 9302 ZZ-9505 Consensus I ZZ-9505 Consensus I ZZ-9505 Consensus I ZZ-9505 Consensus I ZZ-9505 Consensus I ZZ-9505 Consensus I
LI 9502

500.000 1,200.000

6 15

Europa SA BMT Management Berenschot Euromanagement BMT Management PLS Consult Birks Sinclair BASYS
SWS Ireland

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

LI-9502 LI-9502 LI-9612 LI-9612 LI-9612 LI-9612 LI-9612 LI-9612 LI-9612 LI-9612 ZZ-9710 Consensus II ZZ-9710 Consensus II ZZ-9710 Consensus II PHARE Consensus III PHARE PHARE

Strengthening capacity: Adviser to the Ministry of Social Security and Labour (97-0919) Measures to strengthen the capacity of the Ministry of Social Security and Labour (97-5019) Strengthening capacity: Technical appraisal of the worker protection system (97-5017) Support to the Approximation of Legislation in Occupational Safety and Health (98-5079) Procurement of equipment for Occupational Health and Safety Institutional development of National Labour Inspectorate in a pre-accession context Tripartite development of a Pilot Employment Initiative at local level (98-5193) EU Accession-related support to social insurance reform in Lithuania239 Social Insurance Support to the State Social Insurance Fund Board (96-0833) Support to Institutional Development in Occupational Safety and Health (OSH) (98-5086) Identification of regions by the aggregate indexes of their socio-economic development (LI-9710-0045) Social Insurance Accounting Standards (LI-97100046) Strategy for Developing Social Services (LI-97100047) Strengthening the implementation of occupational health and safety policy* Support to social policy development and administration of social assistance benefits and allowances* Preparation for participation in the European Employment Strategy* Development of the integrated information technology system in Sodra Phase II*

Policy Institution Building Institution Building Policy Infra. Institution Building Policy Policy Policy Institution Building Policy Policy Policy Institution Building Policy Policy Infra

300 000 300 000 50 000 50 000 500 000 150 000 300 000 1 500 000 300 000 240 000 110 000 50 000 65 000

4 4 0.7 0.7 7 2 4 20 4 3 2 0.7 0.7

Association Europeenne Birks Sinclair and Associates Birks Sinclair and Associates Birks Sinclair and Associates GEMCO Birks Sinclair and Associates Birks Sinclair and Associates Ministry of Social Welfare, Ireland SWS Ireland Birks Sinclair Birks Sinclair Coopers and Lybrand Oulu Deaconess Institute

Total * Budget of Projects not available; (M) Multi-Country project.

239

7 615 000

100

This project was referred to as the Development of Social Insurance Policy from the Lithuanian side.

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In the table, five types of projects have been identified: Policy-oriented projects generally consist of making recommendations for policy development (11 projects). These can be related to the acquis communautaire in the strict understanding of the term or to other social or labour market policies, in the wider understanding of the acquis communautaire; Training projects consist of the organisation of training for specific target groups (2); Infrastructure projects consist of the provision of equipment in order for a certain institution to function better (2); Information projects consist of the production of documents and/or the organisation of conferences to provide information to the recipient of EC rules or to provide information to the EC counter-part on the situation in the recipient country (4); Institution-building projects consist of strengthening the institutional capacity of different institutions in the CEEC to take on board and to re-enforce the acquis communautaire (4). The overview illustrates that half of the projects are policy-oriented. The question of their sustainability will be discussed below. First, the Consensus projects area analysed briefly, then, the PHARE projects are assessed. The Consensus Projects A review of the Consensus projects240 will be made according to the following criteria: the consultancy selected to implement the project; the number of local experts involved in the project; the project objective, the essence of the work carried out during the project and the main outcome. whether it is part of the hard of the soft acquis in the social policy area; whether the project was part of the policy agenda in Lithuania and how the project it has been integrated into ongoing activities whether there was any indication of awareness and/or collaboration with other international actors carrying out related reforms in the same policy area; to which extent were the results sustainable in the longer term? The evaluation of the final report made by the Consensus expert will be discussed briefly.

240

Only the Consensus II projects will be analysed as there is not enough data for the Consensus I projects to be analysed.

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A. Project Identification of Regions by the Aggregated Indexes of their socio-economic development level, for the improvement of the social security of the countrys inhabitants EU PHARE Consensus LI-9710-0045 The Framework Contractor Birks Sinclair carried out the project. Five local experts, four EU experts and two EU civil servants participated in the project The objectives of the project were to develop aggregated socio-economic development indices at regional level to be able to assess the relative need for social assistance among regions, to establish a sustainable methodology for the maintenance and use of these indices for future policy development and to agree upon an implementation plan for the introduction of this methodology. The main outcome of the project was a round-table discussion gathering key actors, and a model for the measurement of socio-economic development, with seven indices: earned income, social income, integrated net production, redistributed income, demographic structure, labour market and social indexes. The project is part of the soft acquis in the social policy area, particularly in so far as it is to be linked with the identification of under-developed regions, in order to have access to the Structural Funds upon EU membership. The project was successful insofar as a model was created, but it was not identified as an urgent need in the policy agenda. There were no other similar projects with international actors. The conclusion of the project report was that there was a need to develop the quality of the model further, with the institutes that share an interest in the model. A recommendation was made to continue the development process started by the assignment with the support of PHARE funding. The evaluation of the final report is not available. However, the evaluation of the interim report indicates that the work had been done in accordance with the TOR requirements, and that there were no issues that the Contractor needed to explain further. According to the evaluator, the issues raised in the project could not directly be taken up in another project. There was no link to or mention of the work financed by the UNDP in this area, consisting of supporting Lithuania in the development of a national poverty reduction strategy. B. Project Social Insurance Accounting Standards EU PHARE Consensus LI-9710-0046 (Recipient Institution: State Social Insurance Fund Board - SODRA) Price Water House Coopers UAB, Lithuania, carried out the project. Two local experts and one EU expert were involved in the implementation of the project. Moreover, key staff members of the SODRA were included in the implementation team, to take ownership of the project, and to be able to use the International Accounting Standards once the team had finished the project work. The main objective of the project was to provide theoretical and practical training to SODRA Central Office and Branch Accountants on International Accounting Standards (IAS) to enable them to prepare reporting forms and year-end financial statements in accordance with IAS. Indeed, since 31 December 1998, it became a legal requirement to prepare the State Social Insurance Funds financial statements with IAS standards.

78

The project is part of the soft acquis in the social policy area. The project was integrated into the work of the SODRA. There were no other related on-going projects in that area. The results were sustainable in so far as the use of the IAS was integrated into the practices of the SODRA.

Consensus evaluation: the Consensus expert assessed that good work had been provided and high-quality results had been obtained. Beyond that, no further comments were made. C. Project Strategy for Developing Social Services EU PHARE Consensus LI-9710-00047 A consortium consisting of the Finnish consultancy Oulu Deaconess Institute and the English consultancy European Development Services carried out the project. Two local experts and two EU experts were involved in the implementation of the project. One of the experts that participated has said that the project was useful for him, as a local expert, to be exposed to different ways of tackling the organisation of social services. The stated project objective was to facilitate the development of provision of social services in Lithuania, and to set out a strategy with clear goals and objectives for improving social services. The project report stated that the strategy should be the basis for consideration of potential policy changes and should outline relevant steps for implementation. The aim of the report the main outcome of the project was to assist the Steering Group and the Ministry of Social Security and Labour, and to decide upon a strategy for the development of social services in Lithuania. In the report, there is a summary of European models for social policy, with an in-depth description of the Finnish and British models. It includes a description of the financing policies of social services in Europe, and an overview of the current social service policy in Lithuania. This section included a presentation of the legal framework, a presentation of the organisation of the system (the role of different actors: government, county, municipality, NGOs), the financing of the system, the human resources (social workers, home helpers). For the future of social services policy in Lithuania, five main strategies were recommended: The Development of Institutions Redefining the legal and administrative processes Organisation of the financing of the services provided through the model of a mixed economy of care Return of residents to the municipality of origin or to an area to which she or he has some relationship Care audit route to a comprehensive review of the human and material resources available of each institution, and the manner in which these are used. This project is part of the soft law of the acquis communautaire in the social policy area. The project was mentioned in the Social Report of the Ministry of Social Affairs, but it does not seem to have been integrated into other activities in this area in Lithuania. The project resulted in a discussion on the issue of provision of care, but the recommendations were not taken on board as such, and there was no followthrough to the project.

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 There was no interaction between this project and the World Bank project on building Community Social Services, and the work of the World Bank was not taken into account in this project. Other related initiatives taken in the framework of the Danish - Lithuanian co-operation were not taken into account, either. The results were not sustainable as the recommendations were not taken into account or followed through. Evaluation by Consensus Expert: The expert pointed out to the fact that the project had fulfilled the TOR appropriately, and that a comprehensive strategy paper had been produced, introducing various models and alternatives. The Lithuanians had expressed high satisfaction with the final outcome of the project. There were no proposals for amendments to the report, and no indication as to how the issues raised in the report could be taken up in another project. There was no indication as to additional steps to be taken by the beneficiary organisation or other actors, either. The PHARE social protection programme Consensus contributed somewhat to the social protection reform process in Lithuania. However, the restructuring of the programme that took place at the end of 1999, in which the forum to discuss policy issues was abolished and the decision to replace technical assistance with long-term twinning, was not particularly appreciated. (See chapter 5) Different actors involved expressed concern about the decision of the European Commission to discontinue the programme through technical assistance: the final Report of the Consensus II programme show that Consensus II was a successful programme. Despite this fact, the European Commission decided not to carry out a similar programme in the future and to start the twinning programme Consensus III241. There are doubts as to the effectiveness of the twinning strategy for the provision of social policy advice242. Doubts were notably raised as to the willingness of the Ministries to give away their best people. For the Consensus project on cash benefits and non-cash benefits, only one proposal for implementing the project was submitted. In this framework, the Pre-Accession Adviser - the co-ordinator of the project - has no former experience in such a long-term position in a foreign assistance project243. The Lithuanians did not wish to have preaccession advisors fully integrated into the Ministry. The possibility of building up a longerterm, but less integrated relationship seemed more useful to the Lithuanians244. It is too soon to assess the effectiveness of such an approach; however, the fact that the project was formulated by the Lithuanians and that it is part of the government strategy to reform social assistance favours a positive outcome. The strategy of the project is to develop solutions jointly and to transfer skills to render the results sustainable.

241 242

Social Report 1999, p. 197. Interview Expert 3 Lithuania, 12 April 2001. 243 Interview Pre-Accession Advisor, 12 April 2001. 244 Interview Ministry of Social Security and Labour 2, 13 April 2001.

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The PHARE projects In the context of the overall Evaluation of PHARE-financed Labour Market and Social Security Programmes, the programmes in this area were evaluated in Lithuania for the European Commission. The evaluation was contracted to the consortium led by the company COTA. The programmes in Lithuania consisted of legally-binding aspects of the acquis to provide support for approximation of legislation in occupational health and safety - and nonlegally binding aspects to rationalise the social insurance and social welfare finance management systems (organisation, computer systems and staff development), and to provide legal and policy advice in this area245. It is of interest to notice that some other projects, including those developed under the Consensus Programme, were not taken into account in the evaluation. In this section, the success of the projects will be discussed, followed by a brief analysis of the issues they addressed. Table 5.2 indicates the success of the projects according to different criteria, as it appeared in the evaluation
Table 2 Ratings for LITHUANIA Contribution to Programme level
Appropriateness of design

Project level

Value added of Phare

Needs and policies

Analysis of the Evaluation Score by main components Rating: 1 Excellent; 2: Good; 3: Average; 4: Below average; 5: Poor.

Sustainability 5 3 4 1 3 3 3 2 4 4 3 2 2 3 4 2 2 2,9

Effectiveness

Mean score

Advisory MSSL ( 300,000) Strenghtening Capacity MSSL. ( 300,000) Workers Protection ( 50,000) OSH ( 150,000) NLI ( 240,000) LEIs ( 300,000) - Tourism Alytus - Business Incubator Alytus - Disabled Mariampol - Teenagers Mariampol - Tourism Druskininkai - Labour market training Druskininkai - Woodcutters Varena - Social Services Varena - National Park Dzukija Social Insurance Policy/Legislation ( 1,200,000) Sodra ( 300,000) Mean Score

3 2 2 1 3 3

5 3 5 2 3 3

5 3 4 1 2 3

4,3 2,7 3,7 1,3 2,7 3,0

5 3 3 1 2 3

5 5 3 3 2 3 1 1 2 3 3 3,1 2 3 4 4 2 2 2 4 5 3 2 1 2 2,5 2,8

5,0 3,0 3,0 1,0 2,5 3,0

2 3 2 2 2 1 2,3 3,3 2,6

2,3 3 1,7 1 2,7 2,6

2,5 1,5 2,7

In the analysis, no reference was made to the big gaps in the success of the individual projects. The most success was recorded for the project related to the legally binding acquis
245

C Gaude, J. et al., (COTA Consortium), An Evaluation of PHARE financed Labour Market and Social Sector Programmes, Final Report, January 2000, p. 7.

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Mean score

Efficiency

Impact

on occupational health and safety. The place for second runner up was shared by the project concerned with strengthening the NLI and the development of social insurance policy and legislation. The overall assessment of the other projects was average, with the exception of the project concerned with advising the MSSL, which scored poor. In the assessment of sustainability, the evaluation is vague. If anything, it is focused on local conditionalities to be fulfilled for the results to be sustainable. The verdict was that legislative change could only be assessed in terms of its implementation and the levels of compliance. The sustainability of changes in the National Labour Inspectorate were characterised as hard to assess. The organisational changes made in SODRA would be dependent on the capacity and willingness of senior staff to continue the management of change. Skills transfer would depend on staff using and upgrading their skills.on leadership and key personnel as drivers of change. In this respect, the Director and senior human resources officer resigned shortly after the completion of the project, decreasing the possibility of sustenance of the results. The IT systems introduced would be beneficial if an adequate system of maintenance and upgrading to ensure maximum efficiency would be developed. A PHARE project that began in 2000 would notably establish a monitoring unit to oversee the development of an Integrated Information Technology System in SODRA. Sustainability of the Local Employment Initiatives would depend on sufficient local resources being available to increase the scope of such activities. The results of the projects concerned with the provision of legal advice were expected to be sustainable, once the changes to be introduced by the government in the areas of occupational health and safety, employment and social insurance would become statutory. The programmes contributed in the legally binding acquis and the political or soft acquis in the social policy area. Concerning the legally binding acquis, COTA estimated that adaptation of occupational health and safety legislation to the demands of the acquis has been assisted (in the framework of the project Support to the Approximation of Legislation in Occupational Safety and Health). It was pointed out that in the Strategic Plan of the Ministry of Social Security and Labour (MSSL), harmonisation of legislation in occupational health and safety was among the priorities, in the view of EU membership. The PHARE assistance matched the expectations of the Ministry, since the policy changes led to the decision to change legislation in respect of the acquis. Concerning the acquis in labour law as well as the political acquis in area of Employment, the role of the National Labour Inspectorate (NLI) as an independent body was strengthened (Institutional development of NLI in a pre-accession context), and its capacity to monitor and enforce occupational health and safety legislation was enhanced. The Labour Inspectorate notably played a monitoring role in the project concerning local employment initiatives (Tripartite development of a Pilot Employment Initiative at local level), which is part of the European Union Employment Guidelines, the soft policy instrument to move forward in this area. Altogether, nine pilot local initiatives in 4 districts were set up and implemented. The capacity of 4 Local employment offices to select and supervise the projects was enhanced. A Labour Market Training Centre was developed and provided with resources to offer training in basic skills for employment. The prioritisation of employment was also reflected in the Ministrys Strategic Plan of 1998, emphasising the need to improve an active policy for the labour market and employment promotion. According to the evaluators This was assumed as a rationale for the LEIs, but only some relate to active employment measures. The LEIs were set out to serve as models for future applications for EU structural funds, but the link was weak in how to demonstrate well-structured models for future ESF Funding. The prioritisation on employment is also related to the unemployment rate, which increased from 4.4% in 1993 to 82

6.4% in 1998. The framework contractor Birks Sinclair designed the project for LEIs. As the outputs of the projects did not include the formulation of the employment policy, there was a fundamental weakness in project design. Concerning the even softer EU policy, the alignment of social insurance policy and legislation had been effective, reflecting EU norms. Indeed, the social insurance system had been reorganised and strengthened by improving the collection of contributions and the payment of benefits and moving the system towards the standards set for the EU246 (EU Accession-related support to social insurance reform in Lithuania; Social Insurance Support to the State Social Insurance Fund Board). Concerning the development of legislation for social insurance, the experts aware of the demands of EU legislative norms were assessed to have contributed in such a manner that there would not be discrepancies with EU, hence decreasing the likelihood of encountering obstacles in this area once negotiations would begin. Concretely, the EU experts had advised the MSSL on 14 draft pieces of social insurance legislation, including an accident insurance law. In sum, the Consensus and PHARE projects often seemed to address the right issues, from the perspective of the EU. Generally, they were relevant to government policies and identified needs(they) can be regarded as contributing towards the European integration process and the priorities of the Government in this respect. It was also pointed out that the PHARE interventionsvaried in the extent of relevance according to project. The quality of the projects and their effectiveness also varied considerably: The relevance and quality of different EU projects is different: some of them are better than others247. Often, a project, which was not focused enough or integrated into the actions or priorities of the government, had virtually no long-term or sustainable effect. Generally, the assessment was that too little use is made of EU projects, particularly as far as projects that were not directly related to the legally binding acquis were concerned. The motivation of Contractors and foreign experts to participate in projects, and subsequently the quality of their work in project implementation, is very diverse, which helps to explain the mixed results. In general, especially in the pre-accession context, there have been many PHARE projects that correspond to the Lithuanian priorities and requirements associated with the accession of Lithuania to the EU. This also seems to be seeping into the soft policy requirements. Indeed, it is significant that a new PHARE project that began in 2001 is focused on preparing Lithuania for participation in the European Employment Strategy. It is a twinning project with Sweden and Denmark. It seeks primarily to render Lithuanias employment policy compatible with the European Employment Strategy248. Overall, the PHARE programme has provided Lithuania with the possibility to undertake certain reforms more rapidly249. Moreover, since the process has become entirely decentralised, it has been up to the Lithuanians to envisage which type of project they need. The Lithuanians draft project proposals according to the priorities of the accession process. The process has become more structured and systematic because of the Accession Partnerships and the National Programmes for the Adoption of the Acquis, where the policy priorities and the specific targets are established. These guide the manner in which PHARE projects are formulated and the manner in which the resources are used250. It is the EC (EC Delegation + Lithuanian Team at DG ELARG) that decides on whether or not to fund

246

Gaude, J. et al., (COTA Consortium), An Evaluation of PHARE financed Labour Market and Social Sector Programmes, Final Report, January 2000, pp. 10 11. 247 Interview Expert 3 Lithuania, 12 April 2001. 248 Social Report 2000. 249 Interview Ministry of Social Security and Labour 2, 13 April 2001. 250 Interview EC delegation 1 Lithuania, 10 April 2001.

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the project251. The Delegation is also involved in the day-to-day monitoring of project implementation, activities, reporting, evaluation of project out-comes. The projects are useful for the local experts that have the opportunity to participate in their implementation, as it provides them with exposure to different manners in which to tackle specific problems related to the social arena, although the experience of some experts is limited to one national context252. It has helped them to be able to address reform issues in the social sphere in the EU language, and to become familiar with the European ideas and strategy. But, there is a low correlation with policy-making in Lithuania there is often the lack of a next step, to discuss how to implement certain ideas and strategies at national level the problem is to follow-through and to make the recommendations reality253. The projects are also useful for the people who have the opportunity to participate in the seminar in which the results of a project are presented. However, there is little dissemination of project results to the general public or to policy-makers254. In addition to the fact that the PHARE programme is now guided by the Accession Partnership and National Programme for the Adoption of the Acquis. In addition to this, the Ministry decided to set up work groups when required, for the proper implementation of the PHARE and Consensus programmes. This was in the overall framework of the co-ordination of international advice. The principal aspects of this co-ordination will be developed below. The contribution of the PHARE programme in the social policy area was, according to the evaluators, complementary to other donors. The MSSL benefited from gaining new ideas and acquaintance with different legislation from comparative experience of EU experts. The value of the inputs rests on the capacity of MSSL to co-ordinate and make most effective use of different inputs without duplication. There was no mention of different qualities of experts. The MSSL appeared to be more concerned with investment (building infrastructure), rather than technical assistance and skills transfer, which constituted the bulk of the support provided under the PHARE programme. As highlighted in the report, the value of PHARE inputs might be diminished if competing agencies offer services that are more aligned to the priorities of the MSSL. This would appear to place an onus on PHARE to adapt its programme in the future within the context of the overall NPAA.255 As pointed out by the head of the Evaluation Unit in the European Commission: Basically, the evaluation indicates that the countries are left quite much liberty to do what they want with the money256. In the context of the decentralisation of the PHARE programme, the European Commission has established a Joint Monitoring Committee (representatives of the EU delegation in Lithuania and representatives of the institutions implementing the projects) for monitoring the implementation of PHARE programmes. The committee meets twice a year to discuss the implementation of the different projects, the problems faced and the resources used. For recent projects, there have been no comments from the EC on the implementation of PHARE projects.

251 252

Interview EC delegation 2, 10 April 2001. Interview Expert 1 Lithuania, 10 April 2001. 253 Interview Expert 4 Lithuania. 254 Interview Expert 1 Lithuania, 10 April 2001. 255 Gaude, J. et al., (COTA Consortium), An Evaluation of PHARE financed Labour Market and Social Sector Programmes, Final Report, January 2000, p. 30 256 Interview Commission Official 4, 2 February 1999.

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5.4.7. Bilateral Advice from Denmark

The relationship with Denmark is the most developed, including co-operation with: the Danish Ministry of Labour in the area of labour. The co-operation with this Ministry was established in 1992. Under the agreement concluded, Denmark provides technical assistance to the Lithuanian labour market management institutions and the development of the modern labour market system in Lithuania257. In 1999, another Danish-Lithuanian Programme for Co-operation in the Labour Market field was concluded258. the Danish Ministry of Social Affairs in the organisation of a social sector programme, especially focusing on institutions for the elderly and the disabled. A specific co-operation was agreed upon for 1998-1999, consisting of establishing agencies providing services at home and developing social services, and of improving the labour efficiency of social care institutions. For the implementation of this programme, Denmark has allocated 2.3 million DKK259. the Danish Ministry of Foreign Affairs together with the Danish Ministry of Social Affairs for a social initiative in favour of socially excluded groups of people. The Agreement stipulates that the Government of Denmark will support the projects submitted by NGOs, state institutions and agencies, which comply with the overall objectives of the project. A widely mediated announcement was made for the tender for submission of projects throughout Lithuania. 141 submissions were made. The selection of projects will be finalised in 2000, after which the projects selected will be implemented, in the second half of 2000. In January 1999, the Ministry of Labour initiated the Baltic Region Sector Programme on Labour Market Policy. In the framework of the programme, the Danish Government finances labour market projects that comply with established criteria, and in which at least three regions of the Baltic Sea (Denmark, Poland, Kaliningrad, Lithuania, Latvia, Estonia and Leningrad) express the desire to participate. In 1999, Lithuania prepared and submitted five projects. In 2000, the project Regional Development and Employment was approved. The three participating countries are Lithuania, Poland and Denmark. More projects under this framework programme will be suggested in 2001260.

257 258

Social Report 1997, p. 123. Social Report 1999, p. 112. 259 Social Report 1997, p. 123 260 Social Report 1999, p. 113.

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5.4.8. Sweden
Various co-operative agreements have been concluded with Sweden, with the financial support of the Swedish International Development Agency (SIDA). In 1995, the Lithuanian Labour Exchange and the Swedish National Labour Market Agency signed a co-operation development agreement. In the framework of the agreement, five programmes were implemented between 1995 and 1997: one project on the assistance to a model labour exchange; two training programmes; one project on the preparation of methods for labour market predictions; one project on the planning and preparation for computerisation and data processing. There were plans to continue co-operation along these lines in the future. Moreover, for the period between 1997 through 1999, a new programme was planned, consisting of actions for the disabled. The objective of the agreement is the development of the rehabilitation system, integration of the disabled into society, the establishment of a rehabilitation centre for the disabled in Vilnius, and the creation of rehabilitation institutions for the disabled at the Lithuanian labour market training centres. Sweden allocated 1.9 million SEK through the SIDA fund.

5.4.9. Germany
A protocol of intentions was signed between the German Ministry of Labour and Social Affairs and the Lithuanian MSSL in 1997, agreeing to pursue co-operation in the area of labour and social policy. The principal areas of co-operation are assistance in reforming the Lithuanian labour market administration system and assistance in reforming social insurance. These activities were pursued in 1998.

5.4.10. Ireland
Irelands co-operation with Lithuania is materialised through the PHARE and Consensus programmes261.

5.4.11. Norway
Through financial assistance provided by the Norwegian government and the Norwegian FAFO Institution, studies of living conditions are regularly organised in the Baltic States. The first was carried out in 1990, the second in 1994, and the third in 1999. On the basis of the results, a comparative study of living conditions in Lithuanian, Latvia and Estonia will be prepared in 2000262.

261 262

Social Report 1997, p. 123 124. Social Report 1999, p. 114.

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5.4.12. The Baltic Council of Ministers

The Baltic Council of Ministers, consisting of Estonia, Latvia and Lithuania, includes a committee of social security. In 1998, agreements on the regulation of social security cooperation were signed between the three Baltic countries. Common urgent issues on the development of social security were discussed. Training was organised for social security specialists in all three States in a summer school that was organised by the European Institute for Social Security under the Consensus Programme. Bilateral advice has been considerable. One of its strengths is that it builds up a long-term working relation, in which the partners involved know and trust each other. It is of interest to note that one of the elements of added value of PHARE projects is that they provide the Ministry with bilateral contacts and the possibility to develop projects through these contacts. The twinning philosophy consists of making a longer sustainable relationship between CEEC and Member States that have similar structures263 and interests. The Ministry of Social Security and Labour of Lithuania co-operates closely with Ministries in different countries. Ministries of Social Affairs and/or Labour in several EU countries (Denmark, Sweden, Germany, Ireland, Norway) have developed a working cooperation with the MSSL. The MSSL has also developed a working relationship with the Ministries in Estonia, Latvia and Poland.

5.5. Co-ordination of International Assistance

Overall, the international donors and lenders have contributed to developments in the social arena in Lithuania: the implementation of international projects is an important precondition for the development of the social security system. The positive assessments of their performance that have been highlighted in the Social Reports include the organisation of specialised training sessions for different target groups, the strengthening of the infrastructure of social services, the development of the labour market system, and the conduct of various analyses264. The donors and lenders are classified according to the importance of their financial contribution. PHARE and PHARE Consensus are the principal donors. The World Bank also plays an important role, as do the Social Development Fund of the Council of Europe and the United Nations Development Programme265. Bilateral support has also been considerable. 1997 represents a turning point in the manner that the MSSL conceives the use of the financial aid provided by various donors: special attention was focused on the efficiency of the use of foreign assistance, the feasibility of the creation of new projects and co-ordination of the projects. A database was set up to take account of the procedures and results of the projects in effect. The MSSL is responsible for the co-ordination of foreign aid, in order for the links to be made between the projects covering the same areas, and to ensure the most effective use of foreign aid. It develops the projects in relation to the needs. This task is considered to be an important prerequisite of the development of the social security system266. In sum, the MSSL defines its technical assistance priorities, each time identifying the most suitable donor, based on the donors profile, past experience, working methods, and
263 264

Interview Member State Civil Servant 2, 7 March 2001. Social Report 1999 265 Social Reports 1997, 1998, 1999 266 Social Report 2000.

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possibility of financial contribution. The priorities are then presented to the different donors/lenders, in multi-lateral and bi-lateral meetings. The priority is to work with donors rather than lenders. In the 1997 1999 period, only two projects were financed from loans - from the World Bank (Establishment of Community Social Service Centers) and from the Social Development Fund of the Council of Europe (Housing provisions to deportees and political prisoners returning to Lithuania). The major part of foreign assistance is technical assistance, consisting of foreign or local consultations, and training. The strategy of project implementation adopted by the Ministry of Social Security and Labour aims to limit projects controlled by foreign partners, and to leave as large a portion of assistance as possible in Lithuania, investing in reconstruction of buildings, acquisition of computers or other facilities and recruiting more local consultants, training local specialists, etc. The Lithuanians would not like too much intervention of foreign experts, or to be guided by the donors/lenders/consultants. Instead, they would like to control and to lead the implementation of the projects. A feeling of ownership of the different projects is important for their successful integration into the overall social policy in Lithuania267. In addition to the will to control the process of the flow of assistance in the social policy area, the Lithuanians also seek to limit the pressure that foreign assistance puts on the Ministry of Social Security and Labour. The Lithuanians have identified the use of foreign assistance and implementation of projects as a rather complex process, requiring good coordination good preparation of projects and proper administration much time, knowledge and experience. In other words, foreign assistance is valuable, but to obtain the true added value from the implementation of projects, considerable investment from the Lithuanian side is required. Moreover, the different foreign providers of assistance do not have the same procedures for the preparation of projects or for reporting. When a foreign institution administers a project, the Ministry does not have to deal with these administrative hassles. However, in such a case, the recipient does not benefit from the same ownership of the project and its outcome. This means that in order to ensure ownership of the project, it is necessary to invest resources into the administrative requirements of project implementation. Another problematic factor in working with foreign experts in the implementation of a project is the language barrier. Moreover, the Ministry officials are required to spend much time for satisfaction of their additional need for information In many cases, it is impossible to satisfy the requirements of foreign partners, since it would be necessary to increase the number of staff. In case the foreign assistance takes the form of a grant, the Lithuanians need to allocate time for meeting with experts, provide necessary information and provide premises for project management. In some cases, the demands of the foreign partners are deemed to be too demanding. Due to this pressure on the staff of the MSSL, the possibility of creating a project co-ordination group within the Ministry has been envisaged268. This initiative was followed through in 1999. To improve the efficiency and quality of the implementation of international social security and labour projects, specific bodies were set up in March 1999 to meet this aim: the International Assistance Council (IAC) and the International Assistance Board (IAB). These structures aim to improve the co-ordination of international assistance and to ensure the exchange information of different projects in related policy areas. The IAC approves the direction of technical assistance, assesses the results of completed projects. It also seeks to maintain the integrity of the policy by providing proposals for the development of projects and following their implementation. The IAB analyses the needs for technical assistance and
267 268

Social Report 1997, p. 125 Social Report 1997, pp. 125-126.

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proposes new projects, assesses the implementation of projects and submits the directions of technical assistance to the IAC for approval. In 1999, a discussion of the international projects and new priorities in the sphere of technical assistance was organised with representatives of foreign embassies and international organisations in Lithuania. After the introduction of this more co-ordinated approach, the project results improved and became more integrated into the activities in the social domain in Lithuania269.

5.6. Conclusions
To conclude, it appears that: The social policy development of Lithuania has been influenced by different factors, notably liberal political parties, the media, the Free Market Institute and Government. The social security system in Lithuania consists of a social insurance component and a social assistance component. It resembles the Bismarckian system, although the low level of benefits brings to mind the Anglo-Saxon system. There are many problems to be resolved. The government makes efforts to resolve these. The functioning of the MSSL has become more organised and targeted since the regained independence of Lithuania. This is reflected in the yearly Social Reports. Different international organisations have supported Lithuania in the development of its social policy by inciting them to apply international standards or by funding projects in the social policy area; The biggest foreign donor is the EUs PHARE programme, while the biggest foreign lender is the World Bank; EU accession is a national priority, and the PHARE programme is increasingly tailored to the needs of compliance with the EUs acquis communautaire in the social arena. This includes the soft law component of the acquis communautaire (notably participation in the European Employment Strategy and having a functioning social security system); Bilateral support has been provided by different Member States (the Netherlands, Denmark, Germany, Sweden, Ireland and Norway) and long-term sustainable bilateral relationships have been built. These are sometimes re-enforced through twinning via the PHARE programme; A strategy on the use of foreign assistance has emerged, which has increased the effectiveness of the projects and their integration into the reform of social policy in Lithuania. The main conclusion regarding the strategies, policy visions and integration of activities of international donors into on-going policy reform process in Lithuania is illustrated in the table 5.3.

269

Social Report 1999, p. 106.

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Table 5. 3. The extent to which the different international actors have a specific policy vision, which is associated with their projects, and the degree to which their projects are integrated with local activities Policy vision 3 2 1 X WB X ILO/EU X UNDP

1 Involvement of local actors

The diagram indicates a) the extent to which the actors have a specific policy vision (vertical axis), the extent to which the actors use local participants in their projects (horizontal axis) and c) the extent to which the activities of the international agencies are integrated into the national reform agenda of the government (style of text). Italic text indicates that the activities are somewhat integrated into the national reform agenda; Regular text indicates that the activities are integrated into the national reform agenda; Bold text indicates that the activities are fully integrated into the national reform agenda. The World Banks vision of social policy reform is the best defined. It has a comprehensive view of how social policy should develop. It seeks to apply this to all countries to which it grants loans. It puts pressure on Lithuania to introduce a selective social safety net system of social protection, moving in the direction of privatisation of all forms of social policy (Standing and Alber, 2000: 113). It is very much in line with the liberal-oriented discourses propagated by the most influential players in the Lithuanian context (notably liberal parties, the Free Market Institute, the media). This has facilitated the filtering in of the World Banks vision in pension reform in Lithuania. In a nutshell, the World Bank policy in the reform of the public pension system, targeted at transition countries, is to set up a three pillar system, which would ensure against the many risks of old age: A publicly managed system with mandatory participation and the limited goal of reducing poverty among the old; A privately managed mandatory savings system; A voluntary savings system (World Bank, 1994). World Bank experts are well anchored in the Lithuania, constantly providing liberal-orientated advice and technical assistance in the social policy reform process. This is integrated into the national reform agenda. Moreover, the World Bank hardly integrates local experts into its reform activities in Lithuania. The core of the reforms proposed by the World Bank consist of a targeted policy of developing a social assistance system, conserving only flat-rate pensions and limiting entitlement to other benefits, while creating an individually accounted, fully 90

funded, privately managed second tier of pensions (Deacon et al., 1997). The Lithuanians seem to have made a carbon copy of this vision in their own Pension Reform Concept, although they have not yet taken a loan with the World Bank to reform their pension system. One of the problems is that no serious alternatives are proposed to counter this vision of pension reform. The ILO and the EU have well-defined visions in specific areas of social policy. The ILOs vision is very well defined as far as the labour conditions are concerned. Indeed, its labour standards which appear in conventions, recommendations and protocols - are integrated into new legislation in Lithuania. The ILO also has effective procedures for supervising the implementation of its labour standards. It integrates the relevant local actors into activities related to labour standards. Although its labour standards and activities are an important and solid basis for the Lithuanians, the vision of the ILO is not all encompassing, as that of the World Bank. Moreover, its resources for technical assistance are limited. The EU has had a more specific vision of social policy reform since the accession-oriented context. Since then, it has also used more effective tools to assist this process (the NPAA, the AP and the Regular Reports). Its vision in the social policy area should be understood in the wider sense, comprising not only the legally binding acquis communautaire, but also the soft or political acquis. In this respect, it encompasses the more narrow legally-binding acquis (in the area of occupational health and safety, social dialogue, protection of workers, equal treatment of and equal opportunities for men and women), and the broader scope of the soft acquis (the European Employment Title integrated into the Amsterdam Treaty, and principles such as solidarity and re-distribution on which the organisation of social protection is based). However, for membership to the EU, Lithuania is only required to comply with the narrow legally binding acquis, which does not constitute the core of European social policy. The Lithuanians are required to participate in the European Employment Title, but its recommendations (as for EU Member States) are not binding. The broader soft acquis, although associated with a vision, are not among the requirements for membership to the EU. In the accession negotiations, the social policy and employment chapter has been closed for Lithuania. This means that Lithuania has fulfilled the requirements for membership to the EU in this area. Therefore, the political conditionality that the EU had for encouraging Lithuania to make certain reforms in the social arena has been weakened. Local experts are involved in project implementation. However, the PHARE and Consensus projects have (often) not been integrated into the reform agenda, until recently, through the introduction of a decentralised mechanism by which the local actors can identify their needs and priorities for PHARE funding, in line with the accession agenda of the EU. The United Nations Development Programme (UNDP) has through documents such as the United Nations Human Development Report a broad vision of social and human development. This includes the reduction of poverty and the socio-economic integration of all individuals into society. However, it does not have a specific vision of social policy. Its activities in Lithuania are fully integrated into the on-going reform process. The activities have, for example, instigated the Lithuanians to formulate a National Poverty Reduction Strategy. Local experts are fully involved in the activities. The specificity of a donors policy vision, combined with the degree to which its activities are integrated into the national reform agenda and the extent to which local actors are involved in the projects reveal the motivation of the donor to provide support to the recipient country. On the one hand, a very precise and all-encompassing policy vision that seeks to be integrated into the national reform agenda, combined with no involvement of local experts, is characteristic of an actor that seeks to impose its vision. On the other hand, a broad vision, which is integrated into the national reform agenda, and involves local experts, reveals the 91

will of the donor to put the recipient country on the tracks for development in the social arena. The activities and visions of the donors do influence the direction of social policy in Lithuania, particularly when these support the discourses that are propagated nationally. (Note on sources: This account draws on the Lithuanian Ministry of Social Security and Labours annual Social Report which was first produced in 1997, and has subsequently been produced yearly. One reason that the Ministry produces this report is to provide the wider public with more information on the social situation. Another is for Ministry officials to have an objective understanding of the situation and the needs, in order to more effectively be able to formulate adequate policy responses. It is illustrative of the Lithuanians greater awareness of their own situation and of more confidence in regard to their own capacity to formulate policies and take measures. Each year, the Social Report is prepared with the support of the Government on the Netherlands, via the United Nations Development Programme. In practice, experts from Maastrich University provide methodological assistance. The awareness of the social situation and the loopholes in the social policy situation that appears through the Social Reports of the Ministry of Social Security and Labour is confirmed through the interviews carried out in Lithuania in April 2001. Interviews were carried out with two representatives of the Ministry of Social Security and Labour, three representatives of the EC delegation, four local experts, and one long-term foreign adviser. Lithuanias Poverty Reduction Strategy, and an analysis carried out on the contribution of political parties to the social policy line adopted in Lithuania have also been valuable sources of data.)

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6. IMPLICATIONS FOR FUTURE USE OF CONSULTING COMPANIES AS AGENTS OF SOCIAL POLICY TRANSFER
6.1. Some Conclusions
In effect the report addresses the following questions. Does the EU have a coherent and consistent approach to social policy that it seeks to transfer to other countries through its assistances schemes? Does the use of subcontracting through consulting companies enable the EU to transfer any such messages in a consistent way? Is the social policy advice offered to other countries via such technical assistance influential? How does this influence compare with the role of others internal and external actors in the policy making process? What kinds of companies are operating in this field and what are their motivations? How important are the individual experts contracted to these companies in the social policy transfer process? What lessons can be drawn from this review for the EU and individual countries that use subcontracting as a method of international assistance? Chapter one reviewed the external dimension of EU social policy. The thesis in that chapter was that due to the complex structure of the European Union and its institutions, including conflicts of interest and power between and within the different institutions, and the national interests and practices of the EU Member States, a comprehensive united and agreed view of EU social policy has not up to now been possible to attain. However, through soft law, the EUs social dimension has progressively been extended. In discourse, this is being transposed to the external dimension of social policy as well. At the level of rhetoric it seems therefore that the EU has fashioned an external dimension of social policy in its dealings with accession countries. It does attempt to send a coherent message as to the specific social dimension of EU membership. The central question addressed in chapter two was the extent to which the external dimension of EU social policy is taken into account and put into effect by the PHARE programme. The thesis is that the various reforms to the PHARE programme since its inception have not rendered it more effective, and that the widening and deepening social policy dimension of the EU is not fully reflected in the social policy actions of the PHARE programme. Also despite the fact that PHARE has increasingly been guided by the accession agenda, particularly since 1997, it does not necessarily increase the policy influence of the programme. This is due to several factors: a) the fact that the terms of reference (TOR) of projects were often written by experts who were not aware of the political context and priorities of the recipient countries. In such cases, the project often addressed the wrong questions, and was therefore not integrated into the overall policy reform process of the recipient country. This situation has improved with the recent transfer of responsibilities to the Ministries in the recipient countries. It is now up to them to select how they would like to use the PHARE money earmarked for their country in different sectors, although this is subject to approval by the local EC delegation. b) poor project design and the selection of inappropriate 93

experts for implementing the projects. c) the Commissions focus on input rather than on the long-term sustainability of the project in the evaluation of PHAREs sector programmes. In theory, this should improve with multi-annual programming that seeks to conceive the contribution of PHARE to the reform process in a long-term perspective. Chapter three examined the CONSENSUS Programme between 1995 and 2000. The theses of this chapter are that: a) the Consensus Programme is exemplary of a shortcoming in the Commissions way of functioning in that it was conceptualised by a few experts without taking full account of the situation in the recipient countries and without fully conceiving its implementation modalities in advance; b) the role of specific individuals is crucial in the major strategic decisions of the Commission both to set up CONSENSUS and subsequently to destroy it; c) the selection of Contractors through competitive tendering favours private sector players rather than aiming to achieve a balance in project implementation between private sector players, public sector players, non-governmental organisations, academic organisations and research institutions; d) the heavy tendering procedures used were not necessarily correlated with the selection of the most appropriate Contractor for the project; and d) the role of the Contractor is important in project implementation, but the role of the experts is even more crucial. In terms of social policy thinking within the EU influencing the message conveyed by CONSENSUS to recipient countries it is noted that DG Employment and Social Policys intervention in CONSENSUS developed throughout the lifetime of the programme, from disinterest to informal consultation and finally to including its priorities in the projects of the Consensus Programme. In this way those responsible for the social policy of the EU found a way of influencing albeit briefly the external dimension of the EU in relation to the accession countries. In effect, whereas the PHARE Programme as a whole had not been an effective instrument for the advancing of the external dimension of EU social policy, the CONSENSUS Programme had become such an instrument. It also facilitated an effective dialogue between accession country Ministries of Welfare and DG Employment and Social Policy (former DGV) officials and between EU country Ministries of Welfare and CEEC Ministries of Welfare. Its demise in the face of a concerted campaign to retain it is indicative of a lack of consistent external policy thinking on the part of the Commission. How far in practice the programme was as effective as this conclusion suggestion is a matter we turned to in the next chapter where the modalities of implementation through subcontracting are reviewed and assessed. Chapter four reviewed the mechanisms used within CONSENSUS to put its technical advice into operation. The companies who were used as Contractors ranged from classical consulting companies, which were dominant, to non-governmental organisations with social objectives. Several companies were in one way or another interested in social development, from a humanitarian perspective, or from an academic perspective. Among the private sector companies some were generalists, while others were specialised in the provision of a specific type of service. For some companies the provision of consulting services in the framework of the EUs externally oriented social sector programmes was the principal activity, while for others it was complementary. No attempt is made to draw more specific conclusions on the social objectives of the companies since they are so diverse in nature. Certainly there is no sense in which the actors involved reflect in any systematic way best social policy practice within the EU or reflect in any systematic way the EUs external social policy as we describe it in chapter 1. The participation of such a diverse range of actors can only have added complexity to any message the Commission might have been trying to get across about desirable social policy through the vehicle of CONSENSUS. 94

In this chapter we also reviewed in more detail the role in project implementation of the companies and their experts and suggest the ideal characteristics of such companies and experts. Overall it is suggested that the role of Contractors is not as crucial as that of the experts. It is principally the experts who are on the ground in the recipient country that have the possibility to shape policy issues through the projects that they participate in and through the contacts that they establish in the recipient countries, and it is partly because the EUs social policy acquis are so limited that the projects can be adapted to the needs of the recipient country and are open to the influence of the Contractors and experts vision. There are few good EU social policy experts, and throughout the years, they have become closely involved with each other, forming a network of social policy experts. All of these experts participated in projects of the Consensus programme and continue to be active in PHARE social policy programmes. The success of a project often depends on making key local players aware of the importance of the project. There is no single solution on how to do this, although getting the local media involved in the dissemination of information on the project, and getting the attention of key Ministers are often indicative of the success of a project. In order for the project to gain support locally, the foreign experts extend their activities beyond the Terms of Reference in the strict sense of the term. In this respect, the involvement of local experts is crucial for the project to succeed. All foreign experts interviewed agree, and each have their own means of gaining the confidence of the local expert team. Most foreign experts are independent consultants, rather than being tied to a company or an institution. This is why it is their role, rather than that of the Contractors, that has been important on the ground. This does not exclude the development of good relationships with certain companies. Chapter five reviewed the making of post-communist social policy in Lithuania and attempts to assess where external actors such as the EU and PHARE/CONSENSUS fit in to the picture. Besides the local actors external actors also contribute to the making and reforming of social policy in Lithuania. These actors participate in different manners, and are influential to different degrees. The CONSENSUS programme contributed somewhat to the social protection reform process in Lithuania. However, the reform of the CONSENSUS programme that took place at the end of 1999, in which the Programme Advisory Board Forum to discuss policy issues was abolished and technical assistance was replaced with longterm twinning was not particularly appreciated in Lithuania. In sum, the CONSENSUS and PHARE projects often did seem to address the right issues, from the perspective of the EU and generally they were relevant to government policies. They can be regarded as contributing towards the European integration process. However the relevance of projects both to the EU and to the country priorities varied. The quality of the projects and their effectiveness also varied considerably. Often a project that was not focused enough or integrated into the actions or priorities of the government had virtually no long-term or sustainable effect. Generally, the assessment was that too little use is made of EU projects, particularly as far as projects that were not directly related to the legally binding acquis were concerned. The motivation of Contractors and foreign experts to participate in projects, and subsequently the quality of their work in project implementation is very diverse, which helps to explain the mixed results. More generally a) the specificity of a donors policy vision, combined with b) the degree to which its activities are integrated into the national reform agenda and national social policy discourse and c) the extent to which local actors are involved in the projects affect the ability of a donor to provide support to the recipient country. A very precise and all-encompassing policy vision that seeks to be integrated into the national reform agenda combined with little involvement of local experts is characteristic of an actor that 95

seeks to impose its vision. On the other hand, a broad vision, which is integrated into the national reform agenda, and involves local experts, reveals the will of the donor to put the recipient country on track for its own development in the social arena. The EU through PHARE/CONSENSUS did not fall into the trap of the first scenario of policy imposition but did not always meet all the criteria of the second scenario.

6.2. Some Recommendations

Clearly the EU and national governments do seek to influence the social policy and practice of countries that are in receipt of technical assistance. While there may be a lot of rhetoric regarding the right of countries to choose their own path of social development the motivations of foreign assistance include among others influencing those choices in directions which the donors regard as desirable either for self interested or normative reasons. It is intended that lessons can be learned and best practice can be transferred. If this is the case then how might this be done more effectively and how might that influence better counter the influence of other international or national actors who are in the same business but with different normative standpoints or different policy lessons that they wish to convey? Here we reflect on the lessons of this research for such recommendations under three headings. Some of these recommendations are specific to the EU-CEEC relationship. Others are transferable to other donor-recipient relationships. The most salient of the conclusions above to these recommendations may be restated as: At the level of rhetoric it seems therefore that the EU has fashioned an external dimension of social policy in its dealings with accession countries. It does attempt to send a coherent message as to the specific social dimension of EU membership. There is conditionality for this social dimension for the legally binding acquis communautaire, but not for the broader soft acquis. But the widening and deepening social policy dimension of the EU is not fully reflected in the social policy actions of the PHARE programme. Also, despite the fact that PHARE has increasingly been guided by the accession agenda, particularly since 1997, it does not necessarily increase the policy influence of the programme in the social policy area (except for the legally-binding acquis). This limited policy influence is due to the fact that the terms of reference (TOR) of projects were often written by experts who were not aware of the political context and priorities of the recipient countries. In such cases, the project often addressed the wrong questions, and was therefore not integrated into the overall policy reform process of the recipient country. This situation has improved with the recent transfer of responsibilities to the Ministries in the recipient countries, It was also due to poor project design and the selection of inappropriate experts for implementing the projects. The heavy tendering procedures used were not necessarily correlated with the selection of the most appropriate Contractors and experts for the project This has also improved with the increased transfer of responsibilities to the Ministries in the recipient countries, especially as far as the selection of the Contractor is concerned. Also, the Commissions focus on input rather than on the long-term sustainability of the project in the evaluation of PHAREs sector programmes contributed to ineffectiveness. Often a project that was not focused enough or integrated into the

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actions or priorities of the government had virtually no long-term or sustainable effect. Generally, the assessment was that too little use is made of EU projects. Also, the selection of contractors through competitive tendering favours private sector players rather than aiming to achieve a balance in project implementation between private sector players, public sector players, non-governmental organisations, academic organisations and research institutions. The motivation of Contractors and foreign experts to participate in projects, and subsequently the quality of their work in project implementation is very diverse which helps to explain the mixed results. The participation of such a diverse range of companies and individual experts can only have added complexity to any message the Commission might have been trying to get across about desirable social policy through the vehicle of PHARE and CONSENSUS. The role of the Contractor is important in project implementation, but the role of the experts is even more crucial. Overall it is suggested that the role of contractors is not as crucial as that of the experts. It is principally the experts who are on the ground in the recipient country that have the possibility to shape policy issues through the projects that they participate in and through the contacts that they establish in the recipient countries. Whereas the PHARE Programme as a whole had not been an effective instrument for the advancing of the external dimension of EU social policy the CONSENSUS Programme had become such an instrument. It also facilitated through the Programme Advisory Board that involved recipient countries an effective dialogue between accession country Ministries of Welfare and DG Employment and Social Policy (former DGV) officials and between EU country Ministries of Welfare and CEEC Ministries of Welfare. Its demise in the face of a concerted campaign to retain it is indicative of a lack of consistent external policy thinking on the part of the Commission. The EUs role in terms of project work is clearly less influential than that of some other donors. Future membership of the EU does however galvanise policy makers. More generally a) the specificity of a donors policy vision, combined with b) the degree to which its activities are integrated into the national reform agenda and national social policy discourse and c) the extent to which local actors are involved in the projects affect the ability of a donor to provide support to the recipient country. A very precise and all-encompassing policy vision that seeks to be integrated into the national reform agenda combined with little involvement of local experts is characteristic of an actor that seeks to impose its vision. On the other hand, a broad vision, which is integrated into the national reform agenda, and involves local experts, reveals the will of the donor to put the recipient country on track for its own development in the social arena. The EU through PHARE/CONSENSUS did not fall into the trap of the first scenario of policy imposition but did not always meet all the criteria of the second scenario.

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6.2.1. Recommendations to the National Governments and the EU in relation to how they relate to other multilateral donors seeking to influence country social policy
The EU and National Governments need to review the social policy influences of other multilateral donors, in particular the World Bank, and seek to engage directly in a policy dialogue both with the Bank at a global level and at a recipient country level. Most CEEC have now established strategies on their social policy reform needs. For different needs, different international donors have been identified for the provision of support. Donors should be made aware of these strategic plans, in order to enhance their possible positive contribution to the policy reform process of the recipient countries. In terms of comparative effectiveness the most effective mode of operation for influence can be restated as one which involves a) specific donor policy vision, combined with b) donor activities integrated into the national reform agenda and national social policy discourse and c) donor activity within which local actors are involved in the projects.

6.2.2. Recommendations to National Governments and the EU in relation to alternative ways, other than through subcontracted programmes such as PHARE/CONSENSUS by which it might seek to influence the social policy of a recipient country
Twinning between donor and recipient countries would be another way to achieve some of the objectives. A long-term twinning relationship (10 years) where the foreign twinning partner is not fully integrated into the organisation of the government of the recipient country, but would make regular short-term missions for specific purposes is the most effective way of providing the recipient country with advice without interfering into the local organisational structure. The EU twinning partner should have experience outside his/her Ministry. Other qualities for the twinning partner are to be flexible generalists and good co-ordinators with a pragmatic sense. (Interview Member State Civil Servant 2, 7 March 2001; Interview EC Delegation 1, Lithuania, 10 April 2001; Paper 2, section II) Continuous policy dialogue between donor and several similar recipient countries may be a more fruitful way of influencing policy. Such a policy dialogue involving more than one recipient country can be more fruitful than single donorrecipient dialogues. A successful example of this is the Baltic Council of Ministers, including a committee of social security. In February 2000, a meeting was organised by the Baltic Ministers of Social Affairs and the UNDP on poverty issues, to discuss the formulation of Anti-Poverty Strategies in the three countries, and to exchange ideas and experiences. This resulted in the formulation of the National Poverty Reduction Strategy for the three Baltic countries. This could be taken as an idealtypical example for reforms in other areas: pensions, social assistance, etc. (See Chapter 7: The Contribution of the EU to Social Policy in Lithuania)

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 Networking between equivalents in Ministries of Recipient countries can be an alternative mode of policy learning and transfer. To a certain extent, such networking exists and has been one of the sustainable long-term effects of the Consensus Programme Advisory Board despite its formal demise. The EC Social Protection Committee (instigated during the Finnish Presidency, and officially established during the French Presidency in the Nice Treaty) should involve accession country Ministries who should be updated with existing progress reports. Moreover, the accession countries should be involved in the newly established co-ordination process in the field of social exclusion. If their involvement in the Social Protection Committee is not feasible at this stage, they should be included on a mailing list, which would allow them to follow the developments in EU social policy. The information provided to the CEEC through the mailing list should include the development of the work and agendas of the working groups of the ECOFIN and Social and Employment Councils. The interlinkage and balance of power between the Social Protection, Employment and Economic policies of the European Union should be made clear to the CEEC.

6.2.3. Recommendations to the EU/National governments in relation to the better future use of consulting companies as subcontractors for the transfer of social policy advice/experience in the context of PHARE and similar programmes
These are grouped under four headings covering a) the means to increase the status of social policy in projects, b) the enhancement of the institutional memory of sub-contracting, c) the way in which subcontracted projects are evaluated and d) the mechanisms used to engage foreign and recipient country experts. Increasing status of social policy in projects Mainstreaming of social policy. Social Policy concerns need to be mainstreamed into all PHARE and all Finnish government projects in recipient countries, not only for the legally binding acquis, but also for the soft acquis that concern the general development and functioning of the social protection systems. Train Contractors and Experts in Social Policy objectives. The Finish Gov/EC should train the sub-contracted company in the general social policy objectives (over and above specific TORS) that it is seeking to achieve, and on the latest developments in the recipient country, particularly if the consultants have no prior country experience. The EC based country liaison officer could do this. Recent Commission policy documents would inform this process. Strengthen EC social policy expertise among country liaison officers. While the full time long term employment by the European Commission of social protection (and other policy area) advisers who could replace subcontracted consultants in the field is probably not feasible a step in that direction would be the appointment of permanent country liaison officers in each policy field working from the EC. There are currently liaison officers per country (for each CEEC) in the European Commission that have the responsibility for several policy fields, but they are not actively involved in politically orienting the provision of external advice through 99

PHARE. These country liaison officers should, on the one hand, inform the recipient governments and other interested players, in particular local experts, of the latest developments in EU social policy and ensure the distribution of key documents in this area (for which there is a lot of demand), together with the EC delegation. They would, on the other, be informed of the recent policy developments in the recipient countries, key players and local experts. They would inform the EU experts participating in PHARE projects of the relevant policy developments in the recipient country. The recipient government would work together with the local EC delegation in the provision of this information on a regular basis. Strengthen social policy expertise of EC delegations in countries. Alternatively, the transfer of sector specialists from Brussels to the EC delegation could be envisaged, to enhance the policy dimension of the work of the EC Delegation. In this manner, the sector specialist could, for example, conduct the Joint Employment Review with the local government, rather than the process being steered and conducted from Brussels. The sector specialist could also keep the local Ministry of Social Affairs up-to-date on developments in EC social policy i.e. in the fight against social exclusion and poverty and pensions. The EC delegation should more actively use the high-level contacts it has established to build a political consensus on the recommendations proposed and thereby to render the PHARE projects politically influential. It should also play a greater role in the wider dissemination of project results. Strengthen donor institutional memory of project outcomes Strengthen institutional memory of expert track record. For any one recipient country a short list of the few foreign social policy consultants who have good track records as individuals can be constructed to influence appointment decisions. This would be part of the attempt to conserve some institutional memory in pension, social assistance etc policy transfers. Such a memory exists at an informal level and is used to invite tenders from some rather than other consultants. As such informal institutional memory is open to abuse, it needs to be written down and archived. Strengthen institutional memory of Contractors track record. A collective memory of the performance of Contractors and of the results of the projects should also be established. The first would decrease the randomness of the selection of the Contractor. The second would ensure a long-term memory in different sectors. It should notably include all the terms of reference and project reports, according to policy area. Approved list of project managers. EU/Finnish Government should consider setting up its approved short list of project mangers. Selected civil servants should be trained, to be able to be effective, flexible and dynamic project managers and included in this list. Such permanent Project Managers should also be employed to train temporary Contractors in donor policy objectives. Reform process of evaluation of projects End subcontracting of project evaluations. Evaluations of finished contracts should not be subcontracted as much as is current practice. In-house evaluation against broader policy goals would ensure more sustained knowledge of the good and the bad. Evaluation should be undertaken later rather than sooner to assess 100

impact. It should be a brief report to encourage reading. A criterion against which projects should be assessed is the extent to which they fit into current recipient government policy reform programme. Another criteria would be whether the project outcomes were actually followed up at a later stage. Instigate short-term and long-term evaluation. The assessment should be divided into two parts, first, right after the project has been finished, to verify the extent to which the immediate objectives have been met and second, two years after the end of the project, to verify its sustainability. Reform process of selecting experts Prior country experience of experts essential. The prior recipient country experience of project manager and individual consultant is important in facilitating networking and policy influence. Additionally during project implementation, the foreign expert team should spend a considerable amount of time in the recipient country. Delegate more say to country experts and Ministries. A willingness on the part of the foreign team to allocate important responsibilities in the framework of the project to local specialists/experts/agencies and to let them assume a degree of control and ownership over the project is crucial to ensure capacity building and sustainability of policy influence. Interviews and feedback important. Interviews with the key experts and project manager are important to capture the qualities listed above. The interview process and other means should allow for more feedback to failed companies. The financial aspects for the bid do not need to weigh so heavily (currently 30% in PHARE) where an upper limit is already laid down. Pay local experts more. Projects should pay local experts well and on a par with EU experts. Time needs to be allowed to find the best collaborators. Recipient Country Ministries could compile lists of competent personnel/consultants with whom they have some trust. Stop competitive race to subcontract best local expert. There are few good local experts in each country. These are often known by the recipient governments and by the consultancy companies that are submitting a bid. Moreover, the inclusion of a local expert in a tender with a company is often due to the company that was the quickest in contacting the expert (the expert can only be involved in one bid). This race to grab the best experts practice should be abandoned. Instead, the company that wins the bid on other grounds, notably the quality of the tender and foreign experts (team leader and consultants), should be given the choice of which expert to work with, upon the recommendation of the recipient government, once that they won the bid. Lengthen consultant contracts. Sustainable and consistent shifts in social policy are only ensured as a result of long-term consultant company engagement and long term individual consultant engagement10 years is a goal to aspire to. This longterm commitment of the consultant would not indicate that he/she would be fully integrated into the organisation of the government. On the contrary, the long-term relationship would involve short-term visits of the consultant to the recipient country, for specific purposes. The consultant would act as a guide to the beneficiary.

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European Commission: Directorate General Enlargement, PHARE Review 2000: Strengthening Preparations for Membership, Communication from Mr. Verheugen, Directorate General Enlargement, C(2000)3103/2, 21 October 2000. GAUDE, J. et al., (COTA Consortium), An Evaluation of PHARE financed Labour Market and Social Sector Programmes, Final Report, January 2000. PHARE: Social Sector Strategy Paper, jointly prepared by Birks Sinclair and BBI, June 1998. Enlargement Strategy, Europa Website:DG1A. TAIEX meets the challenge, Europa Website: enlargement. b) Interviews Interview Commission Official 1, 4 February 1999 Interview Commission Official 4, 2 February 1999 Interview Commission Official 6, 26 February 2001 Interview Contractor 1, 5 November 1999 Interview Contractor 4, 27 February 2001 Interview Contractor 7, Consultant 2, 23 March 2001 Interview Expert 2, 22 August 2000 Interview Expert 4, 8 March 2001 Interview Expert 5, 22 March 2001 Interview Expert 6, 24 April 2001 Interview Expert 7, 3 May 2001 Interview Member State Civil Servant 2, 7 March 2001 Interview EC Delegation 1, Lithuania, 10 April 2001 Interview Representative Ministry of Social Security and Labour Lithuania 1, 10 April 2001 Interview Representative Ministry of Social Security and Labour Lithuania 2, 13 April 2001 Interview Expert 1 Lithuania, 10 April 2001 Interview Expert 3 Lithuania, April 2001 Interview Expert 4 Lithuania, April 2001 Chapters 3 and 4 a) Monographies, information on EU PHARE and Consensus Programmes DE LA PORTE, C., Annex 3, phd proposal The manner in which the EU, through its external aid programmes, contributes to building the social protection identity in the CEECs, March 1999.

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Consensus PMA, Draft financial memorandum, 1998. Consensus PMA, Final Report Consensus I, Houten, August 1998. European Commission, TOR Consensus I, 1995. Group of 8 comments on the draft financing memorandum provided to the PAB on 14/15 December 1998, February 1999. Minutes of the 9th Programme Advisory Board (PAB) Meeting of the Consensus Programme, Prague, 14 - 15 June, 1999. OMAS, Final Evaluation Consensus Programme I, 1997. Presentation documents, BASYS. Presentation Mercer, Mercer website. Presentation of tasks of DG1A , Europa website: 1998 Working with PHARE: Framework for service contracts, Europa website: European Commission:DG1A. Standard Consensus tender evaluation form Terms of Reference: Monitoring the Development of the Social Protection Systems in the CEECs, Consensus Programme. b) Interviews Interview Contractor Consensus I, 7 October 1999. Interview Contractor 2, 21 March 2000. Interview Contractor 3, 30 August 2000. Interview Contractor 4, 27 February 2001. Interview Contractor 5, 7 March 2001. Interview Contactor 7, Consultant 1, 23 March 2001. Interview Contractor 7, Consultant 3, 23 March 2001. Interview Commission Official 5, 9 February 2000. Interview Commission Official 6, 26 February 2001. Interview Commission Official 7, 1 March 2001. Interview Commission Official 8, 6 March 2001. Interview Expert 1, 9 March 2000. Interview Expert 2, 22 August 2000. Interview Expert 4, 8 March 2001. Interview Expert 5, 22 March 2001. Interview Expert 6, 24 April 2001. 106

Interview Expert 7, 3 May 2001. Interview Framework Contractor 2. Interview Framework Contractor 3. Interview Member State Civil Servant 3, 23 March 2001. Interview participant in framework contract consortium, 4 November 1999. Interview Civil Servants Ministry of Social Affairs of Estonia, 23 March 2000. Interview Representative of Ministry of Social Affairs of Estonia, 23 March 2000. Interview Ministry of Social Security and Labour of Lithuania, 10 April 2001. Chapter 5 a) Monographs, EU and Lithuania Reports GAUDE, J. et al., (COTA Consortium), An Evaluation of PHARE financed Labour Market and Social Sector Programmes, Final Report, January 2000. GUOGIS, A. et al., Lietuvos Politiniu Partiju Samprata Apie Socialine Apsauga, Eugrimas Leidykla, Vilnius, 2000. STANDING and ALBER, Social Dumping, catch-up, or convergence? Europe in a comparative global context, Journal of European Social Policy, Vol. 10., No. 2., 2000. Poverty Reduction Strategy Lithuania, June 2000. Ministry of Social Security and Labour of Lithuania, Social Report 1997. Ministry of Social Security and Labour of Lithuania, Social Report 1998. Ministry of Social Security and Labour of Lithuania, Social Report 1999. b) Interviews Interview Commission Official 4, 2 February 1999. Interview Expert 1 Lithuania, 10 April 2001 Interview Expert 2 Lithuania, 11 April 2001 Interview Expert 3 Lithuania, 12 April 2001 Interview Expert 4 Lithuania, April 2001 Interview Member State Civil Servant 2, 7 March 2001. Interview Ministry of Social Security and Labour 1, 10 April 2001. Interview Pre-Accession Adviser, 12 April 2001

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