A Contract Culture even in Scandinavia

Tilbake til Makt- og demokratiutgreiinga si startside

Makt- og demokratiutgreiinga sin rapportserie, ISSN 1501-3065

Rapport 14, april 2000, ISBN 82-92028-16-1

Magne Eikås and Per Selle


Denne artikkelen inngår i eit større europeisk prosjekt om den nye "kontraktskulturen". Prosjektet er leia av Ugo Ascoli og Costanzo Ranci. Forutan Norge er Storbritannia, Tyskland, Spania, Frankrike og Italia med.

I artikkelen argumenterer forfattarane for at Velferds-Norge held på å endra seg på grunnleggjande vis.

Den nye privatiseringa - knytt til auka bruk av kontraktar og større pluralitet med omsyn til kven som leverer tenester, handlar samstundes om ei omforming av det offentlege, og dermed om ei omforming av relasjonane mellom ulike samfunnssektorar. Etter forfattarane si meining har dette å gjera med eit tidsskilje, der eit velferdsregime vert avløyst av eit nytt.

Rapporten går inn i Makt- og demokratiutgreiinga sitt arbeid med å kartleggje omforminga i det norske organisasjonssamfunnet og endringar i balansen mellom stat, marknad og det sivile samfunn.


I. Introduction: From mutual trust to contracting

II. The historical relationship between government and voluntary social service organizations

III. The “contract culture”

IV. The implementation of contracts

V. The new challenge from the market

VI. Conclusions



I. Introduction: From mutual trust to contracting

In this article we discuss the changing character of the Norwegian Welfare State. In particular, our concern is with the new organizing principles that regulate the relationship and cooperation between public authorities and voluntary organizations and businesses. We are concerned with the emerging tendency towards a breakdown of the “monolithic” welfare state, in particular with the downgrading of the state’s role as a welfare producer. This development provides an opportunity for old and new voluntary organizations and new commercial enterprises to move into the business of welfare through the delivery of contracted services with the public authorities. The emerging contract culture with its emphasis on competition, regulation through formal contracts and accountability, is changing the meaning of contracting between government and other sectors.

The history of cooperation between government and voluntary organizations in the field of social services(1) in Norway dates back to the mid 19th century. Even though voluntary organizations have played a significant role in Norwegian social policy for more than one hundred years, for a long time the scope and nature of their contribution to welfare represented a lacuna in the welfare state research (Kuhnle and Selle 1990).

This lack of research effort and the parallel lack of “voluntary organization visibility” in the public debate on social policy are probably the main reasons why scholars abroad and at home for a long time came to believe that Norwegian social welfare was solely the story of services produced by two sectors: Government (at the national, regional and local levels) and the informal sector (family, friends and neighbours). Most social policy researchers have put Norway in the cluster of welfare states characterized by a predominant public sector with redistributive public institutions (Titmuss 1974, Esping-Andersen 1990).

Such welfare state typologies have recently been critized for being overly simplistic. In Scandinavia Norwegian scholars such as Kuhnle and Selle (1992) and Swedish scholars such as Lundstrøm and Wijkstrøm (1997) have been concerned with the defectiveness of the dominant welfare state typologies in the international literature. They argue that as long as these typologies do not attempt to include the role of voluntary welfare organizations in a systematic manner, we will not obtain a reliable picture of differences and similarities between welfare states. These organizations have played an important, though often neglected, role within the Norwegian Welfare State.

Moreover, as long as these models do not take into consideration the role played by what we may term welfare market-actors, who have always delivered welfare services in Norway (though on a rather limited scale), we will not be able to present a realistic picture of our kind of welfare state. For instance, who is aware that the dental services for adults in Norway are services that are, and always have been, completely financed by the individuals and produced by dentists in a competitive commercial market (Erichsen 1996)? Or that almost half of the annual labour (in man-years) in medical services at the local level is produced by private medical practitioners on contract with the local authorities (Fimreite & Stensvoll 1998)? There exists a long tradition of contracting between government and individuals as representatives of professions at the local level in Norway. This tradition is now about to be expanded to encompass even larger commercial enterprises as part of the new contract culture.

In this article we will first provide a brief historical overview of some of the most characteristic features of voluntary social service organizations’ contributions to social welfare services in Norway. We then outline the mechanisms of government: organization integration and cooperation. In order to understand the contemporary changes in the welfare state, which we think are comprehensive or even ”transformative”, we believe it is vital to understand the difference between the “old” system of cooperation, basically founded upon close integration and mutual trust, and the new contract culture with more focus on competition, time - limited contracts, legal control and accountability, but also greater ideological freedom regarding the content of the services provided by the organizations. Thus, in the main sections we focus on these recent developments. We also trace the origins of the emerging new contract culture, in which the key words are Mangement by Objectives (MBO) and New Public Management (NPM), with an emphasis on deregulation, decentralization, effectivity, privatization and contracting. These concepts, which to a large extent are imported from the vocabulary of business administration, are now penetrating the traditional institutions of the Norwegian welfare state and the social-service-producing voluntary organizations alike. In particular we will show how the contract culture is now about to penetrate one of the core areas of traditional public welfare, i.e. care for the elderly, thus opening up a new market not only for voluntary organizations, but also for commercial enterprises.

II. The historical relationship between govern-ment and voluntary social service organizations

The voluntary organizations’ contribution to welfare

Organizations which originated in two important social movements in Norway, the teetotal movement and the Christian laymen movement, were among the pioneers in philanthropic social work in Norway. These movements date back to the 1840s (Seip 1984). Their activities were directed at helping special groups such as poor and unemployed women, alcoholics, the handicapped, the homeless and other suffering people (Raaum 1988, Blom 1998).

The real momentum began with the founding of “new” social organizations in the late 19th and early 20th centuries. The subsequent development has two main paths, the first of which involved the establishment of national, humanitarian organizations. These organizations first had rather narrow objectives, but later broadened their humanitarian purposes. Examples of such organizations are the National organization for female volunteer workers (1896) and the National Organization for People’s Health (1910).(2) Both of these organizations worked to combat the problem of tuberculosis. This work involved an expanded focus on prevention, e.g. on the origins of illness and bad health, and thus made the organizations capable of continuing and expanding their work on a broader basis when the fight against tuberculosis was finally won. Being pioneers, both organizations were heavily involved in running hospitals, institutions for children, convalescent homes, work- training institutions and sanatoriums (Raaum 1988, Blom 1998). In some of these areas, such as institutions for sick children and the convalescent homes, the organizations were in charge of almost all of the existing institutions at the time. Another important national humanitarian organization which broadened its humanitarian activities and services in this period was the Norwegian Red Cross.

The second line of development is the establishment of national, voluntary organizations for the functionally disabled. The first organizations were designed to help the “classic” groups with strong and visible disabilities: The blind (1908), the deaf (1918) and the crippled (1931) (Ravneberg and Solvang 1995). All of these national organizations were based on former local and regional initiatives and organizations (Onarheim 1990). After 1945 a large number of new organizations were formed, most often with very spezialized purposes. The birth rate of such organizations was particularily high throug-hout the 1980s and 1990s, with an increase in all types of “syndrome”- organizations. These organizations work closely with government and are now among the strongest supporters of the traditional welfare state. They have played successful roles as political advocates for the establishment of universal material welfare entitlements for the disabled, and they see the legitimacy of their rights as strongly connected to the legitimacy of the state in welfare matters.

The period after the second world war has been characterized by continuous expansion in the number of voluntary social service organizations. Thus, the growth in the public sector and the rise of the modern welfare state in this period have definitively not made the voluntary organizations superfluous. More than 50% of today’s organizations in this field were established during the 1960s and 70s (Selle and Øymyr 1995). The number of social organizations at the national level rose from 44 in 1945 to 134 in 1985 (NOU 1988: 17 ).

In 1995 approximately 160 national organizations received economic support from the Ministry of Social Affairs (St meld nr 27 1996-97). This figure encompass all kinds of voluntary organizations in the welfare area, ranging from huge humanitarian organizations with broad social welfare goals to smaller self-help and interest groups engaged in problems such as suicide, anxiety, drug addiction and psycho-social problems (ibid). Some of these new self-help organizations are connected to public authorities in that they receive financial and professional help from the public sector. As a means of comparison we might mention that the national organizations in the welfare area cover approximately 7 percent of a total organizational population of 2500 (Hallenstvedt and Trollvik 1993).

At this point it is perinent to ask the following: In which welfare service areas have the organizations not only made very important contributions historically, but continue to be important service producers? We shall emphasize three in particular: care for mentally disabled, care for alcoholics and child welfare care. Measured in annual employee-years, institutions owned by voluntary oganizations contributed 39.9%, 63.4% and 32.4%, respectively, of the total number of employee-years in these areas in 1985 (NOU: 1988:17 p.120). However, the political decentralization of the responsibility for services for the mentally disabled, which were moved from the regional to the municipal level in 1991 (the HVPU – reform), had one unintentional effect: the reform took place at a time when the dominant ideology was deinstitutionalization, normalization and more ”open care” (Sandvin & Søder 1998). The essence of the ideology (open care) is that the mentally disabled, as far as possible, shall have their own homes in their own local communities, and that the services shall be structured and planned in accordance with this premise. This is the reason why voluntary organizations involved in the running of large institutions for the physically disabled faced a situation in which they were owners of empty buildings associated with an ”outdated” service and ideology. The ideology of deinstitutionalization described above has been strong throughout the 1980s and early 90s, but is now under pressure. Thus, we are again observing a more favorable climate towards larger institutions (especially in psychiatric care and care for the elderly) which may allow room for new types of voluntary activity.

The traditional form of cooperation

Looking back, voluntary organizations in Norway have always cooperated with public authorities, and thus influenced public policy (Kuhnle & Selle 1990). Their genesis coincides with the early phase in the development of the Norwegian welfare state. Government accepted the importance of the organizations’ work, while the organizations themselves not only accepted public responsibility for the social and health-care problems that they were involved in; they pushed in that direction. Often the boundaries between what was public and what was voluntary were very blurred. An early expression of this institutional intertwining is the fact that public officials were often instrumental in the establishment of voluntary organizations in the late 18th century, and they were often members of the organizations’ executive boards (Try 1985).

The broad humanitarian organizations were not “forced” to cooperate with government. On the contrary, they have been key factors in the ideological change that gradually resulted in an overall public responsibility for social - and health care problems. The organizations have been more interested in pragmatic problem-solving, e.g. the improvement of social and health conditions, than in drawing up sharp boundaries against government in order to secure their own autonomy. This is true even for the organizations for disabled persons described above, where the question of organizational autonomy as times has been very important. However, since the implementation of the welfare state the organizations have not been afraid of receiving public funds. Such funds have underscored their rights within the welfare state, rights closely linked to the comprehensive public responsibility within the field.

Government and voluntary organizations have, in the early phase of the welfare state, shared a set of basic goals and for that reason, the relationship has been rather pragmatic and peaceful, and not very contentious. The organizations have had a profound ideological influence on public policy in the welfare area, i.e. the shift from private to public responsibility, and have often served as pioneers in the institutionalization of new forms of social services – services which later often have become a public responsibility (Seip 1984, Blom 1998). Very generally speaking, the historical development seems to be characterized by an integration based on mutual trust, and the organizations gradually have become more important in the implementation of public policy (Klausen and Selle 1996).

The integration of government and many of the voluntary social service organizations has, in general, grown “deeper” from the 1970s until today. The organizations have, in this period, become more dependent on government financial support for the implementation of their services and activities than they ever were before (Selle 1998). This is not unique to Norway: it is a trend found in many other countries as well in Norway (Kramer et al. 1993, Salamon and Anheier 1997). But what probably has been unique compared to other countries, is the relatively high degree of institutional autonomy at the organizational level of the service- producing voluntary organizations. This may be due to their dual nature as service producers as well as membership-based, democratic organizations. The ”service units” of the organizatons are in many cases organizationally separated from the ”mother organization”, even if they both grew out from the old membership organization. However, even today there is an extensive overlap of board members. This structure applies to the majority of the national organizations in the field of social services (Lorentzen 1994). This dual nature of the organizations makes it difficult for the public authorities to treat the organizations as a more or less standardized service-producing unit that can be relatively easily controlled, because the public authorities can not legitimately interfere with the internal democratic structure and the democratic processes of the organizations (Selle and Øymyr 1995).

Nevertheless, this increased economic dependence does have some important consequences for the voluntary organizations. Today, governmental economic support may in some cases be a question of “to be or not to be” for the voluntary organizations, and for most of the social service institutions owned by voluntary organizatons this is definitely the case. For instance, Selle and Øymyr (1995) have shown that the growth of voluntary organizations seems to be strongest in fields where they are most heavily financed, and thereby also legitimated, by public authorities. Accordingly, the growth of the voluntary sector today is largely dependent on public financing and close cooperation with governmental agencies. The gradual integration of voluntary social welfare organizations into an overall public system of finance and control has made it even less accurate than before to consider this sector to be a completely independent alternative to the public sector. On the contrary, this is a development that has resulted in hybrid organizational forms and welfare pluralism, in which “boundaries” between the public sector and voluntary organizations often seem to be rather obscure. But there must be made no mistake that the public authorities are most often the dominant part in this relationship, since they to a large degree control the organizations’ finances through growing public transfers. Thus, within most sectors we do not observe a well-balanced partnership.

The result has been more formal institutional integration at the expense of the more informal integration. Even if “new” voluntary organizations most often started out as independent actors, they soon became more or less integral parts of public policy, or at least they have become very dependent on public transfers. But this does not necessarily result in a severe loss of organizational autonomy. The degree of autonomy will, to a large extent, be defined by the organizations’ own strategic choices, e.g. in the way that they choose to interact and cooperate with public authorities (Skov Henriksen 1996), as well as the interests and goals of the public authorities, which differ largely across sectors.

Voluntary organizations may be integrated with government in different ways: normatively, economically, professionally and administratively (Lorentzen 1994). In our view, it is the financial integration that has been most crucial to the organizations, because historically, in most cases, the financial aspect is strongly related to the other types of integration (Kuhnle & Selle 1990). Thus, in the following, we will present the major funding instruments public authorities in Norway have used (and are still using) to support the organizations. However, the connection between financial integration and the other forms of integration may, as we shall se in section III and IV, be weakened in the contracting system now emerging, while at the same time these financial instruments are undergoing deep change.

1. Basic grants

Basic grants are the traditional public means that have been used to support membership-based voluntary organizations. These grants are usually described as “free”, which means that the public authorities (until now) have laid down few restrictions on how the organizations spend the money. Through this arrangement, government seeks to realise goals connected to participation, local organizational activities and democratic decision making (St meld nr 27 1996-97: 31). It is important that the means of support are framed in a way that secures the organizations a free and independent position in society (ibid). The governmental expectations connected to the goals above, have (until now) not been formulated as distinct prerequisites for receiving grants. This means that there has been little obligations for the organizations to meet governmental expectations on requirements.

2. Grants for running institutions

Government is paying voluntary organizations currently for their service production in different fields, most of which is carried out at the local (municipal) level. If the organizations satisfy various governmental requirements and are part of, e.g. public social and health care plans, they receive public grants that cover most of the operating costs connected to the running of the institutions. On some occasions, the organizations can also use public grants to finance loan investments, e.g. in buildings and equipment. In fact, sometimes it is only the difference in formal ownership that makes such welfare service institutions different from public institutions. Many organizations have downplayed their ideology and value-base in the welfare state period in order to comply with the requirements of the authorities. Professional staffing in the institutions is often a prerequisite for receiving public grants. Service production is usually (though not always) regulated in specific contracts. These contracts between local government and the institutions have traditionally differed vastly in content, duration and degree of formalization, as well as the exercising of public control. This has caused the municipalities’ employer and interest organization (Kommunenes Sentralforbund) to work out standardized contracts, which the municipalities are now about to introduce as a part of the new contract culture. But the organizational resistence to this change seems to have been rather strong at the local level. For instance, the local authorities in the city of Bergen, the second largest city in the country, have worked for a long time to implement a more coherent and formalized practice towards the voluntary organizations and foundations that are running welfare institutions.(3) This new type of legal and financial control seems to have been difficult to implement. There is, for instance, disagreement between local public authorities and the organizations as to the preferred duration of the contracts. In brief, it is in the interest of the organizations to establish long-term contracts which give them financial security, while it is in the interest of the local authorities to have short-term contracts which give them more freedom if they should want to switch between different suppliers.

3. Subsidies

We have now moved from direct public transfers to more indirect public payments. This category covers exemptions from various ordinary financial obligations such as taxes, reduced rent levels on leased buildings, free use of public buildings, sale of public buildings below market price, etc. (Lorentzen 1994). There exists no empirical documentation on the total scope of such subsidies, but they are generally believed to be very significant. This also creates controversies between public authorities and organizations when, for example, buildings owned by the organizations are sold to public authorities or on the market. The problem that arises is the determination of a fair price, given the government subsidies that have been invested previously.

Before turning to how the new contract culture alter how public authorities support the voluntary organizations, we need to understand how this culture could develop in the first place. That is intimately connected to the introduction and implementation of MBO (Management by Objectives) and NPM (New Public Management) in the public sector. Let us therefore first describe what kind of influence MBO and NPM have had on the public sector in general, as well as on the voluntary organizations.

III.The “contract culture”

Public sector change

It is difficult to single out one particular explanatory factor to explain why society seems to be moving in the direction of more strictly regulated “contractual” relationships between different actors. But it seems obvious that the neo-liberal trends with emphasis on competition, market and cost-effectiveness are of great importance. We will describe and analyse one particular public reform that we believe might be one of the more influential parts of this neo-liberal ideology, i.e. the introduction and implementation of Management by Objectives (MBO). (4)

The MBO - reform was part of a more general trend towards at a “modernization” of the public sector in Norway. This process has been labeled “New Public Management” (Hood 1991, Lægreid 1997, 1999). The reform seems to have been one of the answers to the criticism of the public sector in general and the welfare state in particular. The main problems have been believed to be the ineffectivity and suboptimality of the public sector. It is the cost-side of the sector that is most in focus. The public sector is accused of being slow and ineffective. It is too rule-bound and the professions and their organizations are exercising too much power. The public sector is showing weak results and is lacking the kind of flexibility and “user responsibility” that is necessary to bring it into line with the existing claims and demands in society. In other words, the traditional institutions of the welfare state are criticized for not being in line with the “problem structure” of contemporary society. The solutions (the reforms) are to a large degree based on the import of models from the private sector, with a management-oriented philosophy, which is in line with international trends.

The most characteristic features of New Public Management where outlined in seven doctrines formulated by Christopher Hood (1991): (1) “Hands-on professional management” in the public sector, which means active, visible and discretionary control from named persons at the top, who are free to “manage”. (2) Explicit standards and measures of performance, which means definition of goals and indicators of success, preferably expressed in quantitative terms. (3) Greater emphasis on output control, which means resource allocations and rewards linked to measured performance. (4) A shift to disaggregetion of units in the public sector, which means a break-up of formerly monolithic units. (5) A shift to greater competition in public sector, which means a move to term contracts and public tendering procedures. (6) An emphasis on private sector style management practices, which means moving away from “military-style” public service ethics and finally (7) An emphasis on greater discipline and parsimony in resource use, which means cutting direct costs and raising labor discipline. A comparison across nations shows that Norway is among the nations demonstrating a rather clear shift towards NPM in the 1980s, together with nations like Sweden, Canada, New Zealand, Australia, U.K., Denmark, France and the Netherlands (Hood 1995). To sum up: a more flexible, result-oriented and cost-effective public sector is supposed to vitalize and rationalize the operation of the welfare state (Olsen 1993). How did this mangement ideology and philosophy crystalize in Norwegian public policy ?

In 1987 the Norwegian Government decided that all state institutions should introduce “operational plans”(5) for their activities by the end of 1990 (Thorsvik 1991). Through this decision, MBO became one of the main governmental tools in the aim to achieve the best possible use of public resources. The focus was clearly on reduced costs and improved cost-effectiveness. The decision was, to a large degree, based upon proposals that were put forward in a governmental report published three years earlier (NOU 1984:23). This report basically stated that all the activities of the state should be governed through goal decisions and budget frames. Central government was to downplay its former way of governing through concern with details of the state institutions’ performance. Instead, government was to give the institutions more freedom to choose the most suitable means to achieve their planned goals (deregulation and decentralization). Thus, the institutions were supposed to achieve more freedom but at the same time they were required to make plans and report on the results of their activities.The most influential prescriptions were formulated by a governmental agency (Statskonsult) in a report published in 1988. In this document, the central elements seem to be threefold (Thorsvik 1991):

1) The institutions should develop a goal structure which groups, in a systematic manner, the different goals of the institutions. This is supposed to form the basis for precise quantifications of goal achievements.

2) Every institution should make an operational plan based on the formulated goal structure. This plan is to be worked out for one year at a time. It is supposed to show which results the institution wants to achieve, and how it is to achieve them.

3) The last part of this management strategy is the following up of results, defined as “systematic registration, revision and analysis of results and cost information in an institution”. The latter is, according to Statskonsult, a prerequisite for a successful implementation of MBO as a governing tool (ibid). If it is difficult, or impossible, to produce precise information on results and costs, MBO will not work as intended.

There is a certain ambigiouty on the outcome of this governmental tool. Some have argued that very little has been achieved with regard to the underlying governmental goal: more efficient use of public resources (Olsen 1996). And Per Lægreid (1999), for instance, claims that New Public Management has not affected civil service at the national level to any significant degree due to institutional resistence.

Others have argued that even though this instrument might not have had any direct impact on the performance of state institutions, it might have had some indirect impact, e.g. making the people who work in state institutions more aware of the purpose and content of their activity (Thorsvik 1991). Moreover, we have firm reason to believe that there is a significant difference between the civil servants at the central level (the Ministries) and the top leaders of the local administrations in the Norwegian municipalities (where most of the service production actually takes place), in their acknowledgement of MBO and NPM as useful tools in the implementation of cost-effective strategies. The introduction and implementation of a buyer - supplier model in a growing number of municipalities is one of the tools used to increase cost -effectiveness in the municipalities. So, while many municipalities are in the forefront here, others are still working in a fairly traditional way (see section IV).

Regardless of the implementation and outcome so far, MBO and NPM are good examples of the ideological penetration of the market into the public sector. It is hard to imagine how the emerging contract culture could have come about without this influence. In fact, MBO and PM are a defining part of the whole contract culture. The core of the market ideology, economic efficiency and competition, has expanded into areas where this kind of economic rationality traditionally has been excluded (Lægreid 1997). There is no doubt that result measurement, evaluations, quantifications, control and accountability have become more common in public administration. New accounting systems emphasizing performance indicators of different kinds have been introduced. The development towards increased use of internal contracts in public sector not only concerns individuals, but also regulates service delivery between different parts of an institution (e.g. between different departments).

Change within the voluntary sector

Parallel to this neo-liberal ideological shift in public sector, there have been some important processes of change, going on inside many of the social service voluntary organizations, as well as in other organizational fields. These changes are part of the same ideological packages as the MBO/NPM and can be understood as prerequisites that make contracting possible on a larger scale. There are at least three changes that are important in our context: increased spezialization, increased centralization and increased professionalization (Selle 1998).

There has been a general trend towards increased specialization. New organizations, to a larger degree than before, choose a set of well-defined objectives and/or operational areas, directed at well-defined target groups. This development is particularly visible in organizations that have been recently formed, for instance in the explosive grown in the number of self-help and special interest organizations. Increased specialization is linked to two other features: growth in cooperating bodies and growth in the number of “umbrella - organizations”. Specialized voluntary organizations increasingly feel the need for new types of coordinating institutions. For some organizations these coordinating institutions might be the first steps towards the merging of organizations. We see this development as a sign that public policy has become more important to these organizations, not only in terms of central policies at the national level, but at the regional and local levels as well. Both parties, the public authorities, as well as the voluntary organizations, are increasingly in need of effective and time-saving coordinating bodies (Selle 1998).

The average number of members per organization is increasing. Contrary to the expectation that increased specialization would imply a decline in average membership ratio, the organizations are, in general, growing larger. There has been a general tendency towards organizational centralization at the local level. This is expressed in two influential and parallel processes:

1. The traditional model of local organizational units operating in the different communities is gradually changing. Former local units scattered throughout the municipalities have increasingly been amalgamated into a single organizational unit at the municipal level (Selle & Øymyr 1995).

2. The intermediate organizational level has become more important, not least as an adminstrative service- institution for the local organizational units. This is partly a consequence of the introduction of a “new” regional, governmental level (fylkeskommunen) based on popular elections in 1975, but it is also an expression of a more general trend towards increased need for professional (full-time) employees in order to strengthen the organizations’ effectiveness and competitiveness (Selle 1998).

There has been a push towards more professionalization at all organizational levels in the voluntary sector. In this respect, the concept of professionalism may be said to cover two different circumstances: A activity and organization. Time seems to have become more costly to the individual: thus there are rising expectations towards goal-attainment and effectivity. In brief, as time becomes a scarce resource, volunteers become more instrumental in their attitudes towards their organizational acitivity. And, correspondingly, the organizations demand more from their members in terms of voluntary work or they do not want volunteers at all, only members economic contributions. The result is pressure on the traditional view of amateurishness and voluntarism.

Organizations are increasingly employing part-time and full-time workers. This is especially the case at the national and regional organizational levels, while at the local level this is not (so far) a dominant feature, with the exception of the institution-based services, of course. The results of this process are twofold : 1) a strengthening of the central level of the organizations, less “power” to the members and more power to leaders and managers who are increasingly taking on a businesslike management-style, and 2) possible conflicts between professionals and amateurs inside the organizations as these groups may come to represent different cultures (Selle & Øymyr 1995). The “language” of the market and the NPM - ideology in the public sector are gradually becoming more common in voluntary organizations as well (Ulstein 1998, Heitmann & Selle 1999). As a result the traditional membership- based organizational model is put under pressure (Selle 1998).

Since the early 1980s Norway has witnessed growth in non membership-based, professionalized, and highly centralized non-profit organizations in which mass mobilization was not as important as before. As this type of organization grew, and as many of the most important democratically structured, membership-based organizations suffered serious decline, it became apparent that the organizational model which had dominated traditionally was losing ground. As of the 1990s, we are witnessing the emergence of a qualitatively new organizational society, which increasingly lacks traditional characteristics, i.e. being membership-based, democratically structured and based on local branch organizations. The membership-role is evolving. The tendency seems to be towards organizations which are less in need of large memberships, or whose “members” are more loosely associated with the organizations. The result is, in other words, a new type of organization and a new type of member (Selle 1998).

The observed symmetry between changes in the public sector and the changes within many (though not all) of the voluntary organizations could imply that many of these organizations are now “prepared” to meet the new public demands for services., i.e. the emphasis on cost -effectiveness, quality and accountability. We are not saying that the changes within the public sector are the main reason for the voluntary sector change: they are both part of a more overall societal change. However, close contact with and dependence on public money have, in general, speeded up the process of change within the voluntary sector.But this change will probably also make it more necessary for many of the organizations to further strengthen their administrative, economic and legal knowledge, either through the employment of new professionals or through the purchase of such expertise outside their own ranks.

To sum up: the developments that we have described in this section, i.e. those that allow the formation of the contract culture, are all prerequisites for the implementation of contracts in the field of welfare, to which we will now turn.

IV. The implementation of contracts

The changing attitudes of public authorities towards voluntary organizations

During the last few years, four important white papers and public reports have been published concerning the changing relationship between voluntary organizations and government.(6) The proposals in these governmental documents clearly point in the direction of more use of public control and more focus on assessing the achievements of the voluntary organizations in terms of activity and service performance in general. The Norwegian government is now articulating its expectations towards the organizations more explicitly. Although the government does not want to change all basic grants to “earmarked” financial support to specific organizational activities, the documents clearly express that not all current use of these grants is in accordance with governmental expectations and purposes (St meld nr 27 1996-97: 32). The government emphasizes that the purpose of the financial support is not to help the organizations to acquire as many members as possible, but to promote a high level of activity and participation within the organizations. This may call for a change in the way grants are given in the future. The signals in the white paper point in the direction of giving basic grants more in accordance with the level of activity within the organization, and put less emphasis on the presented (and sometimes even false!) membership figures.

If we turn to the way government controls the organizations’ use of basic grants we can also observe new signals in the white paper (St meld nr 27 1996-97). There have traditionally been rather weak governmental control instruments associated with basic grants. Control has basically been limited to ensuring that the organization has delivered accounts, audited by a registered accountant, and making sure, as far as possible, that the number of recorded members is correct. The new signals from the government suggest that this will not suffice in the future. In addition to the traditional control instruments, the government suggests that supervision should be supplemented by new control forms, e.g. external and internal evaluation of the level of activity within the organization. In some cases the government (Ministries) may also implement a closer dialogue with the organizations (St meld nr 27 1996-97: 33).

One of the most interesting signals in the white paper is a proclaimed change towards giving more of the financial support in the form of project grants. These grants are time-restricted. As the name indicates, they are usually made available for specific projects which the organizations may be engaged in for a limited period of time. But this does not necessarily mean that money is given only to well-defined and strictly organized projects. Under this category organizations may apply for funding for specific events, special services or experiments. The diversity under this category is vast, although the sum for the different projects may be relatively small. The criteria for support seem to leave considerable room for discretionary practice. In order to be judged “worthy” of support, the applicant must have a project that is considered relevant to the public authorities. Moreover, public authorities may even define the area or activity to be considered relevant. The applicant must also be believed to be seriously committed to the project (St meld nr 27 1996-97: 25). A public report from Statskonsult (Rapport 1995:3) shows that project grants, as an instrument, have strengthened their position relative to the traditional basic grants (at the national level). But this displacement is not equally unambigious in all Ministries, i.e. in all organizational fields.

A transition to more frequent use of project grants, and thus more public control over organizational activities, which we believe is part of the New Public Management in the public sector, could imply a change of one of the most typical aspects of volunteering in Norway: a high degree of organizational autonomy coupled with nearness (relatively deep integration) with public authorities. Trust and informal relations between organizations and government have always been a prominent feature of organizational life in Norway. It is likely that a transition to project grants will weaken this traditional system of trust and promote formalization and control. However, the extent to which this will happen will largely depend on how the system of project grants is implemented, or more explicitly, how ”strong” a control mechanism is implemented (Selle 1998). We must also be aware of the possible difference in implementation between the national level (the Ministries) and the local level (the municipalities) in this respect.

The knowledge base: limited, but with a clear direction

Our empirical knowledge as to what extent the contract culture has been implemented in the field of social services is at the moment rather scarce and marred by some uncertainties. This is especially the case at the local level, largely due to defective aggregated statistics and a lack of relevant and updated case studies. A few studies have been carried out, however, and we shall consider these in turn.

Five projects involving cooperation between local authorities and voluntary organizations in the field of social services have been carried out in the southern part of Norway (Repstad (ed.) 1998). The five projects (cases) in the study involved services for ”marginalised” youths, battered women, single-mothers and people with disabilities. The researchers concluded that these projects were not characterized by written and ”formalized” agreements, but by more informal and oral agreements. The low degree of formalization was interpreted as an expression of the need for freedom of action (at both sides), as well as a sign of mutual trust. Consequently, this local study does not indicate that the contract culture (so far) has pentrated the relationship between organizations and public authorities in these particular communities. The “old” means of cooperation based on personal contacts/overlapping positions, informal agreements and mutal trust still dominates the relationship. The studies demonstrate, in our view, the stucture of the old relationship between government and the voluntary sector, i.e. the traditional one that the contract culture will change and already has in many municipalities. Information exist that tells a different story.

A nationwide representative survey (Eikås 1999) directed at the administrative leaders of the health and social services in the municipalities clearly indicates that formalized contracting with voluntary organizations and businesses is very common. In fact, formalized contracts are already slightly more common than informal and oral agreements (42.2 % against 38.2%) and in many municipalities there has been formalized cooperation also in the past. The most common form is short-term contracts with a duration of 1-2 years (22% of the municapalities), and many of the municipalities use both kinds of regulatory “instruments” in their cooperation with other sectors. This study also shows that not only large, but even smaller municipalities report using formal contracts. As many as 18% of the municipalities now use this instrument within the health and social sector. However, as we lack time-serial data, we are unable to grasp the dynamics of change statistically. Furthermore, since formal contracts are not unknown of in the “old” system, we can not decide the extent to which these formal contacts are written in the spirit of the new contact culture or not.

We saw that contracts and agreements have been used when voluntary organizations have received public grants for running welfare institutions. This has, for instance, been the case for different voluntary organizations’ involvement in care for the elderly at the local level in Norway. But these “old” agreements between the organizations who have been running such welfare institutions and the public authorities are of quite another character than the “new” system that is emerging now. The new system is far more detailed and formalized, and the claims on performance and results are more clearly expressed in written agreements. It is temping to describe the difference between the “old” and the “new” way of contracting as a difference in the time span of cooperation, where the time horizon used to be “from here to eternity”, while it now is “until tomorrow”. This is, of course, an exaggeration, but it pinpoints the fact that the element of potential competition is now about to transform the “old” way of cooperation.

A general impression (in historical terms) is that voluntary organizations have had a relatively large degree of freedom in their use of public transfers. The former use of formal and informal contracts may be interpreted as an expression of generalized trust. Voluntary organizations may, in general, have been believed to be accountable and thrustworthy: consequently, it has been deemed unnecessary to introduce different kinds of written agreements and more formalized contracts, and control has been rather weak. The move from the traditional form of cooperation building upon trust towards the new type of contract emphasizing control may still mean integration, but perhaps with clearer boundaries between sectors and institutions.

There have, undoubtedly, been recent development trends in Norway that clearly point in the direction of more use of “contracting - out” of (former and new) public services in the field of social services, at the national as well as the local level. And it is important to remember that most services are implemented at the local level. How the voluntary organizations are adapting to this new development and what the consequences might be for them is not yet possible to state unequivocally. The outcome might be different in different service fields. For instance, foreign aid organizations have increasingly become successful partners with government. Groth (1999) shows that there have been dramatic changes in the relationship between state and organizations from the mid 1960s up to the present. From a situation were the organizations were marginal but autonomous, they have now become heavily integrated with the government as contracted partners working as instruments in the fulfilment of governmental policy in foreign aid. Today NOK 1.6. billion are transferred from goverment to the organizations each year, and public transfers are the main sources of income, for most of the organization in this field. In this field, the relationship between government and organizations has been characterized by harmony and consensus, rather than conflict and antagonism, with respect to fundamental questions concerning motives, goals and appropriate means of action. The special structural traits related to the field of foreign-aid and the financial dependency on public authorities have resulted in considerable nearness between organizations and state, without making the organizations less flexible in their practical work abroad. Nevertheless, the organizations have had to adjust to governmental claims on formal control and evaluation of the organizational perfomance. The result has been tendencies towards organizational isomorphism. Different kinds of organizations are working pretty much in a similar way. They hire professionals who are familar with the codes and the “language” in the field in order to compete with other organizations on contracts and projects initiated by government. Since the organizations seem to be aware of the possible dangers of isomorphism linked to the contract culture, they are now gradually becoming more occupied with their image, using rhetoric in order to profile their own values more clearly.

Groth (1999) concludes that even though the intertwining of state and organizations is closer than before in terms of economic support and contracted agreements, this has not resulted in a severe loss of organizational autonomy, as one might expect from theoretical assumptions on the consequences of such close cooperation. There are several reasons for this: Government has made itself almost completely dependent upon the organizations in order to reach its goals in foreign aid. The organizations are working abroad, far from Norway, which complicates close government supervision. Government itself has rather limited knowledge in a relatively new organizational field. In this particular field, the organizations are more legitimate actors than governmental agencies (such as NORAD) in the eyes of the Norwegian people.

These are all factors that we will not find in the traditional field of social services. Conflicts are therefore more likely to occur in this “older” field, where both public authorities and voluntary organizationas often may have well developed knowledge and “natural” ways of doing things. For instance, a case study carried out by Lorentzen (1994) demonstrated how a contracted collaboration between the government and the Norwegian Red Cross on the running of a center for refugees (in the city of Oslo) collapsed after a short period of time, due to a number of conflicts. Such case studies are valuable and point out some very interesting issues and areas of potential conflict that may arise when voluntary organizations become contracting agents for the implementation of public policy.

A qualitatively oriented study of the interplay between local government and private actors has been carried out in three municapalities in the northern part of Norway (Nylehn & Støkken 1996). This is a broad study including the interplay with private actors from all three sectors: private enterprises, the third sector and the informal sector. Since the empirical data they are presenting builds largely on unstructured interviews with representatives from the different sectors, we are not given precise information on how the relationship between voluntary organizations and the local public authorities is regulated, e.g. whether formal contracts/agreements are used to any significant degree. But several relevant findings may be singled out.

In the largest municipality, Bodø, there was, until recently, one private home for the elderly and infirm. It was organized as a private foundation and owned by a religious organization. This institution was almost 100% dependent on funding from the municipality for the running of the institution. The municipality finally concluded that this was not really a satisfactory situation, since they were not able to include this institution in their plans on a completely equal footing with the other (public) institutions in this field. The municapality than decided to take over the operation and responsibility for the instititution, through an agreement in which ownership is still in the hands of the foundation, while the municipality rents the buildings (Nylehn & Støkken 1996). This is a situation that is probably not unique. As the ”old” social service organizations face problems with recruiting new members it becomes increasingly difficult for them to be engaged in such demanding tasks as running nursing homes for elderly people. Even if they hire professionals to work in the institutions, they are still dependent on volunteers as a supplement in order to make it work. However, this does not mean that the public sector is taking over forever. The public sector may within the new ideological climate soon contract out institutions they have taken over.

On other occasions, the municipalities have considered the interplay with voluntary organizations and foundations to be “a good bargain”, even if their governing possibilities are rather limited. This is particularly the case in areas in which the municipality itself has very little to offer. Nylehn & Støkken (1996) state that it is hardly coincidental that so much of the private activity is played out in the area of child care and the care for alcoholics and drug addicts. These are areas in which the public authorities often experience their own powerlessness, and where more experimental and unorthodox methods undertaken by private actors do not clash with public domains and interests.

A third type of interplay is characterized by dilemma and ambivalence from the municipalities’ point of view. Such a situation seems to arise for instance, when local, voluntary organizations or foundations start to build institutions for the care of the elderly, which they then expect the municipalities to take the full responsibilty for once they have been finished. Although the municipalities in general are in favor of voluntary initiatives, they will not always approve of such projects, because they feel that they are caught up in activities that are not in line with their own plans and priorities. But at the same time, they can not show a completely hostile attitude towards such initiatives, because that could implay a loss of support and political legitimity among the citizens of the municipalities.

Furthermore, if we move from the organizational to the individual level, i.e. the voluntary worker/member’s relationship to their organization, it is possible to state that this relationship could also be taking on a more “contractual character”. The new contract culture is general enough to be observed at all organizational levels. We have chosen one example to illustrate this development, but the tendency is seen in large parts of the voluntary sector and particularly within the social service field (Selle 1998).

Since 1974 a 24-hour open “crisis” telephone has been available for needy people in the city of Oslo. This service is run by a foundation; the Church’s City Mission (Kirkens Bymisjon) and it is called ‘Kirkens SOS’. The service employs several full-time, salaried employees and a large number of volunteers, including some clergymen. Every new person who wants to become a volunteer must take an introduction course. By the end of this course, everyone who decides to become a volunteer in this service has to sign a binding contract which is reciprocal. This contract regulates the relationship between the leadership and the volunteers and specifies how the volunteers are expected to relate to the service. It covers, for instance, issues such as loyalty to the purpose and objective of the organization, promises of confidentiality and the rotation of shifts. To be more specific, this implies that the volunteer, for instance, signs a contract in which s/he is required to work at least two shifts each month and to participate in (compulsory) group meetings twice a year. The volunteer is also required to take part in counsiling groups once a month. The leader is required to give individual instruction. If a volunteer is not able to cover his/her shift, he must get another person to do so. After one year, the volunteer assesses his position and may leave after a period of three months if s/he desires (Haugland 1992).

As we can see, the routines for entry into this particular organization are rather comprehensive, probably more so than in most other social service organizations. Applications, interviews, introduction courses and the sub-scription of contracts are essential parts of this organization’s structure and they are very important in the processs of socializing members. This case, nevertheless, clearly demonstrates the trend toward more professionalization inside the voluntary organizations, i.e. a new forms of contract between the individual and the organization. The tendencies in many other organizations, e.g. the Red Cross, point in the same direction. We are now observing a more instrumental attitude from the members as well as the managers of the organizations, for instance in that members’ work for the organizations is more strictly planned and regulated through schedules (Selle 1998).

The developments that we have described in this section all boils down to that voluntary organizations and their members and volunteer increasingly are for hire or prepared to be for hire (Lipsky and Ratgeb (1993). However, they are not the only one.

V. The new challenge from the market

The cognitive shift

We are now observing that voluntary organizations, which have been the dominating “private” suppliers of welfare services, are being challenged by new commercial suppliers who are entering this area with a for-profit motivation. For instance, large international companies are now entering into care for the elderly (Bjerke & Eilertsen 1998, Mietle 1999).

Thus, the result is now more competition, a larger number of potential suppliers, and more pluralism.

We believe that the ideological climate is now about to be changed in a fundamental way, especially in larger municipalities and cities in Norway, in favour of privatization and contracting-out. Since the mid 1980s local public authorities have had a positive attitude to the roles of voluntary organizations as alternative and complementary suppliers of welfare and as arenas for individual and collective ”democratic competence building” and personal growth. But their concern now (almost irrespective of political colour) seems basically to be how to supply the inhabitants in the municipalities with necessary services, no matter who the provider is. We do not question that they still acknowledge public responsibility in terms of finance and control in the field of social services, perhaps even more legal and financial control. However, most likely the local authorities are now accepting less ideological control, e.g. control with the content of the services. As a result of the ideological shift, politicians and managers in public sector agencies at the local level are now increasingly willing to buy core services from suppliers outside their own ranks, instead of producing the services themselves. This process of externalization has been given different labels: “privatization”, “contracting-out”, “out-sourcing”, “purchaser- supplier model” and “competition-exposure”. These are all concepts that to a large degree cover the same phenomenon, and they are an expression of the contract culture. Local public authorities, are of course, concerned with users’ demands and the quality of services as well. It is assumed that the level of quality will not detoriate and the hope is that it can be maintained at the same level as earlier or even improve.

This recent cognitive shift opens up for solutions, which seemed impossible to implement or were not seen at all ten years ago. The shift is now most prevalent at the local level, where it has ”matured” over the last ten years. The result is a step by step process in which voluntary organizations have been given new roles first, and then more space for commercial enterprises has been opened up, making it possible for them to move into new service areas in the Norwegian welfare state. These new market actors are now challenging both the voluntary organizations and the public agencies in the field of social services.

The gradual penetration of business into elderly care

As mentioned in the introduction, private commercial individual actors have always been predominant suppliers in areas such as dental services. But in other areas, such as care for the elderly, commercial enterprises, which are something rather different from individual contractors, have been completely absent until recently. Voluntary organizations, on the other hand, have played an important role here, e.g. in running nursing homes as well as daycare centres. Their contribution has been especially important, e.g. in Oslo, the capital of Norway.

Three research reports (Kristiansen & Kjerstad 1996, Bogen & Nyen 1998 and Bjerke & Eilertsen 1998)(7), as well as the survey carried out by Eikås (1999) and a thesis published by Mietle (1999), substantiate that the changes described above really are at work at the local level in Norway, although they are in an initial phase. Bogen & Nyen’s report shows that in 8% of the municipalities there are private suppliers running nursing homes; support services such as cleaning, laundry and catering (where contracting is common) are not included in this figure. Only one municipality reports that residential care has been privatized. The figure includes both voluntary sector suppliers as well as commercial suppliers, but the majority is supplied by non-profit actors. So far, only 2% of the municipalites report that there are commercial enterprises involved in the core services such as care for the elderly (nursing homes etc). Eikås (1999) indicates that this has now increased to 5.2%.

The scope of the private services in the field of nursing homes seems, at the moment, to be rather modest. Only two municipalities with private suppliers in this area report that these suppliers cover more than 10% of the total ”market” in this area. In most of the municipalities with non-public nursing homes, voluntary actors have always offered such services; thus it is hardly correct to state that this is an expression of ”privatization”: it is rather an expression of lack of ”communalization” in an earlier phase, although the municipalities have covered most of the running costs of these private nursing homes for a long time. On the other hand, in those few municipalities (7) where we can find commercial enterprises in this area, we find that these are services which where formerly produced by the local authorities themselves; thus we can state that this is privatization in a more genuine sense.

What characterizes those municipalities that have been breaking new ground in Norway, through the introduction of a buyer – supplier model on health and social services for elderly? And what kind of experiences have they had with this model so far? The two cases presented in Bogen & Nyen (1998) suggest that these municipalities are relatively densely populated, with 50 000 inhabitants (municipality A) and 25 000 inhabitants (municipality B) respectively. In a Norwegian context, these are large municipalities. Both had a political majority of right-wing seats in the municipality councils at the time when the decision was made.

In 1996 the first municipality (A) awarded a contract to a large multinational commercial enterprise (ISS) for the running of a new nursing home for a period of five years. The building is owned by a foundation in which the municipality is one of the major shareholders. The contract was granted without any kind of competition between different suppliers. In 1997 the second municipality (B) awarded a contract to a large mulitinational commercial enterprise (Partena Care) for the running of a nursing home for a period of four years. The building is owned by the municipality. Two enterprises competed for the contract. This was the first step, but now the authorities of the municipality have taken a further step by putting out the residential care in one of the municipality districts on contract (Bergens Tidende 13.12.1998).

These two cases are examples of both ideologically and economically motivated changes that may have far-reaching consequences if they produce results that can satisfy the expectations of the administrators, politicians and inhabitants in the municipalities. The contracts in these two cases are estimated to give a cost-reduction of 10-20% compared to the level estimated if the services were produced by the municipalities themselves. So far, there is no indication that the level of quality in these two contracted services is below that of the nursing home services produced by the municipalities themselves. The inhabitants seem to be very satisfied with the service they have been offered (Bergens Tidende 13.12.1998).

But it is too early to reach any definite conclusion on the matter of quality on the basis of these few cases. It is important to be aware of the fact that these cases are “pilot-projects” with quite a lot of invested prestige, both on behalf of the private suppliers and the municipalities. Thus, the outcome of these projects will have a significant impact on the development of this new market in the future (Bjerke & Eilertsen 1998). The municipalities are now working out systems for evaluating the quality of these services using a wide range of indicators. This is a complicated and difficult task, and since this is something new it is also impossible to compare with earlier situations. Thus, reliable comparisons can only be made when these quality performance indicators are operative for single case and comparative evaluations in the future. There is no doubt, however, that this process has made some of the municipalities more aware of the preferred content of their services and also of the possibilities for municipal units to win contracts in open competition in the future.

Why are we focussing on these few cases and these few municipalities that have opened up for commercial enterprises in this core field of the traditional welfare state? One important answer can be found in one of the surveys in Bogen & Nyen (1998). When the chief executives in the municipalities were asked how likely they thought it would be that their municipality in the next ten-year period would privatize services that at the moment were not privatized, as many as 75% answered that this was likely to happen (Bogen & Nyen 1998). And when asked how likely they thought this would be the case in the services for elderly people, as many as 20% answered positively, a figure that we believe will only increase in the nearby future. Based on these answers, it would not be unreasonable to expect that the scope of ”privatized” services will be far more comprehensive at the local level in the future.

It is important to note, however, that resistance to this development is still relatively

strong in some of the political parties in the municipalities, not to speak of some of the most powerful trade unions at the local level, e.g. Norsk Kommuneforbund (Verdens Gang 25.18.1999). The survey carried out by Eikås (1999) demonstrates rather clearly that resistance in political parties and in trade unions are considered to be two of the most important factors in explaining the contemporary lack of contracting out of social services in the majority of the Norwegian municipalities.

However, several recent articles in different newspapers indicate that the process of privatization is already taking place. In Oslo, the capital of Norway, with more than 500 000 inhabitants, the city council has decided to put parts or the whole of elderly care out on contract in three different political/administrative parts of the city (Klassekampen 08.12.1998). In Trondheim, the third largest city in Norway situated in the middle of the country, two nursing homes are now being put out on contract (Vårt Land 03.02.1999). In Bergen, which is the second largest city in Norway, with more than 250 000 inhabitants, the city council has proposed that the operation of one nursing home owned and run by the municipality shall be put out on contract in the near future. The chief executive in Bergen (Jan Refseth) confirmed in an interview with a local newspaper that private suppliers in ”soft” services, such as care for the elderly, will be more common in the future, and that Norway is in an initial phase at this development (Bergensavisen 05.12.1998).(8) He has later proposed that the running of all new nursing homes in the city should be contracted out in open competition (Bergens Tidende 13.11.99)

We argue that the cognitive and political conditions for extensive change are already in place; mostly in the big municipalities. However, it is not unlikely that smaller municipalities will follow, e.g. starting out with less controversial areas such as “support services” (laundry, cleaning, kitchen, transport etc.) We already know that 9.5% of the municipalities in Norway have put such services out on contract to commercial enterprises and that some of these municipalities are relatively small units (Eikås 1999).

VI. Conclusions

In this article we have described and analysed trends that point in the direction of a “contract culture”, which is a prerequisite for the implementation of contracting out of (formerly) public services. The traditional Norwegian welfare state is at the moment undergoing major changes. Elements of the New Public Management ideology are now breaking through at the local political level, where most of the responsbility for the welfare service production is placed. The largest municipalities are in the lead position in this process. But concepts such as ”contracting (out)” and ”purchasing- supplier model” are about to become more than theoretical concepts to administrators and politicians in smaller municipalities too.

Are we now witnessing a fundamental change in mentality among local administrators (especially among the chief executives) and many politicians? Who formulates the premises for the change – the bureaucrats or the politicians? The process of contracting-out seems to be accelerating at the local level. Will this imply that privatization actually may be implemented more rapidly and comprehensively than most people would have deemed possible only a few years ago - also in the labor-intensive area of social care? We know from the research on earlier periods of the welfare state that new solutions in the welfare policy are often implemented in some local municipalities first, and than become more broadly institutionalized (e.g. Nagel 1991). Will this also be the result in this area?

It is not unlikely that the contract-culture over the years will make many of the voluntary organizations in Norway more similar to the kind of service producing, non-profit organizations that are found in the Anglo-American countries (Lipsky & Smith 1993, Taylor 1992). In such organizations membership and internal democratic influence play a minor role. While this is already largely the case in the relatively “new” organizational field of humanitarian foreign aid in Norway (Groth 1999), we would expect a similar change in the field of social services and other organizational fields as well, although the institutional resistence in the field of social services is stronger, due to their legacy of internal democrazy and “non public- interference” with organizational matters (Selle1998).

Market actors, even big multinational companies, are now challenging both the traditional voluntary organizations, which for a long period of time have been engaged in the supply of social services and the traditional main ”producers”, i.e. the public agencies themselves. The question arises whether smaller, locally based commercial actors or local voluntary organizations will stand a chance in the competition with big, international companies in the ”welfare business”. Maybe they will form networks based on common interests and mutual dependency (Rhodes 1997)? Will new types of organizational “hybrids” including elements from all three sectors, government, market and voluntary sector, emerge at the local level to meet the new challenges?

What will happen in this area in the future is also dependent upon the position of the voluntary sector in the minds of local bureaucrats and politicians. If the predominant guiding principle is economic effectiveness, we believe that it is vital for the voluntary organization to demonstrate such effectiveness, but in combination with a more clear cut demonstration of its own values. We have seen that this is an organizational strategy that seems to have been rather successful in the field of foreign aid. If voluntary organizations do not show their distinctiveness towards administrators and politicians, i.e. demonstrate that there are certain values and ideologies connected to their service production that makes them different from ordinary market actors and public agencies, the result may be local privatization based on commercial service producers. One reason may be that many users/clients would feel that many voluntary organizations would be too ideological, so that more “neutral” market solutions are to be preferred.

It is too early to predict how the voluntary organizations will meet this new challenge. The general internal organizational changes that we have described will probably make the transition less difficult for some of the organizations. There are also some indications, however, that the organizations are aware of the new situation and that they are willing to act and adapt themselves accordingly. For instance, the ”Employer Organisation of Private Organizations working for Government” (APO), which has over 600 member organizations and a total number of 17 000 employees, published a report in 1997 (APO – rapport nr. 1 1997) dealing with this new challenge.(9) The report discusses the future use of more standardized contracts between the municipalities and the organizations that are running institutions in elderly care. It states that the contemporary arrangements regulating the relationship between many municipalities and the owners of private institutions can no longer continue, because of legal, economic and contractual obscurities. The report suggests that the voluntary organizations and foundations in this area are not willing to be ”put out of business” by new commercial actors without putting up a fight. If the situation in this area is typical for the changing relationship between voluntary organizations and government, in general, we would expect that the focus on more clearly defined legal and economic obligations and ”quality-performance” indicators will be evident in other social service areas as well.

Norway’s welfare state is now moving, ideologically and in practice, away from a model which has been largely characterized by a dominating public responsiblity for welfare services in production, finance and control. Will a downplaying of the role of public authorities as welfare producers have severe impact on important social policy questions such as social rights, equity and equality? There is no doubt that competition, pluralism, market and effectiveness are playing a more substantial role than before. We seem to be moving away from the more traditional and standardized welfare system as witnessed in the ”golden age” of the welfare state. This was a system that was primarily based on the ideals of equality and equity and was commonly described as the social democratic model of welfare. Alternative welfare service producers are now more ideologically legitimate, and legal, economic and ideological mechanisms of (public) control are about to be changed from the “old” system of informal agreements based on mutual trust and non-interference to a system based on elements from NPM and the new contract culture. This development means that it is hardly fruitful any longer to discuss only the relationship between voluntary organizations and government in the area of social services. Even in Norway the whole triangle of public, voluntary and market sectors should be taken seriously in future welfare state discussions and research.


Aftenposten 09.02.1998

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(1) We use the term “social service” organizations in this article. While the connotations and thus the implicit understanding of the area covered by this term may be relatively unproblematic in the continental and Anglo-American literature, this is not the case in Norway. The most common term in Norway is “organizations in the field of social and health care.” In order to be in line with the international literature at large, we have chosen to omit the label “health”. By doing so we will lose some precision, acknowledging that the boundary between social and health care is blurred and hard to define in a strict manner.

(2) The Norwegian names are «Norske kvinners sanitetsforening» and « Nasjonalforeningen for folkehelsen».

(3) This information is based on an interview with two civil servants, a chief planner and a chief buyer, in the department for social and health care services in the city of Bergen.

(4) MBO has been singled out as one of three organizational concepts that have become organizational ”superstandards” and that have penetrated all kinds of organizations worldwide during the 1980s and 1990s (Røvik 1998).The two other superstandards are performance appraisals and total quality mangement (ibid).

(5) In Norwegian language this was called “virksomhetsplaner” (VP).

(6) These white papers and reports are: NOU: 1995:19: Statlige tilskuddsordninger til barne-og ungdomsorganisasjoner. St.meld nr 27 (1996-97): Om statens forhold til frivillige organisasjoner. Statskonsult (Rapport 1995:3): Statlige overføringer til frivillige organisasjoner. Statskonsult (Rapport 1996:4): Statlig støttepolitikk og endringer i det frivillige organisajonslivet.

(7) The first report, which was mainly based on a postal questionnaire to a selection of Norwegian municipalities, was initiated and financed by the employer and interest organization of the Norwegian municipalities (Kommunenes Sentralforbund). It was carried out by SNF (Stiftelesen for næringslivsforskning) The latter report (mainly based on telephone interviews) was initiated and financed by the interest organization of the employees in Norwegian municipalities (Norsk Kommuneforbund). It was carried out by FAFO (Fagbevegelsens forskningssenter). The third report analyzed the use of competition and commercial actors in care for the elderly in Norway. It was initiated by the main trade union of Norwegian nurses (Norsk sykepleierforbund).

(8) In a comparative Scandinavian perspective, Sweden is the country that has gone furthest in the direction of privatization in this area. More than half of the municipalities in Sweden have put social services out on contract. Almost 10% of the nursery homes are now run by private actors. The process started in 1992, when the conservative party (Moderatarna) won the majority of the seats in a number of municipalities and county councils. The social democratic party was ideologically opposed to these new social “solutions” during the first two or three years, but today the ideological contoversies have more or less died down (Vårt Land 03.02.1999).

(9) This organization has now been merged with another organization (HSH) which is the main organization for corporations engaged in commercial trade and service production. The director of APO, Gustav Berntsen, stated after the merger that his member organizations must now become more directed at business administration (Aftenposten 09.02.98).

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