Dr Marius Guderjan is a researcher at the Otto-Suhr-Institute of Political Science of the Freie Universität Berlin, and a Fellow at the Centre for British Studies of Humboldt-Universität zu Berlin.
Dr Mario Kölling is an associate professor at the Department for Political Science of the Spanish National Distance Education University (UNED).
Dr Johanna Schnabel is as a lecturer and researcher at the Otto-Suhr-Institute of Political Science of the Freie Universität Berlin, and co-chair of the working group on Federalism of the German Association for Political Science.
Abstract
During the COVID-19 pandemic, governments adopted and implemented a wide range of support measures for businesses and households to mitigate the economic and social impact of public health restrictions. Central governments adopted the most important measures to support businesses, protect jobs and maintain household incomes in many countries. Given the multilevel governance structure of many European countries, these measures involved varying degrees of consultation with and implementation by regional governments. At the same time, subnational governments provided additional support by setting up complementary schemes. Our contribution presents some insights from France, Germany, Italy, Poland, Spain, the UK and the EU.
Introduction
COVID-19 was not only a public health crisis but was also an economic and social crisis. Governments adopted and implemented a wide range of support measures for businesses and households to mitigate the economic and social impact of public health restrictions (Weder di Mauro, 2020; OECD, 2020; Committee of the Regions, 2021, p. 64; Saunders, 2022; Chattopadhyay and Knüpling, 2022). Because central governments have broad powers and resources to tackle the crisis (Maher et al., 2020), they adopted the most important measures to support businesses, protect jobs and maintain household incomes. Given the multilevel governance structure of many European countries, these measures involved varying degrees of consultation with, and implementation by, regional governments (Lecours et al., 2021; Steytler, 2022; Vampa, 2021). In many countries, regional governments provided additional support by setting up complementary schemes or by topping-up measures of the central government. While subnational governments have significant financial resources to take social and economic measures (Chattopadhyay et al., 2022), they faced financial pressures during the crisis (Capano and Lippi, 2021) and became increasingly dependent on transfers from the central government (Steytler 2022, pp. 414 et seq.).
Insights from European Countries
As part of the LEGITIMULT project, we studied the economic and social policy responses to COVID-19 in six European countries—France, Germany, Italy, Poland, Spain, the United Kingdom (UK), and the European Union (EU).
Due to the absence of strong legislative and fiscal decentralisation and intergovernmental arrangements in Poland, the measures did not involve the Voivodeships. The situation was similar in France; although there was an unusual level of coordination between the regions and central government departments on economic support. The French Solidarity Fund for Small Companies, Self-employed and Micro-entrepreneurs was established by the French government together with the regions, which co-financed and administered the fund.
In Germany, Temporary Aid Programmes, Short-Time Work and Social Protection Packages were adopted by the German government in close cooperation with the Länder through the Bundesrat and consultations between the German Chancellor and the Minister-Presidents of the Länder.
In Spain, during the first State of Alarm (14 March to 21 June 2020), the first Temporary Aid Programme was unilaterally adopted by the central government. The scheme enabled the Autonomous Communities to enact support measures for SMEs and self-employed workers. Coordination with the Autonomous Communities subsequently improved considerably, resulting in agreements on the distribution of funding for further Temporary Aid Programmes. The Extraordinary Social Fund to guarantee sufficient income to families was also transferred to the Autonomous Communities, allowing them to decide on how to spend the money for related programmes at their own discretion.
Although the Italian regions provided some support, the central government decided and implemented the most important economic and social measures in Italy through Decree-Laws. Initially, central government and the regional governments failed to cooperate. The Permanent Conference for the Relations between State, Regions and Autonomous Provinces only started to meet more frequently during the second phase of the pandemic and discussed relevant Decree-Laws.
In the UK, the central government and its agencies also decided and implemented the most important government loans, job retention and welfare assistance schemes. Additional central government grants enabled the devolved governments to set up their own programmes, complementing the economic and social measures of the UK Government. Interestingly, the different governments provided similar funds and grants to SMEs.
The EU, which adds another layer to the multilevel systems of its members, also provided significant resources to mitigate the economic impact of COVID-19 and to promote post-crisis recovery. Next Generation EU, and more specifically the Recovery and Resilience Facility (RRF), introduced a performance-based instrument that is assessed and disbursed on the basis of the fulfilment of reforms, targets and milestones. Member States had to submit national Recovery and Resilience Plans (RRP) to the Commission and the Council of the EU, which decided on the access to funding. While the RFF recommends consultations with subnational stakeholders, central governments were not legally required to do so (Civitarese Matteucci, 2021). Despite the profound impact of the RRF on regional governments, this meant a departure from the obligation of multilevel partnerships, which is a fundamental principle of EU Cohesion Policy (Crescenzi et al., 2021). Although regional legislative and administrative responsibilities were affected, the RRPs were largely designed by central governments without a meaningful involvement of regional governments (Bokhorst and Corti, 2024; Committee of the Regions and Council of European Municipalities and Regions, 2024).
Towards efficient and effective crisis governance
What are the lessons we learned from the economic and social policy measures in these countries? To contain their impact during crises, decisions need to be taken swiftly. Yet, even though the complexity of multilevel frameworks can present an obstacle to fast, consistent and thus effective actions (Peters and Pierre, 2004; Paquet and Schertzer, 2020), coordinating policies across tiers of government can increase the efficiency of crisis management. Joint consultations may prevent governments from duplicating the same measures, which can lead to competition and conflict or result in higher costs and confusion (Watts, 2008; Bouckaert, Peters and Verhoest, 2010; Jensen, Koop and Tatham, 2014; Parker, 2015). Moreover, mutual exchange enables identifying best-practices and mutual learning about each other’s preferences and needs (Füglister, 2012).
Our research highlights the critical role of intergovernmental coordination, even when policy measures are primarily determined by the central government. In Germany, strong coordination was associated with efficient and effective policy measures adopted by the central government. In Spain, coordination improved in the course of the pandemic, helping to clarify needs and distribution criteria. When consultations were limited in scope and substance, as seen in Italy and the UK, economic and social measures were less efficient and effective. Coordination is particularly crucial when regional governments are involved in policy implementation or receive central government grants to fund their own measures. At EU level, centralisation and a lack of coordination with regional governments in the making of the Recovery and Resilience Plans negatively affected the delivery of crisis response; especially in federal or decentralised countries (Corti et al., 2023; Zeitlin, 2023). When the RRPs failed to adequately consider the regional and local needs and capacities, it resulted in a generic, suboptimal allocation of resources and undermined the efficient use of funding (Reviglio and Martinez, 2023, p. 82; European Commission, 2024).
Notwithstanding the benefits of mutual consultations and joint policy-making, in countries like France and Poland, where the central government has the capacities to ensure an efficient and effective design and delivery of economic and social measures, the absence of coordination did not seem to affect its implementation and results.
Multilevel systems may face a choice between fast decision-making by the central government and the participation of regional governments in policy development and implementation. In federal and highly decentralised countries, the central government typically even depends on regional governments to implement or complement its economic and social measures. In such countries, the interaction of central and regional governments plays a crucial role for effective crisis governance (Kincaid, Tarr and Wälti, 2010; Boin and Bynander, 2016; Migone, 2020; Chattopadhyay and Knüpling, 2022; Schnabel and Hegele, 2021). While intergovernmental coordination may delay policy responses, regional governments are equally aware of the urgency of a crisis and want fast solutions to assist businesses, jobs and households. When powers and capacities to deal with a crisis are spread across different levels of government, consultations at an early stage enhance the overall performance of crisis governance and may outweigh potential disadvantages.
This work was supported by the European Union under the Horizon Europe Programme [HORIZON-CL2-2021-DEMOCRACY-01, GA Nr. 101061550].
References
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Further Reading
Chattopadhyay, R. et al. (2022) Federalism and the Response to COVID-19. A Comparative Analysis. Routledge.
Guderjan, M., Kölling, M. and Schnabel, J. (2023) Multilevel Crisis Management: COVID-19 Responses in Federal and Decentralised Polities. In Europäisches Zentrum für Föderalismus-Forschung Tübingen (eds.) Jahrbuch des Föderalismus 2023: Föderalismus, Subsidiarität und Regionen in Europa (pp. 178-191). Nomos.
Steytler, N. (2022) Comparative Federalism and Covid-19. Combating the Pandemic. Routledge.