Chances and limitations of "benchmarking" in the reform of welfare state structures - the case of pension policy

The concept of benchmarking, originally developed as a tool to improve the performance of business enterprises by learning from others’ "best practice", is now increasingly applied in the areas of employment and social policy. Rising internal and external pressures on national welfare states, sometimes reinforced by supra-national institutions, a rapid growth of modern communication technologies and an ongoing process of ideological liberalization drive this development. Just as benchmarking between companies benchmarking between national social policies is seen as an instrument to reduce the costs of pure trial and error.
However, learning from abroad is neither a sufficient nor a necessary condition for successful welfare state adjustment. First, it is only one possible factor for welfare state change next to many others. Second, it does not necessarily lead to policy change because policy makers may be unable or unwilling
to implement what they have learned. Third, even if cross-national policy transfer takes place it may fail to yield the expected benefits. For a number of reasons the transferability of welfare policies across countries may be restricted. Most importantly, policy transfer may be inappropriate if policymakers
do not pay sufficient attention to the different economic, social, political or ideological context in the importing country. This is especially true when it comes to the great institutional diversity of national retirement systems, which are based on highly country-specific policy mixes and which display strong interdependencies with other policy areas. Therefore, a large-scale adoption of onesize-fits-all solutions such as the World Bank’s three-pillar pension model appears to be problematic. The costs of establishing new institutional arrangements form another impediment to policy transfer. The extraordinarily high cost of financing the transition from a pay-as-you-go to a fully funded pension system is a case in point. Moreover, the benchmarking of social policies is faced with the difficulty that policy goals tend to be ambiguous or even characterized by harsh trade-offs. Pension reformers,
for instance, are invariably confronted with the problem of containing rising pension costs while ensuring a decent level of social security for the elderly population. Therefore, the notion of "best practice" appears to be problematic with respect to social policy reform. Finally, policy makers must be concerned with the political risks associated with policy transfer, especially in a political minefield such as pensions. For these reasons, policy transfer between welfare states appears to be qualitatively different from transfer of "best practice" between companies.
Under these conditions, the probability of (appropriate) policy transfer will hinge on two factors. First, the more the local conditions and especially the welfare arrangements differ from one country to another the more difficult and the less likely policy transfer will be. Second, exchange of information
will be easier than the transfer of ideas and goals, which on their part will diffuse more easily across national borders than concrete policy instruments and institutions. In particular, the import of institutions incompatible to existing policy structures may interfere with the balance of power between
societal actors and therefore meet with political resistance.