Virtual Resource Centre - Ex-ante Policy Impact Assessment

Key questions on Social Impact Assessment from the European Commission Guidelines:

Impacts on:	Key questions
Employment and labour markets	Ø       Does the option facilitate new job creation? Ø       Does it lead directly to a loss of jobs? Ø       Does it have specific negative consequences for particular professions, groups of workers, or self-employed persons? Ø       Does it affect the demand for labour? Ø       Does it have an impact on the functioning of the labour market?
Standards and rights related to job quality	Ø       Does the option impact on job quality? Ø       Does the option affect the access of workers or job-seekers to vocational or continuous training? Ø       Will it affect workers' health, safety and dignity? Ø       Does the option directly or indirectly affect workers' existing rights and obligations, in particular as regards information and consultation within their undertaking and protection against dismissal? Ø       Does it affect the protection of young people at work? Ø       Does it directly or indirectly affect employers' existing rights and obligations? Ø       Does it bring about minimum employment standards across the EU? Ø       Does the option facilitate or restrict restructuring, adaptation to change and the use of technological innovations in the workplace?
Social inclusion and protection of particular groups	Ø       Does the option affect access to the labour market or transitions into/out of the labour market? Ø       Does it lead directly or indirectly to greater in/equality? Ø       Does it affect equal access to services and goods? Ø       Does it affect access to placement services or to services of general economic interest? Ø       Does the option make the public better informed about a particular issue? Ø       Does the option affect specific groups of individuals, firms, localities, the most vulnerable, the most at risk of poverty, more than others? Ø       Does the option significantly affect third country nationals, children, women, disabled people, the unemployed, the elderly, political parties or civic organisations, churches, religious and non-confessional organisations, or ethnic, linguistic and religious minorities, asylum seekers?
Equality of treatment and opportunities, non -discrimination	Ø       Does the option affect equal treatment and equal opportunities for all? Ø       Does the option affect gender equality? Ø      Does the option entail any different treatment of groups or individuals directly on grounds of e.g. gender, race, colour, ethnic or social origin, genetic features, language, religion or belief, political or any other opinion, membership of a national minority, property, birth, disability, age or sexual orientation? Or could it lead to indirect discrimination?

From the OECD Checklist for Regulatory Quality, 1995:

The questions that the regulator should be able to answer when regulating.

1. Is the problem correctly defined?

2. Is government action justified?

3. Is regulation the best form of government action? 

4. Is there a legal basis for regulation? 

5. What is the appropriate level (or levels) of government for this action? 

6. Do the benefits of regulation justify the costs? 

7. Is the distribution of effects across society transparent? 

8. Is the regulation clear, consistent, comprehensible and accessible to users? 

9. Have all interested parties had the opportunity to present their views? 

10. How will compliance be achieved?

     

Active inter-ministerial coordination is a key aspect of the work of the central body, as this is a way to promote compliance with the regulatory reform requirements. The body should however be authorized, connected and accountable for the results to the centre of the government in order to strengthen policy coordination and oversight capacities.

The central body is effective if it has means to control ex-ante impact assessment in policy formulation. Such means can vary:

Ø      In Romania, the Public Policy Unit in the General Secretary of the Government can give a negative conformity note to a ministry’s proposal, if the required procedure for drafting the policy proposal was not respected. A negative conformity note means that the policy proposal is sent back to the ministry.

Ø      In the United Kingdom, the Better Regulation Executive is settled in the Cabinet Office. Its main task is the coordination of delivery and implementation of regulatory reforms. It aims to achieve 100% compliance with RIA requirements, partly through a Public Service Agreement which measures the performance of civil servants in complying with those requirements.

 

Selected examples for targeting the scope of impact assessment: 

The European Commission

The European Commission also follows a two-stage IA model in the decision-making process about its Annual Policy Strategy and its annual Legislative and Work Program. When selecting proposals for extended impact assessment, it takes into account whether the proposal will result in substantial economic, environmental and/or social impacts on a specific sector or several sectors; whether the proposal will have a significant impact on major interested parties; and whether the proposal represents a major policy reform in one or several sectors.

The United Kingdom

Ø      An initial Impact Assessment is prepared as soon as a policy idea is generated. It consists of a rough and ready analysis based on what is already known. It should include the options and best estimates of the possible risks, benefits and costs.

Ø      A partial Impact Assessment which builds upon the initial IA, is produced prior to the consultation exercise with the affected stakeholders and must accompany the consultation document as well as being submitted with any proposal needing collective agreement from Cabinet. It should be informed by more discussions, data gathering and informal consultations. The options should be worked out and developed together with thinking on compliance and monitoring. Also, any analysis on cost and benefit estimates are elaborated.

Ø      A full Impact Assessment builds on the information and analysis in the partial IA, which is prepared for the minister’s signature; and

Ø      The final IA is signed by the minister and accompanies the draft regulatory proposal submitted to the parliament.

Source: UK Cabinet Office, http://bre.berr.gov.uk/regulation/ria/overview/the_ria_process.asp

 

Dual-stage IA in the EU

Some EU countries - such as the Czech Republic, Ireland and Lithuania - have also decided to use the dual-stage IA system to identify where it would be inappropriate to apply complex IA procedures for minor issues, or vice versa, where easy IA procedures would be insufficient for complex issues. In practice, the process contains some form of preliminary/basic assessment for screening the complexity of an issue, and uses a number of rules, criteria or thresholds to determine which policy proposals should be further examined and hence undergo extended/full IA.

The preliminary assessments range from a very short and general overview of potential impacts, to a more intensively constructed methodology implying some consultation with other ministries or even with the general stakeholders. The more detailed the preliminary assessment, the better it can be used to determine the appropriate scope of a subsequent extended assessment. In this case, it is vital that the screening for extended IA is based on established criteria and rigid approaches (like inclusion and exclusion lists) to avoid political maneuvering, inappropriate exemptions, etc. One approach is to focus on either level of impact or/and level of priority of the proposals that can be linked to the legislative/strategic planning process.

The Irish Model

One of the key features of the IA model agreed in Ireland in 2005 was that there should be a two-phase approach to IA involving, first, a Screening IA (basic) and second, a Full IA. It was intended that regulations of relatively low impact should undergo a Screening IA, which is a preliminary, less detailed analysis. More significant regulations would be subject to a Full IA consisting of a more extensive and rigorous analysis. The steps for each IA are set out in the table: 

 

Steps of Irish IA model
Screening IA	Full IA
1. Description of policy context, objectives and options (for example different forms of regulation) 2. Identification of costs, benefits and other impacts of options which are being considered 3. Consultation 4. Enforcement and compliance 5. Review mechanism	1. Statement of policy problem 2. Identification and description of options 3. Impact analysis including costs and benefits of each option (i) Tangible costs should be quantified as far as is possible, incl. national competitiveness, compliance costs, social and environmental impacts (ii) Where costs are extremely significant, formal Cost-Benefit Analysis to be conducted to include competitiveness, social and environmental impacts. 4. Consultation, formal process; minimum of 6 weeks 5. Enforcement, and compliance for each option. 6. Review mechanism 7. Summary of the performance of each option and identification of recommended option where appropriate.

 According to the approach set out in the table, a Full IA would be triggered where regulations imposed costs over a particular threshold or if the regulations had implications for a specific policy area identified by the government as being of particular importance. The intention behind this approach was to ensure that IA was applied proportionately and did not become overly burdensome. The Screening IA should apply to all primary legislation which proposes changes to the regulatory framework apart from the Finance Bill and some emergency, security or criminal legislation. It should also be used for significant Statutory Instruments. Where the Screening IA suggests that the proposals are particularly significant in terms of costs or impact, a Full IA should then be conducted. It is the intention in Ireland that the criteria for triggering a Full IA will also be kept under review in light of future experience.

The 2005 report to the prime minister's office recommends a Full IA under any of the following conditions:

a)      there will be significant negative impacts on national competitiveness

b)      there will be significant negative impacts on the socially excluded or vulnerable groups

c)      there will be significant environmental damage

d)      the proposals involve a significant policy change in an economic market

e)      the proposals will disproportionately impinge on the rights of citizens

f)       the proposals will impose a disproportionate compliance burden

g)      the costs to the Exchequer or third parties are significant, or are disproportionately borne by one group or sector.

It is suggested that initial costs of €10 million or cumulative costs of €50 million over ten years might be considered significant in this context.

First of all, before assessing impacts of the alternative actions, the policy maker should identify what would happen if no action was taken. It is important to note that decision-makers often only see regulation as a possible means of achieving targets. However in most of the countries of the region, and worldwide as well, over-regulation is already the characteristic feature. An extensive and complex regulation system is not necessarily the best possible way to choose. It is important to find effective incentive instruments, and regulations are not the only incentive instruments. Sometimes self-regulation or an education campaign could be much more beneficial than a new law.

For selecting the possible alternatives, the first step is to define clearly the goal of the policy-formulation. A clearly identified goal is the means by which the alternatives are compared. Selecting the alternatives to be considered should start with a broad picture of drawing up an initial, extensive list of alternative possible options that are likely to be capable of achieving the proposed objectives. This broad scale should be narrowed down via information gathering and early consultations to 3 or 4 most viable options. These could be then realistically analyzed in more depth. 

AVOID the trio of “alternatives”:

• Do nothing option

• Preferred option

• Ridiculous option

The screening process of the alternatives should be guided by the principles of effectiveness, efficiency and consistency.

• Effectiveness – The extent to which options can be expected to achieve the objectives of the proposal.

• Efficiency – The extent to which objectives can be achieved for a given level of resources/at least cost (cost-effectiveness).

• Consistency – The extent to which options are likely to limit trade-offs across the economic, social, and environmental domain.