The Survival of the European Welfare State

Stein Kuhnle

• Publisher: Routledge
• Year: 2003
• Print ISBN:
  9780415212915
• eBook ISBN:
  9781134614639
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

'Crisis'. 'Breakdown'. 'Dismantlement.' Since the 1970's, these have become the catchphrases used to describe the condition of the welfare states in Europe, in academic and media analyses alike. This book provides an alternative, more optimistic interpretation. It aims to increase both theoretical understanding and empirical knowledge of recent welfare reforms in areas including Spain, Denmark, the UK, Germany and the EU as a whole. An essential resource for students, researchers and practitioners with an interest in the welfare state.

Part I

European welfare states
in perspective

1 Introduction

Growth, adjustments and survival of European welfare states

Stein Kuhnle and Matti Alestalo

Growth

The Bismarckian legislation in the 1880s can be considered as the point of departure for the initiation of the modern welfare state. Comparative studies of the development of social insurance legislation show, however, that the last decades of the nineteenth century and the first decade of the twentieth century witnessed for the most part the introduction and extension only of occupational injuries insurance schemes in Europe. Limited old-age insurance and sickness insurance were introduced in some countries. During the inter-war years social insurance was extended in terms of new risks covered (unemployment), in terms of population coverage, and in terms of countries that introduced all four major schemes of social security. In the aftermath of the Second World War many countries made extensive social reforms. As a result, almost all West European countries had rather comprehensive social insurance programmes for occupational injuries, old age, sickness and unemployment by the year 1950. The following three decades can be characterised as the major growth period of the European welfare state. Differences between European countries began to diminish and major schemes were close to covering the total adult population in many countries (Flora and Alber 1981:37– 80). However, by the early 1980s important variations between European countries persisted, and aggregate data on social expenditure and government employment bear out underlying institutional differences (see Tables 1.1 and 1.2).

Over the last 20 years academic and media attention to the ‘state of the welfare state’ has been dominated by much negatively framed analysis and discussion. In most countries cuts in social benefits and various kinds of adjustments in social programmes have been made. But, as the relative figures in Table 1.1 imply, there was still growth in social expenditure in the 1980s and 1990s (cf. Chapters 3 and 9 for data for selected countries on very significant growth of social expenditures in absolute terms). Figures on social expenditure as a proportion of gross domestic product (GDP) indicate a converging trend across the various types of Eu ropean welfare states, and growth in Continental European countries seems to have reached its limits. Scandinavian countries and the United Kingdom reached the high Continental level in the 1990s. Southern European countries show remarkable growth since 1980 and are ‘catching up’ with the most ‘advanced’ European welfare states. Figures for government employment give a similar picture in the case of Scandinavia and Continental Europe. The share of public employment has not increased in Continental countries during the last two decades, while the share has increased markedly in Scandinavia where on average close to one-third of total employment is in the public sector. The effects of Thatcherism appear evident in the case of the UK where the share of public employment by 1995 had fallen to a level below that of the Southern European countries.

Table 1.1 Social expenditure as a percentage of gross domestic product in different types of European welfare states, 1980–95: unweighted averages^a

Table 1.2 Government employment as a percentage of total employment in different types of European welfare states, 1974–95: unweighted averages^a

Similar challenges

The discussion of causes, effects and consequences of the welfare state encapsulates a methodological problem. The post-war expansion of the welfare state makes it highly difficult to ‘explain’ its variations and developments by conventional factors (population dynamics, major changes in social structures and changes in family structures). The problem is that the development of the welfare state itself has had an increasing impact on these processes. For example, the scope and quality of health services have had effects on population dynamics and, similarly, increased female employment is connected with child and old age care services, not to mention the effect of the increased public services on the continuous growth of the middle classes. Thus, discussions of similar challenges of European welfare states should be conducted only with great caution (Alestalo and Flora 1994:65–66).

We shall concentrate our discussion of similar challenges on population dynamics and the increasing participation of women in the labour force. Tables 1.3 and 1.4 clearly point out the major demographic trend. Europeans are getting older and older. The rapid decline in fertility rates and the increasing number and proportion of old people presents a crucial challenge for European societies. The declining birth rate is most dramatic in Southern Europe, but is apparent also in Continental Europe, especially in Germany (Castles 1998:265).

The gender revolution has increased female labour force participation throughout Europe, and European societies have begun to resemble each other more and more. There are, however, inter-country variations. The Scandinavian and British figures for female labour force participation rates have been relatively high since the 1970s, but female participation rates have increased markedly also in Continental and Southern European countries since the mid-1970s (see Table 1.5). All over Europe women have been the traditional providers of unpaid family care for the young and old. On this background, the intertwinement of welfare state challenges is straightforwardly spelled out by Pekka Kosonen: ‘If women participate in paid work, for instance, child care and services for the elderly must be organized by the public sector (or some other organization)’ (Kosonen 1994:100).

Table 1.3 Total fertility rate (average number of children per woman aged 15–44) in different types of European welfare states, 1960–93: unweighted averages^a

Table 1.4 Population aged 65 and more as a proportion of the total population in different types of European welfare states, 1961–97: unweighted averages^a

Table 1.5 Female labour force as a percentage of total female population aged 15–64 in different types of European welfare states, 1960–95: unweighted averages^a

Why expect less state welfare?

Despite some indicators of increasing convergence between European welfare states there still exists striking institutional differences. In all societies, a number of distinct providers offer welfare: the family, civil society, the market and the state (see Figure 1.1, based on Alestalo and Flora 1994:67). The market may provide welfare in two ways, either in the form of responding to demand for individual or collective insurance or services or in the form of firms offering welfare to their own employees. For reasons of graphical parsimony, ‘the state’ in Figure 1.1 embraces both central and local government. By ‘civil society’ we refer to the complex of social organisations and associations ‘that are not strictly production-related nor governmental or familial in character’ (Rueschemeyer et al. 1992:6). The total output of welfare is the result of various combinations of inputs from these sectors or institutions, and countries can be classified as different types of welfare states by characteristics of the ‘welfare mix’ (see Figure 1.2). Our classification comes close to the ones made by Liebfried (1993), Ferrera (1997) and Kosonen (1994), and the geographical clustering of countries as presented in Tables 1.1–1.5 corresponds rather nicely to a meaningful differentiation of types of welfare states by their historical institutional characteristics.

The providers of welfare and the interrelationships between them have had varying importance over time and across ‘the four social Europes’. For example, the state has had an overall importance in Scandinavia; families and voluntary organisations (e.g. Catholic Church) relatively more importance in Southern Europe. Much research has gone into why different ‘regimes’ (Esping-Andersen 1990), ‘types’ or ‘models’ (Leibfried 1993) of welfare states have developed in Europe. Research has focused on factors such as characteristics of pre-industrial social structures, political institutions, degree of homogeneity of population, culture, problem perceptions and preferences that induce different political-institutional solutions, and the observation that new ideas, new solutions hit political systems and societies at different points in ‘developmental time’. At this present day, with much economic determinism dominating political debate and policy studies in general and welfare state studies in particular (e.g. the claim that globalisation of capital mobility and financial transactions leads to shrinking welfare states) we do well to remember that social insurance was a political invention. It was a politically motivated invention leading to the establishment and cross-national spread of institutions which in the beginning were weakly correlated with scope of industrialisation, level of economic development, ‘problem pressure’ and degree of democracy. Thus, social insurance—and a variety of different principles of coverage, financing and organisation—was introduced and consolidated in different economic, social and political institutional settings, and different relationships between different welfare providers, and different weight to different providers, were established. Pre-social insurance structures and institutions (e.g. the supranational Catholic Church, the family in Southern Europe; an early merged state and church bureaucracy, local government in Scandinavia; guilds and mutual benefit societies in Continental Europe) have a long-lasting impact, as do the early social insurance institutions established. Institutional inertia is one factor why different welfare state types persist in Europe, and one factor why welfare states persist and are likely to do so. Politics and institutions matter.

Figure 1.1 Welfare provision in advanced countries.

Figure 1.2 Types of welfare states in Europe.

By speaking of ‘types’ of welfare states instead of ‘regimes’ and ‘models’ we want to point out the tentative character of this kind of classification and to take into consideration the piecemeal history of the making of European welfare states. Welfare states have seldom been established as a result of big plans or big fights, but mostly as results of complex processes and successive steps of social and political engineering in European history.

Since the early 1980s interest has been growing in the welfare role played by the market, family and voluntary organisations among political and bureaucratic elites, mass media, social science researchers and, to some extent, voters. Paradoxically, this new attention, frequently based on sharp criticism of the allegedly bureaucratic, inefficient and costly welfare state, emanated from political leaders of the ‘less advanced’ Western welfare states: Thatcher in Britain and Reagan in the USA. But this paradox serves to emphasise the importance of political rather than economic factors for policy change. Likewise, welfare cutbacks have subsequently not been more pronounced in the expensive and comprehensive Scandinavian countries than in leaner welfare states. A more general indicator of an increased attention devoted to non-state welfare providers came in an OECD publication: ‘New relationships between action by the state and private action must be thought; new agents for welfare and well-being developed; the responsibilities of individuals for themselves and others reinforced. It is in this sense that the emergence of the Welfare Society is both inevitable and desirable’ (OECD 1981:12). This political statement was based upon perceptions of demographic and economic challenges and implied a clear ambition to shift the burden of welfare responsibilities among the various welfare providers.

Modifications of welfare programmes have occurred all over Europe since then, but without affecting much the overall cost of the welfare state (given demographic composition, entitlements, and increasing welfare needs). The UK, where social expenditure has increased both relative to GDP and in absolute terms, is a case in point. The new awareness of other possible welfare providers than the state may have been induced by economic or financial imperatives and constraints. Modifications of schemes could be looked upon simply as pragmatic adjustments to ‘economic realities’ as defined by those in a position to define. But the new awareness can also be interpreted as an indicator of a major ideological shift: that the state’s strong role in welfare provision is not considered a good thing, that maximum state-organised welfare is not necessarily an expression of the most progressive welfare policy, that voluntary organisations offer other qualities in welfare provision, and that market competition can stimulate both better and more efficient health and other welfare service delivery.

On the rhetorical-ideological level the welfare state has also been claimed to undermine individual initiative, threaten economic prosperity, create ‘dependency culture’ (as if the market, the family and voluntary organisations do not create dependencies). These arguments and beliefs to justify less state welfare may be fictional or real. We still lack a model that explains how and why the boundaries between market, state, voluntary agencies and the family in the provision of social welfare change over time and across countries (Paci 1987). It is also an empirical, under-researched question to what extent boundaries in fact have changed. One hypothesis could be that, controlled for demographic composition, as people and countries become richer, more resources will be spent on welfare because meeting welfare needs have high priority for individuals and their collective representatives as well as for government...

Table of contents

• CoverPage
• Title Page
• Copyright Page
• Figures
• Tables
• Contributors
• Series Editor’s Preface
• Preface
• Part I: European Welfare States In Perspective
• Part II: National Welfare State Reforms In the 1990s: Comparative and Case Studies
• Part III: Towards Consolidated European Welfare States?
• 11. The Treaty On European Union and Its Revision: Sea Change or Empty Shell for European Social Policies?
• 12. Models for Europe?: The Lessons of Other Institutional Designs
• 13. The Future of the Universal Welfare State: An Institutional Approach
• 14. European Welfare Lessons of the 1990s