Politics of Segmentation

Party Competition and Social Protection in Europe

Georg Picot

• Publisher: Taylor & Francis
• Year: 2013
• Print ISBN: 9780415665612
• eBook ISBN: 9781136476815
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

When political parties make policy decisions they are influenced by the competition they face from other parties. This book examines how party competition and party systems affect reforms of social protection. Featuring a historical comparison of Italy and Germany post-1945, the book shows how a high number of parties and ideological polarisation lead to fragmented and unequal social benefits.

Utilising a comparative approach, the author brings together two important issues in welfare state research that have been insufficiently investigated. Firstly, the complex influence of party competition on social policy-making, and second, how some social groups enjoy better social protection than others. Moving beyond the two countries of the case study, the book proposes an innovative framework for studying segmentation of social protection and applies this framework to a wider set of 15 advanced welfare states. Overall, this book draws together different strands of research on political parties and on welfare states, and introduces a new argument on how party politics shapes social policy.

An invaluable text on the political economy of the welfare state, Politics of Segmentation will be of interest to scholars of political economy, social policy and comparative politics.

Part I

Introduction

1	Party competition and social protection

How do party systems and party competition affect the social protection that people get? We know very little about this. We know a good deal about how different political parties (left or right) shape social policy, but research has largely neglected that the actions of these parties depend on the other parties they have to interact with. This book explores the role of party competition in the development of social policy and, more specifically, the fragmentation of social protection, that is, how different groups of people get different levels of protection against social risks.

Party competition is a crucial element of politics in modern democracies. Political parties structure the relationship between citizens and the state. They integrate and represent citizens’ interests, and they formulate and adopt policies that have an impact on citizens’ lives. While doing so, parties compete with each other for votes, government office, and for the successful implementation of preferred policies. The many aspects of these processes of party politics are not adequately taken into account by scholars trying to explain the development of social policy across time and countries.

The main theory in comparative social policy research regarding political parties distinguishes between families of parties (say, social democratic, secular conservative, or Christian democratic) and assumes that these are linked to specific policies that will be implemented if in government. This theory has contributed a lot to explaining the emergence of different types of welfare states after Second World War. Still today, to know what party is in government often gives us a good idea of what policies to expect. But a social democratic party will act differently if it competes mainly with a secular conservative party than if it competes, say, with a Christian democratic party on the one hand, or a communist party on the other. More generally speaking, what a party does depends on its relative position in the party system. Therefore, the structure of the party system matters.

Among the complexities of party politics, hinted at above, this book will examine the configuration of party systems: how they shape party competition and, in consequence, the policy decisions of parties. Party competition is defined here as the interaction between political parties in a party system. The structure of the party system largely determines the interaction of parties. In this sense, the real independent variable of this study is party systems. But party systems in themselves are static. What has an impact is the interaction that is shaped by them. This is why I often refer to party competition rather than party systems. The mentioned definition of party competition is deliberately broad. It comprises different arenas (electoral, parliamentary, governmental), different objectives (votes, office, policies), and even cooperative as well as strictly competitive behaviour (Bartolini 1999, 2000). However, within this broad definition, we will focus mostly on electoral competition, as will be explained below.

Turning to the dependent variable, social protection, one of its most relevant aspects is how comprehensive or fragmented it is. This aspect is particularly pertinent regarding democratic politics and party competition, being the principal mechanism in conveying social claims to the state. What do different social groups ‘get’? Are some groups better and more generously protected against social risks than others? We will consider these questions mainly at the policy level, that is, in terms of the institutional rules as well as the eventual number of beneficiaries. With this focus on the policy ‘output’ of the state we stay close to the policy decisions of politicians and parties, and we will not delve deeper into the social outcome of policies, which is determined by many other factors that are more remote from political decisions. In addition, studying party competition and differentiation of social rights is interesting because it enables us to examine processes of political inclusion/exclusion that may lead to inclusion/exclusion in public policies and, in the last instance though not covered by this study, to social inclusion/exclusion. For the differentiation of social protection I will use the term ‘benefit segmentation’, which is explained in more detail in Chapter 3.

In particular, the book will examine policy segmentation in the field of unemployment benefits. This field constitutes an important element of economic security for large parts of the population – not only for the unemployed but also for those who have a job but are concerned about ever becoming unemployed. Unemployment benefits can be defined as public monetary transfers that are paid to the unemployed in order to compensate for their loss of income. Notwithstanding important variations between national labour market regimes, these policies are a crucial part of social protection in all European welfare states.

Moreover, high unemployment levels have put these policies at the centre stage of political debate in most European countries since the 1980s. On the one hand, they are seen as an important protection against the loss of income and as providing the jobless with the necessary resources in order to effectively look for a new job. On the other hand, high levels of unemployment compensation are seen as a burden on public funds and as disincentives to taking up work (Schmid and Reissert 1996). Given the interest in differentiation of social rights, I look deliberately at unemployment benefits in the plural. Unemployment insurance is only the most well-known and usually more generous programme of financial support for the unemployed. Most countries also have needs-based unemployment assistance or social assistance, which are important measures for the unemployed as well.

One of the main objectives of this book is to bring two fields of political science closer together: the literature on political parties and comparative welfare state research. More concretely, the book uses insights from party research in order to learn more about how party politics affects social policy. Therefore, part of the task is to develop a new theoretical argument, which is what most of this chapter is devoted to. This argument is then put to the test in two ways: first and foremost, through a comparative historical analysis of party politics and social protection in Italy and Germany; second, through a cross-sectional analysis of party systems and social protection in advanced welfare states. Italy and Germany are chosen for the case studies because they have widely different party systems but are relatively similar on important other accounts, such as the basic model of welfare state, political institutions, and even party incumbency. In the post-war decades government in both states was headed by Christian democratic parties. Still, the social protection that was put in place in this period differed widely. This was precisely because both Christian democratic parties had to deal with very different contexts of party competition.

What are the findings of this study? First of all, it demonstrates that party competition matters for social protection. Second, it shows how different party systems bring about different patterns of policy segmentation. This can be summarized in three findings: (1) the more parties a party system includes, the more segmented social protection is; (2) ideological polarization of a party system brings about a high degree of policy segmentation; (3) in non-polarized party systems the more specific spatial configuration matters. This point is harder to summarize in one specific finding. In the German case we find that the fundamental ‘Hartz reforms’ were enabled by the lack of a left-wing competitor to the Social Democrats. In Italy after its party system change in the 1990s we see that bipolar competition between two pre-electoral coalitions has facilitated a reduction of policy segmentation. But ideological differences within each coalition have prevented more structural reforms.

By highlighting the impact of party competition, this study contributes to our understanding of welfare state reform because this aspect has so far been insufficiently recognized. Moreover, the book presents a new way of analysing the differentiation of social rights in the field of unemployment compensation. Using this framework, it takes stock of the segmentation of unemployment benefits across advanced welfare states and it provides a rich comparative account of how unemployment benefits developed in Italy and Germany. Finally, the analysis of party politics in Italy and Germany contains new perspectives on how party systems influenced policy-making. These insights can also be used for research in other policy fields.

Structure of the book

The rest of this and the following chapter develop the theoretical argument and present the research design. After that, the book is divided into two main parts. Part II presents the variation across countries in unemployment benefit segmentation and the development of unemployment benefits in Italy and Germany. Hence, this part sets out the explanandum. Subsequently, Part III shows how party competition (the explanans) influenced policy developments in Italy and Germany as well as variation across advanced welfare states more generally.

The remaining sections of this chapter build the theoretical argument of how party competition affects the segmentation of social protection. The argument involves the number of parties and their positioning in a party system. The more parties there are the narrower the interests they advocate. In terms of positioning, ideologically polarized party systems are likely to produce strong policy segmentation. In non-polarized party systems, the more detailed spatial configuration determines on which voters the attention of parties focuses.

Chapter 2 sets out the methodological approach of the study and explains in more detail why Italy and Germany were selected for the intensive case studies. The party systems of the two states differ strongly. But their differences regarding many other factors (political, institutional, social, and economic) are limited compared to other advanced industrial countries. This set-up makes it possible to distil the effect of different party systems as opposed to other factors. Moreover, the period of investigation comprises the phase of post-war welfare state expansion and the phase of economic austerity since the 1970s. In addition, dynamics of party competition have changed in both states during the 1990s/2000s. These historical changes make it possible to analyse not only the different policy paths between both countries in the phase of welfare expansion, but also to study each country through time, different economic conditions and the effect on policy-making of changes in their respective party system.

The first chapter of Part II (Chapter 3) introduces the conceptual framework for studying the differentiation of social rights in the field of unemployment compensation and applies this framework to today's advanced welfare states. The concept of unemployment benefit segmentation comprises two dimensions: first, how unemployment compensation is divided into various benefit schemes and how inclusive or exclusive these schemes are; second, the differences in generosity between these benefit programmes. The chapter shows the significant differences between advanced welfare states across both dimensions and identifies similar patterns of segmentation.

The following chapter (Chapter 4) describes how unemployment policies in Italy and Germany diverged strongly after Second World War. To this end, the chapter first illustrates how, from the beginning up to 1945, unemployment support evolved very similarly in both countries. Yet, during the post-war welfare expansion Germany established a three-tier system of unemployment benefits with contained differences in generosity and relatively inclusive unemployment insurance (UI). Conversely, Italy developed a system of unemployment compensation with widely different levels of generosity and high fragmentation along occupational lines.

As Chapter 5 shows, reforms of unemployment benefits under austere economic conditions can be distinguished by two sub-phases in both countries. In Germany between 1975 and the end of the 1990s incremental reforms reduced access to UI and unemployment assistance (UA), and cut back the generosity of social assistance more clearly than for the other two benefit schemes. Between 2002 and 2004 the more radical so-called ‘Hartz reforms’ abolished the middle tier of the benefit system, thus leading to a dualization of German unemployment compensation. In Italy small reforms of unemployment benefits during the 1980s followed no clear pattern. By contrast, since the end of the 1980s, the wide differences in benefit generosity were incrementally but significantly reduced.

Part III shows how the policy variation presented in the previous part was influenced by party competition. Chapter 6 discusses the explanations of labour market reforms in Italy and Germany by other authors. For the German case institutionalist accounts prevail. This literature predicted policy stability and, accordingly, has difficulties explaining the more fundamental Hartz reforms. In the Italian literature, the relative powers of the working class and institutions have been indicated as important variables. Also the relevance of party competition has been recognized but not yet satisfactorily analysed regarding unemployment benefits.

Chapter 7 points out how the post-war divergence of the Italian and German benefit systems was driven by the two fundamentally different party systems and the competitive dynamics they generated. In Germany the low degree of polarization in the party system and the small number of parties meant that parties competed on programmatic terms and tried to appeal to broad sections of the electorate. At the same time, they focused on the core of the labour force. Only later, under continuing favourable economic conditions, the credit claiming logic of expanding social protection also led to the introduction of social assistance. In Italy, by contrast, ideological polarization prevented programmatic competition and a high number of parties favoured the representation of narrow interests. The strong radical left promoted, first, employment creation and, later, employment protection. As a consequence, unemployment benefits initially were relatively neglected and, subsequently, a few narrow benefit schemes were strongly expanded that formally kept recipients in employment.

Chapters 8 and 9 examine for Germany and Italy respectively the impact that, first, essentially unchanged party systems had under radically different economic conditions and, second, how changing dynamics of party competition affected reform paths. In Germany (Chapter 8), during the phase of incremental retrenchments, centripetal party competition together with public opinion widely in favour of maintaining current welfare levels impeded structural reforms. Given that governments were nevertheless under pressure to act, the resulting reforms imposed losses mainly on marginal and electorally less significant groups. The ‘Hartz reforms’, by contrast, were adopted after a limited shift in public opinion in favour of reforms. This pushed the Social Democrats to compete harder in the centre of the political spectrum. In doing so, they were not constrained by a relevant left-wing party competitor.

In Italy (Chapter 9) polarization in the 1980s was not as strong as before but still blocked any decisive reforms of unemployment benefits. At the beginning of the 1990s the party system underwent a radical transformation. The new configuration combined centripetal competition between two broad pre-electoral coalitions, and centrifugal competition between parties within each camp. The reduction of generosity differences, but stopping short of a more structural reform, resulted from the compromises found within each camp to deal with these contradictory pressures.

In Chapter 10 I provide evidence that the findings on Italy and Germany can also be applied to other countries. In a first step, I compare party systems and unemployment benefit systems of advanced welfare states at the end of the formative post-war decades. This reveals that countries with a larger number of parties or higher ideological polarization have more segmented social protection. In a second step, I analyse 15 reforms of unemployment benefits in the 2000s and show that reforms in countries with fragmented party systems were more likely to increase the segmentation of unemployment compensation.

Finally, in Chapter 11 I summarize the findings of the book, discuss implications, and indicate future tasks for research. The study demonstrates the relevance of party competition for explaining social policy development. Also the hypothesized relationships between party system characteristics and segmentation of social protection are largely confirmed. Hence, not only is party politics more complex than the story told by the traditional theories of partisan government, but, at least regarding party competition, the neglected aspects of party politics also matter for policy development. The policy implications of other aspects of party politics (such as party organizations) should be investigated more closely in the future.

Theoretical argument

The fundamental starting point for the argument of this study is that party competition has its own dynamics. Political parties mediate between citizens and the state. As such, parties reflect the interests of citizens and their actions are conditioned by the institutions of the state. But they can be reduced to neither of the two sides (Sartori 1990 [1968]). In particular, some theories suggest that parties act in the interests of specific social groups, such as social classes. In fact, the relationship between a party and a certain social group can often be close. However, sometimes organizational ties to the social basis are much weaker and sometimes no specific reference group can be clearly identified at all. Consider, for example, catch-all parties that are not attached to one specific constituency. But consider also, more generally, how party organizations changed historically and, in most advanced industrial states, have become more detached from core constituencies (Kirchheimer 1966; Katz and Mair 1994; von Beyme 2000). If we take political parties as organizations seriously, we cannot simply identify them with a certain social group even if close ties exist. Przeworski and Sprague (1986), in their famous study of electoral socialism, saw the relationship between party and class even driven by the former: ‘the relative salience of class as a determinant of individual voting behaviour is a cumulative consequence of the strategies pursued by political parties of the Left’ (ibid.: 9).

If parties are to varying degrees autonomous from their electorate they have some freedom in choosing their objectives. The three basic types of objectives that are relevant for parties are maximizing votes, getting into government office, and adopting their preferred policies (Strøm and Müller 1999). For any of these objectives, they are in competition with other parties. This is why, whatever the main objectives, a party's actions are influenced by the context of competition. In particular, we cannot assume that the policy decisions of parties are simply based on the interests of their electoral constituency as traditional theories of partisan government do (e.g. Hibbs 1977; Korpi 1983). This may be the case, but it depends on the existence of a clear core constituency and on the effect of competition with other parties. Therefore, I argue that the context of competition always matters for the actions of a party. This context is structured by the party system.

Green-Pedersen (2001, 2002) has shown how party systems and the logics of coalition formation can affect reforms of social policy. In this book I w...

Table of contents

• Front Cover
• Politics of Segmentation
• Routledge/EUI studies in the political economy of welfare
• Title Page
• Copyright
• Contents
• List of figures
• List of tables
• Acknowledgements
• List of abbreviations
• Part I: Introduction
• Part II: Policy segmentation across countries and time
• Part III: The impact of party competition
• Notes
• Bibliography
• Index