The Politics of Welfare Reforms
in (Bismarckian) - Continental
European Countries:
Is there a specific way?
Bruno Palier
Sciences Po - Paris, France
Outline
The “Bismarck” project
The characteristics of Bismarckian
welfare systems
III. The problems
IV. The common trajectory: four sequences
of reforms
I.
II.
I. The “Bismarck” project
The puzzle:
• In the late 1990s, these systems were characterised as
“frozen”, entrapped in the welfare-without-work strategy,
“victims” of “path dependence”
• In the 2000s, important reforms:
Activation of the unemployed
Multi-pillar pension systems
Competition in health care
Development of care policies
What happened? How to understand this U-turn?
The Bismarck project
• Focus on the role of institutions, as independent
AND dependent variables
• On the impact of “cumulative” and
“transformative” changes
• On “sequencing”, reforms trajectories
• On policy/reform feed back
(learning/opens new opportunities)
• Successive reforms can lead to systemic change
The framework of the project:
3 angles
• National trajectories:
Belgium and the Netherlands by Ive Marx and Anton Hemerijck, on the Czech Republic,
Poland, Hungary and Slovakia by Alfio Cerami, on France by Bruno Palier, on Germany by
Karl Hinrichs, on Italy by Matteo Jessoula, on Spain by Ana Guillen, on Switzerland by Silja
Hauserman, on Austria by Herbert Obinger
• Sectoral reforms (social insurance):
"The politics of pension reforms" by Giuliano Bonoli, on "The politics of health care reforms"
by Patrick Hassenteufel and Bruno Palier, on "Unemployment compensation and employment
policies" by Daniel Clegg, and on "Child and elderly care policies" by Nathalie Morel
• Structural changes:
"The politics of the financing of social protection" by Philip Manow, "Changes in the
governance of social protection systems" by Bernhard Ebbinghaus, “The self transformation of
Continental welfare systems" by Anton Hemerijck and "The influence of European integration
on national social policy reforms" by Philippe Pochet.
II. The characteristics of
“Bismarckian” welfare systems
The aim: characterising the “Conservative
Corporatist” type from within.
We look at Principles and Institutions
in order to measure changes
Principles
To provide income security for workers
(Security and not Freedom or Equality)
The importance of professional identities;
The importance of collective protection and
collectively negotiated rights;
The importance of proportionality and the
equivalence principle
(a specific concept of equity);
An orientation towards the support of traditional
family roles;
An emphasis on subsidiarity
Institutions
1.
2.
3.
4.
Mode of access to social protection based on
work/contribution; these systems were primarily aimed
at insuring the salaried workers paying contributions.
Benefit structures: merely in cash, transfer based;
proportional; earnings related; expressed in terms of
replacement rate,
Financing mechanisms based principally on social
contribution/payroll financing,
Administrative structures are para-public, involving
social partners in the management of the social insurance
Kassen, caisses, caza….
These institutions explain a lot
• The problems
• The resistance to changes
• The reforms trajectory
The common problems
• Slow growth (slower than the US, the UK
or Scandinavian countries or Eastern
European countries)
• High unemployment, low employment rate
• Huge political resistance against reforms
• Why? In defense of the family wage: labour
shedding strategies
Solutions that create even more
problems
Low -employment rate, high labour cost:
• High unemployment, long-term unemployment,
de-qualification, social exclusion
• The few who work have a lot to pay: high level of
social contribution, payroll tax, high level of
labour cost
• The trap of jobless growth
Reference to Bismarckian institutions for
explaining resistance to changes
• Those most in difficulty, the most difficult
to change
• Explaining resistance to changes:
- entitlements based on work
- contributory benefits
- social contribution
- the role of social partners
Reference to institutions is also
necessary to understand the
changes:
the reforms trajectory
III. A common trajectory?
• Four main steps
(four types of policies and politics):
– Before retrenchment
– The first wave of (path-dependent) retrenchment
(the 1990s)
– The institutional reforms
– The second wave of reforms, the path-breaking changes
of the 2000s
Analysing policy changes:
Five dimensions
• The context
• The diagnosis
(a specific understanding of the context leads to a specific reform)
• The content of the policy
• The politics of the reforms
• The consequences of the reforms
(policy or reforms feed back)
Before retrenchment
Context
Diagnosis
Content of
the policy
Politics of Consequences
the reforms
- Economic
- Social
- Welfare
- Applying
- No big
downturn
benefits
without work
good old
changes to the
can help
recipes
welfare state,
(mid- Raise in
the victims
frozen
1970’s
social
- It is easier to
landscape
onwards), of the crisis contribution
raise social
contributions
- Increasing
- Raise in
- Change in
unemploythe generosity than taxes, and inefficiencies
than cutting of such policies
ment,
of the
social benefits
(raise in
- Social
benefits
unemployment,
budget
stagflation)
deficits
First wave of retrenchment (1990s)
Context
Diagnosis
- Economic
- The
recession
systems
(early 1990s)
have to be
- Single
rescued,
market
consolidated
- Preparation
of the single
currency;
demographic
changes,
- Maturation
of the
welfare states
Content of
the policy
Politics of the
reforms
- Increase in - Negotiated on
the
the basis of
contributivity
clarification
of social
between
insurance
insurance and
benefits
assistance
- Tax
financing of
noncontributory
benefits
Consequences
- From social
to more
individual
insurance
- “Erosion of
share fate”
(Jacob
Hacker)
- Social
exclusion
Institutional reforms
Context
- Postindustrial
economy
- End of
Keynesianism
-Global and
European
orientation:
coordination
of economic
and social
policies
Diagnosis
Content of the
policy
Politics of the
reforms
- Welfare systems
- Increasing
-Virus/seeds strategy,
are the cause of the
importance of new
layering:
crisis: work-based
benefits (universal or - new provision, new
entitlements retargeted), taxinstitution are
enforce social
financed, managed
implemented at a
exclusion; income
by the state
marginal point,
maintenance is
- Expansion of
- on a contradictory
disincentive to work;
private provision
consensus base,
social contribution
- New mode of
- then they develop as
damage
financing, new taxes, to become a second
competitivity and
less social
pillar of the system
create
contribution
unemployment;
- New mode of
corporatist
management (public
management rules
or private)
hinder reform
capacities
Consequences
-Weakening of
social insurance
mechanisms
and actors
Path-breaking changes
Context
- European
Single
Market
- European
Monetary
Union
- Politics
of liberalisation
Diagnosis
Content of the
policy
- Welfare - Multiplication
systems
of pillars in
need a
pension, active
profound
ageing
adaptation - Activation of
to the new
unemployed
economic
- Competition
context
in health
- Diffusion
- Care or
of the
employment
OECD,
policies?
EES, OMC
ideas
Politics of
the
reforms
Consequences
Divisive
reforms
- We are all supplysiders now
- From income
maintenance to
activation, incentives,
employment-friendly
benefits
- Re-commodification
- Dualisation of the
systems (social and
private insurance/
assistance)
The realignment of Bismarckian
welfare systems
• After a U-turn, they have joined the common
social policy agenda:
-Activation of the unemployed
-Multi-pillar pension systems,
-Competition in health care
-Development of care policies
But in a “Bismarckian” way which leads to a deeper
insider/outsider divide, segmentation.