As far as this last measure – full female employment – is concerned, the welfare state plays a very important role, because it allows for the coexistence of female employment and fertility: by providing social services and parental leave rights, it encourages mothers to work. This has been very successfully achieved in the Scandinavian countries, inversely to what happens in Spain and Italy, with the lowest rates of female employment in Europe.
Although there is evidence that high labour costs and stringent job rights prohibit job growth, privatization of social security may not offer a real solution: first, because private plans depend on favourable tax concessions, thus lowering the state’s income and requiring public subsidization; secondly because these plans tend to inhibit work mobility by making the workers fear to lose their benefits; thirdly, like social security, the private plans also impose high labour costs. Recent decades have seen this kind of private plans being replaced by individual contribution plans.
Nevertheless, the belief that the welfare system leads to inefficient and unproductive bureaucracy, that it can exacerbate poverty by creating cycles of dependence, and that expenditure on the welfare system cuts private investment have been the creed of the first retrenchment policies I am going to talk about, those that Andersen calls ‘the neo-liberal route’. This route was adopted in the 1980’s by a number of countries like Australia, Canada and New Zealand. However, it was in Reagan’s United States and Thatcher’s Britain that it reached its maximum exponent.
This technique of roll-back relies on deregulatory, market-driven strategies, social policies such as reducing or abolishing minimum wages, greater selectivity, and policies of ‘workfare’. A basic assumption of the American model is that the market should provide the basic public safety net. Market decay, however, meant significant decline in private coverage in health and pensions, especially in the 1980’s. Wage deregulation, also a key-feature of this model, produces rising inequality and poverty. This is enhanced by post-industrial work trends, which favour skilled labour at the expense of unqualified labour, increasingly low-paid.
In Canada and Australia, the polarization caused by the roll-back policies was much less pronounced. These countries aimed at a targeting of the welfare provision: eligibility was decided on the grounds of income or tax returns, and the goal was to ‘preclude the rich rather than to include only the demonstrably poor. ‘(The Three Worlds of Welfare Capitalism, p. 16). Both in Britain and the US, this route has proved to foster precarious jobs, involuntary part-time, homework or self-employment, leading to increasing polarization.
The problem is thus, while the general amount of wealth augments, its redistribution fails to happen – some have even suggested that this kind of policies would create a new underclass. What is more, evidence shows that the actual degree of achieved roll-back was very modest: even in the US, the welfare expenditure remained stubbornly high, and the overall levels of expenditure were not reduced significantly. A common explanation to this is that roll-back policies have to face the opposition of the middle-classes and workers, the fact that it is much harder to take benefits away from people than to give them in the first place.
However, if we look at the 80’s, the trade unions’ power was significantly reduced, and thus should have allowed for less opposition and a greater success of roll-back. ‘Social investment’ could be an alternative to draconian roll-back. Here the idea is to create active labour market programs that incentive people to work and train the population in the kinds of skills demanded by post-industrial societies. Such has been the dogma of the Scandinavian administrations for decades. The second model I shall focus on is, thus, what Andersen calls the ‘Scandinavian route’.
During the 1970’s and 80’s, these countries had to rely on the expansion of the public sector as a means to contrary unemployment. They did this to such extent that, by the mid-eighties, public sector jobs accounted for 80% of total net jobs in Sweden and Denmark. Nowadays, however, this figure has been reduced to 30%. The ‘Scandinavian route’ also supports policies to the full-employment of women, so as to maximize the state’s income – however, as we have seen, these policies can lead to diminishing fertility, which is undesirable from the point of view of the sustainability of the welfare-state.
To avoid decrease in fertility, the Scandinavian adopted high provisions for paid maternity and paternal leave. This has proved successful only to a certain extent: today there is great gender segregation – women are concentrated in the public sector, and private companies will rather hire men to whom they don’t have to grant such costly privileges. Scandinavian countries also have nowadays a great proportion of unskilled, albeit well-paid, jobs, produced by a social services-led strategy. Like the case of the US, this suggests a trade-off between either mass joblessness, or mass suboptimal employment.
However, the Scandinavian suboptimal jobs, unlike the United States’, offer decent wages and social security, because they’re offered by the public sector. This kind of welfare system can only be sustained by very important progressive taxes and fiscal control. Nevertheless, even in the Scandinavian model, benefits are more and more related to contributions, and workfare programs also play an increasing role, with training and work requirements being introduced as a condition for unemployment insurance.
So, as Andersen concludes, ‘in most countries what we see is not radical change, but rather a ‘frozen’ welfare state landscape’. Pierson offers an explanation to the little success met by these policies, based on three main factors of resilience of the welfare state: the first is the emergence of new interest groups, which become increasingly well-organized and unite to protect their common interests. In fact, these groups come into being when faced with the threat of cutting-back on their privileges – this is the case, for instance, with students or pensioners.
The second factor of resilience is what Pierson calls ‘lock-in effects’, i. e. , a kind of immobility that prevents the changing of a system just because changing it would be too costly or hard – for instance, the retirement of millions of Americans had been planned according to a previous system, thus preventing, or making it much more difficult, to change. The third reason why roll-back policies had such a limited success, Pierson points out, is that it is very risky, in electoral terms, to cut welfare expenditure.
Thus, to answer the initial question, I think it would be right to say that to predict an eminent dismantlement of the welfare state is to understate its importance in our societies. Welfare states have proved to be remarkably resilient, and roll-back policies were unable to effectively reduce overall expenditure. Currently, in Britain, the government has even committed to higher spending on NHS. It is nevertheless true that changing demography will increase pressure towards change, and probably reveal the need for a continuous process of restructuring.
The issue of the future developments of the welfare state are likely to remain a matter of conflict over the next few years. The reason why this issue has become such ‘an endemic feature’ is that, as we have seen, there is no solution for the problem; as even the so-called Scandinavian model today struggles to achieve its egalitarian goals. What is more, nowadays, the conflict over this problem is indeed the conflict on whether to favour equality over full-employment, or vice-versa.
It is, I think, an increasingly ideological issue, a matter of belief, and that accounts for much of the conflict that has been – and for that which is still to come – on its fate.
Bibliography: Welfare States in Transition, ed. Esping-Andersen, G. , 1996 The Three Worlds of Welfare Capitalism, Esping-Andersen, G. , 1990 Dismantling The Welfare State? , Pierson, P. , 1994 ?Sara Serras Pereira January 2006 1 Show preview only The above preview is unformatted text This student written piece of work is one of many that can be found in our University Degree Social Work section.