Cutting edge: Peter Taylor-Gooby

December 14, 2001

How resilient are the different welfare systems across Europe as the claims made upon them rise?

Governments across Europe face the dilemma of squaring the welfare circle. Electorates are enthusiastic about the welfare state - health services, decent pensions, benefits and so on. But older populations and rising unemployment mean the costs of provision are rising. At the same time, taxes are unpopular, governments fret about the impact of tax on labour costs, and growth rates head downwards. Europe's single market sharpens competition, and Maastricht rules squeeze deficit financing. If governments want to provide (popular) health services and pensions, they must raise (unpopular) taxes.

One of my research interests is attitude surveys, which show the enduring popularity of the welfare state as well as the tendency of most respondents to identify groups obviously richer than themselves who should be the ones to pay for improvements. A second interest is comparative work. With colleagues in European Union countries, I have been looking at welfare systems across the EU.

Our initial findings paralleled those of several other studies: welfare states are remarkably resilient. Expenditure does not grow quite as fast as it did in the past, but more is spent every year. Everywhere there is concern to contain costs. Many reforms have been designed to make welfare services more cost-efficient or reduce spending commitments. The different welfare states also develop new services to meet the risks of modern life. Everywhere there are changes to support women entering paid work - in childcare, maternity (and paternity) employment rights, access to pensions when contribution records are interrupted and so on. Unemployment policies have become more interventionist, both through training to improve human capital and through "workfare" schemes, which strengthen work incentives by making alternatives less attractive.

At the same time, it is striking that the various national differences in the character of welfare states endure: Nordic welfare states remain generous, extensive and committed to an inclusive ideal of citizenship; the Bismarckian continental models of Germany and France spend nearly as much, but link entitlements more closely to the work record through social insurance, and are less woman and family-friendly; Mediterranean welfare states are still skewed towards pensions and healthcare, but have increased spending rapidly to approach EU averages; the United Kingdom pursues its mid-Atlantic course, committed to universal healthcare but with extensive means-testing and a large and growing private sector, especially in pensions.

All this is optimistic, if you like welfare states. It reinforces the view that European polities meet the challenges they face with remarkable effectiveness. Real pressures lead to some stringency, but the different national systems retain their essential character.

However, after this work was published, we re-examined our methodology and realised that it was somewhat simplistic to expect governments to abandon established and popular policy directions in short order. To understand future policy trajectories, it is helpful to examine the processes whereby reforms are being constructed and implemented, as well as current output in terms of provision or spending. This path has led to more work, looking at possible future scenarios through an examination of the machinery of constitutions, institutions and parties and the political actors pressing for different changes.

Our new work reveals a less stable picture. The constellation of forces that sustained particular patterns of provision is showing signs of re-alignment. France - often seen as an exemplar of stability because attempts to impose radical cuts to the state pension system in 1995 were defeated by a national strike - is a case in point. More recent developments have seen the government take the power to set budgets for insurance funds (leading to cuts from 1997 onwards) and establish tax-exempt private long-term savings schemes (pension funds in all but name). In Germany and now Sweden, private pensions are being introduced alongside state schemes. The state may be moving gradually away from its position at the centre of the welfare stage.

This leads to two conclusions. First, method - how research is pursued - has a strong influence on the conclusions reached. Those who look backwards over trends in statistics of welfare output tend to see continuity, while those who examine shifts in policy-making machinery see indications of possible change.

Second, the future of welfare in Europe may not be like the past - and that thought is not altogether comfortable for those who admire state welfare as one of the great European achievements.

Peter Taylor-Gooby is professor of social policy in the School of Social Policy, Sociology and Social Research at the University of Kent and editor of Welfare States under Pressure (2001), Sage Publications, £16.99.

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