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What explains the „unfreezing“ of continental European
welfare states? The socio-structural basis of the new politics of pension reforms
Silja Häusermann
European University Institute, Florence
Prepared for delivery at the 2009 conference of the Swiss Political Science
Association, January 8th-9th 2009, St. Gallen, Switzerland
Abstract
Over the last decade, the main puzzle in the analysis of continental European welfare states has shifted from the explanation of stability to the explanation of change. Rather than being “frozen landscapes”, most continental welfare states have indeed undergone far-reaching retrenchment and restructuring, even in the field of pensions, which supposedly is the most „path dependent“ welfare policy. Moreover, even left-wing political parties and even trade unions have played a major role in cutting back existing pension rights in several countries. How can we explain the contents and coalitional dynamics of these reforms? This contribution reviews four existing hypotheses for the explanation of the recent welfare reforms, arguing that all of them leave major questions unanswered. It then proposes a fifth hypothesis, arguing that we need to link the analysis of policy-making by parties and unions with an analysis of the changing socio-structural constituencies these actors represent. When looking empirically at the profile and preferences of the electorate and membership of parties and trade unions, it can be shown that the recent reforms cater to new constituencies, rather than the blue-collar workers, who were the core beneficiaries of the industrial welfare state. However, since the left-wing electorate has become very heterogeneous, the left is increasingly divided in policy-reforms. Empirically, socio-structural transformations and the preference profiles of constituencies in Switzerland, Germany and France are analyzed by means of survey data. In a second step, an analysis of collective actor positions in the reform space shows how these micro-level transformations affect the coalitional dynamics in three major pension reform processes in the early 2000s. Methodologically, I use factor analysis to analyze the dimensionality of the policy space, and the configuration of actors in this space.
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Introduction1
Over the last decade, the main puzzle in the analysis of continental European welfare
states has shifted from the explanation of stability to the explanation of change. The
very influential neo-institutionalist literature of the 1990s argued that continental
welfare states are “frozen landscapes” (Esping-Andersen 1996), in which endogenous
dynamics of increasing returns and power asymmetries foster institutional inertia and
path-dependence, thereby making far-reaching change electorally risky and highly
unlikely (Pierson 1996, 2001). The arguments of this literature seemed very
convincing: the insurance-based and contribution-financed continental social policy
schemes create – by means of a policy feedback - their own constituencies of
beneficiaries and “regime stakeholders”, which oppose any retrenchment or re-
allocation of resources further down the road. Governments who want to transform
existing policies face a tremendously difficult task, because they face increasing
groups of reform opponents, which may punish them for retrenchment at the next
election. Hence, there exists a status quo-bias in the institutional architecture of
continental welfare states, whereby they become “trapped” in a vicious circle of
increasing problem load (high labor costs, low employment rates, economic
downturn, demographic ageing) and a structural inability to reform.
However, as convincing as this analysis was, far-reaching welfare state reforms in
most continental welfare states from the late 1990s onwards soon proved it wrong.
Even pension regimes, where institutional policy feedbacks are strongest, underwent
deep changes all over continental Europe. Not only have pension rights of the
standard insured been lowered, but most countries have genuinely restructured their
pension-architecture by devising entirely new “pillars”, such as capitalized pension
savings schemes, means-tested minimum pensions or specific pension rights for labor
market outsiders and women (see, e.g. the works of Vail 2004, Palier 2002, Natali and
Rhodes 2004 on France; Bonoli 2000, 2001 on Switzerland: Nullmeier and Rüb 1993,
Hering 2004 and Busemeyer 2005 on Germany; Rhodes 2001 and Natali and Rhodes
2004 on Italy; Chulià 2002 and Natali and Rhodes 2004b on Spain; and Schludi 2005,
Häusermann 2007 and Bonoli and Palier 2007 for comparative analyses of continental
1 I would like to thank Christoffer Green-Pedersen, Bruno Palier, Herbert Kitschelt, Jonah Levy, Mark Vail, Adrienne Héritier and Vivien Schmidt for helpful suggestions and comments. A previous version of this paper was presented at the annual meeting of the American Political Science Association, August 29th-31st, Boston, USA.
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pension regime change). The most surprising aspect of these reforms is the enactment
of considerable benefit cuts in the general public pension levels, because these cuts
were expected to encounter the opposition of almost all future and current pensioners
(Pierson 1996, Schludi 2005). In addition, the expansive reforms elements that were
enacted benefit mostly to higher income groups (as in the case of new savings
opportunities for capitalized pensions) or to new social risk groups, i.e. women and
atypically employed (as in the case of means-tested pension minima or pension credits
for the upbringing of children), which are generally only weakly represented in
political parties, trade unions and parliaments (Bonoli 2005, Häusermann 2007).
Hence, all these changes are precisely the kind of distributional reforms
institutionalists would not expect to happen. Therefore, the current literature
increasingly tackles the question of change, not stability. As Starke puts it: “the
scientific puzzle has gradually shifted from the question as to why welfare states have
not been dismantled to the question as to why (and how) cutbacks have nonetheless
taken place in democratic political systems.” (Starke 2006: 106).
How can we explain these changes? Why did and why could governments take the
electoral risks attached to these reforms plans? There are four existing hypotheses and
explanations in the literature, and I will review them in the first part of this
contribution. Two explanations deal with governments’ ability to avoid blame for
retrenchment, by hiding the reforms (e.g. Pierson 1996) and by discursive framing of
them (e.g. Green-Pedersen 2002, Stiller 2007). A third hypothesis relies on party-
competition: governments can cut back if voters have no opportunity to punish them
at the polls (e.g. Kitschelt 2001). And a fourth explanation focuses on the ability of
governments to selectively compensate some losers of the reforms (e.g. Natali and
Rhodes 2004b, Schludi 2005, Levy 1999). However, all of these explanations leave
major questions unanswered: Why and how can politicians fool voters? Why would
all voters be convinced by a similar discourse? How can governments construct
sufficient majorities for pension restructuring? And why would left-wing parties
propose retrenchment in the first place?
In this contribution, I propose a new explanation of policy change, which links the
changing architecture of continental pension schemes to socio-structural change of
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party electorates and trade union constituencies. The model of reform dynamics I
propose can be seen as a socio-structural complement to the arguments of
compensation and political exchange mentioned above. I would like to demonstrate
that these reform packages have an underlying structural rationale: we cannot make
sense of the specific content of these packages if we do not consider that party
constituencies and their preferences have changed over the last decades. Left-wing
parties today represent a heterogeneous amalgam of working- and middle-class
voters, which differ very strongly in their views as to how and for whom states should
provide public welfare. I argue that when looking at these socio-structural
transformations of the policy space, the recent reforms become much less surprising.
Rather, they do make sense even in electoral terms.
I focus my theoretical framework and my empirical investigation on pension policy,
because pensions are considered to be a “hard case” for reform. They entail a lot of
strongly vested interests and power asymmetries, and are most unlikely to change.
The contribution is structured as follows: In a first party, I review the four existing
explanations of pension regime change. In a second part, I will develop my argument
on the socio-structural changes that underpin the current pension reform dynamics.
After a brief section on data and methods, I will test and illustrate this fifth
explanation empirically in two steps: first, I will show the transformation of party
electorates and trade union constituencies by means of individual-level survey data
and secondly, I will show empirically how these changes played out in three major
pension reforms in Germany, France and Switzerland in the early 2000s.
1. Theoretical framework: Four explanations of the unfreezing of continental
welfare states
All four existing explanations of the recent reform dynamics in continental pension
regimes are very actor-centered. They all focus on the achievements of particularly
lucky, or strategically and rhetorically gifted leaders, and thereby they have a
somewhat heroic and voluntaristic undertone.
According to Pierson (1994, 1996), the reform of mature welfare states in a time of
permanent austerity becomes an exercise of blame-avoidance, because almost all
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voters are stakeholders of the mature social insurance schemes. Consequently,
governments must find ways to shift, avoid or deal with the blame that comes with
welfare retrenchment. The first two explanations for recent change suggest that some
governments find ways to enact unpopular reforms, and not be blamed for doing so.
1.1. The obfuscation argument: hiding the consequences of reforms
In the early articles in which Pierson outlined his neo-institutionalist
conceptualization of the new politics of welfare state inertia (Pierson 1994, 1996), he
also argued that one of the remaining means for governments to enact retrenchments
was “obfuscation”, i.e. the concealment of the negative consequences of reforms. The
argument suggests that strategically skilled elites would enact cutbacks not directly in
level of benefits (such as e.g. lowering the amount of a full pension), but via other,
more technical and less obvious reforms. Examples could be the lowering of pension
indexation, or the extension of the required contribution period for a full pension2.
The obfuscation-argument assumes that voters are much less aware of parameters
such as indexation and calculation formula than of other policy parameters such as the
age of retirement or the amount of a full pension.
Some evidence seems to confirm this assumption, since governments indeed started to
cut back pension indexation in the late 1980s before turning to the plain cutbacks of
pension levels (Pierson 1996, Schludi 2005, Häusermann 2007). However, there are
both theoretical shortcomings and empirical counterevidence to the obfuscation-
argument. Empirically, there have been very clear-cut pension cutbacks in many
countries over the last years. The increase of women’s retirement age to 65 in
Switzerland or the introduction of the legal age of retirement from 65 to 67 in
Germany are just two examples. Also in Germany, the target replacement rate has
been lowered from nearly 70% to less than 50% only between 2001 and 2005
(Häusermann 2007). These are reforms that were very visible, heatedly discussed and
yet implemented. But the theoretical counter-argument is even more important: it is
hardly convincing that in a democracy, governments and elites can “fool” voters with
cutbacks going unnoticed, because there are controls: the opposition parties, the
2 If pensions are not indexed on inflation of prices (or wages), they fall “automatically” in real terms over the years. Similarly, if the required contribution period for a full pension is extended from, say, 40 to 43,5 years (such as in France in the 1990s, see Palier 2002), this actually equals an increase in the legal age of retirement or – given that most contributors do not have sufficiently long careers anymore – a lowering in the pension levels.
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media, independent experts, interest organizations all have expertise in this field.
They know and they can evaluate what it implies not to index pensions or to increase
the number of required contribution years for a full pension. If we assume that politics
is made by strategic actors behaving rationally within the limits of their knowledge –
which Pierson clearly does assume -, it is unlikely that governments can obfuscate the
consequences of reforms. Hence, the obfuscation-hypothesis falls short in answering
several questions: why would voters be ignorant, and why is there no opposition,
expertise, and counter-evidence to the government reform proposals and strategies?
1.2. The framing argument: Convincing voters of the necessity of retrenchment
The second explanation of retrenchment also implies a somewhat heroic assumption
of policy leadership. In this perspective, reforms are the achievements of political
leaders, who manage to convince a majority of the electorate of the necessity of the
proposed changes. Most authors who rely on this hypothesis conceptualize policy
discourses in terms of framing strategies. Stiller (2007) analyzes German pension,
labor market and health policy reforms by referring to the “ideational leadership” of
strong politicians such as German ministers Walter Riester or Wolfgang Clement. In
the field of pensions, Riester managed to frame the introduction of the private,
capitalized pension pillar as a means to save the traditional PAYG-system. Similarly,
Hering (2004) observes that the Social Democratic government had a very strong
discourse on the need and inevitability of retrenchment, which changed the perception
of reforms in the public opinion. The interaction of strong problem load and the
reformist discourse created a window of opportunity for “creative opportunism” of
party leaders and governments (Hering 2004). Green-Pedersen also bases his
explanation of retrenchment policies in Denmark and the Netherlands on the ability of
governments to present cuts as legitimate. A strong party consensus on the direction
of reform allowed the Dutch government in the 1980s to implement retrenchment
(Green-Pedersen 2002). All three authors explain reform politics as a top-down
process, where leaders convince voters of the need for reform. Vis and van
Kersbergen (2007), by contrast, analyze leaders’ and voters’ preferences separately,
but they, too, suggest that reforms occur when both sides are convinced that it is
necessary and justified to cut back benefits. Based on prospect theory, they argue that
if both voters and governments are convinced by the necessity of reform, they may
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become risk-seeking and engage in reforms. Again, governments influence the
evaluation of the reform-necessity by the voters by framing reforms.
It is certainly true that policy leaders develop discourses to legitimize unpopular and
hurtful reforms. But it remains unclear why voters would adhere to these discourses,
if the reforms really cut back their own benefits. It is even less clear why all voters
would adhere to a same discourse or a single “frame”. As with the obfuscation-
argument, leaders are again assumed to be highly rational and even manipulative,
while the electorate is viewed as far less rational. One could argue that voters may
well believe in the overall necessity for reforms, but still oppose the cutbacks of their
very own, individual benefits. In addition, one would expect the opposition or trade
unions to develop counter-discourses in order to challenge the dominant frames.
To some extent, both hypotheses – “obfuscation” and “framing” - are somewhat
“apolitical”, since there is no political power struggle between reform winners and
reform losers over different policy options or over different discourses. Voters are
either fooled or convinced by leaders, and they let themselves be fooled or convinced.
Such explanations assume a strong rationality of political actors, but lack a
theorization of the response to framing or obfuscation strategies.
The third hypotheses one finds in the literature does not rely on blame-avoidance, but
on power relations. Actors can enact retrenchment, if they are in a position in which
they can afford taking the blame for it.
1.3. The electoral argument: Nixon goes to China
The third explanation of retrenchment suggests that governments may implement
unpopular reforms, if they have little to fear in electoral terms. There are two variants
of this hypothesis, one based on party competition (Kitschelt 2001, to some extent
Green-Pedersen 2002) and one based on issue-ownership (Ross 2000). Both theses
want to explain how we can understand that left-wing governments actually seemed
even more successful in enacting cutbacks than their conservative competitors.
Kitschelt’s argument is very straightforward: governments can afford retrenching if
voters have no alternative to turn to in the next elections. In Germany, the red-green
government that was in place between 1998 and 2005 managed to enact retrenchment
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reforms in many fields, notably pensions and unemployment insurance. These
cutbacks were similar to the ones the right-wing Kohl government tried to implement
in the mid-1990s. However, while the Kohl government suffered a dramatic defeat at
the polls in 1998, voters were somehow at a loss of alternatives when it came to
punishing left-wing governments3. They still perceived conservative parties as an
even bigger threat to the welfare state than the left-wing government parties. Fiona
Ross (2000) also builds on this idea of voters’ perception of specific party policies. In
line with saliency theory of party competition, she assumes that parties “own” specific
issues or policy fields, in which voters estimate that they are particularly competent.
Hence, if both left- and right-wing governments enact the very same reforms, they are
not perceived in the same way by voters4. This argument can be labeled “Nixon goes
to China”, referring to the fact that Nixon was the first American President to be able
to go to China, precisely because nobody suspected him to have any kind of approval
for the communist regime. In short, “voters do not trust rightist parties to reform the
welfare state, … Cuts imposed by the left may be viewed as trade-offs for increased
spending in other policy areas, absolute essentials, strategic necessities, or, at a
minimum, lower than those that would be experienced under parties of the right”
(Ross 2000: 164).
Both lines of this third explanation for changes convincingly explain why Social
Democratic governments in Germany and the UK were – at least in the short run -
able to implement some of the harshest welfare reforms of the last decades. However,
there are two things that these explanations cannot account for: firstly, in some
countries, right-wing governments successfully enacted policy retrenchment, as well.
France is a prime example, where the Balladur government in 1993 and the Raffarin
government in 2003 enacted considerable pension cuts (Palier 2002). Similarly,
pension cuts in Italy took place under technocratic and conservative, not left-wing
rule (Natali and Rhodes 2004b). In addition, the Nixon-goes-to-China logic may
explain why left-wing governments could enact retrenchment, but it leaves a very big
question mark as to why they would want to do so in the first place. As Starke notes:
3 Meanwhile, of course, the Social Democratic party split precisely because of this unpopular reform agenda of its government, and the „Linkspartei“ today represents the left-wing alternative voters were lacking in the early 2000s (Picot 2008). 4 With regard to the New Labour-reform agenda in Great Britain, Ross demonstrates that many reforms of the Blair-government attracted support, even though similar conservative proposals arouse strong opposition (2000: 161).
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“the underlying motivation for cutbacks is still little understood”. Ross (2000: 160)
refers to “genuine non-leftist preferences of certain party leaders” and that
governments changed their conceptions of viable policy options, but this seems both
ad personam and functionalist.
The fourth explanation of change does not build on blame-avoidance, either, but
rather on credit-claiming strategies. Governments target welfare reforms at particular
groups, in order to make them politically acceptable.
1.4. The strategic argument: “Vice-into-virtue” and selective package deals
The starting point of this fourth explanation of welfare reforms is that these reforms
are not just about retrenchment, but also about a genuine restructuring of the
distributive consequences of welfare regimes (Ross 2000: 158), entailing both losers
and winners. Again, this argument comes in two ways: selective compensation (Natali
and Rhodes 2004b, Bonoli 2000) and “vice into virtue” (Levy 1999).
The compensation-argument turns the focus of the new politics-literature away from
retrenchment only and tries to bring in the multiple goals and reform strategies that
characterize current welfare reforms. Natali and Rhodes (2004b: 5) identify four goals
that policy-makers may pursue: financial viability, economic competitiveness, equity
and effectiveness. Governments may tie reform packages that combine different
goals, thereby catering to different interests in specific ways. Trade unions in the
Italian pension reforms, for instance, could be compensated for retrenchment by
means of stronger organizational powers. Similarly, governments in France and Italy
mitigated opposition to pension cutbacks by excluding current pensioners – and
public sector pensioners in France - from the reforms. Bonoli and Palier (2007) have a
similar argument: most pension reforms in continental Europe are phased in over a
very long period of several decades. Thereby, current pension beneficiaries who are
expected to be among the most ardent defenders of the status quo are compensated
and their opposition diminished (see also Anderson and Lynch (forthcoming) for a
more elaborate analysis of the conditions under which pensioners’ interests influence
the positions of trade unions). Schludi’s (2005) account of the reforms of Bismarckian
pension regimes can be read in a similar way: governments make concessions to
potential veto players, such as trade unions, in order to mitigate their veto power.
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It is certainly true that most pension reforms exempt current pensioners from heavy
cutbacks, thereby shifting the entire burden of retrenchment to the young. However,
the active population still represents an electoral majority in all European
democracies, and the exemption of the elderly from cutbacks aggravates the benefit
cuts they suffer themselves. Hence, it remains difficult to understand why these
reforms can be enacted without major opposition. It seems unlikely that the
exemption of the elderly or some organizational competencies for trade unions suffice
to construct a sufficient majority for these reforms.
The second variant of the strategic argument resolves this question by arguing that the
recent reforms combine several beneficial effects into “modernizing compromises”
(Bonoli 2001) or “virtuous” policy reforms (Levy 1999, 2001), which simultaneously
enhance the efficiency and equity of continental welfare regimes. Thereby, the
reforms contribute to a more equitable and efficient welfare state, and thus enjoy
sufficient legitimacy. Levy’s argument starts from Esping-Andersen’s (1990)
observation that continental welfare regimes are highly inegalitarian: “they are
fiscally regressive, too generous in some areas while not generous enough in others,
discriminatory against women wage earners, and dissuasive of job creation” (Levy
1999: 245). Governments may target specific inequities or “vices” – such as over-
generous public sector pensions or universal child allowances that are paid even to
middle- and upper-class families – and reallocate spending to the truly needy (i.e. the
poor in Levy’s account (1999) and new social risk groups in Bonoli’s
conceptualization (2005)). Levy (1999, 2001) sees this “vice into virtue”-strategy as a
means for (left-wing) governments to provide resources to their own constituencies
without increasing overall government expenditures (Levy 1999: 247, 256).
Of course, the idea of welfare reforms, which allow overcoming the equity-efficiency
trade-off by taking money from those who don’t really need it and redistributing it to
the truly needy is appealing. However, in a perspective of distributional politics, it can
hardly be overlooked that there are not just winners of these reforms, but also losers,
namely the middle- and higher-income earners, who lose their benefits and privileges.
Moreover, these social strata tend to be more organized and better represented in the
political arena than the poor or the victims of new social risks (i.e. mostly women and
atypical, precarious workers). Hence, the question remains how governments can
possibly overcome the opposition of the powerful against these reforms? Again, how
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can they gain majorities for their reform packages? Why would the higher income-
classes agree to cutbacks of their own benefits?
In the next section, I would like to develop a fifth explanation of welfare reforms that
is very close to this fourth explanation, but complements it with a conceptualization of
actors’ motivations. I also hypothesize that governments focus on credit-claiming,
rather than on blame-avoidance, and they tie specific reform packages in order to
receive sufficient support in the electorate. However, I do not assume that
governments are heroic and opportunistic leaders who arbitrarily grant benefits to
specific groups. Rather, I suggest that political actors defend the relatively narrow
interests of their constituencies. And since the constituencies of the major parties –
particularly on the left – have deeply transformed over the last decades, the policies
these parties advocate have transformed, as well.
2. A socio-structural argument: new conflict lines underlying coalitional reform
dynamics
With the model of change I propose in this contribution, I would like to add a socio-
structural basis to the conceptualization of reforms in terms of policy-packages. In
much of the compensation- or political exchange-literature, decision-makers are
“creative opportunists” (Hering 2004), i.e. skillful leaders who deliberately choose
particular reform goals and combine them in a strategic way. Authors such as Natali
and Rhodes (2004b) analyze the strategies of governments as almost completely
detached from the interests of their actual party constituencies. Others, such as Levy
(1999) take it for granted that the left represents the poor and underprivileged, without
testing this assumption empirically. In contrast to these approaches, I would like to
point out that these package deals are not the fruit of fortuitous coincidences or
macchiavellistic policy-makers, nor are they miraculous win-win-solutions that
overcome hard distributional choices. Rather, post-industrial welfare reforms are
indeed to a large extent a zero-sum-game, since resources are scarce and the needs
and demands of different social groups diverge strongly. Therefore, these reforms can
be traced back to the interests of particular social groups, i.e. they have an underlying
socio-structural rationale.
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My argument is that the transition to post-industrial societies has transformed the
constituencies of political parties and the clientele of major trade unions. If we
understand these socio-structural transformations, we can better explain why the
collective actors enter seemingly “surprising” alliances and why they propose these
packages and political exchanges. In brief: there is a structural basis and explanation
for the recent welfare reforms.
Surprisingly, this transformation of party and union constituencies is oftentimes
overseen. Some of the most prominent literature on current Social Democracy and
left-wing policies (e.g. Rueda 2005, 2007; Levy 1999, 2001; Natali and Rhodes
2004b) still assumes that the left advocates the interests of the “average production
workers”, i.e. the male, industrial, low- or semi-skilled worker with a modest income
and a standard employment biography. However, in a post-industrial society, the
average production worker becomes an “endangered species”, i.e. he is certainly not
the average wage-earner anymore, nor is he necessarily the typical left-wing voter
(Kitschelt 1994). Recent studies even show that blue collar workers are as likely to
vote for populist right-wing parties than for the left (Oesch 2006, Bornschier 2007,
Häusermann and Walter 2008). A meaningful conceptualization of today’s party
constituencies and their interests requires an adaptation of the industrial class scheme
to post-industrial conditions.
The post-industrial transformation of the economy and labor markets in continental
Europe has been driven since the 1960s by mainly three trends (Oesch 2006):
Deindustrialization, i.e. job growth in the service sector and a decline of the
industries; the educational revolution, i.e. an expansion of the new middle-classes
(Kriesi 1997); and the feminization of the labor force, i.e. the massive entry of women
in the labor market. These trends have deeply transformed the class structure of the
labor market, by creating new classes of privileged or under-privileged workers,
horizontal differentiations of the middle-classes and – thereby – new conflict lines.
Oesch (2006) has developed such a new post-industrial class scheme that takes into
account not only the vertical stratification of opportunities and interests, but also the
horizontal differentiation with regard to work sectors and work logics5. This new class
5 The horizontal axis differentiates occupations in terms of the dominant work logic: an independent work logic implies a lot of autonomy and a focus on the economic goals of efficiency and profitability. People with a technical or organizational work logic are in jobs that are oriented towards the
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scheme is most helpful for the analysis of current party constituencies and interests.
Kitschelt and Rehm (2005) have collapsed the original 9 categories in 5 classes that
are meaningful in terms of their welfare-state preferences and values: capital
accumulators (CA), mixed service functionaries (MSF), low service functionaries
(LSF), blue collar workers (BC) and socio-cultural (semi-)professionals (SCP) 6.
My argument is that the constituencies of political parties have changed in terms of
these classes, and that these changes are key for explaining recent welfare state
restructuring. The transformations have probably been strongest on the left side of the
political spectrum: the left today draws mostly on a combination of blue-collar
workers (BC), low-skilled service sector workers (LSF) and high-skilled socio-
cultural professionals (SCP). Social democratic parties tend to be torn between two
poles: on the one hand, they still represent their “old” industrial constituency (BC), organizational goals of their employer or the production efficiency. By contrast, the work goals of people in interpersonal occupations are focused on the people/clients/patients, with whom they interact directly. The vertical axis represents the structuration of income- and skill-differences between different strata. For a classification of occupations see appendix figure A1. 6 Capital accumulators are higher-grade managers, employers, self-employed in liberal professions (physicians, lawyers etc.) and technical experts. They are highly skilled and tend to work in private industries or services. Socio-cultural (semi-) professionals, by contrast tend to work in non-profit or public organizations, or in the service sector. They are typically employed in client-interactive and “symbol-processing” jobs (teachers, therapists etc.) with large work-autonomy. On the low-skilled side of the vertical stratification, there is an important distinction between blue-collar workers and low service functionaries. This differentation coincides to some extent with a sectoral public-private divide; the low-skilled services are very frequently employed in the public sector (personal services), whereas blue-collar workers concentrate in private crafts and industry (metal industry, chemistry, mining and construction etc.). It should be noted, however, that low-skilled service employment is also strongly represented in retail commerce, hotels and restaurants and other private services. Finally, Mixed service functionaries are a residual category; they possess a rather heterogeneous profile in terms of skills and work logic.
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but since the 1970s, the “new left” also mobilizes strongly among higher-skilled
middle-classes, women, and public sector workers (Kitschelt 1994). These new
sections of the left electorate are neither the core beneficiaries of continental welfare
states (since many of them are female, atypically employed etc.), neither are they the
social groups with the strongest poverty risks. Hence, if social democratic parties start
advocating some sorts of cutbacks, this may not represent a “depoliticization of
policy-making” as stated by Natali and Rhodes (2004b: 23), but it may rather
correspond to the interests of a new part of their electorate. Green parties are a
particularly pronounced version of the new left: they attract mostly high-skilled,
female voters in interpersonal work relations and with a strong libertarian value
profile. By contrast, trade unions tend to remain more strongly rooted in the
industrial, rather than the service sector, and among male workers in standard
employment (Ebbinghaus 2006). However, the labor movement today has also
become very heterogeneous: different sectoral trade unions are likely to diverge in
their interests, depending on the skill-levels and job profiles they represent
(Häusermann 2007). Hence, when Natali and Rhodes interpret the labor movement as
“the self-appointed defender of the pensions status quo in all countries of continental
Europe” (2004b: 1), this assumption may be too simple. Finally, changes of party
constituencies have not only affected the left, but also the right. Blue collar workers in
continental Europe are increasingly likely to vote for right-wing, even far-right
parties, because of their very conservative value profile (Kriesi et al. 2006, Bornschier
2007).
Given these socio-structural changes, the left today represents a variety of social
groups with highly different preferences and goals regarding the welfare state. The
two extremes – blue-collar workers and the new middle-class electorates – differ on at
least three dimensions:
• Their position within the welfare state: The continental insurance schemes were
built for blue-collar workers with stable and full-time employment and a full
contribution period. Today, social risks are concentrated in all employment
categories that deviate from this standard scheme: part-time employed, temporary
employment, interrupted work biographies. These profiles are very common
among socio-cultural professionals and low service functionaries (Häusermann
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2007: 112ff.). Hence, these new risk groups may want to restructure welfare
states, whereas blue-collar workers are expected to defend the status quo.
• Blue-collar workers and the new middle-class voters of the left may also differ
with regard to the level of redistribution they claim: Socio-cultural professionals
tend to be rather highly skilled. They may be less inclined to strong state
interventionism than the lower skill- and income-classes.
• Thirdly, there may be a strong value-cleavage between these groups. The “new
left” is a result of the new social movements of the 1980s (Kriesi 1999, Kitschelt
1994), which mobilized on the basis of libertarian and universalistic values, and
which privileged policies such as (gender) egalitarianism, equal opportunities
policies etc.. These policy priorities are likely to diverge from the value-profile of
the male, industrial working class.
I contend that this restructuring of the socio-structural foundations of party systems
leads to new conflict lines, cross-cutting the old left. Post-industrial welfare politics
imply multiple policy goals and conflict dimensions, which divide actors in different
ways. Such a multidimensionality of the policy-space creates opportunities for
political exchange and variable actor alliances. Hence, if we want to understand why
governments tie the policy-packages that we observe, and why they manage to build
sufficient majorities for them, we need to take into account the socio-structural
foundation of the new politics of the welfare state. This argument also implies that the
restructuring of continental pension schemes is the expression of a more fundamental
restructuring of the underlying socio-structural coalitional basis of welfare state
policies.
3. Data and Methods
In order to test and illustrate my argument empirically, I analyze major pension
reforms in France, Germany and Switzerland. These three countries share both the
continental architecture of their welfare states and the structural transformations of the
labor markets in the wake of post-industrialization. Hence, I expect that the socio-
structural transformations of the policy space and the party electorates are similar.
16
In a first part of the empirical analysis, I investigate the socio-structural basis of
political actors in the late 1990s in France, Germany and Switzerland, by analyzing
the constituencies of parties and unions. I also show the preference profiles of these
constituencies on both the economic dimension opposing state interventionism to
liberalism, and the cultural dimension, opposing libertarian to traditionalist values.
These analyses are based on data from the ISSP role of government III survey 1996.
In a second part of the analysis, I show how these transformations affect policy-
making, by tracing actor positions and coalitional dynamics in three major reform
processes of the early 2000s: the 2003 Raffarin pension reform in France, the 2003
occupational pension reform in Switzerland and the 2001 “Riester”-pension reform in
Germany. For the analysis of these reforms, I have drawn on several sources of data:
firstly, the main elements of each reform have been identified through documentary
analysis (mainly governmental reports and bill proposals, documentation of the
consultation procedure and parliamentary debates) and secondary literature. Secondly,
the positions of each actor on these reform elements have been coded on a scale
ranging from 0 to 2. While 1 means that the actor supports the bill proposal by the
government, 0 means that the actor favors a more generous and encompassing
coverage and, conversely, 2 means that the actor claims a less generous and
encompassing coverage of the risk or need at stake. The positions of the actors have
been coded on four aspects of each reform-element: 1) intervention: whether State
intervention is required to resolve the problem or not, 2) scope: who should be
covered by the policy-instrument at stake, 3) level: which level of benefits should be
adopted and 4) competence: at what state level the intervention should take place
(firms, sectors, substate level…). Hence, each actor has expressed at most four
positions on each reform-element. Since all four elements are strongly interrelated
(they form a single dimension in a principal component factor analysis) the average of
the four positions has then been used in the further empirical analyses.
As to the source for coding, I have mainly relied on actors’ statements in the official
pre-parliamentary consultation procedures, the minutes of hearings, and parliamentary
debates7. I have then complemented the coded data with more qualitative information
7 For the case of France, the positions of unions and employers had to be complemented by means of interviews and archival data, since – contrary to Germany and Switzerland - there are no regular consultations. With regard to actor selection, I have included all actors, who intervened in the
17
drawn from documentary analysis, secondary literature and interviews with leading
representatives of the social partners8. Methodologically, I use factor analysis to
analyze the dimensionality of the policy space, and the positions of the actors with
regard to the salient conflict dimensions.
4. Empirical Analysis
In a first step of this empirical analysis, I will analyze party electorates and the
preference-profiles of socio-economic groups by means of survey data, before then
turning to the analysis of three specific reform processes.
3.1. Socio-structural change of party and trade union constituencies
The main change in the restructuring of party electorates relates to the fact that left-
wing parties are not blue-collar parties anymore. Today, they also attract (middle-
class) voters, and have a strong female and public sector electorate. The ISSP 1996
role of government III survey contains information about social classes, their
preferences in terms of party choice and union membership. In the following, I
present logistic regression analyses of the determinants of party choice in terms of
classes and other relevant socio-structural characteristics. The coefficients are
estimates of the odds of voting for a particular party or for being a union member (for
the party vote shares within classes, see tables TA1-TA3 in the appendix). The main
focus of the analysis is on the voting behavior of social classes. I hypothesize that
socio-cultural professionals and lower service functionaries have become equally
likely to vote for left-wing parties than blue-collar workers.
Table 1 provides the results for Switzerland.
consultation procedures. For the French case, I had to make a selection, since no official consultations take place. I have chosen CGT, CFDT and CGC on the side of trade unions and MEDEF and CGPME on the employer’s side. 8 France: interviews with representatives of the governmental conseil des retraites COR, the employer organizations MEDEF and CGPME, and the trade unions CGT, CGC and CFDT; Germany: interviews with representatives of the employer organizations BDA and ZDH and with the trade unions DBB, DGB, Ver.di, IG Metall and ULA; Switzerland, interviews with representatives of the governmental office BSV, the employer organizations SAV and SGV, the trade union SGB and the political parties CVP, FDP and SPS.
18
Table 1: Party preferences of post-industrial risk groups: Switzerland
Support for the left Support for the right
Green Party
Social Democrats
Union member
Christian Democracy
Moderate right
Radical right
1.023 1.014 0.404*** 0.132* 3.581*** 0.786 Capital accumulators (0.87) (0.39) (0.13) (0.14) (1.62) (0.38)
0.699 1.061 0.760 0.724 3.184*** 1.019 Mixed service functionaries (0.44) (0.27) (0.16) (0.29) (1.26) (0.35)
1.433 2.006*** 0.908 1.248 2.637** 0.619 Socio-cultural Professionals (0.75) (0.45) (0.18) (0.42) (1.01) (0.22)
1.420 1.011 0.695 0.522 3.563*** 0.689 Low Service Functionaries (0.83) (0.28) (0.17) (0.28) (1.52) (0.30) Blue collar workers r r r r r r
0.916 2.021*** 1.039 0.951 0.430** Trade Union members (0.38) (0.33) (0.30) (0.24) (0.15)
1.269 1.512* 1.593** 0.785 1.040 0.915 Public sector employment (0.70) (0.36) (0.34) (0.38) (0.35) (0.41)
0.982 0.940* 1.173*** 1.068 1.115** 1.098* Income in 10 (national) deciles (0.07) (0.03) (0.04) (0.06) (0.06) (0.06)
1.193 0.848 0.951 0.434** 0.450*** 0.674 Gender
(0.50) (0.15) (0.16) (0.14) (0.12) (0.21) 0.025*** 0.188*** 0.138*** 0.055*** 0.023*** 0.061*** Constant
(0.02) (0.05) (0.03) (0.02) (0.01) (0.03)
Observations 1329 1329 1338 1329 1329 1329
Pseudo Rsquare 0.02 0.03 0.04 0.05 0.06 0.03 Values in parentheses are standard errors. *** p<= 0.01 level; ** p <= 0.05 level; * p <= 0.1 level. The dependent variable corresponds to the individual vote for this party Green Party: GPS, GB; Social Democrats: SPS; Christian Democracy: CVP, EVP, CSP; Moderate right: FDP, LdU, LPS; Radical right: SVP, FPS, SD, Lega; Data source: ISSP 1996 Role of Government III. Question wording: "Generally, do you feel affiliated or sympathize with a specific political party (without necessarily being a member)?"
In Switzerland, socio-cultural professionals are even more likely than blue-collar
workers to sympathize with the Green Party and the Social Democrats, and this
difference is statistically significant with regard to the social democratic party choice.
More than 50% of socio-cultural professionals opt for the social democratic party, as
compared to about 39% of the blue-collar workers (see table A1 in the appendix).
Low service functionaries – a class including many women and precariously
employed workers – are also 1.4 times more likely to vote for the Greens than blue-
collar workers. However, blue-collar workers are still the social class with the highest
propensity towards trade union membership. It seems that the labor movement
remains to some extent the stronghold of the old left. Finally, however, blue-collar
19
workers are also most likely of all classes to sympathize with the right-wing Swiss
People’s Party. This is the item on which socio-cultural professionals and blue-collar
workers differ most clearly: only 9.3% of the former, but almost 23% of the latter feel
affiliated to the radical right.
Table 2 displays the results for Germany, where Social Democrats have more clearly
remained a worker’s party than in Switzerland.
Table 2: Party preferences of post-industrial risk groups: Germany
Support for the left Support for the right
Green Party
Communist Party
Social Democrats
Union member
Christian Democrats
Moderate Right
1.183 2.763 0.614 0.278*** 2.403** 2.068 Capital accumulators (0.53) (1.98) (0.24) (0.10) (0.88) (1.14)
1.342 0.588 1.288 0.672 1.851* 1.214 Mixed service functionaries (0.52) (0.49) (0.39) (0.20) (0.60) (0.70)
1.742 3.261* 0.662 0.373*** 0.993 2.732* Socio-cultural Professionals (0.68) (2.06) (0.22) (0.12) (0.35) (1.44)
0.546 1.511 0.799 0.525* 1.886* 1.693 Low Service Functionaries (0.30) (1.02) (0.29) (0.18) (0.68) (1.07) Blue collar workers r r r r r R
0.953 3.383*** 1.301 0.725 0.401** Trade Union members (0.26) (1.36) (0.29) (0.18) (0.18)
1.244 0.626 1.052 2.070*** 1.375 0.426** Public sector employment (0.35) (0.31) (0.26) (0.48) (0.35) (0.18)
1.109 0.823** 1.054 1.128** 0.928 1.119 Income in 10 (national) deciles (0.07) (0.08) (0.05) (0.05) (0.05) (0.09)
1.275 0.996 1.096 0.732 0.506** 1.193 Gender
(0.39) (0.49) (0.29) (0.19) (0.14) (0.48) 0.069*** 0.096*** 0.257*** 0.252*** 0.531* 0.037*** Constant
(0.03) (0.06) (0.10) (0.09) (0.20) (0.02)
Observations 521.000 521.000 521.000 602.000 521.000 521.000 Pseudo Rsquare 0.04 0.08 0.02 0.06 0.03 0.06
Values in parentheses are standard errors. *** p<= 0.01 level; ** p <= 0.05 level; * p <= 0.1 level. The dependent variable corresponds to the individual vote for this party Green Party: Grüne; Communists: PDS; Social Democrats: SPD; Christian Democracy: CDU/CSU; Moderate right: FDP; Data source: ISSP 1996 Role of Government III. Question wording: "If there is a general election next Sunday, which party would you elect with your second vote?"
20
Indeed, the left vote in Germany is more differentiated between the different classes
and parties: Socio-cultural professionals are clearly more likely to vote for the Green
Party and for the (eastern) communist Party PDS than blue-collar workers. The odds
are stronger in the case of the communist party, but when we look at the actual
percentages of people sympathizing with these parties, it becomes clear that the
German Green Party in is the champion of the “new left”: almost 30% of all socio-
cultural professionals chose this party vs. only about 14% of blue-collar workers (see
table TA2 in the appendix). The Green Party in Germany is clearly a party with a
rather high-skill electorate (the party also receives the support of more than 20% of
capital accumulators). The east-German PDS, a Party that advocates a strong,
universalistic welfare state, also receives support by the socio-cultural professionals
but with 6.3% mean share of the total workforce, it remains a rather minor player. The
Social Democrats SPD have – as in Switzerland - also become a party that relies on
workers and high-skilled middle-class voters, but it seems that is has kept a more
pronounced blue-collar profile: 38% of the blue-collar workers indicate the SPD as
their party of choice, as compared to only 26% of socio-cultural professionals and
about 34% of low service functionaries9. Similarly, blue-collar workers remain much
more likely to be union members than all other classes. Almost 35% of the blue-collar
workers are unionized vs. more than 10 percentage points less for all other classes. In
sum, it seems that the left-wing electorate - composed of socio-cultural professionals,
low service functionaries and blue-collar workers - is more strongly partitioned into
different parties than in Switzerland, where these classes intermix within the social
democratic party.
Finally, in France, the differences of voting behavior are not very strong and most of
them are not statistically significant, but precisely this is a very telling result: socio-
cultural professionals are just as likely to vote for the Social Democrats than blue-
collar workers, and they are 1.5 times more likely to sympathize with the Green Party.
The Greens have a very heterogeneous electorate in terms of socio-cultural
professionals, mixed and low service functionaries, but not blue-collar workers.
However, with regard to the Social Democrats and the Communist Party, the three
“left-wing constituencies” are more or less equally represented: about 43% of blue- 9 Blue-collar workers may have stayed more consistently with the Social Democrats because there is no populist right-wing alternative in Germany (Bornschier 2007).
21
collar workers, low service functionaries and socio-cultural professionals choose the
Social Democrats and about 10-11% feel close to the Communist Party.
Table 3: Party preferences of post-industrial risk groups: France Support for the left Support for the right
Green Party
Communist Party
Social Democrats
Union member
Centrist Right
Moderate Right
Radical Right
1.214 0.524 0.746 0.346** 3.135** 2.247 0.504 Capital accumulators (0.88) (0.35) (0.25) -0.15 (1.50) -1.72 (0.32)
1.971 0.826 0.838 0.496* 2.086* 2.428 0.163*** Mixed service functionaries (1.20) (0.41) (0.24) -0.2 (0.90) -1.69 (0.10)
1.583 0.457 1.020 1.771 2.054 2.811 0.178*** Socio-cultural Professionals (1.01) (0.24) (0.30) -0.64 (0.92) -1.97 (0.12)
3.475* 1.065 0.795 0.969 1.584 0.274* Low Service Functionaries (2.35) (0.63) (0.29) -0.47 (0.83) (0.20) Blue collar workers r r r r r r
0.920 3.246*** 1.315 0.283*** 1.396 0.496 Trade Union members (0.38) (1.18) (0.29) (0.12) (0.62) (0.32)
1.746* 1.879* 1.582** 4.556*** 0.637* 0.329*** 1.392 Public sector employment (0.59) (0.66) (0.29) (1.02) (0.16) (0.14) (0.58)
1.069 0.891 1.028 1.354*** 1.046 1.261 0.709** Income in 10 (national) deciles (0.15) (0.13) (0.08) (0.13) (0.10) (0.19) (0.12)
0.899 1.082 0.823 0.710 1.318 1.449 0.796 Gender
(0.33) (0.40) (0.17) (0.18) (0.34) (0.54) (0.40) 0.029*** 0.093*** 0.487** 0.041*** 0.102*** 0.014*** 0.587 Constant
(0.02) (0.06) (0.17) (0.02) (0.05) (0.01) (0.38)
Observations 614 614 614 653 614 555 614 Pseudo Rsquare 0.02 0.07 0.02 0.17 0.06 0.06 0.11
Values in parentheses are standard errors. *** p<= 0.01 level; ** p <= 0.05 level; * p <= 0.1 level. The dependent variable corresponds to the individual vote for this party Green Party: Verts; Communist Party: PCF; Social Democrats: PSF; Centrist right: UDF; Moderate right: RPR; Radical right: FN; Data source: ISSP 1996 Role of Government III. Question wording: "Which political party of movement do you feel close to?"
Interestingly, the French unions enjoy more support among the socio-cultural
professionals than among workers. Over 35% of the former say they are member of a
trade union as compared to only about 20% of blue-collar workers. This result reflects
the specific structure of the weak French labor movement system, which is
fragmented in a high number of unions with a specific occupational profile. In sum,
the French left is a very heterogeneous conglomerate of different classes.
22
Most striking, however, is the strong support of blue-collar workers for the radical
right, the French National Front. Nearly 18% of blue-collar workers, as compared to
only 3% of socio-cultural professionals feel close to Le Pen’s Party. This is even
stronger than the working-class support for the radical right in Switzerland. This
tendency of working-class voters to sympathize with the right-wing anti-immigrant,
anti-women and anti-egalitarian parties tends to confirm the hypothesis that blue-
collar workers interested defend their privileges against new groups of potential
welfare beneficiaries (Rueda 2007, Häusermann and Walter 2008).
Overall, tables 1 to 3 clearly show that left-wing parties are not strongholds of the
blue-collar, low-skill and low-income working class anymore. Low service
functionaries and socio-cultural professionals – classes, which include large number
of middle-class voters, women, atypically employed and public sector employees –
have emerged as equally important constituencies. Hence, the electorate of the left has
become very heterogeneous. Its different segments are either partitioned on different
left-wing parties – Greens, Social Democrats, Communists –, or they mingle within
the social democratic movement.
I argue that the heterogeneity of the left-wing electorate confronts these parties with
considerable challenges, because the constituent classes have very different profiles in
terms of preferences and values. They want different things and sometimes, their
interests are even antagonistic. This is what I show in the next step.
Figures 2 to 4 display post-industrial classes and trade union members in the two-
dimensional policy space, which today characterizes western Democracies (Kitschelt
1994, Kriesi et al. 2006). The horizontal axis represents the economic cleavage,
measuring values with regard to state interventionism vs. liberalism. The vertical axis
measures values on the libertarianism-traditionalism dimension10.
10 The measurement of both axes relies on attitudinal data form the ISSP 1996 survey. The operationalization follows Kitschelt and Rehm (2005). The libertarianism – traditionalism dimension displays the results of a factor analysis (one analysis per country, all unidimensional, EV between 1.66 and 1.73) based on the following three variables: • V25: „Listed below are various areas of government spending. Please show whether you would
like to see more or less govenrment spending in each area. Remember that if you say „much more“, it might require a tax increase to pay for it. More or less government spending for : the environment.“
23
• V28: As above, but „More or less government spending for: education.“ • V32: As above, but „More or less government spending for: culture and the arts.“ The Interventionism – Liberalism dimension displays the results of a factor analysis (one analysis per country, all unidimensional, EV between 3.1-4.1) based on the following ten variables: • V16: „What is your opinion on the following statement: It is the responsibility of the government
to reduce the differences in income between people with high incomes and those with low incomes.“
• V20: „Here are some things the government might do for the economy. Please show which actions you are in favour of and which you are against. Government action for the economy: Government financing of projects to create new jobs.“
• V23: As above, but „Government action for the economy: Support for declining industries to protect jobs. (F: Support industries in difficulties)“
• V24: As above, but „Government action for the economy: Reducing the working week to create more jobs.“
• V36: „On the whole, do you think it should be or should not be the government’s responsibility to: Provide jobs for everyone who wants one.“
• V38: As above, but „Provide health care for the sick.“ • V39: As above, but „Provide a decent standard of living for the old.“ • V41: As above, but „Provide a decent standard of living for the unemployed.“ • V42: As above, but „Reduce income differences between the rich and the poor.“ • V44: As above, but „Provide decent housing for those who can’t afford it.“
24
The similarity of the location of classes in the policy-space across the three countries
is striking, and the evidence largely confirms our expectations. Three observations are
particularly relevant for our analysis: Firstly, the policy space in all three countries is
clearly two-dimensional, and the left-wing constituencies spread considerably across
this space: not only do they differ in their libertarian-traditionalist value profiles, but
25
they also diverge with regard to their attitudes on state interventionism. Secondly, In
all countries, the socio-cultural professionals – as the most pronounced “new left”-
constituency – position themselves more strongly to the right than blue-collar
workers, low service functionaries and trade union members. Voters of the new left
are less supportive of the traditional forms of government intervention than the lower-
skilled classes. Thirdly, the most striking finding in figures 2 to 4 is the clear-cut and
strong antagonism between the libertarian value-profile of the socio-cultural
professionals and the traditionalist stance of the blue-collar workers. This means that
the two classes that represent the main electoral basis of the very same left diverge
completely when it comes to their value-profile. Libertarians favor individual self-
expression, (gender) equality, equal opportunities in terms of education etc, whereas
traditionalists value social order and stratification, traditional family structures and the
family/community rather than the individual. However, do these value differences
matter for welfare politics? I contend that they do, and increasingly so. Issues of
gender equality, societal modernization or the valorization of female labor become
more and more important in welfare state reforms (Bonoli 2005, Häusermann 2007).
Hence, the libertarian-authoritarian value-antagonism indeed influences the alliances
and policy-options the left can pursue, even in pension reforms, as will be shown in
the following section.
3.2. Conflict lines and political exchange in continental pension reforms
I suggest that the heterogeneity of their electorate becomes both a liability and an
opportunity for the left-wing parties in policy reforms. It may become a liability, if the
parties have to make difficult choices, privileging some constituencies over others. It
may also become an opportunity in terms of reform capacity, because the diversity
and the breadth of the interests of their electorate allow the left-wing parties to draft
new compromises and participate in a genuine restructuring of the welfare state,
rather than remaining in a purely defensive position, trying to avoid retrenchment.
The new role of the left in the formation of reform compromises appears clearly in the
major reforms of all three countries, Switzerland, Germany and France. In all cases of
reforms, the left was split in the reform-process, some left-wing actors supporting the
reform package and others rejecting it. In most cases, the position of the actors can be
26
explained with reference to their electoral and membership basis, but strategic and
institutional considerations also play a role.
The Swiss reform of the occupational pension scheme in 2003 was an ambiguous
agreement (Palier 2005) that included very different reform elements. On the one
hand, mandatory occupational pension coverage should be extended to new risk
groups, mostly women and part-time employees. Also, gender equality was at stake
with the introduction of a widower’s pension along the lines of the widow’s pension.
And finally, the reform proposal included benefit retrenchment for all insured,
through a lowering of pension levels, more modest pension indexation and cutbacks
in widow’s pensions. This package thus comprised different elements that catered to
very different interests and constituencies. Therefore, it is not surprising that the
different reform elements divided the involved actors along several dimensions of
conflict. Table 4 displays the results of the factor analysis performed on the coded
actor positions. The two factors show that the alignment of actors with regard to the
first factor (recalibration, the expansive issues) differed strongly from the
configuration of supporters and opponents on the second factor (retrenchment).
Table 4: Switzerland, factor analysis on the 1st reform of the occupational pension
scheme BVG 2003
Issues of the reform debate Recalibration
(F1) Retrenchment
(F2) Lowering of access threshold for occupational pensions 0.819 0.326 Special conditions for part-time workers 0.919 0.149 Introduction of widowers' pension 0.827 0.144 Ceiling of insurable income 0.787 0.376 Cuts in the level of benefits 0.243 0.826 Increase of the retirement age 0.189 0.853 Eigenvalues 2.913 1.702 explained variance 0.490 0.280 Factor analysis run on the coded positions of the actors; all factors with Eigenvalue >=1; Varimax rotation;
The two-dimensional space emerging from the factor analysis can be displayed
graphically, and all actors can be located within that space on the basis of their factor
scores. Thereby, it is possible to position the actors on both dimensions and to show
the formation of the relevant alliances. Our focus in figure 5 is on the final reform-
27
coalition that adopted the reform. All actors included in the ellipse eventually gave
their support to the reform package. As can easily be seen, the left was split.
The Green party, womens’ organizations, the Social Democratic party, and some
moderate trade unions (the CNG and the white collar union (VSA) representing a
particularly large female workforce) formed the recalibrating pole of the conflict. For
those actors, the objective of including part-time workers and women in the
occupational pension scheme became a priority, not least in terms of gender
equality11. They even accepted to support the whole reform package, including the
retrenchment elements, in order to pass the reform and save the extension of the
occupational pension scheme to new risk groups. For the blue-collar trade unions, by
contrast, the cutbacks were unacceptable. The main trade union SGB and the VPOD
refused the pension cuts categorically, and they rejected the whole reform package.
For them, the extension of insurance coverage to part-time workers and mostly female
low-income workers did not make up for the lowering of their own benefits.
11 Interviews FDP and SPS (Gutzwiller and Rechsteiner, both members of the parliamentary committee in charge of the 2003 reform of the second tier pension scheme), June 6th, 2002, Bern.
28
Hence, the reform was eventually enacted by a very large and heterogeneous majority
of left-wing parties, moderate trade unions, employers and conservative parties. The
reform was a typical example of an “ambiguous agreement”, as described by Palier
(2005): different actors agree on a reform for very different reasons. The parties of the
new left and women’s organizations accepted the reforms for the recalibrating
aspects, since they were very important to the interests and libertarian values of their
electorate. Strongly feminized classes such as socio-cultural professionals or low
service functionaries outnumber the blue-collar workers in the ranks of the left-wing
parties, and therefore the expansive aspects of the reform were privileged over the
cutbacks. The right-wing parties and employers’ organizations, by contrast, supported
the reform in order to implement retrenchment of benefits. By means of this package,
they managed to construct the large majority that is necessary for reforms in the
consensual Swiss political system.
In Germany, the left-wing parties were themselves in government when they proposed
and implemented the 2001 pension reform, a system change that transformed the
pension scheme from a single-tier public PAYG-scheme to a multipillar regime,
including a means-tested basic minimum pension, a public pension insurance pillar,
and a private capitalized pension savings scheme. Thereby the red-green government
proposed a reform that included – as in Switzerland – both cutbacks and expansive
elements: the minimum pension is an expansive reforms that benefits mostly to those
groups who are punished by the insurance-system, i.e. people with interrupted and
incomplete contribution records, atypically and precariously employed, many of them
women. Along with the minimum pension were also introduced several elements that
benefit mostly to women (educational pension credits, splitting of benefits). The
introduction of capitalized pensions – with strong state subsidies for savers - is also an
expansive reform, which focuses mostly on the middle-and higher income-classes,
who can afford saving for their own pensions. The third axis of reform, however, a
drastic retrenchment of public pension levels, mainly cut back the benefits of the old
working class, whose members are too rich to need minimum assistance, but too poor
to save on their own. These very different reform elements again gave rise to a multi-
dimensional policy space. Table 5 shows the results of the factor analysis:
29
recalibration, retrenchment and capitalization divided the actors in clearly distinct
ways.
Table 5: Germany, factor analysis of the reform of the German pension system 2001
Issues of the reform debate Recalibration
(F1) Retrenchment
(F2) Capitalization
(F3) Individualization of poverty relief 0.865 0.172 -0.051 Universal minimum pension 0.744 0.045 -0.231 Increase of educational pension credits 0.682 0.446 0.27 Splitting of benefits and contributions between spouses 0.872 -0.164 0.103 Lowering of widows' pension rights -0.165 0.926 -0.161 Cuts in the level of pension benefits 0.305 0.912 0.0013 Individual private and occupational pension savings plans -0.047 -0.97 0.948 Eigenvalue 2.649 1.956 1.064 explained variance 38% 28% 15% Factor analysis run on the coded positions of the actors; all factors with Eigenvalue >= 1; Varimax rotation;
I can only represent two dimensions meaningfully in figure 6. Therefore, this figure
shows the configuration of actors with regard to recalibration and retrenchment.
Actors within the ellipse – except for the FDP - supported the reform in the final vote.
30
Once again and as expected, the Green Party turns out as the most ferocious advocate
of recalibration. The SPD took a more favorable position on recalibration than the
average union. However, the Green Party and the Social Democrats had shifted
considerably to the right with regard to the retrenchment dimension and advocated
heavy cuts. This led to a clear rift between the unions and the left-wing parties over
the cutbacks. Figure 6 also shows that the Christian Democrats (CDU/CSU), family
organizations, and the small business employers advocated conservative reforms on
recalibration. Indeed, the red-green government created incentives for mothers to
remain active in the labor force. The conservative actors rejected this dimension of the
reform, because it would call into question the traditional organization of families.
The Green Party and the employers clearly approved of the reform package, whereas
some trade unions (IG Metall, DGB), the welfare organizations of the civil society,
and the PDS rejected it. In between are the unions DAG, and IG Chemie, which
criticized retrenchment heavily, but eventually did not mobilize against the reform.
The SDP approved of the reform, but it was internally split. Finally, for the employers
(such as BDA), the reform was acceptable, because the savings it entailed outweighed
the costs implied by recalibration. Indeed, the main employers organization, the BDA,
stated that the recalibrating elements were “absolutely plausible” (“durchaus
nachvollziehbar”12).
Again, we can make much sense of these party positions when looking at their
electorates and constituencies. The blue-collar trade unions could not agree on the
reform, because their constituencies were clearly the main losers of the reforms.
White-collar unions with more skilled members (IG Chemie) or more female
members (DAG), by contrast, could also refer to the expansive reform elements as a
(partial) compensation of the cutbacks. Similarly, the Green Party, which is only
marginally rooted in the blue-collar workforce, privileged recalibration and
capitalization over retrenchment. The only puzzle is the position of the SPD, who still
represents a large and strong blue-collar constituency. Indeed, the party was deeply
torn on the reform between their “old” and “new” left wings. At the time of the
reform, the “new left” elite, who wished to become more attractive to the new middle-
classes, prevailed in the government. But eventually, these reforms led to an
12 Written statement of the BDA in the public hearing before the parliamentary committee, 8.12.2000, Ausschussdrucksache 14/1090: p. 196.
31
alienation of the blue-collar workers from the SPD and to the formation of a new left-
wing alternative, the “Linkspartei” (Picot 2008).
For the case of France, we look at the 2003 pension reform that was proposed and
implemented by the conservative Raffarin-government. Again, it included a range of
very different reform elements. On the one hand, the government proposed to lower
the indexation of pensions and widow’s pensions in the main public pension pillar. On
the other hand, it also included expansive elements, such as an increase in the
minimum pension, more generous pensions for workers with long and precarious
careers, the increase of educational pension benefits for public servants and –
similarly to Germany – the introduction of individual capitalized pension savings
plans. In addition, the reform proposal also included a certain harmonization of
benefits in the public and private sectors. Again, the diversity of these elements
divided the actors along three distinct dimensions of conflict, as seen in Table 6.
Table 6: France, factor analysis on the "Raffarin" pension reform 2003
Issues of the reform debate
Recalibration/ Capitalization
(F1) Retrenchment
(F2)
Educational pension
credits (F3) Harmonization of the required contribution periods in public/private sectors 0.909 0.247 0.041 Lowering of retirement age for long career workers 0.838 0.225 0.386 Individual pension savings plans 0.829 0.367 -0.173 Increase of minimum pension 0.786 0.177 0.518 Lowering of widows' pensions 0.488 0.82 0.224 Indexation of pensions on prices 0.195 0.946 0.19 Increase of educational pension credits for civil servants 0.073 0.216 0.932 Eigenvalues 3.11 1.89 1.4 explained variance 44% 27% 20% Principal component factor analysis run on the coded positions of the actors; all factors with Eigenvalue >=1; Varimax rotation;
A first factor is composed by elements of recalibration and capitalization, whereas the
second factor represents the configuration of opponents and supporters with regard to
retrenchment. Finally, educational pension credits do not fit in with either of the other
issue categories and form a third factor. Since the latter is a rather minor element, I
only display the first two factors in figure 7.
32
On the horizontal axis, figure 7 shows the alignment of actors with regard to the
cutbacks of benefits. The conservative parties, employers’ organizations, but also
representatives of the Socialist Party stressed the need for “financial consolidation” of
the pension scheme. The turn of the French Socialist to more right-wing positions on
pension cutbacks may be related to the fact that they mobilize equally well within the
new middle-class (socio-cultural professionals) than within the blue-collar workers.
The trade unions, however, were all similarly opposed to the cutbacks, defending the
main public pension insurance regime. However, the left became deeply divided on
the second axis, relative to recalibration (e.g. minimum pensions) and capitalization
(individual pension savings plans): while the old blue-collar union CGT and the
French Communist Party rejected these reform elements, more moderate trade unions
such as CFDT and CGC were much more in favor of these reforms. The distinct
profile of their membership explains this divergence: CFDT mobilizes strongly in the
service sector, with white-collar and female workers. And CGC is a rather high-skill
union of service and public sector workers. These constituencies belonged to the
beneficiaries of the expansive reform elements, while the traditional blue-collar
33
constituencies did not. Hence, CFDT and CGC accepted a reorientation of the system
towards a more redistributive and targeted coverage of particular risk groups, such as
low-income workers, and a more egalitarian benefit structure between public and
private sectors. Thereby, the conservative government was able to divide the labor
movement on this reform, compensating the CGC and CFDT for the cutbacks. By
mitigating the labor protests against the reform, it could be implemented with the
support of a heterogeneous cross-class coalition.
One word needs to be added with regard to the interpretation of the location of the
Communist and Socialist Parties. Both represent blue-collar constituencies as well as
more middle-class voters, but remained firmly opposed to the reform, even though
part of their electorate could have benefited from it. Their opposition must, however,
also be seen in the light of the French majoritarian institutional framework:
Opposition parties consequently have to oppose all policies proposed by the
government, regardless of the reform content. Hence, the exclusion of the left-wing
parties from the reform-coalition is partly an effect of institutions and electoral
strategies, rather than of interest-representation.
In sum, the policy reform space in all three countries has clearly become
multidimensional. In addition, the left was split on the reform packages in all
countries. To a large extent, this split seems to coincide with the heterogeneity of
interests and constituencies that the different left-wing political parties and trade
unions represent. All Social Democratic and Green parties have become more open to
benefit cutbacks, a finding that coincides with the increasingly middle-class profile of
their voters. In addition, they privilege reform elements, which focus on new risk
groups, women, atypical workers, part-time employees or – with regard to
capitalization – middle-and higher income-classes. Depending on the set-up of the
reform package, these concerns outweigh the interests of their “old” constituency, the
blue-collar workers. Trade unions – especially in Switzerland and Germany – remain
more close to the interest of the standard male industrial worker, but the interests of
different unions have also become heterogeneous and in each of the three reforms
analyzed, parts of the trade unions have participated in the reform-coalitions.
34
Conclusion
In this contribution, I showed that recent welfare state reforms in Switzerland,
Germany and France were the result of carefully drafted reform packages, which
comprise several dimensions of reform and conflict. Governments tied packages
including both pension benefit retrenchment and expansion, thereby splitting the left,
and constructing the required majorities for reform. In this interpretation, I agree with
the recent literature that explains welfare reforms as “modernizing reforms”,
“virtuous” compromises or strategies of political exchange (Levy 1999, Bonoli 2001,
2005, Natali and Rhodes 2004b). However, I argued in this paper that these reform-
packages are not arbitrarily designed by heroic governments or by strategic policy
entrepreneurs. Rather, they are linked to the interests and values of party and trade
union constituencies. Governments do not primarily succeed in implementing reforms
by framing retrenchment as necessary, by convincing voters of the needs for cutbacks,
by hiding reform consequences, or by constructing “virtuous” reforms that avoid any
distributional conflicts. Rather, they cut back benefits for some constituencies but not
for others, and they grant new benefits to clearly identifiable constituencies: there is a
socio-structural basis to the positions political actors take in the policy space and to
the kind of compromises they are willing to participate in.
In the Swiss case, the Social Democrats, Green Parties and some white collar and
service sector-trade unions participated in a reform that granted occupational pension
coverage to women and part-time workers, while at the same time cutting back the
benefits in the standard insurance scheme. In Germany, the red-green government
devised a reform which improves pension rights for the most precarious risk groups
(women, atypically employed, people with incomplete contribution records) and the
middle- and higher income levels (through capitalization), while cutting back pension
entitlements of the standard (middle-class) workers. And in France, white-collar,
high-skill and service-sector unions supported a reform by the conservative
government, which included expansive elements for a more needs-based system with
a complement of private pension savings, while cutting back benefit levels in the main
public pension insurance scheme. In each case, the positions of the left-wing actors
supporting the reform-packages can be related to the changing socio-structural basis
of these actors. In Switzerland, Germany and France, the left today relies as much on
socio-cultural professionals and low service functionaries than on the blue-collar
35
workforce. These new constituencies include middle-class and high-skilled workers,
many women, most of them part-time or atypically employed, and public sector
workers. They have different interests and different values than the old working class,
and they do not belong to the range of core beneficiaries of the old insurance welfare
state. Hence, when confronted with the choice between the defense of the status quo
and a restructuring of the pension regime, they may privilege the latter, and so do
(part of) their representatives in the policy-making process.
In the theoretical part of this paper, I have argued that all four existing explanations of
the “unfreezing” of continental welfare states leave important questions unanswered.
In conclusion, I would like to propose an answer to these questions from the
perspective I have developed in this contribution. Firstly, the obfuscation argument
cannot explain why governments can “hide” retrenchment. Why are there no
opposition parties, no media, no trade unions or independent experts spelling out the
distributional implications of the reforms publicly? Similarly, the framing argument
implies that governments convince voters of the necessity of retrenchment. But it
lacks a theorization of the responses of those to whom this discourse is directed. Why
would the “losers” of reforms adhere to such a discourse? And why would the same
discourse convince such a diversity of addressees? My answer to both questions is
similar: voters are neither blind, nor ignorant or easy to convince: quite contrarily, the
collective actors and the voters do understand the distributional implications of the
reforms. However, the reforms do not include retrenchment only, and the cutbacks
included in the reforms do not hurt all voters equally. Rather, the reforms have
different distributional implications for different groups of voters, and pension politics
is more about power than about discourse. Overall, the old beneficiaries of the
industrial welfare state are among the main losers of recent pension restructuring. But
many new risk groups, women, middle- and higher income earners tend to see their
pension rights stabilized or even improved. For them, the expansive elements
outweigh the cutbacks, and this accounts for the formation of (very heterogeneous)
coalitions supporting these reforms.
The “Nixon goes to China”-argument may successfully explain why some left-wing
governments could afford taking some blame for retrenchment, but it has no
explanation as to the actual motivations of these governments to retrench or
36
restructure. Why would Social Democrats cut back pensions? Similarly, the package-
deal literature does not answer the question how governments, who draft modernizing
compromises can gain the necessary majorities for their reforms. My answer lies in
the transformed electoral basis of these parties and in the distributional consequences
of their reforms. Left-wing governments do retrench existing benefits, because the
beneficiaries of the status quo are not their only, and in some countries not even their
most important constituency anymore. The new left-wing electorate may even be
penalized by the old “industrial” PAYG-insurance scheme (many women and service-
sector workers do not have complete contribution-periods), or it may simply be more
interested in certain forms of private savings (as for the middle- and higher income
classes). Hence, for the new constituencies of the left, it may make sense to
restructure the pension regime, transforming it from a public “bismarckian” insurance
scheme into a multi-pillar system combining minimum-rights, public insurance and
private capitalization. In addition, the new left electorate holds strongly libertarian
values, which collide with the industrial insurance scheme that privileges the male
standard worker and stable family relations. Gender equality in the pension scheme, a
more egalitarian benefit structure, or targeted benefits for new risk groups are
important demands for these constituencies.
This reasoning implies that the post-industrial welfare state that emerges from the
reforms of the last decades may differ from the old industrial welfare state not
primarily for functionalist (problem-pressure) or ideological reasons (neoliberalism),
but rather because the post-industrial society is different from the industrial society.
Socio-structural change affects political parties and interest organizations, and thereby
it affects policy-making. This is why I would argue that welfare state research needs
to pay more attention to electoral and socio-structural dynamics, which have so far
been mainly the subject of other research fields such as party system research or class
analysis. To be clear, the positions of political parties and interest organizations
cannot be inferred directly from the preferences and values of their constituencies.
This transmission is both imperfect and bi-directional. However, if we neglect the
socio-structural foundations of collective interest representation, we may develop a
conceptualization of policy-making that becomes too voluntaristic and detached from
actual societal change.
37
Appendix
Figure A1: Classification of occupations in post-industrial class groups
based on Kitschelt and Rehm (2005: 23
Independent work
logicTechnical work logic
Organizational work
logic
Interpersonal work
logic
Technical experts
(CA) 21 Physical, mathematical
and engineering science
professionals
Higher-grade
managers (CA) 11 Legislators and Senior
officials
12 Corporate Managers
Professional/
managerial
Technicians (MSF) 31 Physical and
engineering science
associate professionals
Associate managers
(CA) 13 General Managers
Associate
professonal /
managerial
Petty bourgeoisie
without employees
(MSF) Self-employed >24
Skilled crafts (BC) 71 Extraction and building
trades workers
72 Metal, machinery and
related trades workers
73 Precision, handicraft,
printing and related trades
workers
74 Other craft and related
trades workers
Generally /
vocationally
skilled
Routine operatives
and routine
agriculture (BC) 61 Market-oriented skilled
agricultural and fishery
workers
92 Agricultural, fishery and
related laborers
81 Stationary-plant and
related operators
82 Machine operators and
assemblers
83 Drivers and mobile-
plant operators
93 Laborers in mining,
construction, manufacturing
and transport
Low/ un-skilled
Two-digit numbers in front of job descriptions are ISCO88-2d codes.
Socio-cultural semi-
professonals (SCP) 22 Life science and health
professionals
23 Teaching professionals
24 Other professionals
32 Life science and health
associate professionals
33 teaching associate
professionals
34 Other associate
professionals
Large employers, self-
employed
professionals and petty
bourgeoisie with
employees (CA) Self-employed <=24
Skilled office workers
and routine office
workers (MSF) 41 Office Clerks
42 Customer Service Clerks
Skilled service and
routine service (LSF) 51 Personal and protective
services workers
52 Models, salespersons and
demonstrators
91 Sales and services
elementary occupations
38
Green
Party
Social
Democrats
TU
member
Christian
Democracy
Moderate
right
Radical
right
Capital accumulators 9.59% 35.62% 13.07% 8.22% 28.77% 17.81%
Mixed service functionaries 6.59% 32.97% 15.84% 13.19% 23.63% 23.63%
Socio-cultural professionals 7.59% 51.79% 25.84% 14.29% 16.96% 9.38%
Low service functionaries 10.67% 42.67% 16.67% 10.67% 24.00% 12.00%
Blue collar workers 6.12% 38.78% 27.08% 21.43% 11.22% 22.45%
Mean share in workforce 7.67% 41.72% 20.69% 13.96% 20.09% 16.56%
Number of observations 652 652 1634 652 652 652
Data source: ISSP 1996 Role of Government III. Question wording: "Generally, do you feel
affiliated or sympathize with a specific political party (without necessarily being a member)?"
Green Party: GPS, GB; Social Democrats: SPS; Christian Democracy: CVP, EVP, CSP; Moderate
right: FDP, LdU, LPS; Radical right: SVP, FPS, SD, Lega;
TA1: Party vote shares of post-industrial classes: Switzerland
Support for the left Support for the right
Notes: Values are the percentage of people in a particular class choosing this party / being a union
member (among the respondents who indicated a party preference).
Support for the right
Green
Party
Communist
Party
Social
Democrats
Union
member
Christian
Democrats
Moderate
Right
Capital accumulators 21.31% 5.46% 19.67% 15.94% 40.98% 12.57%
Mixed service functionaries 16.67% 5.24% 27.14% 21.79% 38.57% 12.38%
Socio-cultural Professionals 29.65% 8.41% 26.11% 24.39% 23.89% 11.95%
Low Service Functionaries 12.10% 6.45% 33.87% 22.58% 39.52% 8.06%
Blue collar workers 13.88% 6.05% 38.08% 34.78% 35.23% 6.76%
Mean share in workforce 19.04% 6.35% 29.39% 25.18% 34.96% 10.25%
Number of observations 1024 1024 1024 822 1024 1024
Data source: ISSP 1996 Role of Government III. Question wording: "If there is a general
election next Sunday, which party would you elect with your second vote?"
Support for the left
Table TA2: Party vote shares of post-industrial classes: Germany
Notes: Values are the percentage of people in a particular class choosing this party / being a
union member (among the respondents who indicated a party preference).
Green Party: Grüne; Communists: PDS; Social Democrats: SPD; Christian Democracy:
CDU/CSU; Moderate right: FDP;
39
Green
Party
Communist
Party
Social
Democrats
Union
member
Centrist
Right
Moderate
Right
Radical
Right
Capital accumulators 4.91% 4.91% 35.58% 16.75% 17.18% 28.22% 9.20%
Mixed service functionaries 9.22% 9.71% 42.23% 13.85% 11.65% 21.84% 5.34%
Socio-cultural Professionals 8.76% 10.36% 43.82% 35.40% 13.94% 19.92% 3.19%
Low Service Functionaries 10.84% 9.64% 42.17% 12.61% 9.64% 19.28% 8.43%
Blue collar workers 3.70% 11.85% 42.96% 19.19% 7.41% 16.30% 17.78%
Mean share in workforce 7.52% 9.31% 41.53% 21.22% 12.53% 21.36% 7.76%
Number of observations 838 839 840 1037 844 845 846
Table TA3: Party vote shares of post-industrial classes: France
Support for the right
Data source: ISSP 1996 Role of Government III. Question wording: "Which political party of movement do you feel
close to?"
Notes: Values are the percentage of people in a particular class choosing this party / being a union member (among
the respondents who indicated a party preference).
Green Party: Verts; Communist Party: PCF; Social Democrats: PSF; Centrist right: UDF; Moderate right: RPR;
Radical right: FN;
Support for the left
40
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