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Welfare State Reforms:Theoretical Background

What does Social Policyand “Welfare State” mean?

Where does it come from? Theories, Explanationsand Types of Welfare States

Basic Data

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What is social policy?

political institutions, processes and policies to protectpeople in case of poverty / need or against risksoverstraining individuals and their relatives (security,income, health, age, housing, education, etc.)

in a broader understanding to control and reduce socialinequality (not natural, illegitimate)

„... the study of the social relations necessary for humanwellbeing and the systems by which wellbeing ispromoted.“ (Dean, Social Policy, 2006: 1)

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What does ‚Welfare‘ mean?

Welfare refers to 'well-being‘ and also to the range ofservices which are provided to protect people in a numberof conditions

Welfare is associated with needs, but it goes beyond whatpeople need;

to achieve well being, people must have choices, and thescope to choose personal goals and ambitions (Spicker etal. 2007)

Enjoyment/Pleasure, freedom /responsibility and thinking(Aristotle), Capabilities (Sen) to be a part of human society(Inclusion) (Dean ibd.)

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Welfare State State with exclusive power/violence and policy to create a social and

legal order, based on social security, equality and justice

Institutions, regulations and processes to assure, correct andsupplement markets, e.g. work, income and living conditions

ideal model, where the state accepts responsibility for the provision ofcomprehensive and universal welfare for its citizens (Spicker et al.2007)

the Degree of Citizens social rights in sense of property rights,

meaning the degree of ‘De-Commodification’ (welfare beside markets andfamilies)

and social stratification (re-distribution) (Esping-Andersen 1990)

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StaatRecht, Hierarchie

bürokratische VerwaltungGleichheit

MarktWettbewerb/ExklusionUnternehmen

GemeinschaftSolidarität

Informell, Familie

Intermediärer BereichGemischte Regulierung

NPO etc.

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Modern Miracle / trinity of state, market and family Development from informal to formal exchange, civil society and

organised solidarity with state regulation

Modern anonymous and functional differentiated conditions requireand enabling welfare-state

Background:

Decline of Feudalism <-> Growing Mobility, Freedom, Anonymity and longerchains of Interdependencies (Cities, International commerce…) (s. Elias)

Growing Independence and Interdependencies with functional differentiatedEconomy and Society (division of labour) (e.g. Household – Firm, Weber)

Concentration of Power, Absolutism and State-Building

there’s no ‘free’ market without state and civic culture (trust, norms,values) (non contractual basics of contract, Durkheim)!

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Welfare State Theory: Functionalism

Welfare State as social institution to create and solve socialproblems in relation to social order (social integration) (seeslides before)

Independent Variables:

social and economic requirements / needs

demography, urbanisation, industrialisation, capitalism,enlightenment, rationalisation, modernisation, social problems ...

enforce and enable welfare states

Different Accents:

Economic/technical, cultural/social or policy/politics

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Conflict-theory and political interests

Welfare State (dependent Variable) as De-Commodification,Stratification(see def. of Esping-Andersen)

Social and political interests, conflicts, movementsdetermine / enforce welfare states

independent variables: Strength and structure of Workermovement / organisations, trade unions, socialist-parties(also Christian democrats and centre) and governments

Modifications

Political market-competition (Median-voter-model in ‘rationalchoice’ and economic theories)

Logic of Inclusion / momentum (see also Institutionalism below)

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Source: Own Creation, based on Dean (ibd.) and BourdieuGünter Roth

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Institutionalism

Welfare State as Institution / social order / regulation asautonomous and powerful (‚polity‘-dimension) beside socialfunctions or conflicts

Self-interest / -logic (momentum) of institutions /bureaucracies, government-/ voting-system

majority/proportional, 2-party/multi-party-systems, corporatism...

Institutional competition and policy-learning, isomorphism

Path-dependency and ‚policy-feedback‘ (problem-solution-moreproblems) --> vicious circle

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Welfare State Research: Measurement Traditional:

Social Expenditures <--> neglect of services, reduction/ no differentiation,problems of values, comparability ...

Better:

Social Rights, ‘De-Commodification’ (s. Esping-Andersen)

Universality <-> Restriction, Pre-conditions, Contributions, means-adjustment/testing, Exit/Duration, volume of benefits

Pension, Sickness, Unemployment --> Index (weighted per-capita of people inneed)

In praxis primarily: replacement ratio (of wages)

Stratification / Social Inequality, Poorness

What is with families, informal solidarity, love... (?!)

welfare / quality of life (Index) <--> UN

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Types of Welfare States / - capitalism (Esping-Andersen) Social democratic (e.g. Sweden)

High Degree of ‚De-Commodification‘ and low stratification (unequality),universalistic social welfare for all citizens, high benefits (‘folkhemmet’/ people’shome), social services mainly by state org., positive welfare culture, tax-financed,social exp. 30-40%/GDP

Liberal (e.g. USA) low de-commodification, high inequality as incentive, ‚minimal state’, market-

orientation, free civic culture (donations/foundations), pluralism; social securityfor poor (less-eligibility/workfare; tax financing, less spending/provision ofservices but regulation, 10-20% / GDP

Conservative (e.g. Germany) middle de-commodification/stratification; principle of subsidiarity, familialism,

paternalism (patron/client) to assure authority; status-/worker-orientation, socialinsurance, coroporatism, self-organisation

{Residual or rudimental (South)}

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Determinants of welfare-state-development Social Problems (poorness, unemployment, age, sickness...)

Social and political disorder / conflicts

Culture (z.B. rationalisation, values)

Economic Development

Demographic change

parties, trade unions, interest associations

Corporatism / structures of interest-organisation

Institutions, Elites, bureaucracies

path dependency, institutional dynamic, selfishness of institutions

veto-points / joint-decision making system

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Hypotheses & Evidence of welfare state research the strength of left parties and ratio of elderly population are positive

correlated with de-commodification and social democratic regimes

strength of conservative and catholic parties and authoritarian / statiststructures are positive correlated with conservative regime andnegative correlated with de-commodification

Concerted Action of corporative-state-relations and corporatism arepositive related to de-comodification

federalism / veto-players constraining central welfare stateinterventionism and de-commodification

weakness of left parties combined with economic strength encourageliberal welfare-state/capitalism regimes

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Evidence: Social Exp. are the higher...

the higher they have been in previous periods

the more left-parties and christian democrats/middle-partiesin government

the higher economic development

the higher unemployment and population ageing

the higher the ratio of civil servants

the more parties participating in government

the fewer/weaker veto-players are (e.g. federalism)

the older democracy (Schmidt, 2003, 1998 with OECD-data)

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Public Health Expenditures are the higher ... the higher the GDP-per-capita in a state

the higher the ratio of seniors per population

the higher the number of physicians per capita

the higher the ratio of state expenditures to GDP and public healthservices

the older democracy

if less cost containment like National Health Service

Vgl. Schmidt, M.G., Warum die Gesundheitsausgaben wachsen. Befunde des Vergleichs demokratischverfasster Staaten, in: Politische Vierteljahresschrift 2/1999, S. 229-245.

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Some Welfare State Research-Critics

Unclear or implicit theory (ideal- or real-types?)

Neglect of political decision making and unintended effects

Neglect of religion and state-church-relations

Transfer- and state-bias / disregard of regionaldifferentiation, social services and informal services

Macro-Bias (z.B. sectoral and regional differences)

disregard of associations

disregard of inter- und intra-state-/cultural-heterogenity

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Problems tocompare SocialExpenditures ...

Quelle: Alber 2003

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Social Spending and economic development (1890-1989)

R2=0,51, Quelle: Schmidt 1998: 268 Günter Roth

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Growth of Social Spending / GDP and GDP in GE

Quelle: BMAS, Sozialrecht 2006: 953

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Ageing and Expenditures on LTC (2000)

Quelle: OECD 2005

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Social Spending and avoiding poverty

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poverty rate of population in the EU25 (2001)

Note: SK (2003), EE, LV (2002), MT SI (2000), CY (1997)Source: EU-Comm. Social Situation 2004, Eurostat

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Ungleichheit der Einkommen (2001)

Anm.: Verhältnis des Gesamtäquivalenzeinkommens von 20 % der Bevölkerung mit dem höchsten Einkommen(oberstes Quintil) zum Gesamteinkommen der 20 % der Bevölkerung m.d. niedrigsten E. (unterstes Quintil).Quelle: Eurostat

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Welfare State Spending and Political Parties

Quelle: Obinger/Starke PVS Sonderheft 2007: 478 Günter Roth26

Social Expenditures as Percentage of GDP 1980 1990 2000 2003

Sweden 28,6 30,5 28,8 31,3

France 20,8 25,3 27,6 28,7

Denmark 25,2 25,5 25,8 27,6

Germany 23,0 22,5 26,3 27,3

Belgium 23,5 25,0 25,3 26,5

Austria 22,6 23,7 25,3 26,1

Norway 16,9 22,6 22,2 25,1

Italy 18,0 19,9 23,2 24,2

Portugal 10,8 13,7 20,2 23,5

Poland - 15,1 21,2 22,9

Hungary - - 20,6 22,7

Finland 18,4 24,5 21,3 22,5

Luxembourg 23,6 21,9 20,4 22,2

Greece 11,5 18,6 21,3 21,3

Czech Republic - 16,0 20,3 21,1

Netherlands 24,1 24,4 19,3 20,7

United Kingdom 16,6 17,2 19,1 20,6

Switzerland 13,9 13,5 18,0 20,5

Spain 15,5 20,0 20,4 20,3

Iceland - 14,0 15,3 18,7

New Zealand 17,1 21,8 19,1 18,0

Australia 10,9 14,1 17,9 17,9

Japan 10,3 11,2 16,1 17,7

Slovak Republic - - 18,1 17,3

Canada 14,1 18,4 16,7 17,3

United States 13,3 13,4 14,6 16,2

Ireland 16,8 15,5 13,6 15,9

Mexico - 3,6 5,8 6,8

Korea - 3,0 5,1 5,7

Turkey 4,4 7,6 - -

OECD - Total 15,9 17,9 19,4 20,7

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GDP per capita in PPP (2005) (EU15=100)

PPP=Purchasing Power ParitySource: Eurostat

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Population in EU-25 (2002)

Source: EU-Comm. Social Situation 2004, Eurostat

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Sozialstaatliche Finanzierungssysteme in Europa

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Ratios of Social Expenditures EU (diff. functions) (1980-2000)

Quelle: EU-Kommission, www.sozialpolitik-aktuell.de

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Total Expenditure on Health % of GDP

10,6

9,79,3

8,4 8,2 8,17,7

7,36,7

0

2

4

6

8

10

Ger

man

y

Gre

ece

Fra

nce

Den

mark

Neth

erl

an

ds

Italy

Au

str

ia

Un

ited

Kin

gd

om

Fin

lan

d

1980 1990 2000

Source: OECD Health Data 2004

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Public Expenditure on Health as % of GDP

8

7,26,8

5,9 5,95,6 5,5

4,65

0

1

2

3

4

5

6

7

8

Ger

man

y

Fra

nce

Den

mar

k

Ital

y

Un

ited

Kin

gd

om

Au

stri

a

Net

her

lan

ds

Fin

lan

d

Gre

ece

1980 1990 2000

Source: OECD Health Data 2004

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Out-of-pocket payments as a percentage oftotal expenditure on health, 1990-1998*

Note: *Except B: 1996; E, D, I, L, P: 1997; Source: OECD Health Data 2001Günter Roth

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Percentage of total health expenditure(taxation against social insurance) in EU

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LTC-Expenditures a. Public LTC-Exp./GDP

Source: OECD/Jacobzone 1999 (Data 1992-1995), European Economic Policy Committee 2001 (Data 2000 exc.GER), Comas-Herrera et al. 2003 (Data Germany, 2000)

3

2,5

1,71,6

0,7 0,70,6

0,9

0,0

0,5

1,0

1,5

2,0

2,5

3,0

Den

mar

k

Net

her

lan

ds

Un

ited

Kin

gd

om

Fin

lan

d

Ger

man

y

Au

stri

a

Fra

nce

Ital

y

Gre

ece

LTC-Expenditure/GDP in % ('92-'95)

Public LTC-Expenditure/GDP in % ('92-'95)

Publ. LTC-Expenditure /GDP in % (2000)

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LTC-Provision in OECD

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Supply with Nursing-Homes /100 aged 65+

0

1

2

3

4

5

6

7

8

9

Net

her

lan

ds

Sw

eden

Fin

lan

d

Can

ada

Den

mar

k

Lu

xem

bo

urg

Au

stra

lien

New

Zea

lan

d

No

rway

Fra

nce

Bel

giu

m

Jap

an

Un

ited

Sta

tes

Ger

man

y

Un

ited

Kin

gd

om

Irel

and

Au

stri

a

Ital

y

Sp

ain

Po

rtu

gal

Gre

ece

ca. 1990 ca. 1995

Quelle: Hennessy 1995; Jacobzone 1999; OECD 1999, Statistisches Bundesamt

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0

5

10

15

20

25

Au

str

ia

De

nm

ark

Ca

na

da

No

rwa

y

Un

ite

d S

tate

s

Fin

lan

d

Ne

the

rla

nd

s

Au

str

ali

en

Sw

ed

en

Ger

man

y

Fra

nc

e

Un

ite

d K

ing

do

m

Ja

pa

n

Be

lgiu

m

Ire

lan

d

Ita

ly

Sp

ain

Po

rtu

ga

l

Ne

w Z

ea

lan

d

ca. 1990 ca. 1995

LT-Home-Care-Services / 100 elderly (65+)

Quelle: Hennessy 1995; Jacobzone 1999; OECD 1999

20

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Ratio of Elderly (65+) in % (1990 u. 1995)

0

2

4

6

8

10

12

14

16

18

Sw

eden

Italy

Bel

gium

Nor

way

Uni

ted

Kin

gdom

Gre

ece

Ger

man

y

Den

mar

k

Spa

in

Aus

tria

Fran

ce

Japa

n

Por

tuga

l

Finl

and

Luxe

mbo

urg

Net

herl

ands

Uni

ted

Sta

tes

Can

ada

Aus

tral

ien

New

Zea

land

Irel

and

Turk

ey

1990 1995

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Life-Expectancy by Birth (2002) (Female)

Quelle: Eurostat

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Life-Expectancy by Birth (2002) (Male)

Quelle: Eurostat

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‚Demographic Burden‘ (young and old / working-popul.) (1999)

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ratio of childs in day-care

Source: OECD 2001Günter Roth

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Australia 5,97 4,53 127 1,44

Austria 5,78 5,56 108 0,22

Belgium 6,36 5,97 .. 0,39

Canada 6,14 4,88 107 1,31

Czech Republic 4,58 4,21 97 0,38

Denmark 7,10 6,82 130 0,28

Finland 5,84 5,74 117 0,10

France 5,98 5,61 112 0,38

Germany 5,26 4,28 106 0,98

Greece 4,06 3,82 154 0,23

Hungary 5,18 4,61 119 0,57

Iceland 6,70 6,15 .. 0,56

Ireland 4,49 4,14 148 0,35

Italy 5,31 4,87 113 0,44

Japan 4,63 3,47 109 1,15

Korea 8,20 4,79 .. 3,41

Luxembourg 3,64 3,64 .. ..

Mexico 5,87 5,12 140 0,75

Netherlands 4,90 4,51 123 0,39

New Zealand .. 5,53 135 ..

Norway 6,37 6,12 105 0,25

Poland .. 5,56 132 ..

Portugal 5,85 5,77 135 0,09

Slovak Republic 4,11 3,99 107 0,12

Spain 4,89 4,33 117 0,56

Sweden 6,46 6,25 121 0,21

Switzerland .. 5,43 112 ..

Turkey 3,51 3,46 167 ..

United Kingdom 5,48 4,66 115 0,82

United States 7,34 5,08 125 2,26

Country mean 5,62 4,96 .. 0,65

Public and private

% of GDP

Public

Private % of GDP

% of GDP 1995 = 100

EducationExpenditure

in OECD(Perc. GDP)

Source: OECD

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References Alber, Jens (2003): Recent developments in the German welfare state: basic continuity or paradigm shift? In: Neil,

Gilbert/Van Voorhis, Rebecca (Ed.): Changing patterns of Social Protection, London: Transaction, p 9-74.

Arts, Wil/Gelissen, John (2002): Three Worlds of Welfare Capitalism or more? A state-of-the-art report, Journal ofEuropean Social Policy 12(2), 137-158.

Bäcker, G./Bispinck, R./Hofemann, K./Naegele, G. (2000): Sozialpolitik und soziale Lage in Deutschland, Bd. 1, Opladen:Westdeutscher Verlag, S. 21-45 (www.sozialpolitik-aktuell.de)

Bundesministerium für Arbeit und Sozialordnung (2006): Übersicht über das Sozialrecht, Nürnberg: BW-Verlag.

Dean, Hartley (2006): Social Policy, Cambridge: Polity Press.

Esping-Andersen, Gösta (1990): The Three Worlds of Welfare Capitalism, Cambridge: Cambridge University Press.

Hennessy, P., (1995): Social Protection for Dependent Elderly People: Perspectives from a Review of OECD Countries(Labour Market and Social Policy, Occasional Papers No. 16), OECD, Paris.

Jacobzone, S., (1999): Ageing and care for frail elderly persons: An overview of international perspectives (OECD,Labour Market and Social Policy, Occasional Papers No. 38), OECD, Paris.

OECD (Organisation for Economic Cooperation and Development), (Hg.) (1999): A caring world. The new social policyagenda, OECD, Paris.

OECD (2005): Long-Term Care for Older People, Paris.

Schmidt, M.G. (1998): Sozialpolitik in Deutschland: Historische Entwicklung und internationaler Vergleich,Leske+Budrich.

Schmidt, M.G. (2003): Sozialpolitik, in: Jesse, E./Sturm, R. (Hg.), Demokratien des 21. Jahrhunderts im Vergleich,Leske+Budrich, Opladen, S. 403-448.

Spicker, Paul, et al. (2007): Introduction to Social Policy, http://www2.rgu.ac.uk/publicpolicy/introduction/contents.htm