Comparative political economics

1. Comparative political economics Lecture 5 Paolo Graziano

2. Building the welfare state • consequence of social rights expansion • from social assistance and employment protection… • … to health care and pension policies • golden age of welfare state: 1945-1973 • where does the welfare state come from? • Bourgeoisie pressures • workers and trade unions pressures • bureaucratic expansion

3. Three worlds of Welfare capitalism • Different problems for different welfare states. • Liberal (Uk, USA): poverty and inequality • Christian democratic (Italy, Spain): unemployment • Social democratic (Sweden, Denmark): high public expenditure

4. Pressures on the welfare state • external pressures: globalisation and europeanisation • productivity growth slowdown • ‘growth to limits’ of governmental commitments (high social expenditure) • population ageing • household restructuring

5. Globalisation • the internationalisation of economies... • … rise of new international competitors… • …especially from new industrialised countries… • ...determines… • …’race to the bottom’... • i.e. welfare state retrenchment

6. Europeanisation • role of supranational institutions... • … and policies (ex: EMU) • creation of a multilevel system of governance • interaction among countries and subnational authorities

7. Globalisation vs. Europeanisation? • market orientation (negative vs. positive integration) • modes of governance (intergovernmental vs. multilevel) • decision making mode (close vs. open) • Towards an European social model?

8. Permanent austerity • massive shift in employment from dynamic manufacturing activities… • … to less dynamic service provision… • … and lower wages… • … mean lower taxes... • … i.e. shrinking welfare states. • service economy trilemma (employment growth, wage equality, budgetary constraint)

9. Welfare state maturation • expansion of governmental commitments • increasing generosity in… • public pension systems … • … and health care systems. • High fiscal costs … • … and increasing social insurance charges… • …which means increasing labour costs.

10. Population ageing • life expectancy increase • pressures on pension policy… • … but also on health care policy… • … and social assistance. • overall increase in social public expenditure

11. Transformation of household structures • increase in women’s labour force participation • falling fertility rates • rise in single-parent households • change in the ‘male-breadwinner’ household structure • increase in costs … • … and in variety of social services provision.

12. Challenges for policy-makers • variety in pressures… • … political demands… • … and processes of mobilization. • changes in interest group and party preferences • different policy menus… • … and policy opportunities for political actors.

13. Structure of political cleavages • winners … • … and losers from welfare state reforms. • increasing conflicting interests of different types and generations of workers • general pressure towards cost contaiment • towards an anti and pro-welfare state cleavage?

14. Recalibrating Europe’s welfare • presence of a set of constraints (external + domestic) … • … and deliberative shift of weight and emphasis among the various social policy instruments and objectives. • types of recalibration: functional, distributive, normative and politico-institutional

15. Functional recalibration • relates to social risks around which welfare state provisions • involves rebalancing within and across functions of social protection • from passive compensation to activation (from welfare to workfare) • containment of old age protection

16. Distributive recalibration • inequalities between insiders and outsiders • … and within insiders (between different categories of the insured). • risk for ‘generational clash’ • need for new balance among ‘old’ and new costly rights

17. Normative recalibration • from the normative goal of protecting aged, sick and unemployed from poverty, social and political marginalization… • … to the new goals of guaranteeing social status and personal fulfilment. • from social rights protection … • … to social opportunities guarantees?

18. Politico-institutional recalibration • towards a new welfare state governance setting • europeanisation • decentralisation • privatisation • need for coordination rather than regulation?

19. Change patterns in Europe • scandinavian model • continental model • anglo-saxon model • southern European model • distinct countries, distinct problems, distinct solutions?

20. Scandinavian model • social protection is a citizen’s right • unemployment insurance • general (high) taxation finances a generous welfare state • policy objectives of the ‘90s: • cost containment • activation policies

21. Anglo-saxon model • limited level of protection • means-tested benefits • low (and of short duration) unemployment benefits • deregulated labor market • policy objectives of the ‘90s (UK) • further labor market deregulation • national minimum wage • incentives towards non-public forms of social insurance

22. Continental Europe • fairly generous and built on the ‘male-breadwinner model’ • high spending and taxation • great role of trade unions and employers associations • policy objectives of the ‘90s: • expanding female employment (activation policies) • employment subsidies • rationalise welfare provision (incremental pension reform)

23. Southern Europe • generous pension formulas … • … and universalistic in health care. • ‘occupational’ syndrome • family is quite important • external (European) adaptational pressures • policy objectives of the ‘90s: • cost containment (pension reform in Italy) • institutional reconfiguration (decentralisation) • rationalisation of social protection