Sozialalmanach - Caritas Luxembourg

the European Union (EU) have undertaken comprehensive welfare reform in the years since
the 1990s in particular 15 . Taken together these reforms add up to a momentum of system
change that goes far beyond the popular concepts of failed neo-liberal ‘retrenchment’
and the ‘new’ politics of the welfare state as the politics of the ‘status quo’. Moreover,
cleavage conflicts over issues like childcare and leave arrangements, employment protection
legislation and active aging, are being fought out within mainstream social democratic and
Christian democratic parties, rather than between left and right 16 . If we interpret the welfare
state more broadly than aggregate social spending, a finer grained qualitative analysis of
long term policy evolution reveals a process of profound yet gradual transformation across
several related policy areas 17 . Limiting ourselves to the more critical reform measures, in
a wide array of countries, at least seven key reform trends can be identified – each briefly
introduced here.
In macroeconomic policy, up until the late 1970s, Keynesian priorities, geared toward
full employment as a principal goal of economic management, prevailed. In the face of
stagflation the Keynesian order gave way to a stricter macroeconomic policy framework
centred on economic stability, hard currencies, low inflation, sound budgets, and debt
reduction, culminating in the introduction of the European Monetary Union (EMU).
Building on two decades of monetary integration, EMU has transferred monetary policy,
a core function of the modern welfare state, to an independent central bank (ECB) and
it has significantly constrained member states’ fiscal policy discretion 18 . Also countries
that have decided to stay out of EMU have moved towards hard currency regimes with
increasingly independent central banks, modelled after the ECB.
In the field of wage policy, a reorientation took place in the 1980s in favour of marketbased
wage restraint in order to facilitate competitiveness, profitability, and employment
under conditions of growing economic internationalization. Strategies of wage moderation
have been pursued in many countries through a new generation of social pacts in Europe,
linked with wider packages of negotiated reform, making taxation, social protection,
pension and labour market regulation more ‘employment friendly’. The rediscovery of a
jobs-intensive growth path in Denmark, Finland, Ireland and the Netherlands, by way of a
first generation of new social pacts, has also allowed the social partners to strike deals over
productivity, training, and job opportunities for less productive workers. In the 1990s, the
15 Boeri et al. (2001); Boeri et al. (2005); Ferrera & Hemerijck (2003); Brandt et al. (2005).
16 Stiller (2007); Korthouwer (2010).
17 Hemerijck & Schludi (2000); see also Brandt et al. (2005).
18 Featherstone & Dyson (1999); Martin & Ross (2004).
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