Sozialalmanach - Caritas Luxembourg

linking the amount of benefits received to income or means-testing from the top 24 , taking
back transfer payments from those less in need via the tax system, and so on. Alongside
these strategies of “vertical” targeting based on economic resources a trend is also observable
towards “horizontal” targeting based on social risk: reducing the generosity of some core
transfer programs (old age, disability and survivor pensions, for example) while increasing
family benefits; introducing new subsidies for caregivers or categories with special needs, or
expanding programs against social exclusion. Despite the above-mentioned “crowding-out
effect” of established programs, some policy adaptations to the new structure of risks and
needs have indeed taken place in a number of countries 25 . Great Britain, where income
guarantees and unemployment benefits are modest, has, over the past decades, shifted to
work conditional tax credits to support low-wage workers and their families. In Continental
Europe, the main problem is that heavy social contributions price less productive workers out
of the market. In the face of the relative weakening of traditional male breadwinner social
insurance programs, policy makers in these countries have turned towards strengthening
minimum income protection functions of the welfare state, coupled with strong activation
and reintegration measures. This is also captured by the shift from out-of-work benefits to
in-work benefits in many European countries. Access to benefits has been generally made
more restrictive and conditional, but at the same time new networks of public and private
employment services have been set up in order to promote and facilitate the labour market
re-integration of workers without jobs. The 2005 Hartz IV reforms in Germany stand out
as a case in point, involving a drastic shortening duration of benefits, tighter requirements
to accept suitable jobs, simplification of insurance regulations, wage insurance for elderly
unemployed, and the merger of unemployment assistance and social assistance.
In the area of old-age pensions, the most important trend is the development of multipillar
systems, combining PAYGO and fully funded methods with a tight actuarial link
between pension benefits and contributions. The common thread is the shift toward defined
contributions and changes in the assessment of pension accruals, together with postponing
the retirement age. Sweden and Italy have fundamentally altered the architecture of their
system, promoting “paradigmatic” change. Most countries tough have kept within the
boundaries of “parametric” reform, moving within the logic of existing systems and
taking steps in one or more of these directions: increasing the age of retirement, tightening
qualifying conditions, restricting indexation rules or strengthening the link between
contributions and benefits. Another important common trend in this area has been the
growth of occupational and private pensions, giving rise to “multi-pillar” systems combining
24 Kuhnle (2000).
25 Armingeon & Bonoli (2006); Taylor-Gooby (2004).
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