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Living with Hard Times How Citizens React to Economic Crises and Their Social and Political Consequences Integrated report on policy responses to crises (Deliverable 2.4) WP 2: Policy responses to crises Workpackage Leading Institution: UU Submission due date: September 2014 Actual submission date: November 2014 This project has received funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement n° 613237 Table of Contents Executive summary .................................................................................................................... 4 Introduction ................................................................................................................................ 6 PART I: integrated report ........................................................................................................... 7 1. Labor policies ................................................................................................................... 10 1.1 Minimum wage and vacation ...................................................................................... 10 1.2 Dismissals ................................................................................................................... 13 1.3 Unemployment insurance ........................................................................................... 16 1.4 Retirement ................................................................................................................... 19 2. Health services and care of disabled people ..................................................................... 20 2.1 Sickness benefits ......................................................................................................... 20 2.2 Healthcare services ..................................................................................................... 24 3. Social aid (poverty measures, tax policies, housing allowances) ..................................... 28 3.1. Poverty measures ....................................................................................................... 28 3.2. Tax policies ................................................................................................................ 29 4. Family policies and costs of education ............................................................................. 30 4.1 Parental leave .............................................................................................................. 31 4.2 Child allowances, child tax credits ............................................................................. 34 4.3 Costs of education ....................................................................................................... 35 Conclusive discussion .............................................................................................................. 38 Bibliography ............................................................................................................................. 41 PART II: Country reports ......................................................................................................... 44 France ....................................................................................................................................... 44 Germany ................................................................................................................................. 129 Greece ..................................................................................................................................... 166 Italy. ........................................................................................................................................ 195 Poland ..................................................................................................................................... 229 2 Spain ....................................................................................................................................... 282 Sweden ................................................................................................................................... 349 Switzerland ............................................................................................................................. 389 United Kingdom ..................................................................................................................... 439 Appendix: List of interview respondents ............................................................................... 483 3 Executive summary This report describes the policy changes that have followed the recent economic crisis in Europe. Particularly, it examines changes in labor, health-care, tax and social policies in nine countries of the LIVEWHAT project: France, Greece, Germany, Italy, Poland, Spain, Sweden, Switzerland and the United Kingdom during the period of the last ten years (2005- 2014). The study is based on materials collected and summarized by all the nine partners of the consortium, though the final report and analysis is made by the Swedish team. The analysis of crisis response indicates shifting patterns across countries. Expectedly, there are great differences between countries that have been more or less affected by the crisis. In Germany, Switzerland and Sweden the effects of the crisis, as well as the related policy changes, have been moderate. While France has not gone unscathed through the crisis its policy responses have not had a fundamental impact on labor market policy and social security systems. Both Poland and the UK have engaged in wide-ranging reforms to cut public spending. However, Poland has also taken steps towards a more inclusive welfare system, for example by introducing paid parental leave and more affordable childcare. At the far end of the spectrum we find Italy, Spain and most notably Greece. The reforms in Greece have been ‘all embracing’, leaving practically no section of society unaffected. An important finding is that reforms of the welfare systems in these nine countries have generally been less comprehensive than might have been expected, especially in light of recent academic and public debates. Still, the welfare retrenchments that have been initiated and their possible effects on citizens must be understood in the light of changing structures on the labor market, namely the precarization of labor. Even slight changes in levels and conditions of eligibility for sickness and unemployment benefits will have potentially more palpable affects for a workforce that is increasingly less likely to be granted access to such systems. Hence, although the majority of the reforms directly worsened the situation of public sector employees, there are negative long-term impacts for those in the beginning of their labor career. Another finding is that reforms adopted in the nine countries have in many cases no direct relationship to the recent economic crisis. Some reforms, in particular the changes in pension 4 systems, had been discussed for a long period of time before the crisis erupted in Europe. The crisis supplied an opportunity to adopt and implement such reforms as part of broader packages aimed towards decreasing debt and consolidating budgets even if the short-term gains of reforms to attain such goals are sometimes negligible. Similar patterns can be discerned in relation to systems of unemployment insurance and sickness benefits, the reforms of which in some cases were discussed long before the crisis erupted in Europe in 2008. Still, regardless the causes of the reforms described in this report, their negative impact on states’ welfare systems require that many groups of citizens, particularly in Greece and Spain, need to look for alternative initiatives for enhancing their resilience. 5 Introduction This integrated report summarizes the main findings of Work Package 2 of the LIVEWHAT project, focusing on policy responses to crisis. It consists of a comparative assessment of policy responses to crises based on national reports on policy changes in France (FR), Germany (DE), Greece (EL), Italy (IT), Poland (PL), Spain (ES), Sweden (SE), Switzerland (Swiss) and the United Kingdom (UK). The report covers the period from 2005 to 2014. The report builds on the analysis of policy documents and interviews with key informants like high level public officials. All countries in the consortium have provided data and are responsible for country reports presented in Part II, the integrated report has been written by the Swedish team: Ludvig Norman and Katrin Uba, Uppsala University. This report could be complemented by picture of changes of citizens’ social and labor rights that is provided by deliverable 2.3 (Report on citizens’ rights depletion). The report focuses on five principal policy areas: 1. Labor market policy including minimum wages, dismissals, unemployment insurance and retirement. 2. Sickness benefits and healthcare services. 3. Social aid including poverty measures. 4. Tax policies. 5. Family policies including parental leave, child allowances and costs of education. Particular issues of interest have been policies and regulations that affect citizens’ everyday lives and were likely to be affected by the crisis. The policy changes discussed below do not measure the outcome of reform but provide an overview of changes in labor, healthcare and social policies. How the public reacted to these changes in public and