The Transformation of Welfare States? This accessible work provides a ‘political sociology’ of welfare states in industrial societies, with both historical and contemporary perspectives. Ellison focuses on the social and political underpinnings of a number of welfare regimes and looks at the transformations they have undergone and the challenges they face. This book assesses current debates about the role of ‘globalization’ in welfare state change, paying particular attention to contemporary views about the capacity of embedded institutional structures to limit the effects of global economic pressures. Ellison assesses the changing nature of social policies in nine OECD countries – selected to include ‘liberal’, ‘social democratic’ and ‘continental’ welfare regimes. Taking labour market and pension policies as the main areas of investigation, this volume provides ‘snapshots’ of welfare reform in each case, charting the ways in which different regimes ‘manage’ the range of challenges with which they are confronted. Ultimately, the book suggests that all contemporary welfare regimes are experiencing a level of ‘neoliberal drift’. As yet, this trend towards liberalization remains constrained in those countries with more ‘coordinated’ economies and institutionalized forms of social partnership – but the question is for how long? This book will be of great interest to students and scholars of International Politics, Sociology and Social Policy. Nick Ellison is Senior Lecturer in Sociology and Social Policy at the University of Durham. He has published widely in the area of the politics of social policy. The Transformation of Welfare States? Nick Ellison I~ ~~o~;J;n~~;up LONDON AND NEW YORK First published 2006 by Routledge Published 2017 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright © 2006 Nick Ellison Typeset in Baskerville by HWA Text and Data Management, Tunbridge Wells The Open Access version of this book, available at www.tandfebooks.com, has been made available under a Creative Commons Attribution-Non Commercial- No Derivatives 4.0 license. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Ellison, Nicholas, 1952– The transformation of welfare states? / Nick Ellison. p. cm. Includes bibliographical references and index. 1. Public welfare. 2. Social policy. 3. Welfare state. 4. Globalization– Social aspects. I. Title. HV31.E553 2005 361.6´5–dc22 2005007664 ISBN 13: 978-0-415-14250-2 (hbk) ISBN 13: 978-0-415-14251-9 (pbk) For Sarah and Hannah Contents vii Contents List of tables viii Preface ix 1 ‘Globalization’, institutions and welfare regimes 1 2 The challenge of globalization 23 3 Globalization and welfare regime change 48 4 Towards workfare? Changing labour market policies 77 5 Labour market policies in social democratic and continental regimes 100 6 Population ageing, GEPs and changing pensions systems 126 7 Pensions policies in continental and social democratic regimes 152 8 Conclusion: elfareW regimes in a liberalizing world 178 Bibliography 195 Index 215 viii List of tables Tables 1.1 Welfare regime indicators (1980) 19 1.2 Production regimes: labour market indicators (1980) 20 2.1 Exports and imports as percentage of GDP 30 2.2 Growth of manufacturing production and exports in newly industrializing economies 31 2.3 Cross-national variation in globalization 35 2.4 Stocks of outward FDI by major investing economies, 1960–94 35 2.5 Stocks of inward FDI by host economies, 1960–94 35 2.6 Gross capital inflows 38 4.1 Growth of long-term unemployment as a percentage of total unemployment in OECD countries 79 4.2 Employment in services as a percentage of civilian employment 80 4.3 Female labour force as a percentage of total labour force 80 4.4 Part-time employment as a percentage of total employment and women’s share in part-time employment 82 6.1 Old age pension spending as a percentage of GDP in selected OECD countries, 2000 127 6.2 Old age dependency ratios in selected OECD countries 129 6.3 Life expectancy at birth (years) in selected OECD countries 132 6.4 Pension fund assets as a percentage of GDP in selected OECD countries 132 Preface ix Preface For well over a decade now, a good deal of scholarly attention has been paid to welfare state ‘crisis’ in the ‘advanced’ capitalist democracies. Much of this intellectual effort has been fruitful – at least in the sense that possible causes of welfare state ‘retrenchment’ have been thoroughly discussed and awareness of the challenges that face mature welfare systems has consequently increased. Understandably, however, in view of the complexities involved, there is little consensus either about the root causes of welfare state change, or the extent of change itself. Disagreements can be quite fundamental. Few concessions are given, for example, by those who believe that ‘globalization’ lies at the root of the problems that so many welfare systems are encountering, or by their critics, who are equally convinced that global pressures exercise relatively little influence over welfare state change. Whether economic ‘globalization’ encourages a ‘race to the bottom’ as national governments cut social spending and liberalize their welfare arrangements in an effort to attract inward investment remains a serious point of contention. Nevertheless, there is a sense in which the ‘great globalization debate’ has moved on from the height of its influence in the early-to-mid 1990s. What has been rather mischievously referred to as ‘business school globalization’ appears to be on the wane – outside business schools at least – and, increasingly, attention is being given to other factors not directly associated with this phenomenon – rapid population ageing or changing patterns of employment, for instance. More recently, interest has focused on the ability of welfare regimes to resist – or, better, to ‘adjust’ to – the pressures that confront them in ways that preserve their key characteristics. Here the capacity of the institutional structures and assumptions that became so deeply, if differentially, embedded within postwar welfare regimes becomes the focus of interest, the ‘institutionalist’ argument being that they ‘set limits’ to global economic pressures. These issues and debates are the main theoretical concern of this book. To address them adequately ‘globalization’ is ‘brought back in’ as a major phenomenon, the potential influence of which remains of great significance to welfare regime change. But the role of institutions is held to be equally important – the interrelationship between these two poles in different welfare regimes being the main point of attention. This is not purely a book concerned with theoretical accounts of welfare regime change, however. Just as important is the manner in x Preface which social policies in particular welfare systems are changing and what can be said about the causal roles of global, institutional and ‘contingent’ factors as processes of change unfold. To this end, the greater part of this volume takes the form of an extended assessment of social policy change in nine welfare regimes, the focus being on the core areas of labour market policy and old age pensions. Combining conclusions from the theoretical discussion with insights gained from the analysis of contemporary change in different welfare regimes, one contention here is that ‘globalization’ plays a significant, if largely indirect, role in welfare reform – global economic pressures being influenced or conditioned by institutional and other factors. Such a verdict is hardly new, of course: a good deal of the recent literature on welfare state change comes to a similar conclusion. The real issue, however, is that ‘change’ is an ongoing process and, while the pace may be slow, the direction of change appears broadly to favour market solutions. Obviously, such a statement needs to be justified, particularly as it is not suggested here that regimes that are embracing market-oriented change are necessarily doing so with enthusiasm, let alone that the much-heralded ‘race to the bottom’ is ever likely to become a reality. The analysis of theoretical approaches to welfare regime change, which stresses the importance of a ‘weak globalization’ perspective, together with the examination of policy developments and institutional change in the nine case studies provides sufficient evidence to substantiate this claim. In terms of structure, Chapter One sets the scene with an introductory discussion which outlines the main parameters of the debate between globalization enthusiasts and institutionalists, before moving on to examine the concept of ‘welfare regime’ in some detail. Justifications for the choice of countries and welfare areas are provided towards the end of this chapter. Chapter Two examines the globalization thesis more closely, concentrating primarily on the economic dimension, before considering the issue of whether or not global economic pressures are undermining the core institutions of the nation-state. These themes are continued into Chapter Three, but with the focus shifting to debates about the specific impact of global- ization on welfare regimes. This chapter also provides introductory snapshots of the nine case studies, through an initial assessment of their recent political and economic fortunes, including a brief