Christoph Arndt The Electoral Consequences of Third Way Welfare State Reforms Social Democracy’s Transformation and its changing welfare changing welfare states Political Costs Amsterdam University Press the electoral consequences of third way welfare state reforms CHANGING WELFARE STATES For quite some time, a key fi nding and theoretical puzzle in comparative welfare state research was welfare states’ remarkable stability. In the last decade, however, it has become clear that advanced welfare states were (far) less immovable than they seemed at fi rst. In fact, speaking of changing wel- fare states captures much better the actual reforms that were taking place. Th is series is about the trajectories of those changes. Have there been path- breaking welfare innovations or are the changes incremental instead? Are welfare states moving in a similar or even convergent direction, or are they embarking on divergent trajectories of change? What new policies have been added, by which kind of political actors, how, and with what conse- quences for competitiveness, employment, income equality and poverty, gender relations, human capital formation, or fi scal sustainability? What is the role of the European Union in shaping national welfare state reform? Th is series answers these and related questions by studying the socioeco- nomic, institutional and political conditions for welfare state change, its governance, and its outcomes across a diverse set of policy areas. Th e policy areas can address traditional “old” social risks like old age, unemployment, sickness (including the health care system), disability and poverty and in- equality in general, or “new” social risks that have arisen mainly due to post-industrialization, such as reconciling work and family life, non-stan- dard employment, and low and inadequate skills. In addition to focusing on the welfare state more narrowly defi ned, the series also welcomes publica- tion on related areas, such as the housing market. Th e overriding objective of the series is tracing and explaining the full trajectories of contemporary welfare state change and its outcomes. editors of the series Gøsta Esping-Andersen, University of Pompeu Fabra, Barcelona, Spain Brian Burgoon, University of Amsterdam, the Netherlands Anton Hemerijck, VU University Amsterdam, the Netherlands Barbara Vis, VU University Amsterdam, the Netherlands Kimberly Morgan, George Washington University, Washington, USA Herman van der Werfhorst, University of Amsterdam, the Netherlands The Electoral Consequences of Third Way Welfare State Reforms Social Democracy’s Transformation and its Political Costs Christoph Arndt Cover illustration: Johann Peter Hasenclever, Arbeiter vor dem Magistrat Cover design: Crasborn Grafisch Ontwerpers bno, Valkenburg a/d Geul Lay-out: V3-Services, Baarn isbn 978 90 8964 450 3 e-isbn 978 90 4851 721 3 (pdf) e-isbn 978 90 4851 722 0 (ePub) nur 754 © Christoph Arndt / Amsterdam University Press, Amsterdam 2013 All rights reserved. Without limiting the rights under copyright reserved above, no part of this book may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means (elec- tronic, mechanical, photocopying, recording or otherwise) without the written permission of both the copyright owner and the author of the book. Table of Contents List of Tables List of Figures List of Abbrevations Preface 1 Introduction 1.1 Empirical puzzle 1.2 The arguments in brief 1.3 Structure of the book 2 Theoretical Background 2.1 The political-economic and societal background to Third Way policies Social Democracy’s transformation towards the Third Way 2.2 Social policy and the welfare state as a base for social democratic alignment 2.3 Welfare state reform as a catalyst for partisan dealignment Comparison of traditional social democratic and Third Way social policy 2.4 Decommodification, social class and conceptualising the social democratic core constituency 2.5 Political system, party competition and welfare reforms The impact of the electoral system for the electoral effects of the reforms Competitor parties for social democracy after Third Way reforms under pr Challenge from the left Challenge from the right Credibility considerations and the prospects for challenger parties Mainstream parties as potential challengers 2.6 Social democracy and declining class voting 3 Design and Methods 3.1 Case selection and strategy of comparison 3.2 Analysis of reforms 3.3 Analysis of the electoral consequences of reforms 3.4 Data sources for the statistical analysis 3.5 Organisation of chapters 4 United Kingdom 4.1 The social policy of the Labour Party 4.2 Alignment of the social democratic core constituency in the United Kingdom 4.3 Welfare state reforms in Britain under New Labour, 1997-2005 4.4 Party competition around welfare state reforms, 1997-2005 4.5 Data and variables 4.6 Results Attitudes towards Labour’s policy and voting behaviour after 1997 Electoral effects of Labour’s policy change, 1997-2001 Electoral effects of Labour’s policy change, 2001-05 4.7 Conclusion 5 Germany 5.1 The social policy of German social democracy 5.2 Alignment of the social democratic core constituency in Germany 5.3 Welfare state reforms in Germany and their political context, 1998-2009 5.4 Party competition on welfare state reforms in Germany, 1998-2009 5.5 Data and variables 5.6 Results Attitudes towards reform proposals and actual reforms First red-green cabinet, 1998-2002 Second red-green cabinet, 2002-05 The spd in the Grand Coalition, 2005-09 5.7 Conclusion THE ELECTORAL CONSEQUENCES OF THIRD WAY WELFARE STATE REFORMS 6 Denmark 6.1 The social policy of social democracy in Denmark 6.2 The traditional core constituency of Danish social democracy 6.3 The labour market reforms under social democratic governments, 1993-2001 6.4 Party competition and welfare state reforms, 1993-2001 6.5 Data and variables 6.6 Results Attitudes towards reform proposals and party choice after 1993 Alignment of sd’s core constituency, 1994-98 Alignment of sd’s core constituency and breakthrough of the Danish People’s Party, 1998-2001 6.7 Conclusion 7 Sweden 7.1 The Swedish social democratic party and its social policy 7.2 The core constituency of Swedish social democracy 7.3 The Third Road, crisis responses and welfare state reforms in the 1980s and 1990s 7.4 Party competition in Sweden, 1991-2006 7.5 Data 7.6 Analysis Attitudes towards labour market reform proposals and party shares The electoral punishment after the crisis, 1994-98 The sap’s recovery and the Left Party’s setback, 1998-2002 7.7 The sap’s electoral fortunes in opposition 7.8 Conclusion 8 Comparative Summary 8.1 General expectations and summary of findings The role of the electoral system for the electoral effects of the reforms Th e role of party competition for the electoral eff ects of the reforms 8.2 Discussion of rival explanations 9 Discussion 9.1 Applicability of arguments to other countries 9.2 Contribution to existing literature and political implications 9.3 Implications for future research on social democracy TABLE OF CONTENTS Appendices Appendix A: Appendix to Chapter 4 (United Kingdom) Data sources Description of variables used in analysis Appendix B: Appendix to Chapter 5 (Germany) Data sources Description of variables used in analysis Appendix C: Appendix to Chapter 6 (Denmark) Data sources Decription of variables used in analysis Appendix D: Appendix to Chapter 7 (Sweden) Data sources Description of variables used in analysis Notes References Index THE ELECTORAL CONSEQUENCES OF THIRD WAY WELFARE STATE REFORMS List of Tables Table 2.1 Social and labour market principles and policies under traditional and Third Way social democracy 44 Table 2.2 egp-Class, labour market position and claim for decommodification 47 Table 2.3 Occupational composition of Western European electorates, 1995 62 Table 3.1 Electoral system, party competition and possible contenders for reform-minded social democrats in the early 1990s 68 Table 4.1 Party choice by selected social classes, United Kingdom 1964-1997 80 Table 4.2 Vote shares for three major parties and turnout in British general elections, 1964-2005 81 Table 4.3 Selected labour market reforms introduced by Conservative and Labour governments, 1998-2005 84 Table 4.4 oecd replacement rates of unemployment benefits for United Kingdom, 1989-2007 85 Table 4.5 Perception that Labour Party looks after interests of social groups, 1997-2005 (per cent) 90 Table 4.6 Party shares and non-voting among Labour Party’s core constituency, 1992-2005 (per cent) 91 Table 4.7 Predicted probabilities of vote choice among aligned core constituency by perception of Labour, 2001 92 Table 4.8 Predicted probabilities of vote choice by perception of Labour, 2005 94 Table 5.1 Party choice by selected social classes, Germany 1969-98 102 Table 5.2 Vote shares for federal elections, Germany 1965-2009 103 Table 5.3 Classification of labour market reforms introduced by red- green government, 1998-2005 108 Table 5.4 oecd replacement rates of unemployment benefits for Germany, 1989-2007 110 Table 5.5 Attitudes towards labour market reform proposals by voter group, percentage points 116 Table 5.6 Party shares and non-voting among the spd’s core constituency, 1998-2009 (per cent) 117 Table 5.7 Predicted probabilities of vote choice among aligned core constituency by perception of spd, 2002 119 Table 5.8 Predicted probabilities