Thesis. Welfare-state-reforms: Empirical Test. The crisis of welfare states

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1 Welfare-state-reforms: Old and new politics or: does politics (left/right) still matter? And: is there no alternative with a race to the bottom? Günter Roth Thesis! Thesis: Different explanations for welfare state expansion and reforms (retrenchment)! Expansion of welfare state due to left-middle-governments (incl. Christian democrats) ( ) ( golden age of welfare states )! New Politics since ca due to de-industrialisation (low economic growth), unemployment, new social divides, family-crisis, aging populations...! Fiscal crisis, global competition u. EU-Integration enforces Deregulation and retrenchment of welfare states ( race to the bottom ) there is no alternative ( TINA ) (Thatcher, Blair, Schröder)! --> Division of left-right disappears (left = out ), New Labour / Middle / New Politics (against old left )! But: institutional inertia, path-dependency and welfare-intereststructures as impediment for reform-politics Günter Roth 2 The crisis of welfare states! unemployment and jobless growth! service economy / society with slowing economic growth! growing public depth! Demographic change / ageing populations! Globalisation and migration! History and path-dependency, sp. for Germany: post-socialism! crisis of representation (state, parties, churches, trade-uniuns)! modernisation, individualisation / change of informal solidarity! revival of neo-liberal and neo-conservative ideology Empirical Test! Operationalisation of welfare state (depending variable)! classical: Social Expenditures / GDP (Castles)! better: Social Rights; De-Commodification; social disparity (stratification)! Unemployment, indicating class-conflict (Korpi) <-> Poverty! Independent (explaining variables):! political Parties! Institutions (z.b. state-structure, veto-player, Corporatism), path-dependency! Controlling for Intervening Variables! Economics, Unemployment, Population-Ageing, Urbanisatin, Familie-Structures etc.) (z.b. Allan/Scruggs) Günter Roth 3 Günter Roth 4 1

2 Germany: Social Expenditures / GDP in % Social Expenditures / GDP in % ( ) Source: Leisering 2003 (BMA), without East-GER Günter Roth 5 Quelle: Obinger/Starke 2007 Günter Roth 6 Social Expenditures / GDP in % ( ) Quelle: OECD Revenue Statistics Quelle: Obinger/Starke 2007 Günter Roth 7 Günter Roth 8 2

3 Quelle: OECD Difference of Taxes & Social Expenditures / GDP in % ( ) R 2 =-0,8234 zum Ausgangsstand v Günter Roth 9 Welfare State Reform: Unemployment Unemployment (wage replacement ratio netto) Diff zu Max. UK 62,5 32,0-30,5-30,5 Ireland 61,5 42,5-19,0-29,5 Denmark 69,0 63,5-5,5-20,5 Netherlands 84,5 75,5-9,0-14,0 New Zealand 48,0 42,5-5,5-14,0 Sweden 79,0 72,5-6,5-14,0 Belgium 74,0 62,0-12,0-12,0 US 63,0 57,5-5,5-10,0 Australia 35,5 46,0 10,5-6,0 Finland 45,2 64,5 19,3-6,0 France 46,5 71,0 24,5-5,0 Canada 67,5 65,5-2,0-3,5 Germany 69,0 65,5-3,5-3,5 Switzerland 75,5 76,5 1,0-2,5 Austria 37,5 64,0 26,5-2,0 Norway 54,0 70,0 16,0-1,0 Italy 13,0 46,5 33,5 0,0 Japan 53,0 55,5 2,5 0,0 Mittelwert 57,7 59,6 1,9-9,7 Quelle: Allan/Scruggs AJPS 2004 Günter Roth 10 Wohlfahrtsstaatsreformen Bsp: Krankengeld Sick-pay replacement-ratio netto Diff zu Max. UK 62,5 31,5-31,0-31,0 Ireland 61,5 42,5-19,0-29,5 Denmark 69,0 63,5-5,5-21,0 Finland 60,5 73,5 13,0-18,0 New Zealand 48,0 42,5-5,5-16,5 Netherlands 84,5 75,5-9,0-14,0 Sweden 89,5 82,5-7,0-11,5 Belgium 86,5 80,0-6,5-6,5 Germany 100,0 93,5-6,5-6,5 Italy 72,5 74,5 2,0-6,5 Australia 35,5 46,0 10,5-6,0 France 58,5 61,0 2,5-4,5 Canada 67,5 65,5-2,0-3,5 Switzerland 81,0 81,0 0,0-3,5 Austria 72,5 80,0 7,5 0,0 Japan 51,5 55,5 4,0 0,0 Norway 54,0 100,0 46,0 0,0 US Mittelwert 67,9 67,6-0,4-10,5 Quelle: Allan/Scruggs AJPS 2004 Günter Roth 11 Netto-Replacement-Ratios ( ) Quelle: Scruggs 2004, n. Obinger/Starke PVS Sonderheft 2007: 485 Günter Roth 12 3

4 Welfare State Reforms ( ) Net-Replacement-Ratios in Percent and Diff. abs. ( ) in OECD up to 6 Month Unemployment up to 60 Months Unemployment (incl. Social Assistance) Land 2005 Diff. zu Diff. zu 2001 Australia 47,3-2,0 51,4-1,6 Austria 67,3-0,2 62,0-3,2 Belgium 60,8-0,2 62,0 1,0 Canada 74,2 0,0 53,5 2,5 Czech Republic 64,2-1,8 58,2-8,9 Denmark 72,3-1,0 78,6-0,6 Finland 70,7-2,8 72,3-4,1 France 71,5-2,8 60,6-3,1 Germany 73,3-0,5 61,9-3,8 Greece 46,8 1,5 17,1-3,0 Hungary 55,3 1,0 42,1 1,2 Iceland 62,0 2,3 72,9 0,9 Ireland 53,7 2,7 72,6 3,2 Italy 72,3 9,5 6,5 1,0 Japan 60,3-4,0 56,7 0,5 Korea 55,3-5,8 41,4-6,5 Luxembourg 89,0 0,2 70,1 1,7 Netherlands 71,3-1,3 70,5-0,5 New Zealand 47,3 0,5 51,1-1,1 Norway 72,7 0,3 70,9-4,6 Poland 60,7 5,0 59,3 5,1 Portugal 83,3 0,0 61,3 2,9 Slovak Republic 67,8 3,2 37,8-50,6 Spain 73,5-0,8 49,2-0,5 Sweden 71,2-2,8 70,3-1,7 Switzerland 80,0 0,5 74,6-8,4 United Kingdom 50,8 4,7 61,9 0,9 United States 66,0-0,8 29,9-2,2 Median 67,6-0,1 61,0-0,8 Quelle: OECD, own calculations for Median-Income and Median-Family/Household-Situation pink = 3. Quartil; blue = 1. Quartil; ( Günter Roth 13 De-Kommodifizierung and Model-Catch-up? Günter Roth 14 Once again: Party-Politics still matter... Conclusion I! Growth to Limits and Stability of developed Welfare States! Catch-up: Retrenchment in case of relatively high Social Expenditures! Cutbacks primary on general public Spending and Unemployment (but there s still also expansion)! There is leeway and Left/Right still matters (Korpi, Allan/Scruggs, Obinger/Starke)! Weak, but positive correlation between social spending and internationalisation of economy (high export-rate) (Colin Hay 2006)! Unemployment & deficits enforce cutbacks (Allan/Scruggs)! Some Evidence for path-dependency and institutional inertia due to Corporatism (Allan/Scruggs) Quelle: Obinger/Starke PVS Sonderheft 2007: 478 Günter Roth 15 Günter Roth 16 4

5 Conclusion II! Neoliberals/Neocons. neglect positive outcomes of Welfare State! Stability, demand, skills/education, motivation, productivity, social balance, moderate wages (i. p. corporatism), trust, solidarity...! Globalisation is overbooked: 1990: 5% higher import/export-ratios / GDP as 1980 in OECD! Main Part of Competition happens in and between economic attractive Welfare States! Costs showing/depending on productivity! Welfare States offer economic subventions! Exit deliver costs and risks! closeness to important markets in welfare states as benefit References! Allan, J.P./Scruggs, L. (2004): Political Partisanship and Welfare State Reform in Advanced Industrial Societies, American Journal of Political Science, Vol. 48, No. 3, ! Castles, Francis G. (2006): A Race to the Bottom? In: Pierson, Christopher/Castles, Francis G. (Eds.), The Welfare State Reader (2. Ed.), Cambridge UK: Polity Press, ! Castles, F.G. (2006): The growth of the post-war public expenditure state: long-term trajectories and recent trends, Sfb 597, Staatlichkeit im Wandel, Arbeitspapier, Universität Bremen.! Hay, Colin (2006): Globalization, Economic Change and the Welfare State: The Vexatious Inquisition of Taxation?: in: Pierson, Christopher/Castles, Francis G. (Eds.), The Welfare State Reader (2. Ed.), Cambridge UK: Polity Press, ! Korpi, Walter (2006): Welfare-State Regress in Western Europe: Politics, Institutions, Globalization, and Europeanization, in: Pierson, Christopher/Castles, Francis G. (Eds.), The Welfare State Reader (2. Ed.), Cambridge UK: Polity Press, ! Obinger, H./Starke, P. (2007): Sozialpolitische Entwicklungstrends in OECD-Ländern : Konvergenz, Divergenz oder Persistenz, Politische Vierteljahresschrift, Sonderheft Nr. 38, ! OECD (2007): Tax, Benefit Models, Paris ( OECD (2007): Revenue Statistics 2006, Paris. Günter Roth 17 Günter Roth 18 5

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