ABSTRACT
The social protection systems of Western and Central European countries have their origins in the social reforms of Otto von Bismarck in Imperial Germany in the 1880s. For that reason this distinctive model of social provision is sometimes referred to as the Bismarckianmodel (Palier, 2010a) as well as, for reasons discussed below, the conservative-corporatist (Esping-Andersen, 1990), Christian Democratic (van Kersbergen, 1992) or industrial achievement-performance model (Titmuss, 1974). Nations whose welfare systems are of this characteristic variety include France, Germany, and the Benelux countries, as well as Austria, and, following a period of comparatively late welfare expansion in the 1970s and 1980s, Switzerland. Due to some shared institutional characteristics Eastern and especially Southern European countries are sometimes also considered to have Bismarckian systems of social protection, though their specific developmental features justify seeing the welfare models of these regions as distinctive (see Chapters 17 and 18 in this volume). As shown in Figure 16.1, by 2008 all larger countries with Bismarckian social protection
systems devoted a higher share of their national wealth to social protection than is, on average, the case elsewhere in Europe. This is true even in comparison to the Nordic countries, long considered the ‘gold standard’ for welfare state generosity (see Chapter 15). While levels of social expenditure have fallen back considerably from their historic highs of the mid-1990s in most Nordic countries, in Western and Central Europe these have remained much more stable going into the twenty-first century. Though this is a reflection of a very solidly institutionalised commitment to using collective mechanisms to protect citizens against social risks, the Bismarckian model of social protection is, however, not without its critics. Despite the now larger sums generally devoted to social policy than elsewhere, at-risk-of-poverty rates remain markedly higher in many of these countries than they are in Nordic Europe. And although their employment performance has improved since the mid-1990s (Hemerijck and Eichhorst, 2010), levels of employment remain structurally lower in many countries of Western and Central Europe than elsewhere in the continent. To an extent, indeed, it might be said that the high levels of expenditure that characterise these social protection systems are partly a reflection of some socio-economic problems that these systems themselves engender. This chapter discusses the forces behind the historical development of these large social protection
systems, the particular aims and objectives of this type of social policy, and how these are promoted through the common institutional features of Bismarckian social protection systems.
social rights are traditionally derived – directly or through a family member – from employment status, and the regulation of compulsory welfare provision is often articulated in complex ways with free collective bargaining between trade unions and employers – the social partners – at firm, sectoral and national levels. One result of this is that in areas such as sickness and pensions there are often separate compulsory social insurance schemes in different companies or economic sectors, resulting in these systems being characterised by considerable internal fragmentation and diversity. With the partial exception of Belgium and France, these social protection systems have also
traditionally upheld conventional familialist conceptions of the gender division of labour, privileging the income protection of the main (usually male) breadwinner, but providing only limited social services to facilitate the reconciliation of (female) labour market participation and household care provision (Morel, 2007). A number of the aims of this model of social provision can be related to the importance of subsidiarity, a principle that is particularly central to Catholic social doctrine and holds that direct state intervention is only appropriate when the self-protective capacities of lower level social organs – the family, voluntary organisations, and professional and vocational communities in the labour market – cannot be effectively supported through public subsidies (van Kersbergen, 1995, p. 188). It is for this reason that the state often plays a rather arms-length role in the regulation and delivery of welfare provisions, to the extent that the concept of ‘welfare state’ should be applied to these systems only with caution (Palier, 2010a, p. 24). Despite the social protection systems of Western and Central European countries seeking to
provide increasingly universalistic cover in the post-World War II decades, social insurance remained – and still remains – the dominant form of welfare provision in this welfare model. Individuals are protected against the risk of temporary or permanent inability to earn income in the labour market by the specific contributions that they (and their employers, if they are salaried employees) pay when they are in work, making these systems strongly contributory in both their entitlement logic and financing systems. Even transfers designed to supplement additional costs, such as family benefits, often operate on an insurance-like basis, and are to a large extent financed out of employer-and employee-contributions. Cash transfers are the main form of welfare provision that individuals receive, including for many basic medical services, which are reimbursed by sickness insurance funds rather than being directly collectively financed and free at the point of receipt. It was intended that through the development of comprehensive social insurance systems to cover all major social risks resulting from family and market failures, the direct provision of extensive social or labour market support services would be unnecessary and the role of tax-financed welfare payments, such as social assistance, could be reduced to an absolute minimum. Indeed, a number of these countries had no general tax-financed minimum income scheme until the 1970s (Belgium) or 1980s (France). The ability of this social insurance-based model to protect the vast majority of the population
was strongly dependent on full (male) employment and stable family structures. More perhaps than elsewhere in Europe, deindustrialization and the return of mass unemployment in the 1970s seriously undermined the basic logic of social protection in Western and Central European countries. Moreover, the institutional structures of the Bismarckian social protection system encouraged a series of short-term, defensive responses to the changed economic environment within which welfare states have found themselves since the last decades of the twentieth century. Through policies of labour shedding governments responded to mass unemployment by using the social protection system to provide less productive workers with more-or-less permanent access to income outside work, through prolonged unemployment or disability benefits or the expansion of early retirement pensions. As well as leading to the rapid development of highly unfavourable dependency ratios, the unintended consequence of these measures,
however, has been to further impede job creation, particularly in low-skill sectors of the economy. As a result Western and Central European countries came in the 1980s and 1990s to face low employment, structural unemployment and growing concerns about problems of social exclusion among sections of their populations. The apparent inability of governments in Western and Central European countries to adapt
their structures of social protection to new social and economic risks and problems led some in the 1990s to argue that these were frozen welfare systems (Esping-Andersen, 1996). While the institutional structures of Bismarckian welfare systems have indeed militated against sudden and radical structural reforms, it is today evident that substantial changes have taken place in recent years (Palier and Martin, 2008). Though these reforms have to an extent succeeded in making both labour markets and welfare systems more inclusive in Western and Central European countries, some argue that this has been at the price of institutionalising a form of dualism in the social protection treatment of stable-employed ‘insiders’, on the one hand, and ‘outsiders’ with precarious attachment to the labour market, on the other (Palier, 2010b). Simultaneously, however, there are also some indications of an as yet tentative shift towards a more proactive and service-centred approach to welfare provision than has typically characterised this model.
