Why We Need a New Welfare State

During the Belgian presidency in the second half of 2001, Frank Vanden- broucke, then Belgian Minister of Social Insurance and Health Care, eager to build on the Lisbon Agenda's social ambitions, invited a group headed by G0sta Esping-Andersen, which included myself, to draft a report on a new welfare architecture for twenty-first century Europe, later published with Oxford University Press under the title Why We Need a New Welfare State (2002). For Vandenbroucke, a towering intellectual of the active welfare state movement in European social democracy, fundamental changes in the economy and society called for pathbreaking social policy innovation (Vanden- broucke, 2001). The assignment he gave Esping-Andersen and colleagues was to rethink the welfare state for the twenty-first century, so that 'once again, labour markets and families are welfare optimizers and a good guarantee that tomorrow's adult workers will be as productive and resourceful as possible' (Esping-Andersen etal., 2002: 25). In terms of public policy, a shift in emphasis was required to 'prepare' individuals, families, and societies to adapt to various transformations, such as changing career patterns, working conditions, and family demography, instead of simply 'repairing' damage with passive social income protection.

In Why We Need a New Welfare State, Esping-Andersen et al. contend that the prevailing inertia that male-breadwinner welfare provision fosters will result in increasingly suboptimal life chances in labour market opportunities, income, educational attainment, and intra- and intergenerational fairness for large sections of the population. European societies are confronted with problems of cumulative welfare failure because labour markets, families, and existing social policy repertoires remain rooted in passive transfer- oriented social insurance of workers with stable job biographies. The staying power of the male-breadwinner social insurance policy legacy, according to Esping-Andersen etal., frustrates more adequate responses to 'new' social risks of the post-industrial economy, which adversely affect low-skilled workers, youngsters, working women, immigrants, and families with small children. Most troublesome is the polarization between work-rich and work- poor families. Top income households are increasingly distancing themselves from the middle as a result of rising returns to skills, exacerbated by marital homogamy, that is to say, family formation of spouses with similar educational backgrounds. At the bottom of the pyramid, less-educated couples and especially lone-mother families face (child) poverty and longterm joblessness. As inequality widens, households' capacities to invest in their children's futures will become ever more unequal (Esping-Andersen, 2005, 2009).

Perhaps the most important conceptual contribution of Why We Need a New Welfare State is that it adopts a 'life course perspective' in rethinking twenty- first century welfare provision (see also Mayer, 1997). Through the lens of the life course, Esping-Andersen et al. are able to identify and explicate better the intricate relationships that link care for children, the elderly, and other vulnerable groups to female employment and changing family structures. Problems of working poverty, obsolete skills, and old age poverty are not predicaments that fall on citizens and families by chance. They are the end results of problems in the early stages of people's lives. From a life-course perspective, the real litmus test for future welfare state success will be the ability to resolve the tension between women's new career preferences and the continued desire to form families. In terms of public policy, this implicates an institutional realignment of the boundaries between work and family life which, during the heyday of male-breadwinner welfare states, were primarily viewed as functionally differentiated public and private spheres. In an era of dual earners it is no longer the case that mothers (but also fathers) enter the labour market unencumbered by their caring obligations for dependants. For mothers with small children, affordable day care is crucial. Esping-Andersen et al. go as as far as to argue that 'the financial viability of the welfare state in the twenty-first century depends critically on the both the revenues generated by high levels of women's labor force participation, on the one hand, and their willingness to reproduce the next generation, on the other' (2002: 160). Many labour market changes, ranging across increasing work pressures, job insecurity, and unpredictable working time have exacerbated work-family tensions, as indicated in many recent studies (Gallie and Russel, 2009; Steiber, 2009; Saraceno and Keck, 2010). It is important to point out, in this context, that traditional Keynesianism and neoclassical economics have been largely blind to the issue of gender equality and changing tensions between the organization of both paid work and family life.

Why We Need a New Welfare State contains a number of interlinked proposals in the areas of family policy, labour markets, and old age retirement, adapted to the social and economic challenges of the twenty-first century of ageing populations, changing households, and the rise of a competitive knowledge economy.

Because the heaviest burden of new social risks falls on the younger cohorts, in terms of policy redirection, the welfare effort should privilege the active phases of the life course. This entails reallocating social expenditures away from pensions and social insurance towards services such as family policy, active labour market policy, early childhood education, vocational training, ensuring productivity improvement, and high employment for both men and women in the knowledge-based economy. There is, however, no contradiction between an explicit welfare effort towards privileging the active phases of life and sustainable pensions per se. As Vandenbroucke correctly states in the introduction to the volume: 'we should firmly keep in mind that good pension policies—like good health policies—begin at birth' (Esping-Andersen et al., 2002: p. xvi). Why we Need a New Welfare State underlines the need for a deliberate orientation towards 'early identification' and 'early action' targeted at the more vulnerable new risks groups.

Without a significant shift from late to early interventions, governments will not be able to redress inequality and reconcile economic growth with well-being. The overarching imperative is to prevent social disadvantage in the early stages of the life course. To increase school attendance and to minimize secondary school drop-outs, there is a need for universal subsidized daycare facilities and after-school programmes. Such programmes simultaneously provide quality education to children and reduce the opportunity costs for mothers to take up work.

Maximizing employment is the key to securing effective, sustainable, and equitable welfare states. For families, access to paid work is the single best welfare guarantee and a crucial source of identification, self-respect, and social participation. A strong and gender-neutral work ethic has always been a bastion of Scandinavian social democracy. Because the health conditions of each elderly cohort is better than that of the cohort preceding it, and also the education gap between the old and the young is rapidly narrowing, supporting flexible retirement, raising the retirement age to at least 67, and introducing incentives to postpone retirement could greatly alleviate the pension burden (Esping-Andersen and Sarasa, 2002). Throughout their contribution, Esping-Andersen etal. acknowledge the paramount importance of passive income transfers, often associated with 'old' social risk management, to make up for the fact that not all labour market incomes are sufficient to meet family needs. It is important to add that Esping-Andersen et al. emphasized—contra the Third Way—that social investment is no substitute for social protection. Adequate minimum income protection is a critical precondition for an effective social investment strategy. In other words 'social protection' and 'social promotion' should be understood as the indispensible twin pillars of the new social investment welfare edifice. It remains imperative to have a tightly woven welfare safety net of minimum income support below the social investment policy repertoire, even in the best-designed social investment welfare state (Esping-Andersen, 2002: 46; 2009).

The overarching social investment imperative is to prepare individuals, families, and societies to pre-empt various risks rather than simply to repair damage after risks produce genuine individual and social costs. A new welfare regime needs to be based on an appropriate novel mix of social policy instru- ments—combining income maintenance support and integration measures— which encourage and not enforce citizens' active societal engagement and autonomy. A truly effective and sustainable social investment strategy must be biased towards prevention (Esping-Andersen et al., 2002: 5).

The agenda-setting work of Esping-Andersen's group has been followed by comparable contributions by national think tanks, including the Irish National Economic and Social Council (NESC, 2005), the Dutch Scientific Council for Government Policy (WRR, 2006), and the Swedish Institute for Futures Studies (IFFS) (Lindh and Palme, 2006), and other agenda-setting publications by Giddens, Diamond, and Liddle (2006), Esping-Andersen with Palier (2008), Delors and Dolle (2009), and Morel, Palier, and Palme (2012). At the EU level, the Renewed Social Agenda, attending to the needs of children and youth, especially through education and actions to combat child poverty and the commitment to promote women's access to the labour market, has reinforced the social investment perspective as a central tenet of the European Union's action programme (European Commission, 2008a).