Recalibrating work and welfare in Europe's new Member States
Undoubtedly, the new EU Member States of Central and Eastern Europe (CEE) have witnessed the most radical and epochal political and economic institutional evolution of any of the countries discussed in this book. Since the fall of the Berlin Wall in November 1989, CEE welfare policies and institutions have been in an almost constant state of flux. Indeed, so much that the metaphor of welfare recalibration for analysing social policy changes over the radical transition from communism to free market and democracy is perhaps ill conceived. Social policy transformation in postcommunist CEE is more a story of 'system transformation' than one of 'catching up' with the older Member States of the EU (Cook, 2007; Haggard and Kaufman, 2008; Inglot, 2008; Nolke and Vliegenthart, 2009). Below, the emphasis is on key functional, normative, distributive, and institutional dimensions of the post-socialist 'system transformation' process up to the late 2000s. In that respect, a focus on these four dimensions could nonetheless be heuristically helpful in tracing the processes of path-departing welfare state transformation across the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia, the first eight post-communist nation-states to become full members of the European Union in 2004, followed, in 2007, by Bulgaria and Romania.
In 1989, at the height of the immediate transition crisis, the functional challenge at hand was to (re)cast and (re)design, practically overnight, welfare provisions that were functionally able to underpin and support the transition to the modern market economy and pluralist democracy (Stark, 1996). In institutional terms this implied a wholesale shift from public to private responsibilities for citizens' life chances and welfare. The choice of a free market economy harboured particularly profound consequences for the institutional capacities of welfare provision, both on the revenue side, including new methods to raise taxes and contributions to mitigate poverty and unemployment, and on the spending side, including new administrative capacities to manage wholly novel programs of work and welfare, including for the first time non-state actors, such as the social partners, into the political space of social policymaking. In normative terms, such pathbreaking institutional redesign surely tramples popular expectations about employment guarantees, universal social service provision, and income equality. Fundamental to the transition from communism to the market economy, is its (re)distributive potential, that economic inequality, resulting from free (capital, product, services, and labour) markets, can be a source of innovation and social and economic progress. But given the (admittedly battered) communist legacy of the state's primary role in securing employment and providing social transfers and services, the transition to a market economy inevitably reneges on these long-cherished welfare expectations. This is likely to trigger deep social and political conflict, particularly when at the same time new democratic freedoms raise hopes that new governments would be more attentive to citizens' social needs (Haggard and Kaufman, 2008).
Although the social problems of the countries of Central and Eastern Europe in the immediate wake of the 1989 transition to a market democracy have definitely been far more intense than in the other Member States of the EU, they have not been completely different. Mass unemployment under austere macroeconomic conditions, pension systems overburdened by an ageing population, health problems, and rising social inequality figured on both sides after the fall of the Berlin Wall. Equally salient, and not unlike southern Europe, is the presence of a pronounced urban-rural divide and a growing informal economy in Central and Eastern Europe (see also Sotiropoulos, 2005).
In order to gain analytic leverage on the complex dynamics of CEE welfare state transformation since the collapse of communism, Alfio Cerami (2010) identifies three distinct episodes of reform across the region. In the first phase of the transformation to the market economy, roughly between 1989 and 1993, the breakdown of the socialist economy, followed by a deep economic recession, pressed policymakers to expand welfare provision to mitigate the immediate social distress of mass unemployment and dire poverty. After 1994, when the cumulative burden of social protection expansion of the first phase proved financially unsustainable, retrenchment and privatization efforts gained overriding importance, leading to, also on the advice of the IMF and the World Bank, the introduction and expansion of multi-pillar (private) pension systems in most CEE countries. In the third phase, from 2001 to the onslaught of the global financial crisis, in many countries social reform shifted towards efforts of rebalancing existing social policy practices and activating social priorities, in correspondence with the augmented EU imprint on social policy change in the region. Cerami aptly calls this latter period the stage of welfare 'recalibration' (after Hemerijck and Ferrera, 2004) of consolidating, updating, and ironing out the 'layered' complementarities and imbalances produced by the first two waves of post-communist social reform (Cerami, 2010: 252). To be sure, the exact timing and specifics of the three phases varied from country to country, but the overall sequence does seem to hold across the region. Building on the impressive analyses conducted by Stephan Haggard and Robert Kaufman (2008), Tomasz Inglot (2008), and Alfio Cerami and Pieter Vanhuysse (2009), I wish to highlight the three-pronged dynamics of social policy change in post-communist CEE.
The collapse of state-socialism and the (re-)establishment of capitalism in 1989-91 were accompanied by a deep economic crisis (Stark and Bruszt, 1998). Economic growth and wages declined rapidly and inflation spiralled, bringing an end to full employment, with job losses ranging from 10 per cent in the Czech Republic to 30 per cent in Hungary. Many (male) workers who lost their jobs in the state-run industrial sector withdrew from the job market altogether, to reappear in the shadow economy later on. Social policy, in this period, was used as a buffer to cushion the most dramatic effects of economic crisis and reform, especially the loss of income through unemployment. Early retirement provisions and disability pensions were expanded for redundant workers (Fultz and Ruck, 2001; Muller, 2002). At the beginning of the early 1990s, Polish, Hungarian, Czech, and Slovakian governments introduced fairly generous targeted unemployment insurance and established basic safety nets, together with other compensatory policies, based on lenient eligibility criteria including expanded pension entitlements and family benefits with broad coverage. In Poland in the early 1990s, the government committed itself to the creation of a social safety net for workers in the formal sectors of the economy. Notably, a farmers' insurance system was introduced in 1990 and within a decade became an indispensable anti-poverty programme for the underdeveloped Polish countryside, operating alongside a comprehensive unemployment protection scheme introduced in the same year, and made available to virtually all adult citizen without a job but with a credible record of previous employment.
Also family allowances, inherited from the communist era, were deployed as ad hoc policy tools for assisting victims of the transitional recessions of the early 1990s. The Hungarian government also placed great emphasis on leave entitlements for working mothers and maintained an array of social services left over from the socialist era. Child support programmes were particularly generous and were made a universal right in 1990. In 1992, existing family allowances were supplanted by several new types of means-tested benefits aimed at fighting poverty. The Czechoslovakian government also established a safety net designed to protect the most vulnerable groups in the transition to a market economy, in anticipation of the ensuing economic crisis. By late 1992, subsequent reform intentions were temporarily suspended due to the separation of the Czech Republic and Slovakia (Inglot, 2008: 219-26). The Bulgarian government strengthened the social assistance programme inherited from the socialist period and guaranteed a basic minimum income. In 1990, Bulgarian policymakers secured early retirement schemes for a number of occupational categories despite an already low retirement age— 60 for men and 55 for women. In 1990, in Romania, a relaxation of restrictions on early retirement led to the fastest surge of retirees of any Eastern European country. A social safety net for those displaced by the transition was also created: an unemployment scheme was constructed in 1991 and in 1995 a social assistance programme targeted low-income sectors, while child allowances were increased and universalized in 1994.
On a more structural basis, most countries introduced minimum wage and income-related social assistance schemes to combat poverty. The number of people on pension, unemployment, or social assistance benefits increased dramatically, placing greater financial strain on welfare schemes. As a result, social spending as a percentage of GDP increased rapidly, while GDP itself contracted. Inflation hikes often depleted the real value of wages and benefits, leading to increasing poverty not only among the old, where poverty was traditionally concentrated, but also among the young and among low wage earners and their families, except for Slovenia and the Czech Republic (Nesporova, 1999; Potucek, 2007). By and large, the crisis-induced expansion of welfare provision was considered imperative to smooth the democratic transition across Eastern Europe (Inglot, 2003, 2008). In this period, corporat- ist institutions, such as the Hungarian tripartite National Interest Reconciliation Council (NIRC), later renamed as the Interest Reconciliation Council (IRC), proved particularly effective in preparing a fair number of income policy packages and social reforms. IRC agreements helped legitimize highly unpopular reform in hard economic times.
By 1995, the CEE economies had been growing again, as had real wages, but employment rates remained extremely low in Hungary, Slovakia, and Poland (Hemerijck, Keune, and Rhodes, 2006). However, as the number of people on pensions, unemployment or social assistance benefits increased dramatically, this led to a near fiscal crisis by the mid 1990s in most CEE countries. The early politics of welfare state expansion to compensate for economic distress and consolidate democracy thus became unsustainable, especially owing to escalating unemployment. A new wave of social reform took shape with a view to cost-containment and welfare retrenchment (Keune, 2006; Cerami, 2011).
Cost containment was achieved by tightening unemployment benefits, reducing replacement rates, limiting the duration of benefits, and suspending price-inflation indexation. In Hungary, social assistance moved from flat-rate to means-tested benefits. Universal family allowances were partially replaced by means-tested benefits on the poor, while universities introduced tuition fees and healthcare was partially privatized. In Poland, in 1994, criteria for unemployment insurance were tightened. In regions where unemployment was high, entitlement duration was cut to six month, to incentivize regional mobility. Furthermore, maternity leave programmes were abolished in 1996. In addition, families with incomes in the top 10 per cent were no longer entitled to family allowances and childcare benefits. Furthermore, the government tightened eligibility criteria for disability pensions. As elsewhere, the Czech government did not fully compensate for inflationary pressures on the actual value of benefits. Notably, the government significantly curbed sickness pay, while enacting drastic cuts in unemployment provisions. By and large, CEE governments restructured their welfare systems in market-liberalizing directions. Reforms ended state monopolies in welfare provision and legalized private health and educational services. The mid-1990s wave of retrenchment met with remarkably little political resistance.
Three important features stand out in the second stage of welfare retrenchment and cost containment. The first master trend has been the consolidation of a shift away from tax financing to increased payroll financing, linking duration and benefit levels to social contribution, plus indexation, in many areas of welfare provision from unemployment insurance to healthcare and disability pensions. This implied a path-contingent return to pre-communist Bismarckian social insurance traditions from the late Austro-Hungarian Empire. Benefits have been made more conditional on previous employment records since the mid 1990s in practically all CEE countries. Perhaps the clearest example of this shift took place in Romania in 1992, when the government decided to raise payroll taxes from 14 to over 25 per cent of wages. Inherently related to the problem of growing numbers of inactive citizens claiming benefits from already severely indebted social insurance funds, the reinforcement of Bismarckian social insurance, which was never completely dismantled during the communist era, was an obvious institutional choice (Cerami, 2010). Moreover, the shift to social contributions allowed for the simplication of income taxes in the direction of flat rate taxation. But while the Visegrad countries have in important measures returned to their roots of Bismarckian social insurance from the late nineteenth century, the Baltic nations have seen a greater emphasis on means testing and targeting. In the Czech Republic and Hungary this led to greater differentiation between the social insurance and social assistance tiers of the welfare state, thus sharpening the divide between the more 'deserving' short?term unemployed, older, and regular workforce, receiving more generous benefits, and the more 'undeserving' long-term unemployed, younger, and marginal workers on social assistance entitlements (Duman and Scharle, 2011; Sirovatka and Hora, 2011).
The second feature relates to pension reform, in particular the privatization and the individualization of savings, strongly advocated by the World Bank across the region in the mid 1990s. State-socialist old-age pension systems were largely financed on a pay-as-you-go (PAYG) basis through transfers from state firms to the state budget; direct contributions by workers themselves were rare (Fultz and Ruck, 2001). In the second half of the 1990s pension reform accelerated, on the advice of the World Bank, in the direction of multipillar pension systems, partially privatized, replacing the earlier pay-as-you-go system in the public pillar. The introduction of the mandatory second tier of old age pension schemes run by private funds, on the basis of notional defined benefits, was introduced in Estonia in 1994, Latvia in 1995, the Czech Republic and Hungary in 1998, Lithuania, Slovenia, and Poland in 1999, Romania in 2001, Bulgaria in 2002, and Slovakia in 2003 (Inglot, 2008: ch.4; Orenstein, Bloom, and Lindstrom, 2008). These reforms have made pensions more individualized, more dependent on lifetime contributions and life expectancy, more earnings-related, and thus less redistributive. The Czech Republic resisted the shift to compulsory private co-insurance, mainly because the Czech economy was not in as deep a fiscal crisis as many of the other CEE countries by the mid 1990s. As such, the Czech Republic was less dependent on loans provided by the IMF and the World Bank. In 1995 the Czech government decided to split their first pillar pension tier into two components: the first including a citizenship-based flat-rate pension, which is complemented by a second, a professional status and earnings related scheme. An additional voluntary scheme, run by joint stock companies, has also been made available. In addition, the government agreed to raising the statutory retirement age incrementally for women to 57-61 (the actual limit depending on the number of children) and for men to 62 up until 2007 (Potucek, 2007). Another difference across countries relates to special pension privileges for various occupational groups. While in Hungary and Czechoslovakia such arrangements were abolished in the early 1990s, the Slovakian government actually created non-contributory pensions for the police, customs, and security forces as late as 1998. In Poland, other privileged groups—farmers, miners, railroad workers, the military, and a large number of war veterans—received pension bonuses.
Third, there is the creeping re-familiazation of social services. Family and childcare policies and maternity benefits constituted prominent examples of state-socialist welfare provision in most CEE countries. Traditional forms of public support for families with children weakened considerably during the transformation period. In Hungary, earnings-related maternity benefits were entirely abolished to be replaced by flat-rate benefits which were linked to the level of the minimum pension in 1997. The provision of childcare and kindergartens was at least partially recommodified in the Czech Republic. Passive family benefits lost their universal status in 1994 and became less generous. Family cash support dropped as well, with the important exception of Slovenia. Targeted, means-tested residual schemes were introduced in child allowances in the Czech Republic. Polish provision of public childcare is historically poor. Slovenia is the exception, where family cash support continued. Meanwhile, Hungary, the Czech Republic, and Slovakia held on to substantial parental leave schemes (Szelewa and Polakowski, 2008). However, the many curtailments in family policy were accompanied by a severe decline in female employment. In terms of gender employment, most of the new Member States today are far removed from the communist-era 'dual-breadwinner' model. Liberal labour market and social services reform have further eroded important policy supports around pregnancy and childcare (Cerami, 2008). As a consequence, birth rates have fallen dramatically, even more so than in southern Europe.
Coming to the final and more complex period, which Cerami (2010) refers to as the 'phase of recalibration', there are strong elements of reconsideration and correction to the surge of social policy privatization of the previous period, especially relating to healthcare and pensions. Activation and active labour market and social inclusion policies gained more prominence, partly inspired by the EU Lisbon Agenda. After the mid 1990s, active labour market policies expanded in Hungary, Poland, Slovenia, and Slovakia. The early 2000s witnessed the establishment of several employment programmes targeting marginalized groups such as the young and the Roma population (Sissenich, 2005: 169). In addition, the Polish introduced a disability benefit for young handicapped persons with insufficient work records. Though family benefits were cut in 1995, by the late 1990s family allowances again expanded and benefits were further increased in the 2000s (Haggard and Kaufman, 2008: 311-13; Inglot, 2008: 252-77, 303). By the early 2000s, the maternity leave programme was also fully reinstated in Poland. In terms of cost-containment, Polish employers were required by law to pay for the first thirty days of sick leave. By 2003, some of the special bonuses formerly provided for specific professional groups were removed. In the later 1990s and early 2000s, more activating 'welfare to work' programmes were introduced. In Hungary, the activation shift was part and parcel of the political agenda of the conservative government led by Viktor Orban (Fidesz) to encourage 'self-help' in society in order to stay clear of heavy redistribution. So as to reinforce 'activation', unemployment insurance and social assistance programmes were curtailed, but the minimum wage was doubled. The early 'welfare to work' strategies further reinforced the ongoing divergence between unemployment insurance and social assistance, including in terms of administration. The administration of the new unemployment assistance and social assistance programme was devolved to local governments in 2000 (Duman and Scharle, 2011). In many Visegrad countries, especially the Czech Republic and Hungary, we can observe a strong push towards activation in both the unemployment insurance and social assistance tiers of social security, with tightened behavioural conditions but at the same time adequate levels of minimum income, inspired also by EU recommendations from the European Employment Strategy (EES) (Zeitlin, 2003, 2005a, b). In Hungary in 2006, the social-liberal government redesigned unemployment assistance as a minimum income scheme, with benefits measured in terms of equivalent family income, to allow for better targeting of families and especially of child poverty. With EU support, the Public Employment Service was reorganized into regional branches responsible for client-oriented personalized jobseeker services.
By the mid 2000s, the Polish welfare state also moved to a more universal model of social assistance as a stepping-stone towards the establishment of a general minimum income guarantee by 2008. Similarly in the Czech Republic, by the early 2000s, the social assistance minimum was raised, followed by the expansion of family payments in 2004 (Haggard and Kaufman, 2008: 326-30; Inglot, 2008: 238-50, 303). By 2005, the Czech government came to endorse an explicit active family policy, triggered especially by a chronically low fertility rate, at about 1.2 children born to young couples, but also programmatic initiatives embraced by the EU. Additional steps by the Christian and social democratic coalition government concern the new Labour Code, approved by parliament in 2006, committed to close the gender gap in job opportunities, wages, and other living conditions. Concurrently, measures were taken marginally to reduce incentives to retire early, but wider reforms were not legislated for until 2006 (Haggard and Kaufman, 2008: 321-6; Inglot, 2008: 226-35). Bulgaria also expanded anti-poverty programmes in the early 2000s (Haggard and Kaufman, 2008: 330-4). In income support, new activation measures involved job consultation, training, and support for entrepreneurship. In Romania attempts to curtail early retirement in 2001 were balanced with a 40 per cent hike in the minimum wage, an increase in transfers to the large underdeveloped rural sector, and the creation of a minimum income scheme that was expected at the time to cover almost 600,000 households and cost almost 0.5 per cent of GDP (2008: 336-40).
Over the three-stage process of transition crisis-induced welfare expansion, cost-containment retrenchment, and recalibration, the welfare systems of Central and Eastern Europe have evolved towards a mixed or 'hybridized' welfare edifice, combining Continental 'Bismarckian' elements in social insurance and 'Anglo' market-based pensions and social services, undergirded by basic 'egali- tarian-universalist' safety-net provisions (Zeitlin, 2003). Linda Cook has aptly described the process of CEE welfare state transformation as 'layered' by the path-dependent egalitarian legacies from the communist era and the revival of Bismarckian social insurance, and the more path-shifting liberalizing influence of key international organizations, notably the IMF and World Bank but also the EU (Cook, 2010). Social insurance provision has come to revolve around Continental regime-style income replacement programmes, financed out of compulsory social contributions, linked to employment histories. Particularly, the Visegrad countries seem to have returned to their original late nineteenth- century roots of Bismarckian social insurance. Market-oriented social policies have expanded, especially in the areas of pensions and some social services, such as health and education. Here the liberal imprint of the World Bank's 'multipillar' pension is visible (Orenstein, Bloom, and Lindstrom, 2008). Throughout the past two decades, in addition, the normative inheritance of (communist) egalitarianism did not vanish overnight. By contrast, the egalitarian legacy helped to recreate and sustain universal social safety nets aimed at compensating and correcting Continental and liberal reforms. Unlike some of the southern European welfare states, all of the new EU Member States today preside over non-categorical, universal last resort minimum-income provisions.
Hybrid new welfare policy mixes are of course not stable per se as they have come about through intense distributive conflict. Stephan Haggard and Robert Kaufman (2008) convincingly argue that with democratization, the wide coverage of social protection reached over the communist era created strong electoral and interest group constraints on fully-fledged privatization and retrenchment, even in the shadow of strong fiscal pressure. In the first half of the 1990s, nationalist-populist parties dominated governments in Romania and Slovakia while leftist parties—whether reformed communists or social democrats—were in office in Bulgaria, Hungary, and Poland. All had important constituents among the elderly voters and formal sector workers who were most directly threatened by market-oriented reforms. As a consequence, mainstream parties campaigned on promises to maintain solidaristic commitments to expand social safety nets. This also explains the limited success of Vaclav Klaus's neoliberal social agenda between from 1992 to 1994 in the Czech Republic. As he presented himself as the Thatcher of Eastern Europe, the envisaged move towards means-testing and tightened eligibility requirements met considerable opposition from the trade unions and coalition parties (Potucek, 2007). Ultimately Klaus floundered, also owing to the country's relatively strong macro-economic performance, which strengthened the hand of political actors arguing for an expansion of social commitments (Haggard and Kaufman, 2008: ch.8; Inglot, 2008: ch.4).
In institutional terms, the master trend has been the 'devolution' responsibilities to regional and local authorities. In Poland the principle of subsidiarity was enshrined in the Polish constitution, leading to the establishment of three autonomous levels of local administration. In Hungary, the construction of means-tested family support was complemented with the establishment of complex networks of central and local agencies. In Poland, the same was true of the newly created farmers' insurance. Furthermore, early in the transition, the Czech government created a network of regional labour offices to administer unemployment benefits and active labour market policies. In Romania, the most important reform of the second half of the 1990s was the adoption of a new law on local public finance. Decentralization expanded local financing and administrative responsibilities for many basic social services, including education, social assistance, and some health services (Haggard and Kaufman, 2008: ch.8; Inglot, 2008: ch.4).
The new role of the social partners is a second noteworthy dimension of institutional overhaul. Following the transition, unions and new employers' organizations were immediately taken on board in tripartite bargaining structures and policy platforms. Throughout the region the establishment of tripartite structures triggered heated political debates. After having established corporatist bargaining structures, Czech and Hungarian governments abolished again them in 1993 and 1998 respectively. In addition, one of the two largest Polish trade union federations withdrew from tripartite bargaining in late 1998. In Hungary, the first Viktor Orban conservative government dismantled the tripartite IRC in an attempt to end corporatism, while it abolished the Ministry of Labour by splitting its responsibilities between the Ministry of Economics and the newly created Ministry of Social and Family Affairs. Successive governments in these countries have again restored corporatist institutions and social dialogue structures (Sissenich, 2005; Inglot, 2008: ch.4). Despite these truncated experiences with partisan social dialogue, in hindsight, it can nonetheless be argued that tripartite encounters were important for channelling distributive conflict and brokering societal consensus behind difficult welfare reforms. In a comparison pension reform across Central and Eastern Europe, Igor Guardiancich has exemplified how early radical pension reforms ultimately failed to stabilize in the more polarized majoritarian democracy of Hungary and the clientelist polity of Croatia (Guardiancich, 2011, 2012). In Hungary, ultimately in 2010, the second right-nationalist majority governments of Viktor Orban renationalized funded private pensions. To wit, the more consensual political systems of the Czech Republic, Poland, and Slovenia, with much stronger unions, achieved far more durable pension change through less radical reform (Guardiancich and Orenstein, 2011). Extensive consultation, also with the (weakened) social partners, proved most conducive to greater long-term policy coherence. Despite high polarization in Poland by the late 1990s, thereafter policymakers were able to commit all the major parties and corporatist actors to the new pension system. In Slovenia, the most consensual democracy with the strongest trade union movement in Central and Eastern Europe, pension reform was supported by a encompassing bargain involving all major stakeholders.
Particularly characteristic of the process of welfare state transformation in Central and Eastern Europe has been the extended role for international organizations, such as the World Bank and the IMF, but also the EU. From the early 1990s onwards, as most CEE governments depended on IMF and World Bank loans, this allowed these two 'Washington Consensus' organizations effectively to promote labour and welfare reforms based on fiscal stabilization, liberalization, and privatization, especially, as has already been intimated, in the area of pensions (Orenstein, 2008). The role of the EU in the domestic social policy agenda, in the preparation for full membership of the Union, has been far more limited. However, it can be argued that since 2000 the EU has gained sway over social reforms through the Employment Strategy, the Lisbon Agenda, and the Social Inclusion Process (Guillen and Palier, 2004). Noteworthy also is the EU's assistance in institution and capacity building in preparation for EU membership (in the PHARE projects), specifically designed to serve modernization in public administration and the training of civil servants. In countries such as the Czech Republic, Bulgaria, Estonia, Poland, and Slovenia, employment policy has been increasingly modelled after the EES and Lisbon Agenda. When, in 2004, the new Member States that became full participants in the Lisbon Strategy, social policy moved to the top of the political agenda. There is also some evidence that CEE polities also borrowed widely from the diverse experiences of Western European welfare states individually. Probably the best example concerns the Swedish pension reform of the late 1990s that was imitated across the region, but the same applies to a lesser extent of the emulation of Dutch and Danish active labour market policies across since the new millennium (Haggard and Kaufman, 2008: ch.8; Inglot, 2008: ch.4).
The transition from a state socialist to a modern welfare state embedded in a market economy is without historical precedent. In the absence of a commonly understood template for conducting the transition, patterns of welfare recalibration across Central and Eastern Europe conjure up an image of experimental trial-and-error policy learning, under varying economic, social, political, and international conditions and constraints. This triggered a process that David Stark has called 'recombinant transformation', recombining old and new, domestic and supranational elements (1996). In the analysis above, I have focused primarily on trajectories of policy change. It is important to underline, as does Claus Offe (2009), that ad hoc and inconsistent emergency social policy bricolage comes with policy volatility and a great deal of political instability and ideological polarization. Moreover, the politics of welfare recalibration mobilized different social groups and factions, from reconstructed communists to nouveaux-riches elites, seeking institutional advantage from the new social policies (Eyal, Szelenyi, and Townsley, 1998). As a result, in many countries, the citizens who protested in the streets of Berlin, Prague, and Budapest, etc. in 1989 have become increasingly disappointed by the results of the economic transformation and are beginning to question the validity of normative principles of distributive justice in their newly created welfare edifices. Some academics observe a 'backslide' from democracy in the emergence of anti-liberal, antielite, ethno-nationalist and anti-European political mobilization in so many new Member States (Diamond, 2008; Bunce, McFaul, and Stoner-Weiss, 2009). In his monograph, Building States and Markets after Communism: The Perils of Polarized Democracy, Timothy Frye shows how political instability is associated with higher levels of inequality, slower growth, and less consistent economic and social reform, which in turn, reinforce even more policy instability, further weakening democracy in Central and Eastern Europe (Frye, 2010). What these changes in the political and social environment imply for the process of further welfare recalibration is uncertain. Will the new democracies of Central and Eastern Europe move towards more inclusive forms of welfare governance, which would suggest that the Enlargement was successful in consolidating democratic European welfare states? Or, alternatively, will some of the new EU Member States witness a backslide to paternalistic semi-authoritarian forms of social protection in the aftermath of the global financial crisis?