Social Europe in Crisis: The Impact of the Eurozone Crisis on National Welfare States
On Wednesday, March 21, Maurizio Ferrera and Anton Hemerijck took part in a luncheon discussion hosted by BU’s Center for the Study of Europe on the impact of the ongoing Eurozone crisis on European social policy.
Maurizio Ferrera is Professor of Comparative Public Policy at the University of Milan. He is also the President of the Graduate School in Social, Economic and Political Sciences and director of the Research Unit on European Governance (URGE) of the Collegio Carlo Alberto Foundation in Moncalieri (Turin). His research interests include comparative public policies and European integration, with a special focus on the development, crisis and perspectives of the European welfare state.
Anton Hemerijck is the dean of the Faculty of Social Sciences at the VU University Amsterdam, and vice rector. Between 2001 and 2009 he was director of the Netherlands Council for Government Policy (WRR). He publishes widely on issues comparative social and economic policy and institutional policy analysis.
Anton Hemerijck’s presentation followed the main argument of his forthcoming book Changing Welfare States, a major new examination of the wave of social reform that has swept across Europe over the past two decades.
In his talk at BU, Hemerijk challenged the perception that European welfare states are crumbling under weight of domestic and external pressures, and offered a view of “welfare recalibration” quite different from the “frozen welfare landscape” depicted in academic literature. He argued that European social policy has undergone profound transformations in recent decades in response to a wide range of challenges – not excluding the current financial crisis – from intensifying globalization, de-industrialization, aging populations, declining birthrates, and the rise of women in the labor market to European integration and more. The resilience of the European welfare state throughout, he said, owes not to its “stability” – something which threatened its undoing during the monetarist challenge of the 1980s – but rather to its adaptability, as evidenced in cumulative adjustments across a number of macroeconomic policy domains.
Hemerijck highlighted the cognitive dimension of the adjustments, describing how shifting norms and values have shaped social policy in Europe since the 1990s. He explained the recalibration of the European welfare state as a form of “social learning,” a phenomenon first described by Hugh Heclo in 1974. He then outlined four dimensions of social learning, the first being functional recalibration, which pertains to the social risks against which welfare states desire to protect. In this regard, he said, there’s been a shift from a static perspective to a more dynamic one, from income support for disadvantaged groups to social investment in human capital over the life course. The second is distributive recalibration, which concerns the (re)distribution of costs and benefits in society. The third is normative recalibration, which concerns the norms and values guiding search for effective and fair policies. Europeans, Hemerijck said, want to live in “harmonious societies,” and as a consequence, the welfare state enjoys huge normative support throughout the EU. Nevertheless, there has been a shift from a Rawlsian notion of fairness to a more “capacitating fairness” balancing rights and responsibiliites. Finally, there is institutional recalibration, which concerns not only levels of decision making but also responsibilities of individuals, states, markets, and families.
Optimistic that European societies remain capable of re-adapting their welfare institutions to the new context.Hemerijck concluded by saying that there is much more policy intelligence, or social learning, than meets the eye if you look at the world through the new politics of the welfare state.
Maurizio Ferrera focussed his remarks on Italy, and in particular, on the new Monti government, for which he had high praise. The policy innovations Mario Monti has succeeded in pushing through are, Ferrera said, an example of how a traditionally “inert” country, under the right conditions, can become a quick mover. He argued that recent events in Italy highlight the role of the European Union in shaping and re-shaping domestic politics. At the domestic level, he said, they offer an illustration of something Anton Hemerijck alluded to in his discussion of welfare state politics, namely, the ways governments initiate unpopular reforms.
After a recap of the events of 2011, culminating in Berlusconi’s resignation in November 2011 under pressure from Italian President and implementation of a “technocratic government” under Mario Monti. Ferrera underscored the democratic nature of the process, over against accusations to the contrary in and outside Italy. He went on to outline the Monti program, which, he said, aims to restore fiscal sustainability and financial stability and to promote growth and to restore stability in a fair way. The first component, titled Save Italy, dealt with pension reform, redressing inequities in terms of gender and intergenerational fairness. The second, Grow Italy, introduced a number of “liberalizations,” essentially removing barriers to growth. This package, Ferrera said, should result in 1% growth in Italian GDP per annum. The last package, Work Italy, introduced on March 20, promises major reform of the Italian labor market, allowing for firings under certain conditions; more secure contracts for younger works; and overhaul of the Italian unemployment system. While the reforms are not without opponents in Italy, so far, he said, markets have responded favorably: spreads for Italian bonds, which traded at junk levels at the end of 2011, have been slashed in half.
According to Ferrera, the Eurozone crisis has proved, in Italy’s case and also in peripheral countries, to be a spur in domestic policy realm. He argued previously, in a book co-authored with Elisabetta Gualmini, that Italy and the other south European countries were rescued by the EMU, insofar as the EMU made the status quo in those countries unviable. The Eurozone crisis, he said, presents a similar challenge and he referred to the European pressure to get rid of Berlusconi. We are seeing a “Europeanization of politics,” he said, admitting that Monti’s accomplishments highlight the increasing relevance of “European” credentials. It is interesting therefore – according to Ferrera – that Monti has said he will never say, “Europe is demanding …” He’s promised whatever he proposes is because it is good for Italy. On the plus side, there’s been a rapprochement between political parties in Italy, who for now are backing Monti’s reforms, maybe because they know they won’t get the blame.