Whatever Happened to the Bismarckian Welfare State? From Labor Shedding to Employment-Friendly Reforms

34 Pages Posted: 30 Mar 2009

See all articles by Anton Hemerijck

Anton Hemerijck

Scientific Council for Government Policy, The Netherlands; Erasmus University Rotterdam (EUR)

Werner Eichhorst

Institute for the Study of Labor (IZA)

Abstract

The paper challenges the widespread view that Bismarckian countries with a strong role of social insurance and labor market regulation are less successful than other employment regimes and hard to reforms. This has been true about a decade ago. But both the institutional set-up and the performance of BIsmarckian countries have changed fundamentally over the last years. The paper summarizes major reform dynamics in Bismarckian welfare states which had adopted a strategy of labor shedding in the 1970s and 1980s to combat open unemployment. As this was associated with an increasing burden of non-wage labor costs, this triggered a sequence of more employment-oriented and more fundamental reforms that eventually helped overcome a low employment situation. The paper pursues the trajectory of reforms, shows the structural change in labor market performance and points out the achievements of past reforms, but also emphasizes the need for further action in terms of education and training, activation and employment opportunities for all working age people in these countries so that flexibility and security can be reconciled.

Keywords: Bismarckian welfare states, social insurance, social policy, employment, labor market policies

JEL Classification: J26, J68

Suggested Citation

Hemerijck, Anton and Eichhorst, Werner, Whatever Happened to the Bismarckian Welfare State? From Labor Shedding to Employment-Friendly Reforms. IZA Discussion Paper No. 4085, Available at SSRN: https://ssrn.com/abstract=1369831

Anton Hemerijck (Contact Author)

Scientific Council for Government Policy, The Netherlands ( email )

The Hague NL-2500 EA
United States

Erasmus University Rotterdam (EUR)

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Werner Eichhorst

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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