The chapter starts with the contrasting conception of social citizenship in Western Europe, and then gives a brief history of the various welfare states. Because this story has been told, and told well, only the briefest summary will be presented. The chapter will emphasize a major common similarity – despite the varieties among the welfare states, they all depended on high levels of employment among the working population (Huber and Stephens 2001: 1). A relatively full-employment economy of decent jobs and a relative equality of wages allowed for the financing of the welfare state – that is, where most were contributing rather than drawing benefits – as well as for redistribution. The countries differed in how they accomplished high levels of employment, but they all managed to do so, and this enabled them to develop their social welfare states.

I then describe the subsequent, contemporary slowdown in the economies, the failure of traditional Keynesian policies, the deterioration of the labor market, the rising poverty, and the consequences for the vulnerable groups. The chapter discusses the dilemmas faced by the Social Democratic governments. They are caught between the strong pressures of globalization and changes in the economy and the labor markets on the one hand and domestic demands for social protection on the other. Thus far, changes in the major welfare state programs – pensions, disability, health care, the programs for the insiders – have been incremental.