Introduction

This final chapter provides a cross-cutting reading of the earlier contributions in an attempt to account for the common characteristics of the Bismarckian welfare reform trajectory . It will not concentrate on the detailed contents of each reform1, or on the differences between them, these having been exhaustively detailed in the national chapters that make up the main part of this volume. Instead, this chapter will focus on the specificities of each phase of the common reform trajectory , with a particular emphasis on the diagnoses, the politics and the consequences of the reforms adopted. The aim is to give a general answer to the question: ‘how did Bismarckian welfare systems change’?

Variations across countries and policy fields notwithstanding, it is possible to discern four main stages in this sequential process of change:

• 1) The first reaction to the crisis consisted mainly of raising social contributions to rebalance the accounts of social insurance schemes, destabilized by increasing unemployment and slow growth. The key focus was to save the economic and social model based on the highly skilled , highly paid, and highly productive sectors and workers. This was done by preserving (and protecting) the jobs and social protection of the most productive male breadwinners , and by removing the least productive workers from the core labor market. Social insurances were highly instrumental in the implementation of this strategy. This first phase happened ‘before retrenchment ‘ and involved a ‘labor shedding ‘ strategy, an increase in social contributions and some moderate ‘consolidation’ measures.

• 2) However, these policies had the consequence of decreasing overall employment rates and increasing labor costs through the continuousincrease in social contributions , as fewer people working had to pay more and more to preserve their social protection and to provide the growing number of inactive people with income. This trend appeared to be in considerable tension with the new economic context of the early 1990s, when the single market was implemented (1992) and preparation for the single currency was underway. Hence a second phase of the reforms trajectory can be identified, with a lot of decisions aimed at stabilizing if not retrenching social expenditure.