Introduction

With the transition to post-industrialism and financial austerity, most Bismarckian welfare systems have started to face similar structural challenges for reforms since the 1970s: budgetary pressures for retrenchment contrast sharply with new demands for social protection, resulting from the failure of both labor markets and traditional family structures (Esping-Andersen 1999). Hence, welfare policies have shifted from a dynamic of steady growth to a period of restructuring and redefinition of social rights. Even though the precise content and timing of the reforms varies across countries, similarities in the new politics and social policies of Bismarckian welfare systems are striking: retrenchment of existing benefits, increasingly means-tested benefit entitlements and a stronger emphasis on activation and social investment , notably with regard to former welfare state outsiders .

Accounting for similarities and differences in this common trend is, however, all but obvious, since a plurality of factors may have influenced the content and timing of this process of restructuring. While many studies refer to the explanatory power of the macroinstitutional context of decision-making, notably the number of veto points in an electoral system (Immergut 1992; Swank 2002), more recent studies also point to the micro-institutions of the Bismarckian welfare system as variables shaping the dynamics of reform endogenously (Bonoli and Palier 2000). These micro-institutions comprise mainly the rules of eligibility and the type of benefits and financing, as well as the actual organization of policymanagement. In addition, business cycles and/or the color of the party in government are supposed to influence the dynamics of reform or stability (Huber and Stephens 2001; Korpi and Palme 2003); and last but not least, the emergence of the EMU may have triggered common dynamics of reform, as well (Palier and Manning 2003; Ferrera and Gualmini 2004).

In testing how this plurality of ‘usual suspects’ explains Bismarckian welfare system reforms across countries, Switzerland is particularly promising for at least two reasons. Firstly, the oversized Swiss coalition government has been composed of the same major four political parties for over fifty years. National elections may shift the power balance in the national Parliament to some extent, but overall, it remains stable.