Introduction

Social Democrats regained power in the UK and Germany in the late 1990s, after long periods spent in opposition. This chapter takes stock of welfare state reforms in both countries and aims to answer whether, and how far, 10 years of Social-Democratic governments have left their modern imprints on the institutional set-up of the welfare state, based on Hall's categorisations of change (1993; see also Chapter One, this volume). As the dimensions of ‘modernisation’ identified by 6 and Peck (2004) are largely peculiar elements of the UK modernisation process, I will refrain from operationalising these in comparative analysis here. A common thread of ‘modernising’ welfare state arrangements in both countries, however, has been the focus on reducing the dependency ratio and increasing employment rates, while at the same time highlighting the need for social justice. This approach to modernisation is in accordance with some of the elements outlined by Esping-Andersen et al (2002). After briefly sketching out the socioeconomic conditions and institutional design of the two welfare states in the late 1990s, this will serve as a reference point for further analysis. I will elaborate in greater detail on the main elements of the common modernisation themes, before addressing the various reforms in the domains of (un)employment, pensions and family policies. This chapter is limited to these three domains because, firstly, they constitute the core dimensions of mainstream comparative welfare state regime analyses (cf Esping-Andersen, 1990, 1999), and, secondly, space limitations do not allow for a more comprehensive analysis. In conclusion I aim to assess these reforms in the light of the research question.

Socioeconomic conditions and institutional welfare state design in the late 1990s

According to widely accepted categorisations, Germany and the UK are said to have very different forms of capitalism and welfare state arrangements. Germany belongs to the Conservative/Christian- Democratic welfare regime, relying primarily on social insurance, while the UK is usually characterised as a Liberal welfare state, relying primarily on the market and means-tested benefits (Esping-Andersen, 1990, 1999). While the main aim of the German unemployment and old-age pension schemes has been to achieve social stability and cohesion (mainly through guaranteeing the individually achieved living standard for unemployed [male] workers as well as pensioners), the main aim of the largely means-tested UK transfer system has been to alleviate poverty (cf Goodin et al, 1999).