Are European Welfare States Adequate, Modern and Sustainable? Reassessing Welfare Regime Theory in the Context of Current Demographic Challenges

by Svitlana Kykot

Institution: Roskilde University
Year: 2016
Keywords: Pension; Esping-Andersen; Welfare Regimes; Adequate; Sustainable; Modern
Posted: 02/05/2017
Record ID: 2082535
Full text PDF: http://rudar.ruc.dk/handle/1800/26410


European pension systems currently face multiple challenges related to demographic changes. Life expectancies are increasing, while birthrates are declining, creating an imbalance between the working population and the elderly. Simultaneously, the increasing participation of women in the labor market necessitates modern pension systems that shift away from a ‘male breadwinner’ model. In response to these challenges, the European Commission urges a shift towards adequate, modern and sustainable pension systems. This project used a quantitative approach to investigate to what extent Esping-Andersen’s classic welfare regime theory is capable of addressing the aforementioned challenges faced by European pensions systems. Pension-related aspects of Esping-Andersen’s concepts of ‘decommodification’ and ‘stratification’ provided the tools to comparatively assess the outputs of the complex and varied pension systems of 13 EU Member States, and assign each country into a welfare regime: Liberal, Conservative or Social Democratic. However, when operationalizing welfare regime theory, several doubts were raised concerning the explanatory power of the theory. Countries within each regime varied considerably in their characteristics, and some countries did not conform to any particular regime type. Several countries placed outside of their traditional regimes; for example, Germany was categorized as a Liberal regime, although they often represent the Conservative ideal type. Furthermore, by focusing on average measurements of the replacement rate, Esping-Andersen’s approach does not capture variations across income groups. Based on the regime categorizations, welfare regime outcomes were assessed in terms of their adequacy, modernity and sustainability, measured by examining: at-risk-of-poverty rates, material deprivation, duration of work life, and net replacement rates. Conservative regimes were found to generally have the lowest capacity to face all of the current pension challenges, but the other regimes had more mixed results. Only two countries were categorized as Liberal, limiting the comparability of this regime. Countries in the Social Democratic regime were generally the most modern, which fits Esping-Andersen’s theory that stipulates that they should have universal benefit systems, and should thus not have a gender bias. Conservative regimes, on the other hand, were the least modern, and this can be explained by a reliance on occupational differentiation in their pension schemes, which may discriminate against women. The project also observed a notable trade-off between sustainability and adequacy, exemplified by the UK and the Netherlands. While the UK had the most sustainable pension schemes, they were also the least adequate, due to their high at-risk-of-poverty rates. On the other hand, the Netherlands had the most adequate pension system, with the lowest at-risk-of-poverty rate, but also the least sustainable pension system. This highlights the need to create balanced pension policies, capable of addressing all… Advisors/Committee Members: Kvist, Jon (advisor).