When Past Reforms Open New Opportunities: Comparing Old‐Age Insurance Reforms in Bismarckian Welfare Systems

Abstract

France, Italy, Germany, Austria and Spain have all gone through several waves of pension reforms both in the  s and in the early  s. Comparing the politics of these reforms shows some similar trends: reforms were usually postponed until European integration and/or economic recession forced governments to act. Before the first wave of reforms, the main form of 'action' had been to increase payroll taxes to finance pensions. In the  s, reforms were usually negotiated on the basis of a quid pro quo: benefits were intended progressively to decrease in exchange for noncontributory pensions being financed from general tax revenues instead of through the insurance schemes. The second wave of reforms (during the  s) seems to have brought more innovation, with new goals such as the development of voluntary private pension funds and the need to increase employment rates among the elderly and to stop early retirement. The article aims, first, to trace the political processes leading to these reforms; second, to reveal the commonalities in these processes between the various cases; and third, to highlight the differences between the first and second waves of pension reform. It will emphasize the role of 'sequencing' and demonstrate how each pension reform facilitates the adoption of the next one.

The Politics of welfare reform

“…As we have shown for pension reforms in Continental Europe (Bonoli and Palier 2007), the reform trajectory is made of a succession of reforms, with the new one being, at least partly, based on the consequences of the previous one. Each stage in the process opens up new reform opportunities, by changing the political context in which reforms take place.…”

“…However, labor shedding created negative fiscal feedback effects in the longer run which, in consequence, led to more far-reaching reforms in subsequent years and contributed to a staged reform process in pension policy (cf. Bonoli and Palier 2007). A first path reversal is also visible in family policy and health care , albeit to a lesser degree.…”

“…Like in other Continental countries (cf. Bonoli and Palier 2007), the government envisaged the transformation of the pension system into a multi-pillar system and announced the abolition of existing early retirement programs. Several factors were used by the government to justify this radical turnaround in pension policy.…”

“…Even path-dependent changes and marginal cuts, however, might have been risky in political terms and, due to the traditional involvement of workers organization in pension policy-making, (at least) the acquiescence of the unions was a fundamental precondition for a successful reform (Bonoli and Palier 2007). Therefore the Amato cabinet followed two strategies.…”

“…Employment policies and unemployment insurance systems have changed, shifting away from a 'labor shedding ' strategy and towards the development of activation policies (Clegg 2007). Austria , France , Germany , Italy and Spain have each gone through several waves of pension reform, the last introducing innovations such as voluntary private pension funds and emphasizing increasing employment rates among the elderly (Bonoli and Palier 2007). In health care , reforms grafted two new logics onto the traditional insurance approach: a logic of universalization through state intervention, and a market logic based on regulated competition (Hassenteufel and Palier 2007).…”