Social Welfare and the Ethics of Austerity in Europe: Justice, Ideology and Equality

Even before 2008, social welfare systems across Europe were facing a considerable number and range of challenges: shifts in production and employment patterns; increasing global competition and outsourcing; new labour market risks; structural long-term unemployment and labour market inactivity; changing household formations; and an ageing population with fiscal implications for pensions and healthcare costs in particular (Clasen and Siegel 2007). Laid on top of these ongoing challenges, the financial meltdown of 2008 and the ensuing bank bailouts, sovereign debt crises, economic contractions and fiscal crises affecting many countries have sharpened focus around these issues and on the stated need for reform. The post-crash era has seen governments responding to this chain of events as they have sought—in differing ways, with differing objectives and with differing effects—to reduce the public debt through changes to tax regimes, to welfare expenditure and more broadly to the nature of welfare provision. At the same time, however, and as Farnsworth and Irving (2011) suggest, the extent to which economic crisis will impact on welfare states in the short, medium and long term depends not only on the objective facts of the extent of economic collapse but also on the more ideological dimensions of crisis management which concern the ways in which the crisis has been defined, understood and responded to.

Six years after the onset of the financial crisis it is now possible to begin to see how its longer-term effects on welfare are playing out across different European welfare regimes. It is therefore an appropriate time to reflect on the ethics of the different welfare policy choices that have manifested themselves across European countries. This special issue brings together analyses of post-crash reform across a diverse set of contexts and policy areas to address the shared questions of how the ideas and realities of ‘welfare crisis’ and ‘welfare solutions’ have been informed by particular framings of socio-economic problems and particular constructions—whether explicitly or implicitly—of fairness and justice. Collectively, the articles explore how policy discourses have sought to frame and justify desired reform strategies in particular ways, how the relationship between evidence and ideology has evolved and been crafted in differing contexts and what appears to be taking shape in terms of the impacts of the reforms on patterns of power, inequality and injustice in different European nations.

Hence, whilst the economic turbulence of 2008 onwards has created enormous challenges for economic, political and policy regimes, it is also the case that this turbulence has opened up a window of opportunity through which desired reform agendas might be framed, justified and pursued. Yet response strategies inevitably emerge from the ideological, historical and political contexts in which they sit and several of the contributions included in this special issue pose the question of the extent to which responses to the crisis in particular countries (Denmark, Ireland, Italy, Sweden, the UK) match, or diverge from, prior trajectories consonant with traditional typologies and categorisations of welfare regimes. In doing so, many articles agree with Grimshaw and Rubery's (2012) evaluation that the crisis has permitted the extension and intensification of neoliberal thinking and policy on social welfare, somewhat ironically given the origins of the crash in under-regulated financial markets and notwithstanding the fact that particular countries were at different starting points for this process. The papers by Adam Whitworth and Elle Carter, Daniel Edmiston, Mary Murphy and Daniel Heap address the extent to which the crisis has led to such a reinforcement of neoliberal ideas about social welfare and a strengthening of the neoliberal project more generally in a range of national contexts. In some—the UK and Ireland—this strengthening of the neoliberal project following the crisis represents a reinforcement of path dependency in the country whilst in others—Denmark, Italy and Sweden—this represents the reinforcement of a more recent policy turn.

In their article on welfare-to-work reform, Adam Whitworth and Elle Carter argue for the importance of analysis of policy framing and policy storying in governmental attempts to redraw what is seen as problematic, possible and ‘true’. Taking the UK Coalition government's activities around worklessness and welfare-to-work, and with a particular focus on the Work Programme activation scheme, the authors highlight the benefits of a Foucauldian analytics of governmentalities that incorporates an explicit emphasis on power, storying, ‘truth creation’ and technologies. The authors argue for the centrality of these issues on the one hand as a key site of political energy and contestation and on the other for the understanding of ideas of truth and acceptability, citizenship relations and notions of self. Whitworth and Carter argue that these UK reforms deliberately downplay structural and socio-economic inequalities at the behest of individualistic emphases on behaviouralism, responsibilisation and self-reliance which have the potential to embed systematically and deepen existing inequalities in a recursive and self-reinforcing cycle of (dis)advantage. At the same time, however, a Foucauldian lens also highlights the centrality of agency and technologies of the self within the reformulated banal encounters that make up the transformed UK activation landscape.

The article by Daniel Edmiston explores case studies from three countries with different levels of social spending and fiscal balance which have traditionally been classified in three different welfare typologies—the UK, Italy and Sweden—and analyses their welfare responses to the crisis through the concepts of fairness, need and sustainability. Edmiston argues that although there remains a good degree of path dependency in these countries as regards their reactive policies towards the crisis, there is a point of convergence of all three in that they are moving to varying degrees towards an embedding of the neoliberal paradigm into their welfare state design and function, an example of Farnsworth and Iriving's (2011) ‘austerity consensus’: all three countries have undertaken fiscal consolidation rather than fiscal accumulation and have moved towards a contractarian understanding of fairness, particularly in restricting eligibility to unemployment benefit and increasing sanctions to sharpen focus on the responsibilities of social citizenship. Following Eichhorst and Knowle-Seidle (2008), Edmiston views this as a process of ‘contingent convergence’ in a move towards a smaller state.

The article by Mary Murphy discusses how the neoliberal ‘Celtic Tiger’ model in Ireland has been reinforced since the onset of crisis. Taking a historical perspective, Murphy asks why, when previous crises in Ireland had resulted in paradigmatic shifts in socio-economic policy, the present crisis has served to reinforce the neoliberal path of low taxation and curtailed social spending that the country had been on since its last paradigmatic shift following the economic crisis of the 1980s. Murphy outlines the Irish policy responses to the crisis as being low taxation, user charges, privatisation, deregulation and more conditional welfare. She explores the reasons for this reinforcement utilising Hay's (2004) analytical framework to explain the gradient and orientation of change as an outcome of the relationship between institutions, interests and ideas. She concludes that there has been an overwhelming narrative favouring fiscal consolidation and neoliberal policy amongst the elite coalition in Ireland of big business, political parties across the spectrum and large sections of the media. Murphy identifies key institutional shifts that have narrowed democratic representative and participative space, curtailing capacity to build alternative narratives. Therefore, despite the social fallout from the austerity measures, opposing interests have been unable either to articulate sufficiently or win support for alternatives. While Murphy argues that domestic politics are the prime force shaping Irish budget decisions the European Troika presence to oversee the terms of the Irish bailout can be interpreted as a diminution of Irish national sovereignty that has served to strengthen the already dominant domestic narrative of austerity.

In his paper, Daniel Heap focuses on one particular area of welfare provision and labour market activation—the rights and responsibilities of working-age sick and disabled benefit claimants—and compares the cases of the UK and Denmark. In similarity to the work by Edmiston, Heap finds that despite differences in welfare ideology, extant activation regimes and the organisation of active labour market policy in the two countries, developments since the crisis as far as welfare provision for this group is concerned, have been remarkably similar. This similarity comprises three principal aspects: first, there has been a subsuming in both countries of an originally distinct agenda of improving support for sick and disabled claimants into a much broader worklessness agenda. Second, both countries show evidence of ‘parking’ claimants with high support needs. The outcome-based nature of the incentive schemes operating for the activation of benefit claimants appears to be at the root of this problem in both national contexts. Lastly, Heap finds that both countries have struggled to fund support adequately for this group. This is particularly problematic because less generous and more conditional benefits have been justified on the grounds of the state providing more support to find employment.

Whilst these four contributions discussed thus far take a primarily pessimistic view of the ways in which the crisis has been used to reinforce the neoliberal project and put the European social model into question, other contributions consider how the consequent shrinking of the welfare state may open up new possibilities concerning welfare pluralisation and the promotion of the third sector and civil society in providing more democratic and participative forms of welfare, albeit taking into account the danger that the third sector can be co-opted into the neoliberal project. Such issues are discussed in the papers by Rosangela Lodigiani and Luca Pesenti and Lee Gregory whilst the paper by Abel Polese, Jeremy Morris, Borbála Kovács and Ida Harboe considers the role that informal provision of welfare contributes in countries in Central and Eastern Europe where the overarching task of transforming former planned socialist societies and economies has overshadowed the particular problems which have been posed by the Great Recession.

Rosangela Lodigiani and Luca Pesenti, discussing the Italian case, look at how the crisis has increased interest in the idea of ‘subsidiarity’—that is, the organising principle that a central authority should only have a subsidiary function, performing those tasks which cannot be performed effectively at a more immediate or local level. The authors note that even before the crisis, the idea of welfare pluralism—the delivery of welfare through a variety of public and private actors—was very much entrenched in the Italian polity and ‘familialist’ welfare model but that post-crisis, the notion of subsidiarity has come further to the fore. The article demonstrates that the subsidiarity principle can be marshalled into support for neoliberal thought but that it can also be transposed into a range of political and ideological projects concerning welfare. The article discusses both social-democratic ideas of the ‘welfare mix’ and more radical configurations of the idea of subsidiarity in which the state actively promotes the role of civil society and the community to take responsibility for welfare provision.

Focusing on the UK, Lee Gregory discusses the ways in which time banking—a form of complementary currency created for a local community and operating its own circuit of value—was co-opted within David Cameron's idea of the Big Society. Gregory discusses how the Coalition government in the UK has associated the need for austerity with the need further to promote self-help—that is, activity conducted by individuals and communities for themselves and/or their families which is reciprocal and not carried out by professionals, drawing on people's skills, power, labour and knowledge. Time banking as a form of self-help gives the possibility for governments to reduce demands on rising welfare budgets and counterbalance the breakdown of social cohesion by re-establishing moral and social responsibilities towards the community. However, just as Lodigiani and Pesenti demonstrate as regards subsidiarity, time banking offers the possibility of a new way of organising welfare through the promotion of use-value time as well as the opportunity to challenge excessive individualism and the imposition of market values into the ‘core economy’ of family, community and democracy.

Abel Polese, Jeremy Morris, Borbála Kovács and Ida Harboe's article investigates how since the end of socialism scholars have been debating whether post-socialist welfare policies in Eastern Europe and the former USSR could be considered to be converging into Western European patterns or whether they should be considered an exception beyond these categories. In the post-2008 context, this debate has been enriched by the view that changes in post-socialist welfare states reflect neoliberal ideology and policy paradigms characterised by the ‘individualisation’ of social risks, privatisation in provision, the monetisation of benefits and the partial devolution of social welfare provision to local authorities. Polese et al. contend that such interpretations miss the role of informal welfare provision and informal renegotiations of the scope of welfare policies. Rather than seeing the former socialist region as an exception, the article suggests that the very debate about the welfare state and welfare policies in all countries and regions should be revisited in order to consider informality as a major element of social policy making. Based on detailed fieldwork in three CEE countries—Lithuania, Uzbekistan and Romania—Polese et al. show how different types of welfare—in particular old-age security through pensions, healthcare and childcare—may by produced and exchanged informally. The mechanisms of exchange that dominate this parallel welfare system are found to operate beyond the state's purview, particularly since 2008. Ultimately, the article shows how welfare policies are renegotiated by domestic and local actors and come to form something approaching a systematised form of mutual aid and self-help welfare.

Taken together, the varied contributions across this special issue highlight the transformative impact of the crisis on both policy framing and policy making as well as the differing roles of necessity, choice, opportunism and evidence across the countries studied. In doing so, the contributions also draw attention to the longer-term impacts and implications of these shifts for welfare reform, inequalities and inequities in the years to come.