How traditional welfare regimes deal with inequality
One answer to reducing inequalities are welfare regimes (41). Esping-Andersen distinguishes three ideal types of welfare regimes in the Global North: a liberal, conservative and social democratic welfare regime (42). These offer different types and degrees of protection against social risks as they prevent the commodification of various social functions such as work, old-age provision, education, housing, health and care. They differ in the degree to which certain public services are considered social rights and therefore should not depend on ability to pay. The liberal welfare regime dominates in Anglo-Saxon countries such as the US, UK and Australia. It is a regime focusing on those who cannot take care of themselves financially in the market economy: The sick, people with special needs, the elderly, the unemployed. It is explicitly not a welfare state for all, but only for the ones in need. In market societies, people are responsible for themselves and are paid according to their market performance. This “residual” welfare state tries to prevent those who are capable of working from wrongfully claiming social benefits, leading to high bureaucratic costs and stigmatisation. The middle classes in these countries typically make an effort to remain independent from welfare benefits. Therefore, private solutions such as private schools, private pensions and private health insurance for the middle class and high earners emerge. The conservative welfare regime dominates in continental Europe in countries such as Germany, Austria and France. Historically, its origins go back to collective insurances that arose in occupational groups where certain risks were shared (i.e. miners are regular victims of mining accidents, farms are victims of extreme weather events). In conservative welfare regimes, access to a large part of the social security benefits is typically linked to participation in the labour market or citizenship, or both. This creates a welfare state that functions according to insurance principles: Insured people are “insiders”, non-insured are “outsiders”. The latter include migrants and many women. The social democratic welfare regime dominates in Scandinavia (Sweden, Denmark, Norway and Finland). It guarantees universal social rights and strives to provide well-developed public social infrastructures, education, health, care and decent quality housing for all. This leads to a (partial) de-commodification of these services, i.e. school attendance is not a commodity that has to be paid for; communal and social housing are publicly supported. Basic principles of this model are a policy of full employment (all people have a right to work) and the entitlement to access services and infrastructures of good quality for all residents (including those with higher incomes).
The following table summarises the characteristics of the three welfare regime types:
|
Liberal welfare regime |
Conservative welfare regime |
Social democratic welfare regimes |
|
|
Countries |
Anglo-Saxon countries |
Continental European countries |
Scandinavian countries |
|
Understanding of the welfare state |
Welfare state only for deserving poor; a good quality of social services is offered privately |
Social benefits tied to participation in the labour market and/or citizenship |
Welfare state provides good quality public services “for all” |
|
Commodification |
Markets for retirement provision, care, education, housing and health |
Decommodification of social services for “insider” |
Decommodification of social services for “all” |
The different welfare regimes have different effects on inequality and related indicators of societal well-being. Exercise 2.1 allows participants to explore the social performance of countries with different welfare regimes.4
41 – Esping-Andersen, 1990. The described regimes are models describing ideal types. In various countries the welfare approaches have changed considerably, e.g. several scandinavian countries have taken more liberal policies lately. Nevertheless, the typology is still helpful to distinguish different pathways and underlying worldviews of welfare policies of different states and their link to inequality, 42 – This chapter is based on Novy et al., 2020.
