European welfare states in motion

In this working paper, we assess to what extent European welfare states have moved in the direction of social investment in terms of spending and how well they are performing socio-economically, for instance in terms of unemployment, poverty-reduction and work-family life reconciliation. Moreover, we discuss the welfare reform trajectories of ten selected welfare states in the period up to the financial and economic crises. We do so against the backdrop of the socio-economic adaptive challenges that 21st century welfare states face, like population ageing and increased economic globalization.
Our analysis demonstrates that the return on social investment seems considerable:
those countries with high(er) levels of social investment spending perform better
in terms of unemployment and poverty-reduction. However, the scope and timing of a turn towards social investment varies considerably across countries. Reforming in the direction of social investment is typically a contentious political process. In the context of tight budgets, a turn towards more social investment spending calls therefore on the learning capacity of policy makers, and on the existence of reform coalitions that are able to circumvent entrenched interests blocking fundamental reform.
Based on our findings, we draw four policy conclusions in the final chapter: (1)
Welfare reform is difficult, but it happens; (2) We live in a world of path-dependent
solutions and setbacks; (3) The EU helped set the social investment agenda; and (4); There is a need for an EU social investment pact.