Trajectories of Reforming European Welfare State Policies under the Post-2008 Socio-Economic Governance Regime

Abstract

Since the onset of the global financial crisis a decade ago, social policy reforms have become increasingly prominent in EU governance and policy debate. The severe decline in annual growth rates of social expenditures in EU-28 indicates a clear retrenchment bias in implementing respective reforms after 2008. Whereas the increasing salience of the seemingly necessity of austerity policies and structural reforms is widely acknowledged, the causes and consequences of these developments remain fiercely contested. While some see the EU as a catalyzer of the debasing of national welfare states, mainly driven by the imperative of fiscal discipline, others stress the broad scope of action left to national decision makers. Many member states have undertaken more or less far-reaching social and employment policy reforms, which they have often sought to justify by reference to EU requirements and recommendations. The article seeks to identify and to discuss specific trajectories and causalities explaining the retrenchment and deregulation bias, which goes along with the post-crisis architecture of fiscal and macroeconomic policy coordination, including Economic Adjustment Programs and Memoranda of Understandings (MoUs) imposed on fiscally distressed countries. Therefore, an econometric analysis provides an examination of the impact of financial assistance programs (ESM/EFSF) and/or of the Excessive Deficit Procedure (EDP) on countries’ social expenditure rates for the period 2008 to 2013. In addition, the correlation between the ideological base of parties in government and the social expenditure ratios is tested.