1. Globalisation And the crisis of the welfare state

2. The end of the golden age From late 1970s, post-war settlements break down (series of severe crises) Three main factors –End of the post-war boom –Globalisation of world economies –Inflation provokes shift in economic policy (from full employment to controlling inflation) Common result: welfare states thrown into question

3. Structure of lecture Whatever happened to full employment? What is ‘globalisation’? What major problems have recently emerged? How has EMU (European Monetary Union) affected this situation?

4. Introduction: End of 30 years economic growth in Europe Collapse of the post-war Bretton Woods settlement (Vietnam & oil crises) –Floating exchange rates –Recalibration of trade policy Rise of ‘little tiger’ economies Keynesian economic management (‘stagflation’) –Import penetration –Balance of payment & exchange rate crisis –Inflation

5. 1990s: emergence of global economy IT revolution lowers costs of trade International firms restructure (flexibility) = competition to attract investment 1980s: deregulation of capital markets. Growth of speculation: eg – dot-com bubble [1990s] –[housing market and sub-prime mortgages [2000s]] 1989 collapse of Soviet Block Transition from GATT to WTO: global regulation of trade

6. Political consequences Globalisation of financial markets = constraints on public expenditure –Currency speculation –‘Glocalisation’ strategies used by major firms (plant and personnel in cheaper locations) + supply chains Downward pressure on wages and welfare –Centralisation of budgetary controls –Decentralisation of welfare obligations –‘Social dumping’ (the risk) Rising youth and long-term unemployment (with ‘flexibilisation’ as the solution)

7. Demographic factors Rising life expectancy Strain on pension and health budgets Rising levels of female labour market activity (lower fertility) Lower replacement ratios (i.e. fewer active tax-payers/contributors and more social dependents) = more strain on social budgets

8. European Monetary Union I Creation of single European market (EEC transformed into EU in 1987) To facilitate trade, European currencies already linked (‘the snake’) 1989-91 Maastricht Treaty commits to EMU (realised 2001)

9. European Monetary Union II EMU: Growth and Stability Pact restrict public expenditure Convergence criteria –Public expenditure must not exceed 3% GDP –Size of National Debt subject to constraints Pressure of social expenditure Shift from ‘passive’ to ‘active’ welfare (‘bad’ passive versus ‘good’ active welfare spending)

10. Globalization: welfare futures? Economic imperatives v. social rights? The fate of participatory democracy ? The threat of the ‘drive to the bottom’? Current welfare = visible shifts: –away from social welfare as economic constraint –towards enabling market participation ( EES / securing livelihoods) –Social protection as security against future risk (social risk management)

11. New worlds of welfare? Esping Andersen’s analysis (2002) Corrosion of traditional family = threat to children (‘homogamy’) Economic transformation: stress on learning ability Threat of social bifurcation (dual labour market)

12. Esping Andersen’s social investment strategy Bias to prevention, not cure Incorporate Rawl’s concept of social justice Recast welfare towards safeguarding child development (pro-family) Harmonise motherhood and employment Social inclusion via employment Shift pensions towards defined contribution Reconfigure 3 welfare pillars (market, state, family)

13. Conclusions I Neo-liberal responses: ‘you cannot buck the market’ –External flexibilities (market imperatives) –Competition on price –Widening income disparities –Residual welfare A ‘drive to the bottom’ of competition between districts & EU member states

14. Conclusion II European Social Model –Negotiated flexibilities –More investment in training –Compete on product quality –Positive welfare (to enable participation)

15. Conclusion III: the need for new governance? Welfare states born of nation - building Globalization corrodes national sovereignty, national economies, national laws –Will political defence by electorate allow state welfare to survive? –Or will shift to individual protection continue? The problem: no collective responsibility to define common rules and collective obligations