Financing social security in the EU: Business as usual?

an article by Norman Wagner (Austrian Federal Chamber of Labour) published in International Labour Review Special Issue: The Crisis, Inequalities and Social Policy in the European Union Volume 151 Issue 4 (December 2012)

Abstract

This article assesses how well welfare models with different financing mechanisms cope with a major financial crisis.

It focuses on five EU countries, which represent different welfare models. It also analyses how the crisis and the associated stimulus or austerity measures changed financing, revealing a regressive impact.

It demonstrates that, in the short- or medium-term, contribution-based social systems have more stable public finances during a recession than tax-based systems. That said, the corporatist/continental welfare model seems most likely to remain stable in the long run, in so far as it focuses on keeping employment – the system’s main source of revenue – stable.

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