Abstract
This article presents a novel explanation for instances of business support for welfare state expansion. It emphasizes the importance of cost considerations in shaping business preferences and argues that their willingness to support and ability to oppose demands for increases in the generosity of social insurance programmes depends primarily on the extent to which labour unions accept that these increases are to be financed by workers themselves. Based on a comparative-historical analysis of postwar welfare state development in the Netherlands and the United Kingdom, the article shows that this willingness among others depended on the type of labour market risk, the margin for pay increases, and the extent to which social welfare initiatives were perceived as actual improvements to the social wage by labour unions.
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