Social Protection Dualism, De-Industrialization and Cost Containment

Abstract

Purpose – European social protection arrangements have undergone significant transformations since the mid-1970s. However, while the existing literature has focused on reforms in public welfare arrangements, an analysis of both public and private social protection is needed to understand the social protection status of European workers. Recent reforms have led to varying degrees of social protection dualism between insiders and outsiders. After showing the existence of dualization processes in Germany, France, and the United Kingdom, the chapter explores the structural and political sources of these processes. Methodology/approach – We conduct a comparative historical analysis and process tracing of policy change and its drivers in three major European political economies. A combination of qualitative evidence and quantitative measurements are used. Findings – We find that de-industrialization has contributed to unsettling the skill composition that sustained both public and private postwar social protection arrangements. This development has affected the preferences of employers, for whom cost containment has become a critical issue. Furthermore, we show that the capacity of employers to realize their preferences depends on the governance structures of social policy arrangements and on domestic political institutions. Originality/value – The chapter suggests new perspectives on employers' preferences in Coordinated and Liberal political economies which differ from those which have informed the Varieties of Capitalism approach.