Recession rocks Western Europe's welfare states
For decades West Europeans competed with each other to build the ''model'' welfare state. Sweeping programs of ''social insurance'' - from generous unemployment benefits to almost limitless free health care - were built on a foundation of economic growth.Skip to next paragraph
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Today that foundation is shaken. Growth has halted, or slowed to a trickle. And as the recession bites deep from one end of Europe to the other, a new race has started . . . to slash welfare budgets.
It foreshadows potentially significant social and political change. But the key immediate challenge facing governments today, according to many observers, is to trim their welfare budgets without trimming their electoral support.
''Many governments would find themselves out of office if they were to cut welfare payments too drastically,'' says one political analyst. ''There's no question the welfare system has become something sacrosanct since the war. But at the same time, if they don't reduce public spending - a large chunk of which goes to the welfare systems - their economies could collapse. And that would also put the governments out on the street.''
Just how Western Europe's welfare systems will eventually be rebuilt will vary from one country to another. For now, the catchword is cut.
The pruning shears have been wielded primarily (and not surprisingly) by conservative and center-right governments in Britain, West Germany, the Netherlands, Belgium, and Denmark. But even in socialist France, the shears have begun to prune a blossoming welfare budget deficit now exceeding $4 billion a year.
In the Netherlands, the new center-right government (sworn in earlier this month) has set as one of its priorities saving $1.4 billion next year alone by cutting some social security benefits and freezing others, and by chopping some health-care subsidies. Premiums will also be raised.
In Britain, where Conservative Prime Minister Margaret Thatcher saved the government more than $2 billion by slashing unemployment and family benefits in her first year in office (1979), a debate has opened over how much more will have to be cut from the welfare budget. Most agree cuts will have to be made.
Social benefits and the nationalized health service now take more than $8 billion a year from the British government till, accounting for 40 percent of government spending (against only one-third in the late 1970s).
For its part, the new West German government of Chancellor Helmut Kohl announced plans to cut public spending, including outlays for welfare, less than a month after taking office in October. Labor Minister Norbert Blum, however, rejected proposals by Economics Minister Otto Lambsdorff to reduce unemployment and other social benefits, pledging instead to delay pension increases, tighten up on student loans, chop child-welfare benefits, and boost insurance premiums for the elderly.
''We are faced with only one choice,'' Mr. Blum said recently, ''caution or demolition. And as I am against the demolition of the social welfare system, I regard a breathing space as absolutely necessary.''
In Belgium, the center-right government has been encountering stiff public resistance recently to its new austerity program. This includes freezing for two years state-supported insurance schemes for doctors and health workers, cutting family allowances, and reducing the number of hospital beds in the country by one-quarter.
And in Denmark - once the model-of-models for the rest of Western Europe - Poul Schluter, the new conservative prime minister, has pushed through a plan aimed at cutting public spending next year by about 7 percent - almost entirely at the expense of the welfare system.