Europe trims the sails of its welfare states
Copenhagen — The welfare state in Western Europe has survived against almost overwhelming odds. The reason for its endurance today in countries from Denmark to the Netherlands, West Germany to Britain, is a mixture of cost-cutting reform and unshaken faith.
"Denmark," says a Danish journalist, echoing the view heard across Europe, "will never seriously attack or limit the cradle-to-grave safeguards it provides for its citizens. The current economic crisis is, however, putting a tighter rein on welfare services."
The problem, of course, is money -- the lack of it. The worldwide recession, sparked by the 1973-74 oil crisis, has forced European governments to redefine sharply downward the extent to which they support the dream-turned-reality.
In Denmark -- a quintessential welfare state -- succeeding governments since 1849 (when the country's first welfare legislation was introduced) have put into practice the theory that the measure of any society is the way it treats its weakest members.
Today, no one avoids the system completely -- whether unemployed, sick, on pension, raising children, or deceased. The cost of having children is borne by the government. Burial is also free, thanks to the state. And every misfortune in between is covered to some degree by the omnipresent Big Brother.
But like other countries in Western Europe, Denmark is having more and more trouble keeping its quintessential welfare state quintessential.
Social expenditures in Denmark make up more than one-third of the national budget. Taxes support the system almost exclusively, and because the tax rates have already reached the limit of political acceptability, the government has had to borrow heavily to help pay the bill. Denmarkhs net foreign debt at midyear is $13.5 billion, or 25 percent at GNP. Its budget deficit -- forecast to be nearly $4 billion this year -- has risen by about 500 percent since 1975, nearly doubling in the past two years.
Still, Prime Minister Anker Jorgensen, reflecting solid and unswerving popular support for continued government financing of social services at almost any price, said last month that the government had no plans to correct the huge budget deficit. He explained that there was simply no political support for massive spending cuts.
Social Affairs Minister Ritt Bjerregaard, meanwhile, has been fine tuning and trimming the countr's welfare system ever since he took office nearly two years ago.In the process, however, he has been emphasizing that the government remains as committed as ever to the welfare state -- even though the country cannot afford it today the way it did 20 years ago.
Bjerregaard has pointed to excesses and absurdities in the system, such as rich pensioners receiving the same allocations as the poor and a disproportionate share of the welfare budget going to keeping the terminally ill alive for another two or three weeks. She has been oppotunities to economize and has seized on them.
But no one is writing off the Danish welfare state despite the continuing propensity of foreign pundits to do so for welfare systems from Sweden to France. Since the mid-1800s, when Bismark gave modern-day substance to the welfare concept, musing that a citizen with an old-age pension to look forward to was more content and easier to manage than one without, serious thinkers and hacks alike have been calling the welfare state in Europe an endangered species with predictable regularity.
Both a survivor and cause of fallen governments and fiscal crisis, the European welfare state today faces its toughest test since World War II -- finding ways to finance it in a period of slow growth without raising taxes to unbearable levels. But again, the system will survive.
Even Britain's Conservative Prime Minister Margaret Thatcher has never called for the demise of the British welfare system. Her aim is wide-ranging reform through tax incentives and other measures designed to make the British people work harder and prosper.
Recently, the Swedish government introduced a belttightening program that, while boosting the expected budget deficit for 1982 to $15 billion, will cut public spending by $3.6 billion in order to stimulate industry and exports. "But we're not changing course drastically," an economist said, "only adjusting our expectations." A plan to lower the maximum income-tax rate from 85 to 75 percent and the marginal rate for the mass of taxpayers to 50 percent has not received across-the-board political support.
In West Germany, proposals to cut welfare spending in the 1981 budget were scrapped earlier this month when Chancellor Helmut Schmidt's ruling coalition won Bundestag (lower parliament) approval of the Labor Ministry budget, which includes welfare benefits by a wide margin. Foreign Minister Hans-Dietrich Genscher had called for slashes in social spending -- the largest single item in the federal budget -- labeling it "a social hammock." His plea went unheeded.
In Belgium, a government collapsed earlier this year due in part to its courageous attempt to cut social spending. The new government -- under Prime Minister Mark Eyskens -- is having little success with even more limited aims in the cost-cutting field.
Efforts to reduce welfare expenditures in the Netherlands, meanwhile, where such outlays account for 30 percent of the $150 billion national budget, have been blocked consistently by the parliament.
And in France, where the cost of social services has risen fourfold in the past decade, to $124 billion last year, newly elected Socialist President Francois Mitterrand can be expected to give more backing -- not less -- to the welfare system than did the center-right government of his predecessor, Valery Giscard d'Estaing.
Emile van Lennep, secretary-general of the 24-nation Organization for Economic Cooperation and Development, summed up the current mood in Europe concerning the welfare state when he underscored the commitment to the concept coupled with the need to economize: "The state must surely remain as the main guarantor against social risks such as unemployment, ill health, disability, and old age . . . ," he said. "But [it must do so] in an economically efficient way , with the sails trimmed to make the most of the economic wind of the day."