Introduction

As we discussed in Chapter 1, welfare state reform, that is, updating, adaptation, retrenchment, or restructuring, is not a recent phenomenon. Still, it is increasingly capturing the agenda of governments in developed democracies, albeit in varying degrees of prominence. Where does the need to reform come from? In the previous chapter, we examined a key pressure coming from the outside, globalization, which pushes for welfare state change by exerting a functional pressure for reform. However, there are also domestic changes or pressures from within that add to this need and that influence actors’ ideas on how to respond and which type of reforms to undertake. The pressures from within stem from the shift toward a postindustrial society and comprise new social risks. We assess how this shift influences the need for welfare state reform by analyzing descriptive quantitative data on such diverse phenomena as the makeover of the employment structure and the demographic and household transformation. Moreover, we offer an extensive discussion of the different challenges from within that current welfare states face, including population aging and declining fertility, mass unemployment, changing family structures and gender roles, the transformation of life cycle patterns, and the shift toward a postindustrial labor market.

We show how the still ongoing changes have altered the foundation of the postwar welfare states in such a way that continuation of existing arrangements seems increasingly unlikely, if not impossible. Specifically, various previously well-functioning arrangements, such as pension or disability systems, are facing mounting inefficiencies, including burgeoning benefit claims (as in the Dutch disability scheme discussed in Chapter 6) and declining revenues, a combination of challenges that threatens their existence. Moreover, societal and economic changes cause new social risks to emerge, which existing welfare states are not yet covering, or at least not covering adequately. These newly arisen risks add up to a functional pressure for reform. As we argued (especially in Chapters 2 and 6), we do not assume that these functional pressures always translate into welfare state adaptation, updating, retrenchment, or restructuring. However, they do form a key point in our account of welfare state reform.