Abstract
This book is based on the exploration of the Comparative Welfare Entitlements Dataset’s second round (CWED2) that included Central and Eastern European (CEE) countries. The author’s and her colleagues’ effort to integrate CEE countries into the ‘large-n’ European comparative works on welfare state development cannot be overstated. Although these countries (Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) joined the European Union a decade ago (in 2004 and in 2007), they are still often left out of European comparative studies or are analysed as a separate set of cases. Against this background, Kuitto’s aim is to investigate whether CEE welfare states do actually form a distinct welfare state regime type or whether they fit other, well-established, Western welfare state models. In this way, she not only contributes to our better understanding of welfare state development in Eastern Europe but also helps to smooth the East-West divide that still seems to be difficult to overcome today, some thirty years after the breakdown of state socialist rule.
Kuitto builds her macro-level comparative analysis of CEE welfare states on solid theoretical and methodological foundations. She starts from a distant perspective questioning whether the ideal-typical welfare regimes, as formulated by Esping-Andersen (1990) in his seminal work, still exist in the reality of today. She divides her research up into various phases. In the first stage, she contrasts the ideal types (created on the basis of data from the 1980s) with the real-world of Western European welfare states. In the second stage, she compares CEE welfare states during the period of 2005 and 2007 with the ‘real’ welfare states in Western Europe in the same period. In her words, ‘first and foremost the actual contemporary Western European welfare models serve as the frame of reference for the empirical assessment’ (71).
Kati Kuitto has a much more ambitious aim than ‘just’ formulating a typology of CEE welfare states. Her book has a great deal to say not only about the place of CEE welfare regimes in Europe (which in itself is a considerable achievement) but also about the relevance of Esping-Andersen’s typology at the beginning of the 21st century. Overall, her intention is to ‘assess the welfare policy arrangements in CEE countries in the light of welfare regime theory’ (70).
Kuitto disaggregates her research question into five carefully formulated hypotheses (76-77). The first two relate to the established Western welfare states and ask whether these countries still constitute different models of welfare. Are the boundaries of the regime types still as solid as they were in the 1980s, when Esping-Andersen’s research was carried out? The second set of hypotheses is related to CEE countries. Kuitto’s central concern is whether a common welfare model emerged in this region and if so, whether this model is unique to this geographical area, or rather an approximation of one of the pre-existing Western European models (social democratic, conservative corporatist, liberal or Southern).
Following the introductory chapter that provides a thorough overview of already existing comparative research on CEE welfare states, the author describes, in the first part of the book, the institutional development of welfare systems in the region, starting prior to World War II, and explains the peculiarities of state-socialist welfare systems. While this part of the book resembles in some ways the introductory part of a PhD thesis, Kuitto makes some notable observations. For example, she claims that the transition from autocratic to democratic rule enhanced state capacities in CEE countries, and, together with macroeconomic stability fostered by the EU, by the mid-2000s created favourable conditions for welfare policies (34). Such statements have a different connotation today, in 2018, than they had prior to the global crisis and call into question whether the rapid erosion of democratic institutions in some countries of the region will lead to the dismantling of welfare states. Does more democracy really bring about more welfare? Does less democracy, in turn, lead to the erosion of social rights? Leaving these issues aside, Kuitto concentrates on the period around EU-accession and does not pose questions that go beyond her particular focus.
After reviewing the literature on the historical development of welfare states in the region, the author turns to the post-socialist period and gives an account not only of the development of welfare expenditures and major reforms in these countries but (mainly based on Cook 2007) also takes account of the major actors involved in the formation of welfare states in the new democracies, including domestic and international stakeholders. One minor shortcoming of the book is that Kuitto does not go back to these foundations later on, after the central part of the book. Neither does she refer to the possible historical institutionalist roots of newly emerging welfare state patterns, nor does she refer to the role of various stakeholders in the formation of distinct welfare states in the region. Strengthening the book’s consistency but leaving intellectual curiosity unsatisfied, she remains focused on the analysis of the outcomes of welfare state development.
In the third, theoretical chapter, Kuitto provides a summary of the emergence of the term ‘welfare state’ and turns to an exhaustive analysis of the development of comparative welfare state analysis. She critically assesses Esping-Andersen’s Three Worlds of Welfare Capitalism, its critiques and ameliorations before she formulates her own theoretical framework that is largely based on Bonoli’s (1997) and Bambra’s (2007) amendments to the original ‘Three Worlds’ typology. Kuitto analyses the ‘how much’ dimension and the ‘how’ questions simultaneously (62), and thus includes not only data on the spending profiles of welfare states but also analyses the way in which states spend these resources. Following Bonoli (1997), she distinguishes between Bismarckian and Beveridgean modes of welfare spending, that is, between states that emphasise contributions and those that finance welfare primarily from general taxation. Castles (2009), and to some extent also the feminist critique of Esping-Andersen’s ‘Three Worlds’, inspire Kuitto to include (social and health care) services in her analysis.
The author’s three-fold analytical framework, accounting for the multi-dimensional character of welfare systems, thus includes three distinct elements: The organisational principles of welfare state funding, where she distinguishes contribution-oriented (Bismarckian) and universalistic (Beveridge-style) systems. She measures this dimension in terms of social revenue. The emphasis of welfare efforts, in other words, the structure of public welfare expenditure, measured in terms of the development of various social expenditure categories. The decommodifying potential of welfare states, that is, the generosity of benefits, operationalised through an investigation of replacement rates and eligibility criteria.
Among these three dimensions, the third, the decommodification dimension, raises the most questions. Kuitto herself acknowledges the shortcomings of her difficult decision to incorporate unemployment and sickness benefits as well as old-age minimum pensions, but leaving two central fields of social security - earnings-related pensions and parental leave systems - out of her analysis. The first seems to be especially problematic because it limits the applicability of Kuitto’s comparative efforts to match her findings with Esping-Andersen’s ‘Three Worlds’ as the latter relied heavily on the measurement of the generosity of ‘ordinary’ public pension schemes as opposed to minimum pensions. Another difficulty with choosing minimum pensions arises from the state socialist past of CEE countries. Given full (and compulsory) employment in these countries up until the late 1980s, relatively few people have had to rely on minimum pensions as most citizens, including women, had a stable work record during their active years. In fact, the role of minimum pensions has increased only recently as a new cohort of employees, whose working careers were mainly in the post-1990 period, achieve pension age, and are thus much more unstable than those of employees in earlier generations. Overall, using minimum pensions tends to distort the findings of the otherwise very accurate analysis.
Kuitto’s selection of cases uses a very similar research design. Ironically, one important similarity of these countries was that they ‘have not sustained any serious reversals of democratic development’ (83), a statement that, as noted in earlier, should be revised given more recent developments. But it is the case that the period under scrutiny (2005 to 2007) can be characterised by efforts of these countries to adjust their democratic, economic and welfare institutions to the hard and soft regulations of the European Union. Retrospectively, choosing the period 2005-2007 results in a positive bias, as this was the heyday of democratisation in many of the countries studied, which was followed by economic and political crises and the global recession.
In her selection of data, Kati Kuitto carefully adjusted her calculations to take account of cyclical and structural conditions including demographic and social variables like the unemployment rate, and the ratio of elderly to young population (89). In the case of decommodification, she not only takes the legislative rules into account but also the actual intentional output of governments’ welfare policies by measuring replacement rates as well as generosity indices. By doing so, she considers the historically wide gap between de jure and de facto coverage rates in CEE countries that are mainly due to various forms of un- or underreported employment (Szikra 2004 ; Palme 2009). She calculates welfare generosity for two standardised household types or fictive cases of beneficiaries: a single person without children earning 100 percent of a measurement unit rightly criticised by feminist authors; and a family with two children where one spouse has APW-level earnings. While Kuitto acknowledges the deficiencies of the case-type approach as it ignores, for example, lone parenting, we have to add that the family type she has chosen more closely resembles the Western European male breadwinner model typical of the post-war era (the Esping-Andersen model) rather than the Central Eastern European model, where most families have been double earners and women typically work full-time, especially when their children reach school age.
Notwithstanding the minor shortcomings of her model, Kuitto makes some valuable observations. Examining first the organisational principles of welfare provision between 1995 and 2013, she concludes that CEE countries on average rely far more heavily on social contributions to finance their social policies than the Western European welfare states (103). This finding is in line with earlier historical research that argues that Central and Eastern European countries display a strong Bismarckian imprint (Inglot 2008; Szikra and Tomka 2009). Indeed, as Kuitto states ‘we do not find any examples of a universalistic, Beverdigean-oriented welfare state’ in the region (105). Later on, she refines these results using cluster analysis and states that these welfare states are not entirely uniform as they correspond to the conservative corporatist welfare regime to a varying degree (113). Interestingly, Estonia, a country close to the Scandinavian states, is the leader in this respect with over 80 percent of its financing relying of social insurance contributions. Kuitto then compares Esping-Andersen’s typology with the real Western European welfare states using cluster analyses (agglomerative hierarchical clustering) and finds that, in their financing patterns, the persistence of welfare regimes closely corresponds to the ideal types in Western Europe (109).
As a second analytical dimension, the author examines the emphases in welfare policy through needs-adjusted social expenditure and expenditure in terms of GDP on various fields of social policy between 1995 and 2013. Hit hard by the financial crisis, it is not surprising that total social expenditure dropped in most CEE countries around 2008 and, since then, has only gradually climbed back to its pre-2008 level. The drop in social expenditure varied between 20 percent in Slovenia and around 12 percent in Estonia and Latvia, significantly less than the Western European average of around 22 percent. The level of spending on old-age related cash benefits has remained stable across the region as a whole, and even increased continuously in Hungary, whereas spending on the working-age population decreased in several countries over the past decade. (Kuitto only takes cash benefits for the unemployed into account and does not include active labour market policies.) In terms of services, the author observes that, in contrast to Western Europe, health care spending did not increase in CEE countries. Social services, that only comprise a minor share of social spending all over Europe, are even more marginalised in these countries (118-119). The results of hierarchical cluster analysis show that, in terms of welfare policy patterns, CEE countries have developed in different directions and can be grouped together with a number of Western welfare states. From a temporal perspective, Kuitto stresses the dynamic nature of CEE welfare states and their changing spending patterns (128). This finding again confirms earlier research that emphasised the ‘emergency’ character (Inglot 2008) and the volatility (Szikra and Tomka 2009) of CEE welfare states.
In terms of the third dimension, the decommodification potential, Kuitto first scrutinises the development of welfare generosity in CEE countries as compared to their Western counterparts. She concludes that, during the 2000s, minimum pensions became less generous in nearly all CEE welfare states, with Bulgaria being the only exception. Slovakia, and to some extent Romania, have been the most volatile in the case of social provision, the former being the leader with around a 60 percent replacement rate of the Average Production Worker Wage (APW) during the late 1990s, after which it slid down to around 30 percent, to the level of most other CEE countries. This compares to a Western European average that increased from around 40 to 50 percent over the past decade. Interestingly, the author finds that some of the most developed welfare states in Western Europe score at the same low level of minimum pensions as CEE laggards Romania and Lithuania (131). Still, as we noted earlier, the generosity of minimum pensions does not say much about the pension system as a whole and, for this reason, these findings may well be misleading. Looking at the generosity of working-age benefits, most CEE countries increased unemployment benefit replacement rates during the early-mid-2000s, with Poland being an outlier, keeping the average replacement rate at around 30 percent continuously. Eligibility criteria, however, have been tightened everywhere with Slovakia being the strictest country having a three-year qualification period and a maximum period on benefit limited to six months. Kuitto’s period of observation ending in 2011 in this case (in some other cases in 2013) but, given the post-2011 changes, Hungary scores lowest in this respect with a maximum period of three months of unemployment benefit.
In the case of sickness insurance, perhaps rather surprisingly, CEE states turn out to have a higher level of income replacement rates than the Western European average, with Romania, Slovenia and Bulgaria being the most generous, and again, Slovakia showing the most drastic changes. These countries also use more generous eligibility criteria than Western European states. We can note here that it is likely that sickness insurance (just like disability pensions) has often provided a smoother transition out of the labour market than less generous unemployment benefit schemes for many people who lost their jobs during the transition years. Taking all the benefit schemes together, Kuitto argues that CEE states ‘are not less generous than their mature counterparts’ (137). At the same time, actual take-up rates may be lower than in Western European welfare states. For example, in most countries only between one third and one quarter of the registered unemployed actually receive unemployment benefits, while they might be engaged in irregular or unreported employment, which again points to major differences in de jure welfare entitlements compared with de facto generosity.
One of Kuitto’s main conclusions about the decommodification potential of welfare states is that, given the different generosity levels of various social policy schemes in Europe, there is no generally high or generally low decommodifying potential for welfare states, as postulated by Esping-Andersen (139). This leads her to argue that it is inevitable that, when analysing generosity of welfare states, there will be a focus on individual programmes. In the final part of the book, she goes further and argues that, although a ‘core essence’ of Western welfare regimes still exists, the boundaries of Esping-Andersen’s typology seem to be blurred. The most path-dependent dimension is that covering the financing principles of welfare states, which has proved to be rather stable since the 1980s, when Esping-Andersen created his typology.
Regarding the CEE welfare states, Kuitto’s final assumption is that they do not embody any of the specifically Western models. She argues, at the same time, that there is no common CEE welfare state model either. Rather, these countries join different clusters depending on the dimensions and programme under scrutiny. The author thus confirms and further refines the findings of earlier research on the ‘hybrid’ or ‘mixed’ character of CEE welfare regimes (e.g. Cerami and Vanhuysse 2009). Some common characteristics, however, can be found among countries of the region, as summarised in Table 5.14. These include, among others, the generally lower level of social policy spending, a strong reliance on social contributions, as well as the slightly higher importance of cash transfers as compared to services. A further commonality is the relative generosity of regulations, which is often downgraded by the weakness of de facto implementation. In sum, welfare states of the CEE region indicate an ‘axiomatically Bismarckian type of welfare model, combined with universalist elements’ (165).
Overall, Kuitto’s book is path-breaking in terms of integrating CEE welfare states into the ‘large-n’ macro-level comparative welfare state literature. The Post-Communist Welfare States in European Context is a rewarding read also thanks to the author’s habitus as a researcher: She is modest and self-reflective in formulating her hypotheses and analysing the results of a refined comparative methodology. Throughout the book, she carefully reflects upon the merits and shortcomings not only of other comparative analyses but of her own research as well. Her findings contribute significantly to the constructive criticism of Esping-Andersen’s ‘Three Worlds’. But Kautto’s most significant contribution is the multi-dimensional analysis of CEE welfare states as part of the European picture.