Welfare Models: Globalization’s Impact on Bismarckian Systems
Welfare Models and Globalization
There are common elements in the interaction between globalization and all types of welfare states: activation of public policy such as education to employment initiatives, privatization of welfare services, public spending cuts, and coverage services that legitimize the welfare state or social policy to provide services to the population.
However, Prior and Syres conceive that globalization impacts differently depending on the welfare system and national responses embodied in social policies. They defend that the interaction between globalization and the welfare state is reciprocal, not unidirectional.
Bismarckian Model
Daly (2001) considers the Bismarckian welfare model to be highly regulated and organized by institutions and interests, administratively centralized, and interconnected. The principles that characterize this model are:
Operating Mechanisms:
Aid is achieved through the market. Men through employment and women generally through family relationships. There are therefore two systems: the market-work and marriage, combining benefits and services. The costs of social protection systems are articulated through social insurance.
Principle of Equivalence:
The level of support received depends on the contribution made indirectly from the amount of wages.
Horizontal Equity:
Related to the cycle of work and personal life. The final stages of life in economic terms are covered by retirement. It affects families with children because they are covered for child-related costs.
Self-Management:
Direct state intervention is the last of the options, highlighting an intervention of other social institutions closer to citizens, such as family or community. The management is to take the representatives of workers, employees, and government.
Inclusion in the Social Structure:
The welfare model refers not only to individuals and their capabilities but also to individuals in terms of their family and social status, promoting traditional families and certain groups over others.
According to Daly, the most important aspects of globalization that are involved in the Bismarckian welfare state are:
The Formula for Financing Welfare:
Financing has become an element of pressure in terms of expenditure and income from a time when the decline in employment reduces government revenue (taxes, social security contributions), while increasing demand for social expenditure, so this model is vulnerable to the pressures of globalization. There is also what Daly calls the “dilemma of securing additional resources,” which influences the traditional trend of increased social security contributions, creating problems of competitiveness.
The Nature of Demand for Services:
This issue is related to the ability of states to adapt to increased service applicants without resources.
Social Benefits in Relation to the Flexibility Involved in Globalization:
The Bismarckian welfare state has limited abilities to respond flexibly to changes in the environment that encourages globalization.
The Strict Guidance of This Type Usually Limits Welfare State Responses to Globalization, Which Demands Flexible Subjects.
The paradox whereby the more mobile and flexible are the people to adapt to globalization, more individual and is less familiar, and yet, this type of State encourages more to social and family organizations. Mobility and adaptation, hence restrict and hinder access to the welfare state at the same time allowing greater labor adjustment.
Daly concludes that the relationship between globalization and the welfare state based on suggestions from Bismarck is based on two central aspects: the model of financing and management of social security and increased demands for public services. In the contextualization of social policies, is to take into account macroeconomic policy and labor market. Germany, for example, is strengthening both economic and social policies of cutting markedly liberal, as is clear from the election results of the elections held in 2005, whose outcome has been at Angela Merkel’s government, which clearly emphasizes economic policies on other social policies.