Welfare Regimes and Social Policy: A Review of the Role of Labour and Employment

The extent of global poverty and inequality in the world is widely acknowledged as a pressing political, economic and social issue. The recent global financial crisis has demonstrated the need to reconsider employment and social policies, although the austerity plans adopted by many countries undermine, rather than reinforce, existing policies. The form that policies should take at the current time, in the context of a highly integrated global economy, remains a subject of debate.

Social policies are grounded in decisions about the respective rights and responsibilities of states, markets and households, with individuals deriving and being allocated rights and responsibilities as citizens and/or as active labour market participants. Much of the current policy arena is occupied with reconsidering the role of the state in social protection, with allowance made for direct cash transfers to people as citizens, albeit often restricted to those defined as members of “vulnerable” groups. Too little of the new social policy development is grounded in the analysis of the changing structure of employment and of the implications of such changes for owners of capital, employers, the self-employed and employees in terms of their responsibilities for social protection.

This paper explores the intimate connections between employment and social policy, arguing that attempts to separate the two policy areas and confine them to separate spheres are misguided. It locates these linkages within the broader concept of a welfare regime: the collection of institutions—including the state, households and markets—which determine social and economic well-being along a number of dimensions. The relationships between employment and social policy are examined within a range of contexts: the theoretical approaches to welfare states and welfare regimes, the trajectory of economic development, the new dynamics of the global economy, the consequences of neoliberal policies, and the impact of economic volatility, fragility and crisis. By tracing how patterns of employment shape social policies and how social policies can support better employment outcomes, we present a case against delinking the two policy areas.

The paper argues that there is a tendency for social policy to be treated as a kind of residual policy category—something that is done when the business of running the economy has been accomplished. However, social policy is critical for the development of human resources and capabilities that themselves influence employment outcomes. There is also a need to insert into both economic and social policies a much greater awareness of how changing employment arrangements directly influence the distribution and level of economic risk, for both workers and their families, and to take into account explicitly the extent to which existing social policies address those risks. It requires taking a global view of integrated economic and social policies, moving away from the tendency to separate out policies appropriate for “the North”, and those befitting “the South”. These relationships have not been well documented or explored. There is a real need to do so, in concrete contexts with specific examples, in order to better understand the relationship between social policy, welfare regimes and employment.

James Heintz is Assistant Research Professor at the Political Economy Research Institute, University of Massachusetts, Amherst, United States. Frances Lund is Director, Social Protection, at Women in Informal Employment: Globalizing and Organizing (WIEGO) and Senior Research Associate, School of Development Studies, University of KwaZulu-Natal, South Africa.

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