European Welfare States Under Attack

Report Outline
Funding Crisis Across Europe
The Scandinavian Laboratory
Britain's Postwar Experience
Special Focus

Funding Crisis Across Europe

Austerity Arising From Economic Decline

With economies stagnating and unemployment at postwar highs, most of the Western European governments are facing hard and frequently unpopular decisions about austerity — extending even to the dismantling of some parts of their once-sacrosanct social-welfare programs. Virtually all of these countries are calling into question social-welfare standards that took decades to develop and that have successfully defused social discontent in the past.

Faced with rising bills for such programs as unemployment aid, family services and old-age pensions, the governments are looking for ways to limit the traditional patterns of growth in public services. In Europe these programs are far more advanced than in the United States, where President Reagan is engaged in a similar exercise of cutting social-welfare budgets. How well, or badly, Europe manages to reduce public spending without tearing the fabric of society may hold significant lessons for the United States. Reagan's economic course of action has already been compared, in its general thrust, to that which Prime Minister Margaret Thatcher instituted in Britain nearly two years ago.

Experts from the 24 major Western, mostly European, industrial nations belonging to the Organization for Economic Cooperation and Development (OECD) met in Paris last October to examine the strains that a faltering world economy had placed on their welfare states. An official report on the meeting noted that social-welfare spending in those countries averaged 25 percent of the gross national product — the sum of all spending on goods and services — and 60 percent of total public spending. “It is tempting in these circumstances to call for a moratorium on social development and indeed governments appear to be trying to limit the growth of public expenditure on a case-by-case basis,” the report said. “There can be little doubt that OECD countries are in a welfare crunch.”