The financial crisis, which struck the EU countries in 2008, was followed by the severest economic recession since the end of the Second World War, involving a significant drop in GDP (negative economic growth) for most of them. Output growth has turned negative or stagnated in several countries, the impact on labour markets has led to rising unemployment rates and public debt and deficits have soared. In the aftermath of the crisis countries were confronted with a deteriorating social context, which is due to the severity of the economic downturn, the worsening job situation and the increased unemployment. This has resulted in a heightened need for social protection while at the same time making it more difficult to finance.
The crisis has highlighted the role of social protection as a social buffer and an economic stabilizer that cushions the impact of recessions. Social benefits have been an essential element of national crisis response in the countries of the European Union. Social security programmes not only act as an important component of the crisis „exit strategy“, helping to revitalize the economy but they also protect the most vulnerable part of society. One of the lessons that can be learned from the crisis is that countries and their inhabitants are differently exposed to economic shocks due to the variations in the design of social security that they are covered with. This consideration is essential to analysis because, as Őzdemir et al (2010) point out, the origins of the crisis can be spotted in the financial sector, where income levels tend to be relatively high. Nevertheless, there is piecemeal evidence that the most vulnerable in society have to struggle most with the negative consequences of the crisis.
This work examines the capacity of specific types of welfare states, classified mainly according to Esping-Andersen’s concept, to absorb macro-economic shocks – in particular with reference to the most vulnerable parts of society. Which social policy challenges arise in Sweden, Austria and Spain and which differences in the economic and socio-political impacts of the crisis can be identified? The question regarding the ability of a system to handle external disturbances gains importance, as one of the main claims after the outbreak of the financial crisis is to improve our political, economical and societal systems to become more resistant or resilient.
Table of Contents
1 Introduction
2 Challenges for Three European Welfare States: Sweden, Austria and Spain
2.1 Welfare State Typology
2.2 A typology of economic crises
2.3 Impacts of the financial crisis on national budgets (2007 – 2010)
3 Impact of the Crisis on Unemployment, Poverty and Distribution
3.1 Unemployment: Developments in Sweden, Austria and Spain in comparison
3.1.1 Unemployment rate of the total population (from 15 to 74 years)
3.1.2 Youth unemployment rate and youth unemployment ratio
3.1.3 Unemployment rate according to the highest level of education
3.2 Poverty: Developments in Sweden, Austria and Spain in comparison
3.2.1 Poverty rate of the total population
3.2.2 Youth-poverty rate
3.2.3 Old-age poverty rate
3.2.4 Poverty rate of single parents with one dependent child
3.2.5 Summary of the findings concerning poverty
3.3 Distribution: Developments in Sweden, Austria and Spain in comparison
3.3.1 Which lessons can be learned from past recessions concerning distributional effects?
3.3.2 Which lessons can be learned from the current crisis concerning distributional effects?
3.3.3 Summary of the findings concerning the Gini coefficient
4 Summary and Conclusion
Objectives and Topics
This thesis examines how the 2008 financial crisis and subsequent economic downturn affected unemployment, poverty and income distribution in Sweden, Austria and Spain. It asks whether differences in these developments can be associated with the countries’ welfare-state models and their capacity to cushion economic shocks.
- Welfare-state typologies and resilience
- Economic crises and national budgets
- Unemployment by age and education
- Poverty risks across population groups
- Income distribution and the Gini coefficient
- Comparative analysis of European social protection
Excerpt from the Book
3.2 Poverty: Developments in Sweden, Austria and Spain in comparison
As unemployment rates were on the rise in all three countries it is important to understand to which extent the newly unemployed are protected from the risk of poverty by the specific social policy of their welfare regime. This work alludes to the argument that poverty rates are more comprehensive measures of economic well-being than solely considering employment status or labour earnings.
It is expected that the degree to which poverty rises during an economic downturn will vary significantly across countries reflecting their different labour markets and socioeconomic institutions. The aim of this section is to identify the factors and their respective impact, which prevent incomes from falling below the poverty threshold as this allows it to assess the effectiveness of social protection schemes. Therefore it is inquired whether the economic recession has raised the relative number of poor people in Sweden, Austria and Spain in the midterm (2007 – 2010). To this end I first pose the question who is at risk of poverty meaning that their income is below 60% of the median equivalised income after social transfers. Apart from merely looking at the developments of poverty for the total population a closer look is taken at groups in society, which one would expect to be especially vulnerable to the impacts of the crisis to obtain a more differentiated picture. Detailed investigation will therefore be made for young people between 15 and 24 years, elderly people over 65 years and single parents with one dependent child.
Before comparing the relative poverty rates of different years I have to point out that the at-risk-of-poverty rate is a relative measure of poverty and the poverty threshold varies greatly between the different states. Furthermore reductions in income due to unemployment result in some reduction to median incomes and consequently to the poverty threshold that is responsive to income changes. This decreased relative poverty threshold will - other things being equal - reduce the numbers of people counted as poor. It is therefore necessary not only to look at the poverty rates but also at the development of the poverty threshold.
Chapter Summaries
1 Introduction: The introduction presents the research question, the concept of resilience and the indicators used to compare the three countries.
2 Challenges for Three European Welfare States: Sweden, Austria and Spain: This chapter introduces welfare-state and economic-crisis typologies and compares national budget indicators surrounding the crisis.
3 Impact of the Crisis on Unemployment, Poverty and Distribution: The main analysis compares unemployment, poverty and income distribution, including differences by age, education and household type.
4 Summary and Conclusion: The final chapter brings together the country comparisons and discusses the relationship between welfare regimes and resilience.
Keywords
welfare states, financial crisis, resilience, Sweden, Austria, Spain, unemployment, youth unemployment, poverty, income distribution, Gini coefficient, social protection, Eurostat
Frequently Asked Questions
What is this thesis about?
It compares the social consequences of the 2008 financial crisis across the welfare systems of Sweden, Austria and Spain.
What are its central themes?
The main themes are welfare-state resilience, unemployment, poverty, income distribution and social protection.
What is the primary research question?
The thesis asks how the crisis affected the three countries and whether differences in their social indicators can be linked to their welfare-state models.
What research method is used?
The author conducts a comparative analysis of existing statistical data and research, drawing on European Labour Force Survey and EU-SILC information.
What does the main analysis cover?
It compares unemployment, poverty risks and Gini coefficients, with attention to differences between population groups.
Which keywords characterize the thesis?
Key terms include welfare regimes, resilience, unemployment, poverty, income distribution, social protection and the Gini coefficient.
How does the thesis approach youth unemployment?
It compares the youth unemployment rate with the youth unemployment ratio and discusses how their different denominators affect interpretation.
Which groups are examined in the poverty analysis?
Alongside the total population, the analysis considers young people, older people and single parents with one dependent child.
What theoretical framework informs the country comparison?
Esping-Andersen’s welfare-state typology provides a starting point, supplemented by discussion of a Southern European welfare model.
- Quote paper
- Verena Mai (Author), 2012, Resilience of European welfare regimes against the negative impacts of the financial crisis 2008, Munich, GRIN Verlag, https://www.grin.com/document/214912
