Literature Overview

The debate on welfare state retrenchment and reform is characterised by what Pierson (1996, 2001) calls the

‹dependent variable problem›. It refers to the striking ambiguity of the term ‹welfare state› which can be used to label a whole range of different policies and institu-tional arrangements. The provision of social services, for instance, can be viewed as one defining characteristic of welfare states, just as transfers and redistribution to the underprivileged, although both things are essential-ly not the same. The meaning of ‹welfare state› is thus often blurry and so are scholars’ attempts to operation-alise it.

If generosity and retrenchment are to be examined, two approaches can be distinguished, both of which have been widely applied. One is to use aggregate so-cial spending on various schemes as the dependent vari-able (e.g. Castles 2004, Gornick / Meyers 2001, Siegel 2002). This has been criticised because it does not allow to draw any conclusions whether a change in spend-ing is caused by altered regulations or a change in the economic environment (an economic downturn, for ex-ample, is likely to drive up the number of welfare claim-ants). Proponents of the aggregate measure try to fix this problem by using ‹adjusted› spending instead, i.e.

aggregate spending divided by the number of recipients.

Even this procedure, however, leaves some issues unre-solved; most prominently, it remains indistinguishable

if changes to entitlements or changes to institutional governance are accountable for fluctuations in spend-ing. Moreover, aggregate spending often reacts with a time lag, making its real determinants hard to discern (Green-Pedersen 2004, Kühner 2007, Scruggs / Allan 2004).

Another approach was chosen by Esping-Anders-en (1990). Rather than focusing on aggregate spEsping-Anders-ending figures, he suggests paying more attention to individ-ual benefit entitlements as these have the advantage of being robust against changes in the economic envi-ronment, do not have a time lag, and reflect more ad-equately what a welfare state offers its citizens in terms of financial support. The drawback in this approach–de-spite its intuitive logical appeal–is that it is difficult to implement in research practice. The challenge is meth-odologically: while spending data are easy to come by and exploit, individual entitlements are contingent on a multitude of factors such as eligibility rules, replace-ment rates, taxation and so on. Esping-Andersen’s solu-tion to this problem is the construcsolu-tion of a single index merging all these factors into one single number that can be conveniently processed. He calls this index de-commodification index, referring to the extent by which social security is removed from market dependency, applicable to all types of protection schemes that offer earnings replacements. The study at hand follows this approach since aggregate spending data are essentially incapable of informing us as to the disparities in pro-tection between standard and non-standard workers.

Understanding welfare dualism thus seems impossible unless individual entitlements are made the object of investigation.

The basic idea of the decommodification index was later taken up by Scruggs (2004) who extended the database to encompass several decades starting in the 1960s, revised the computation method, and renamed it generosity index. Recently, the database has been fur-ther expanded and the methodology refined (Scruggs / Jahn / Kuitto 2013). It comprises indices on unemploy-ment and sickness benefits as well as on pensions; each index (except for pensions which are not included in

this study) is composed of four variables: replacement rates, benefit duration, required weeks in employment previous to benefits, and waiting days before the dis-bursement of the benefit starts. All variables are com-puted for a worker 40 years old with 20 years of employ-ment history. The aggregation of the variables is done by the addition of the Z-scores of all variables, calculated on basis of the log-values of the raw variables across all countries and years, with replacement rates given a dou-ble weight. The resulting score is finally weighted by the coverage rate of the respective benefit.

This seminal approach allows one to compare the generosity of individual welfare entitlements across a wide variety of countries on a time series basis, there-with opening up an entirely new perspective in com-parative welfare state research. Yet with regards to the goal of this study, namely to analyse welfare entitle-ments of atypical workers, the generosity index is not well suited because its focus is solely on standard en-titlements. Replacements rates in the generosity index, for instance, are calculated for workers with a full-time work week, while corresponding figures for workers with lower earnings are not yet available. Furthermore, the only variable to measure the strictness of qualifying conditions, which is of foremost importance to atyp-ical workers, is the number of employment weeks re-quired to become eligible, even though there are other factors, such as the number of minimum hours of work per week, certainly posing no less an obstacle. Given that qualifying conditions are much harder to meet for atypical employees, they should likewise carry a higher weight in an index designed to gauge entitlements of non-standard workers. The generosity index is hence an excellent point of departure, but needs refinement to be applicable to part-time and fixed term workers.

A more explicit focus on atypical employment is placed by Tangian (2011). Originally designed to as-sess the scale of flexicurity, i.e. the balance between employment flexibility and social security, in interna-tional comparison, Tangian invented a new method by which social protection of both standard and atypical employees can be measured simultaneously. His

ap-proach deviates from Scruggs’ and Esping-Andersen’s in one fundamental point: rather than expressing the generosity of entitlements by a numeric value directly derived from predefined empirical indicators (e.g. re-placement rates, duration of receipt etc.), he suggests to simply rank international welfare schemes according to their generosity. By doing so, he avoids the contentious issue of assigning exact numerical values and weights to each of the numerous aspects constitutive for benefit generosity; instead, it suffices to be able to state that one benefit scheme is more generous than another. The resulting ranks can be easily transformed into quanti-tative scores. What is appealing about Tangian’s origi-nal procedure is that protection of both standard and non-standard employees is ranked on the same scale and in direct comparison with each other. It is therefore possible to calculate the precise difference in generosity between standard and atypical employees’ entitlements, which could be interpreted as a quantitative measure of welfare dualism. Just like the generosity index, Tangian’s method is ready to be applied to a variety of provisions such as unemployment, sickness, maternity, pensions, and paid holidays.

In spite of all these virtues, there are some severe caveats. One is that Tangian does not specify in greater detail which criteria were consulted in order to rank the schemes. This would not be too serious, if his primary goal were to present and demonstrate the basic func-tioning of his new method. Yet in this case it obscures that there is one principal objection against ranking wel-fare benefits of standard employees relative to those of atypical employees on the same scale. The critical point is that both cannot be evaluated by the same criteria and hence cannot be ranked in direct comparison to each other. An easy illustration of this problem is given by the role of qualifying conditions which play a profound-ly different role in atypical and standard workers’ chanc-es of receiving benefits. For standard employechanc-es with long contribution records and high income qualifying conditions might not matter much; to atypical employ-ees they most likely do. Likewise, a given replacement rate can mean different things to different kinds of

em-LITERATURE OVERVIEW 17

ployees depending on their income level. One group with high earnings may view a given percentage rate as generous while another one with lower earnings may not. In face of these differences between standard and non-standard employees in the criteria defining whether a benefit is generous or not, it seems as no good idea to measure both on the same scale, as this would wrong-ly impwrong-ly that benefits for both types of employees can be evaluated by the same criteria. The better way thus seems to assess both things by separate standards.

There are some other indices that do not deal with overall generosity, but focus only on the eligibility part.

This includes contribution conditions as contained in the generosity index, yet extends further to comprise also behavioural requirements claimants are required to comply with. Making benefit receipt conditional on a certain behaviour is an attempt to stifle incentives to become long-term dependent on public financial sup-port. Since the state of joblessness can only be escaped by an individual’s own job search efforts, the monitor-ing of recipients’ behaviour is of special concern for the handout of unemployment benefits, which is why the support for the unemployed in almost all countries is linked to obligations to actively seek work. With regards to sick pay, such obligations are usually less rigorous as recovery from illness is less contingent on personal ef-forts. Attempts to measure the strictness of behavioural obligations, which are differing largely across countries, are thus focused on unemployment benefits.And to the best of my knowledge, no such attempt has so far been undertaken for sickness benefits.

The most comprehensive approach to eligibility criteria measurement stems from Venn (2012) which is

based on earlier studies by Hasselpflug (2005) and the Danish Ministry of Finance (1998). In addition to fa-miliar criteria taking into account contribution history, she presents novel indicators of claimants’ obligations to be occupationally and geographically mobile, to be available during active labour market policy participa-tion, and to proof serious job search efforts. These are further complemented by variables capturing the strict-ness of sanctions authorities can impose should a claim-ant fail to meet her obligations. The variables are coded on a scale from 1 to 5, weighted and added. Although this approach is certainly innovative and contributes a new perspective to the discussion of benefit generosi-ty, it does not bear special importance for the debate on dualism, since obligations do not differ for standard and non-standard workers. Therefore, I decided not to include behavioural obligations in this study.

In short, I have adopted a method in the tradition of Esping-Andersen (1990) who assesses generosity of welfare states by analysing individual entitlements. This approach seems particularly well-suited for the aim of this study, which is to examine to what extent one group of employees faces conditions of social protection less favourable than others and how this impacts the struc-ture of employment. Since no index so far has defined indicators explicitly concerned with the specific situa-tion of atypical employees in comparison to standard ones, I have constructed three new indices: one is to gauge the strictness of qualifying conditions, while the remaining two measure amount and duration of bene-fits for standard and atypical employees. Finally, I have left aside behavioural obligations because these are un-likely to cause welfare dualism.