Description

The European welfare state is under siege from demographic, labor market and family change, and from European legal and economic integration, particularly in the context of the Economic and Monetary Union (EMU). European welfare states would need to shift from risk compensation to risk prevention in order to remain viable in the medium term. However, implementing what has been called a “social investment strategy” is extremely costly, and thus increasingly unlikely in those European countries most hit by the sovereign debt crisis and ridden with austerity policies that depress growth and thus hinder fiscal consolidation. An unanticipated consequence of the failure to recognize systemic interdependencies in the EMU, welfare state divergence in the Eurozone can be already observed and is likely to increase. Without real social convergence, however, the EMU is unsustainable, therefore arrangements must be devised to address the consequences of such interdependencies.