Conditionality, austerity and welfare: Financial crisis and its impact on welfare in Italy and Korea

Abstract

What happens to welfare states when conditional financial aid is provided by an external financial actor? The conventional wisdom is that conditionality brings about welfare state retrenchment. The two cases analysed in this article – Korea during the financial crisis of 1997–1998 and Italy during the Eurozone crisis since 2011 – do not seem to confirm this received wisdom. This article tackles the puzzle of expansionary welfare reforms in the presence of economic conditionality, as transpired in Italy and Korea. We argue that conditionality and its contents interacted with, activated and had an impact on domestic political dynamics that led to progressive choices in welfare policy. Utilizing the Most Different Systems Design, we stress the importance of government ideology or partisanship and political contestation and competition – focusing on political actors that could threaten the government’s legitimacy when acquiescing to conditionality if not balancing neoliberal elements with expansion of social rights – and political agency underpinning government strategies in effectively introducing and implementing policy reforms.

Family as a Socio‐economic Actor in the Political Economies of East and South East Asian Welfare Capitalisms

“…Recently Yang () challenged the homogeneity of a productive East Asian welfare regime and highlighted the emergence of divergent patterns of welfare development. Similarly, Choi () highlighted how the expansion of pensions and incapacity‐related benefits in Korea aimed to protect against increasing levels of poverty and reflected, among others, political party responses to electoral demands (see also Croissant ; Peng and Wong ; Hudson and Hwang ; Sacchi and Roh ).…”

Ultra-low fertility in South Korea: The role of the tempo effect

“…The crisis itself had a strong impact in Korea, leading to a spike in unemployment in the late 1990s, but this factor alone cannot explain the observed long-term changes in fertility. Similarly, the financial crisis did not lead to a long-term increase in the vulnerability of families with children: Rather, the initially very limited government spending on families and social protection has expanded since the late 1990s (e.g., León, Choi, and Ahn 2016;Sacchi and Roh 2016). These reforms included an extension of maternity leave, establishment of parental leave since 2001, and a vast expansion of public childcare provision, which is now fully financed by the government.…”

Electoral Coalitions and Policy Reversals in Portugal and Italy in the Aftermath of the Eurozone Crisis

“…This 'deregulation at the margins' led to the widespread diffusion of non-standard employment among young workers. Workers on open-ended contracts also benefit from very generous Short-Time Work (STW) schemes 5 , while unemployment benefits and activation policies for labour market outsiders were nearly absent (Sacchi & Roh 2016). The two main EPL reforms implemented during the crisis, the Fornero labour market reform implemented by the Monti government and the Jobs Act, both aimed to tackle the dual nature of the labour market.…”