The welfare state and its role in the socio-ecological transformation

Bock-Schappelwein, Julia et al. Article The welfare state and its role in the socio-ecological transformation Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung (VAW) Provided in Cooperation with: Institut Arbeit und Wirtschaft (IAW), Universität Bremen / Arbeitnehmerkammer Bremen Suggested Citation: Bock-Schappelwein, Julia et al. (2024) : The welfare state and its role in the socioecological transformation, Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung (VAW), ISSN 2942-1470, Duncker & Humblot, Berlin, Vol. 1, Iss. 4, pp. 457-472, https://doi.org/10.3790/vaw.2024.1454903 This Version is available at: https://hdl.handle.net/10419/317896 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Duncker & Humblot · Berlin The Welfare State and its Role in the Socio-Ecological Transformation By Julia Bock-Schappelwein*, Andrea Egger**, Katharina Falkner***, Ulrike Famira-Mühlberger****, Angela Köppl*****, Claudia Liebeswar******, Christine Mayrhuber******* and Margit Schratzenstaller******** Summary This article argues that the socio-ecological transformation does not only require to restructure the traditional welfare state architecture but also to renew welfare state objectives and institutions. While compensatory and preventive functions have long been in the foreground, it is now time to expand the transformative component and promote ecological sustainability through the welfare state. Conceptual starting points for the socio-ecological transformation are the core of this article. Zusammenfassung In diesem Artikel wird argumentiert, dass die sozial-ökologische Transformation nicht nur eine Umstrukturierung der traditionellen Wohlfahrtsstaatsarchitektur erfordert, sondern auch eine Erneuerung der wohlfahrtsstaatlichen Ziele und Institutionen. Während * Julia Bock-Schappelwein, Austrian Institute of Economic Research in Vienna (WIFO), [email protected] ** Andrea Egger, EVACON, [email protected]t *** Katharina Falkner, Austrian Institute of Economic Research in Vienna (WIFO), [email protected] **** Ulrike Famira-Mühlberger, Austrian Institute of Economic Research in Vienna (WIFO), [email protected] ***** Angela Köppl, Austrian Institute of Economic Research in Vienna (WIFO), [email protected] ****** Claudia Liebeswar, abif – analyse, beratung, interdisziplinäre forschung, [email protected] ******* Christine Mayrhuber, Austrian Institute of Economic Research in Vienna (WIFO), [email protected] ******** Margit Schratzenstaller, Austrian Institute of Economic Research in Vienna (WIFO), [email protected] The authors are indebted to Andrea Sutrich and Marion Kogler for careful research assistance. Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung 1 (2024) 4: 457 – 472 https://doi.org/10.3790/vaw.2024.1454903 OPEN ACCESS | Licensed under CC BY 4.0 | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/vaw.2024.1454903 | Generated on 2025-05-19 12:47:00 458 Julia Bock-Schappelwein et al. Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung, 1 (2024) 4 lange Zeit kompensatorische und präventive Funktionen im Vordergrund standen, gewinnt nun die Stärkung der transformativen Funktion und die Förderung der ökologischen Nachhaltigkeit durch den Wohlfahrtsstaat an Bedeutung. Der Artikel fokussiert auf konzeptionelle Ansatzpunkte für die sozial-ökologische Transformation. JEL classification: H4, H80, I38 Keywords: socio-ecological transformation, welfare state, vulnerable groups, social policy 1. Path Dependency and New Challenges for the Welfare State Looking back historically, the development of welfare state structures was, on the one hand, a response to pressing current issues and, on the other hand, also set the course for society. A series of measures related to working conditions (for example, the maximum daily working hours for factory workers) also actively shaped the social fabric of European countries. Following an expansion of welfare state benefits, predominantly of a compensatory nature, from the 1980s onwards policymakers set new goals for welfare state structures with the investment welfare state (van Kersbergen and Hemerijck, 2012). Enabling people to participate in the labour market and education policy, from early childhood education to lifelong learning, have become central fields of welfare state action (Taylor-Gooby, 2004; Hemerijck, 2023). Investment in human capital was understood as a basis for strengthening the economy and thus economic security. This article argues that the socio-ecological transformation does not only require to restructure the traditional welfare state architecture but also to renew welfare state objectives and institutions. While compensatory and preventive functions have long been in the foreground, it is now time to expand the transformative component and promote ecological sustainability through the welfare state. In the following we outline the necessity as well as the framework conditions for the welfare state to foster the socio-ecological transformation. This conceptual contribution begins with the building blocks and objectives of the eco-social welfare state (section2), addresses the necessities of the socio-ecological transformation (section3), and highlights the need for distributional considerations (section4). Starting points for the social and ecological transition of the welfare state are outlined in section5. The article concludes with considerations on the interactions between the various objectives and policy measures (section6). 2. Comprehensive Welfare State Structure The development of welfare states and their services are facilitated by economic growth, and social developments have a positive impact on economic OPEN ACCESS | Licensed under CC BY 4.0 | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/vaw.2024.1454903 | Generated on 2025-05-19 12:47:00 The Welfare State and its Role in the Socio-Ecological Transformation 459 Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung, 1 (2024) 4 growth in turn. Welfare states and growth also influence each other negatively, since the extent to which growth and climate-damaging emissions have been decoupled is still limited, undermining, for instance, health outcomes (Haberl etal., 2020; Hirvilammi, 2020). Approaches to decouple welfare and growth are not the topic of this article (Koch, 2022; Büchs and Koch, 2017), which provides fundamental reflections on how to develop and transform welfare state structures in the direction of an eco-welfare state. The starting point is the fact that welfare states are key players in the transformation of social policy towards a ‘sustainable welfare state’ (Koch, 2022). Social policy regulations encompass people’s lives so comprehensively that it is difficult to define social policy as a separate policy area. However, in the face of increasingly pressing environmental problems and challenges, new tasks are arising for the welfare state: Following the historical evolution from a compensatory to a preventive to an investment focus, the transformative function of the welfare state is increasingly moving to the fore. This transformative function aims to not only support, but also accelerate the path to a low-resource and low-emission economic and social system that is also socially inclusive. The volume of social protection expenditure– as a quantifiable part of social policy– in relation to GDP averaged about 30 % in the European Union (EU27) in 2021; ranging from 15 % of GDP in Ireland to 38 % in France (Eurostat1). In addition, also laws and standards, such as working time regulations and minimum wages, also shape the social situation of the population and are therefore part of welfare state structures. Infrastructural conditions, in particular the range of services in the area of services of general interest, play a role as well. A prospering economy and society require a complex infrastructure and services such as energy supply systems, water supply, wastewater disposal, transport infrastructure, and telecommunication networks. Infrastructure for education, health and housing sectors provides important services of general interest which have a high priority worldwide (Spatafora, 2021). Figure1 illustrates the transition from a traditional to an ecologically sustainable welfare state. The need for structural changes in the areas of employment, health and long-term care, housing, mobility and family policy is partly derived from obligations arising from various climate policy regulations (Paris Climate Agreement (UNFCCC, 2015); European Green Deal (European Commission, 2019); European Climate Law (European Commission, 2021b), Effort Sharing Regulation (European Commission, 2023), “Fit for 55” package (European Commission, 2021a)). 1 Eurostat, [spr_exp_sum__custom_12437386], retrieved on 1.8.2024. OPEN ACCESS | Licensed under CC BY 4.0 | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/vaw.2024.1454903 | Generated on 2025-05-19 12:47:00 460 Julia Bock-Schappelwein et al. Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung, 1 (2024) 4 Figure 1: From a traditional to an ecologically sustainable welfare state Source: Own elaboration. The transformation of the traditional welfare state into an eco-social welfare state means targeted support for vulnerable groups in all fields of action. The transformation requires measures to reduce the number of vulnerable people. At the same time, support measures for these groups need to be expanded during the transformation and adaptation process. In the medium and long term, education, labour market and economic policies etc. play a key role in determining the vulnerability of the population. Steps towards an ecologically sustainable welfare state are therefore cross-cutting issues and do not fall exclusively within the remit of traditional social policy. In view of the complex interdependencies and uncertainties outlined above, in addition to specific measures, an integrative policy approach is increasingly needed, which allows new solutions and overcomes the silo mentality between environmental and social policy. 3. Background to the Socio-Ecological Transformation Models used by Earth system science show that the stability of the planet’s ecosystem and therefore the well-being of humanity are more and more endangered by human activity. For example, Richardson etal. (2023) show that the Vulnerable groups Fields of action Mobility Long-term care HealthFamily Employment Housing Financing Welfare state Eco-social Welfare State compensatory investing compensatory investing preventive transformative TRANSFORMATION PROCESS Climate change Climate and environmental policy vulnerability increasing Fields of action define the vulnerable groups (negative) feedback vulnerability decreasing vulnerability decreasing preventive positive impact OPEN ACCESS | Licensed under CC BY 4.0 | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/vaw.2024.1454903 | Generated on 2025-05-19 12:47:00 The Welfare State and its Role in the Socio-Ecological Transformation 461 Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung, 1 (2024) 4 defined planetary boundaries have currently been exceeded in six out of nine relevant system areas and that the stability of the Earth system is therefore very likely to be jeopardised2. The effects of exceeding these limits are already evident and visible in the form of global warming and reduced biodiversity. As the safe are being passed, the risk of transgressing tipping points in some areas increases3, which can lead to sudden and sometimes irreversible changes. This jeopardises livelihoods for many people and triggers migration flows (IPCC, 2018)4. There are major interdependencies between the stability and resilience of the Earth system and human well-being. Rockström et al. (2023) therefore suggest that human well-being should be given greater consideration when recording impacts of climate changes: The loss of livelihood or income, loss of water or food security or occurrence of chronic diseases up to the loss of human life, i. e. human well-being5 should be a central component in defining fair and safe Earth system boundaries. Regional differences in climate impacts must also receive more attention (Rockström etal., 2023). Some of the ecological limits defined in recent decades have already been incorporated into international environmental policy, such as climate policy and the international climate target of reducing global warming to well below 2°C or below 1.5°C compared to the pre-industrial level (UNFCCC, 2015). At EU level, the European Green Deal (European Commission, 2019) provides the basic framework for the green transition. With the European Green Deal, the EU member states set themselves the target of achieving climate neutrality by 2050. With the adoption of the European Climate Law (European Commission 2021b), this target became binding, with the interim target of reducing greenhouse gas emissions by at least 55 % by 2030 compared to 1990 levels. This target is split between the EU emissions trading system (ETS) for emission-intensive industries and the remaining areas of buildings, transportation, agriculture, waste management and less emission-intensive industries (nonETS). The EU-wide target for the EU ETS is to reduce emissions by 62 % by 2030 compared to 2005. For the non-ETS sectors, the Effort Sharing Regulation 2 Cf. www.pik-potsdam.de/de/aktuelles/nachrichten/schwindende-widerstandskraftunseres-planeten-planetare-belastungsgrenzen-erstmals-vollstaendig-beschrieben-sechsvon-neun-bereits-ueberschritten-1 [30.08.2024]. 3 https://www.pik-potsdam.de/de/produkte/infothek/kippelemente/kippelemente. 4 See also www.pik-potsdam.de/de/produkte/infothek/kippelemente/kippelemente [03.01.2024]. 5 In doing so, they combine UN sustainability goals, the doughnut economy and the previous concept of planetary boundaries. The concept of the doughnut economy (Raworth, 2017) as an economic theory is based on planetary and social boundaries within which there is a safe and fair space for humanity and a regeneratively distributing economy. The Amsterdam economic area adopted the doughnut economy in 2020 (see also doughnuteconomics.org/amsterdam-portrait.pdf [30.08.2023]). OPEN ACCESS | Licensed under CC BY 4.0 | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/vaw.2024.1454903 | Generated on 2025-05-19 12:47:00 462 Julia Bock-Schappelwein et al. Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung, 1 (2024) 4 (European Commission, 2023) sets national reduction targets for the individual member states by 2030 compared to 2005 emission levels. In line with the goal of climate neutrality by 2050, the European Commission presented a comprehensive package of legislative proposals in July 2021 with the “Fit for 55” package (European Commission, 2021a). The aim is to reduce greenhouse gas emissions by 55 % by 2030. This package provides for the amendment of existing energy and climate legislation, on the one hand, and the introduction of new legislation, on the other.6 Most of the proposed EU directives and EU regulations have been adopted in the meantime (Kettner etal., 2023). The legislative package now provides the basis for the implementation by the member states. Regardless of the political instrument, the limited timeframe until 2030 and the ambitious goal of reducing emissions and adapting to climate change pose considerable challenges for implementation, which also have a significant impact on the further development of the welfare state architecture. A paradigm shift is therefore required from sectoror area-specific (individual) measures to cross-sectoral approaches that also encompass all governmental levels. 4. Distribution of Impacts and Costs of Climate Change Climate change and environmental damage have physical, psychological, social, economic and institutional effects (Fuchs and Thaler, 2018; Papathoma-Köhle and Fuchs, 2020), which are unevenly distributed both within and between countries. • The physical dimension includes health risks from heatwaves and climate change in terms of the incidence of illness, but also the frequency of damage to infrastructure facilities such as buildings. • The social dimension refers to the risk of particular social groups being harmed. Key vulnerability characteristics are income, level of education, migration background, family context, chronic illnesses, age and gender (Seebauer etal., 2021). Risks affecting individual groups of people overlap and reinforce each other. In addition to people with a low level of education, people with severe health conditions, single parents and people with a migration background, children and people over the age of 65 are particularly vulnerable (Seebauer etal., 2021). Moreover, almost all vulnerability characteristics apply more often to women than to men. These vulnerable groups are both directly affected by climate change and will be more severely impacted by climate protection measures indirectly, notably when they have a financial im6 For an overview, see also Kettner and Feichtinger (2021). OPEN ACCESS | Licensed under CC BY 4.0 | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/vaw.2024.1454903 | Generated on 2025-05-19 12:47:00 The Welfare State and its Role in the Socio-Ecological Transformation 463 Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung, 1 (2024) 4 pact, for example through rising product prices as a result of corrective taxes (Kirchner etal., 2019). • The economic dimension relates to the direct and indirect costs of climate change (health impacts for the population, crop failures, damage to infrastructure, disruption of production or supply chains, international feedback loops, etc.), as well as the necessary investments for climate protection and adaptation to climate change. • Theinstitutional dimension encompasses the range of services offered by the public sector at all governmental levels in the area of public infrastructure and public services (services of general interest, mobility, health, etc.). Taxpayers are faced with new costs for the adaptation of services. • Furthermore,climateimpactsandchangesalsohaveapsychological dimension, which results directly from heat stress or exposure to extreme events (stressors as triggers for mental illnesses or their worsening). Indirect adverse effects include fear of loss and feelings of powerlessness in the face of climate change or its unevenly distributed effects. Policy measures that are perceived as unsatisfactory can lead to anger, disappointment and resignation (Carleton, 2017; Cianconi etal., 2020; Pörtner etal., 2022). Perceived or actual inequalities exacerbated by climate change and climate protection measures also harbour potential for conflict. The costs and damage caused by environmental degradation and climate change are unevenly distributed. Those who contribute above average to environmental damage are less affected by these effects. Striking data from the World Inequality Database suggests that the per capita emissions of the top 1 % of the income distribution have increased since 1995, while those of the remaining 99 % have decreased. The per capita emissions of the top 1 % are more than 20times higher than those of the lower half of the income distribution.7 The lower income groups are disproportionately affected by environmental degradation (poorer housing conditions, health, etc., including premature death). These intangible costs have a very significant impact on people’s lives but cannot be comprehensively quantified in monetary terms. However, estimates show that the intangible costs in the health sector alone are significantly higher than the direct costs (Tompa etal., 2019; Leoni etal., 2020). Presumably for that reason, the costs of inaction in climate policy for the private and the public sector are still little recognised by the public and policymakers (Steininger etal., 2020). 7 See also https://wid.world/country/germany/ (30.08.2024). OPEN ACCESS | Licensed under CC BY 4.0 | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/vaw.2024.1454903 | Generated on 2025-05-19 12:47:00 464 Julia Bock-Schappelwein et al. Vierteljahreshefte zur Arbeitsund Wirtschaftsforschung, 1 (2024) 4 5. Starting Points for the Social and Ecological Transformation of the Welfare State In the traditional approach, the welfare state regulates the conflicting goals between the production factors of capital and labour, while “natural resources” such as air and water or the time spent on unpaid care work are not directly addressed. The challenge for an “ecologically sustainable welfare state” now is to formulate new regulations for the old conflicts of interest, taking into account the previously ignored consumption of resources and overuse as well as climate change (Kromp-Kolb, 2023). While both compensatory and investment-based social policy leave the source of risk production largely unaffected, a preventive, but above all a transformative welfare state aims to change the conditions of production and consumption that are harmful to resources and the climate (Meinhart et al., 2022). Enforcing and supporting the transformation process thus represents a new task for the welfare state (Mandelli, 2023). At the same time, traditional objectives, i. e. compensatory and investment-related tasks, are gaining in importance, as climate change and environmental degradation cause high health, social and economic costs. Ecological sustainability represents a new orientation in the alignment of institutional welfare state structures. It is about the structural consideration of the new social “climate risks”8 in the welfare state architecture and the compensation of costs for vulnerable groups (Frondel etal., 2017). The transformation to an ecologically sustainable welfare state means a re-regulation of different goals and interests, some of which harmonise with each other, but some of which also involve classic conflicting objectives. These conflicting objectives must be taken into account and avoided when considering all relevant policy areas– transport policy, housing policy, infrastructure policy, etc.– together. An ecologically sustainable social policy must therefore be designed in such a way that both the social effects of climate change and climate policy are mitigated, and the climate-damaging effects of social policy are reduced. The specific objectives and the desired shape of the socio-ecological transformation and future production and consumption conditions require an ongoing social and political discourse and negotiation process on a broad basis. The following fundamental scope for action and starting points in the existing welfare state should be addressed: • social protection against new risks and impacts caused by climate change (e. g. strengthening and regulating private insurance coverage9 and disaster protection), 8 IPCC (2022) defines 127 main risks, i. e. risks that have potentially serious adverse consequences for people and socio-ecological systems. 9 Sinabell and Url (2006). 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OPEN ACCESS | Licensed under CC BY 4.0 | https://creativecommons.org/about/cclicenses/ DOI https://doi.org/10.3790/vaw.2024.1454903 | Generated on 2025-05-19 12:47:00