Anton Hemerijck, Professor at the EUI Department of Political and Social Sciences and co-author of the book Who’s Afraid of the Welfare State Now?, has long advised the European Commission on social policy. Recently elected as a member of Academia Europaea, he also served on the Commission’s High-Level Group on the Future of Social Protection and the Welfare State from 2021 to 2023. Most recently, together with his ERC Advanced Grant team at EUI, he provided the background document ‘Social Investment Returns over the Life-Course’ for an historic joint meeting of social affairs and finance ministers on 12 March 2024.
In this interview, Prof. Hemerijck reflects on the resilience of European welfare states through successive crises, the political logic behind sustained social investment, and why even populist leaders can’t afford to dismantle the welfare commons.
Your book Who’s Afraid of the Welfare State Now? argues that European welfare systems proved far more resilient than often assumed, emerging stronger from both the Great Recession and the COVID-19 pandemic. Could you walk us through the main ways welfare states adapted during these crises?
One of the most important things I want to highlight is that during both of these crises – the Great Recession and the COVID-19 pandemic – the welfare state didn't have to be reinvented. If you think back to the Great Depression of the 1930s, there was no welfare state in place. As a result, when everyone stopped spending, the economy collapsed dramatically.
During that time, British economist John Maynard Keynes famously argued that in economic downturns, what’s needed is to stabilise demand. And that’s exactly what European welfare states, particularly after World War II through the 1950s and 60s, were designed for. Policy makers left, right, and centre expanded social security systems so that if a crisis hit, this could be buffered – especially at the macroeconomic level, with the micro-level effect of protecting families from falling into poverty.
Now, the way modern welfare states are structured, ideally, is to buffer those who are most vulnerable to job loss. If the system has strong and inclusive protections, it can absorb shocks more effectively, both macro and micro. This is true in countries like Sweden, the Netherlands, and Germany. It was less true in countries like Italy, where the safety nets are more fragmented and tend to primarily support pensioners. In those cases, both macro and micro-level buffering falls short.
But the main lesson is that we always complain about the welfare state – that it’s slow, that it can’t really move, that there’s always a trade-off between equity and efficiency. But when a major crisis strikes, the welfare state is extremely effective. You can even go further. You have this initial buffering function, and then, in the case of the COVID-19 pandemic, you expand furlough schemes for workers, including the self-employed, that were originally not included in the system, to improve shock absorption.
That’s one lesson. The other is about what we might call a more active, social investment-oriented welfare state. In some countries – again, particularly the Nordics, as well as Germany, the Netherlands, and Austria – the welfare state doesn't just buffer against shocks, it also supports people and families across critical transitions over the life course. This includes policies like parental leave and access to early childhood education and long-term care.
And if you look back over the long decades of the 2010s, the the countries that buffered the best, and also bounced back the better, from higher unemployment back to higher levels of employment, these have been the more social investment oriented welfare states. And that’s ultimately the reason why we say they emerged stronger.
With the war in Ukraine, rising inflation, renewed pressure on public budgets – not least from growing defence spending – are we at risk of slipping back into the austerity mindset of the 2010s? Or do you see a shift in how policymakers view the role of social investment?
No, I don’t think so. There have been arguments, particularly in outlets like the Financial Times, suggesting that in light of the war in Ukraine, governments now face a choice between spending on social protection and investing in the military. But that’s a false dichotomy. As we’ve shown, the countries with inclusive welfare states and a strong focus on social investment tend to be the most competitive and they are also the one that van meet military spending thresholds.
If you want to sustain a strong tax base to fund defence, you actually need to invest in areas like education and care. That’s fundamentally what supports long-term economic competitiveness and, by extension, the capacity to fund military spending. So there’s no real contradiction.
The danger, however, is that this kind of rhetoric remains politically attractive. Some politicians argue that we can no longer afford social spending, but there’s a growing recognition – both across Europe and at the EU level – that this thinking is self-defeating in times of democratic backsliding.
People at the lower end of the income scale are the most vulnerable to economic shocks. They rely more on the welfare state, and if that support is scaled back to boost defence spending, they may turn to the populist far right – as we’re already seeing in some countries. That, in turn, undermines European unity and indirectly lends legitimacy to authoritarian regimes like Putin’s.
So yes, the austerity narrative still exists, but it’s not supported by the evidence. And continuing down that path would be counterproductive.
The book suggests that more generous welfare states, particularly in north-western Europe, fared better during economic shocks. What can underperforming states like Greece or Italy practically learn from these models, especially given the political and institutional differences?
I think there are two sides to this predicament.
First, if you look at countries like Greece and Italy, they are facing accelerating demographic aging. That creates a real need to shift from traditional social protection toward more future-oriented social investment.
Second, given the aging predicament, employment rates in countries like Italy remain well below those in the leading welfare states. In other words, there’s room for growth – and that growth needs to happen soon. If the working-age population shrinks too much without raising employment, it becomes harder to finance pensions. To sustain those systems, countries need to invest more in children, education, care, and dual-earner families.
Now, part of the difficulty is that the period of austerity – driven in large part by EU-level decisions at the time – undermined the capacity of these countries to move in a social investment direction. That was, in my view, a policy mistake. And this is where the EU has a corrective role to play. The Recovery and Resilience Facility (RRF) can be seen as a step in that direction, even if it's only a temporary one.
But to make thing work, conditional funds need to be used for actual social investment – not for measures like the “superbonus” in Italy for renovating private homes. The focus should be on building a more service-oriented welfare state: early childhood education and care, active labour market policies, long-term care – these require trained professionals and proper social infrastructures.
Administrative capacity is also a key issue. In southern Europe, for instance, Spain performs better than Portugal, and Portugal better than Italy. So there’s work to do on implementation as well. But despite these challenges, I do believe it can be done.
You discuss an ‘experiential legacy’ from the Great Recession that influenced the response to COVID-19. Could you elaborate on how this policy learning occurred, and what this tells us about the EU’s capacity for adaptive governance?
Yes, we make a distinction between what we call the experiential legacy of the Great Recession and the way it later shaped the policy response to COVID-19. One major lesson from the earlier crisis was that turning to austerity too quickly – treating it as the default reflex to economic downturns – simply didn’t work. That became increasingly clear, even to institutions like the International Monetary Fund, which were the first to point out that the fiscal multipliers assumed in standard neoclassical economic models were being falsified.
So that’s the negative lesson: austerity was damaging. But there’s also a positive lesson. Countries with robust welfare states managed not only to buffer the shock better, but also to help people transition back into employment more effectively. This created a broader recognition that having a strong welfare system is not just socially beneficial, but also economically and politically important.
That’s what we mean by an experiential legacy – policy learning that emerges from the failures and success of past approaches. And that learning clearly carried over into the COVID-19 response. The pandemic was unpredictable, but this time, many governments reacted differently. The Recovery and Resilience Facility, for instance, was in part a corrective to the austerity-driven policies of the 2010s. Similarly, the widespread use of furlough schemes reflected a new understanding: that effective social buffers aren’t just good for countries like Sweden – they benefit everyone.
This learning process has created a kind of positive feedback loop. So to your question about the EU’s capacity for adaptive governance: we’ve seen that when lessons from past crises are taken seriously, they can shape better responses to future challenges. The hope now is that this more balanced approach to crisis management is here to stay.
We actually begin the book with a quote from Angela Merkel at the 2012 World Economic Forum, where she said: “Europe is 5% of the world’s population, 27% of the world’s GDP, and 50% of the world’s social spending. That’s why we’re not competitive.” But today, nobody would say that anymore.
Your book suggests that the welfare state has regained legitimacy in recent years. But with rising populism and political fragmentation in Europe, do you think public support for inclusive welfare policies is still as solid as it seems?
Yes, so the argument I’m making – both in my ERC project and in a forthcoming work – is that, during elections, political parties often campaign on distributive promises: vote for me and you’ll get more pensions or childcare; vote for the other side and you’ll get less. These are framed as a kind of zero-sum distributive tokens.
But in a big welfare state, where around 30% of GDP is spent helping people navigate the major transitions of life – such as having a child, losing a job, re-entering the labour market, or retiring – the welfare state functions as a system of life-course support. Once in government, parties that made simple promises become responsible for what I call the "welfare commons": the full range intergenerational policies like childcare, education, unemployment protection, and pensions.
In Europe, these policies are very popular. That popularity acts as a constraint on governments, but also a productive one. For example, a party might enter government having promised to protect pensions, only to realise that doing so requires investing in children and families, because the long-term sustainability of pensions depends on a productive and available future workforce.
We’ve seen this clearly in Italy. Giorgia Meloni campaigned against many of Mario Draghi’s policies, including a massive expansion of childcare provision. But once in office, she adopted much of his approach. She came to understand that increasing female labour market participation requires expanding access to childcare. So despite her distributive campaign rhetoric, she continued and even strengthened key elements of social investment policy.
At the same time, voters are not stupid. Across Europe, people now see themselves as stakeholders in the welfare state. If your child has access to childcare, or you depend on a public pension, the political debate becomes highly personal: What does this policy mean for my family, my retirement, my grandchildren’s education? This lived connection makes electorates more attentive to welfare reform promises of political leaders.
If you compare this with the US, the contrast is striking. Federal spending on welfare is much lower, largely limited to Medicaid and Medicare. This creates a different dynamic. A politician like Donald Trump can make promises based on trade protection rather than on social protection. He can offer the illusion of keeping jobs that are no longer viable in the global economy, without providing a safety net for those who lose them. That weakens both the government's responsibility and the electorate’s expectations around long-term welfare, and that is potentially dangerous for democracy.
Anton Hemerijck is a Professor of Political Science and Sociology at the EUI Department of Political and Social Sciences. Over the past decade he frequently served as an advisor on social policy, social investment, and the welfare state for the European Commission.
Read the book Who’s Afraid of the Welfare State Now?, by Anton Hemerijck and Manos Matsaganis, published by Oxford University Press.