This report examines the patterns in demographic changes, labor market changes, and deepening inequalities in major welfare states classified as having different welfare systems, while understanding how each country is preparing a response system to convert its existing welfare system. To this end, we looked at the changes in demographic structure, labor market, and deepening inequalities faced by the UK (liberalism), Germany (conservatism), Sweden and Finland (social democracy), and examined which response policies they are pursuing.
First, regarding the changes in demographic structure, the institutional response was discussed with respect to the fact that each country is facing an aging population. A comparison of the provision of pensions, medical services, and care services was performed.
In the case of the pension system, reforms were implemented to increase the sustainability of pensions in all countries. As the aging population intensified across all countries, the age of pension benefits was delayed, and the system was changed to help those members who were otherwise unaided by the pension system due to a lack of work history. In the case of medical and care service provision, the problem of financial sustainability was found to be a serious threat as the elderly population increased. Since the state’s public responsibility for medical services is strong, and population groups other than the elderly are also subject to these policies, major reforms have rarely been implemented to improve financial sustainability. Meanwhile, in some countries, measures have been taken in the care services to ensure that operators of frontline service delivery systems can carry out their policies efficiently, as they can strengthen the authority of local governments, which govern the service delivery system.
Next, changes in the labor market were examined, which focused on employment status and each country’s response to their specific labor market conditions.
In the case of the UK and Germany, as the platform economy expands, it was noted that knowing how to respond to increases in unstable jobs, such as gig jobs and 450 euro jobs, is a challenge. Specifically, the policy implementation method that sought to determine how to include platform workers in the existing social security system should be adjusted according to whether these individuals are regarded as workers or self-employed people. In addition, considering that a large number of platform workers are earning low wages, discussions are underway on how to establish a social protection system for them. Next, Sweden was found to have experienced fewer challenges related to its welfare system following expansion of its platform economy. This is because in Sweden, a social democratic welfare state that has developed around social allowances, the existing welfare system acts as a mechanism to buffer various problems arising from the platform economy. However, despite Sweden’s continuous promotion of active labor market policies, the increasing unemployment trends have not been dampened, raising the need to confirm the effectiveness of active labor market policies. In the case of Finland, a lawsuit is underway in which the administrative court requests judgment on the legal status of platform workers, and no specific discussions are underway to determine how the existing welfare system will respond to the increase in platform workers.
Lastly, individual welfare states’ responses to deepening inequalities were approached by introducing discussions on inequality, which should be resolved through continuous consultations with the scholars from each country who participated in this study.
In the UK, wealth inequality and income inequality are intensifying, and wealth inequality again intersects with the issue of intergenerational inequality. However, the wealth tax committee concluded that revisions to existing inheritance and capital gains taxes need to be pursued instead discussing the introduction of a net wealth tax. In Germany, income inequality continues to expand, and the gap between East and West Germany continues to be observed. The expansion of income inequality tended to intensify after COVID-19. In addition, wealth inequality is deepening, and the necessity of discussing tax reforms in recent elections has emerged as a major policy agenda. Sweden is a country with relatively low income inequality when compared to some of the major developed countries; however, the gap between the upper and lower-income groups is gradually widening. Moreover, as a result of examining the difference between the Gini coefficient of after-tax income and the Gini coefficient of pre-tax income, it was confirmed that the redistribution effect of wealth through tax and social policy was weakening. This trend was found to have intensified since COVID-19. Finland, like Sweden, is showing a growing gap between its upper and lower-income groups, and the increase in the working poor has emerged as a major social problem.
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