Introduction

For more than two decades, the governments of the EU have presented welfare state reforms as reactions to rising levels of unemployment and other types of labour-market marginalisation, and in terms of their need to curb expenditures on social security. The growing use of public funds to support people of working age over the past 50 years evidently plays a major role in these reforms. However, welfare state reforms have gradually come to be placed in the context of broader developments in society. Rather than being seen as temporary measures to deal with economically hard times, more structural, fundamental and lasting needs for welfare state reforms came to the fore. Of course, the analysis of modernity and the challenges faced by welfare states are themselves contested. Nevertheless, the following issues are frequently mentioned as examples of major developments to which welfare states have to be adjusted.

• • Economic globalisation: affects relations of competition around the world and, among other things, increases the pressure on national governments to create an attractive economic climate and adjust social policies accordingly.

• • Demographic changes: encompass, for instance, the relative growth of the elderly population, changes in the composition of households, changes in the composition of the labour force and migration.

• • Labour-market changes: the most cited manifestations are unemployment, longterm unemployment, underemployment, quantitative and qualitative changes in the demand for, and supply of, labour and labour-market flexibility.

• • Processes of differentiation and individualisation: taking place in relation to these points. Society and the biographies of its citizens are becoming less standardised and more complex and unpredictable, partly due to the decreasing importance of institutions such as the family and the lifetime job. These processes also may affect patterns of inequality.

• • Reduced government spending: the EU and specifically the Maastricht Treaty have forced national governments to keep government borrowing within strict limits.

These developments have been interpreted as elements of a transformation of modernity. For example, Beck (2000) talks about the transformation of ‘primary modernity’ into ‘secondary modernity’ or the ‘risk society’. Others, such as Gorz (1999), prefer to use the concepts of ‘Fordism’ and ‘post-Fordism’. These transformation processes force national governments into action. The direction of action, however, is subject to political debate, reflected in the ‘challenge profiles’ that national governments design with respect to their welfare state, as well as in the variety of reform programmes national governments have initiated.