This chapter is intended to shed light on the heuristic value of a life-course perspective for analysing welfare policy changes and their impact on individuals and their social protection, integration and citizenship. The concept of the life course helps us link a macrosociological analysis of this institution to a microsociology of the biographical trajectories of individuals. In this respect, it is a fundamental conceptual tool for analysing and understanding rearrangements in the changing relation between labour markets and welfare policies.

This chapter's starting point is the assumption that every societal model interconnects three spheres: the labour market, the welfare state and a life-course regime. Castel (1995) has shown that industrial wageearning societies have relied on a strong connection between the dependent economic status of wage-earners and an extensive system of protection against risks. My aim is to show that a third dimension has to be added to this key pair in industrial society. This third dimension is the life course and the way it has been socially organised. Studies have shown how the advent of industrial society was closely tied to the tripartate social organisation of the life course, which was gradually institutionalised as the status of wage-earner developed along with a welfare state based on social rights and citizenship (Riley et al, 1972; Kohli, 1987; Guillemard and van Gunsteren, 1991; Guillemard, 2000). The convulsions now occurring with the advent of a new, knowledge-based society affect these three major dimensions of work, welfare and life course organisation.

After recalling the key role welfare states have had in organising the tripartite life course in industrial society (education during youth, work during adulthood and retirement during old age), this chapter will examine how, given changes in the world of work, this tight correlation between the spheres of employment, welfare and the life course is now coming undone. Changes in the workplace, as fordism is declining and an information society is emerging, are desynchronising the ages of life. A new, more flexible life course in a knowledge-based society is offering individuals a variety of career possibilities but, too, chaotic, unforeseeable biographical trajectories with, as a consequence, new uncovered risks, as we shall see. Our rigid welfare institutions are increasingly unable to satisfy the needs for security that are thus arising.

This book is an outcome of COST Action A13, ‘Changing Labour Markets, Welfare Policies and Citizenship’.The purpose of COST Action A13 has been to examine the effects of social security systems and welfare institutions on the processes of political and social marginalisation and exclusion. So far, COST Action A13 has published or is in the process of publishing the following books and articles in journals:

Jørgen Goul Andersen and Per H. Jensen (eds) Changing labour markets, welfare policies and citizenship, Bristol: The Policy Press.

Jørgen Goul Andersen, Jochen Clasen, Wim van Oorschot and Knut Halvorsen (eds) Europe's new state of welfare: Unemployment, employment policies and citizenship, Bristol: The Policy Press.

Tony Maltby, Bert de Vroom, Maria Luisa Mirabile and Einar Øverbye (eds) Ageing and the transition to retirement, Aldershot: Ashgate.

Jean-Claude Barbier and Wolfgang Ludwig-Mayerhofer (eds) ‘The many worlds of activation’, European Societies, vol 6, no 4, Special issue on activation policies.

Harriet Bradley and Jacques van Hoof (eds) Young people in Europe: Labour markets and citizenship, Bristol: The Policy Press.

Birgit Pfau-Effinger and Birgit Geissler (eds) Care and social integration in European societies, Bristol: The Policy Press.

COST is an intergovernmental organisation for the coordination of scientific and technical research, aiming at the coordination and formation of networks on a European level between nationally funded research projects. Some 80 experts, appointed by 17 countries, have participated in COST Action A13. The COST Action A13 network was in force for five years (1998-2003). For further information about COST Action A13, see www.socsci.aau.dk/cost.

In the 1990s, there was a widespread belief in the inertia of the welfare state. In contrast, we now observe quite far-reaching changes in welfare policies, and several possible directions seem to be open for tomorrow's welfare states. In brief, we are in the midst of a thoroughgoing reform of welfare systems. Welfare policies are changing in response to new challenges, new actors and changing power relations. We also face new discourses about welfare that are disseminated across the rich welfare states.

Current conceptualisations and explanations of welfare state change are not always very helpful for analysing these often quite ambiguous changes. In the first place, explanations of changes have tended to focus too much on the problems of cost containment or competitiveness, failing to acknowledge other sources of change. Secondly, they have seen change too one-sidedly as a matter of retrenchment and failed to recognise that current changes also involve the expansion of social rights. Furthermore, the criteria used to assess change depend too much on the welfare state architecture that developed in the second half of the 20th century; in particular, they usually focus too narrowly on the state versus the market dichotomy, and too much on cash transfers rather than services. Finally, analyses of change often put too much emphasis on formal institutions and too little on outcomes.

Although analyses and interpretations along these lines have provided valuable insights, we must find a new vantage point for looking at the reforms under way and devise new standards of measurement for assessing current reforms and their eventual effects. In this book, we have suggested as a starting point for this analysis a broader notion of societal change; we have suggested assessing welfare reforms mainly from an outcome perspective and we have suggested focusing on the effects of such reforms on citizenship – while acknowledging at the same time that citizenship itself is being redefined.

Challenges and change: beyond retrenchment

During the 1990s, following Pierson's (1994) pioneering work, welfare state reform was mainly seen in terms of retrenchment. This view highlighted economic pressures as the major cause of change and provided extremely valuable insights into the politics of blame avoidance.

The central theme of this book is labour market change, its interrelationship with welfare policies, and their joint impact on citizenship. In this chapter we discuss these changes from the perspective of ageing workers. Labour market and social policies have had a major impact on the organisation of the end of the worklife for this sector of the population in the past decades. In many welfare states, social programmes have been used – as instruments for labour market strategies – to ‘externalise’ older workers from the labour market. This process is referred to as the ‘early exit’ of older workers.

Recently, this policy has been reversed. Many welfare states have tried to change the early exit culture into a late exit culture, to cope with demographic ageing, welfare state costs and new demands on the labour market. Instead of ‘externalisation’ of older workers, the political target nowadays is the ‘re-integration’ of older workers.

Against the background of these developments and changes we will address two questions. Firstly, whether and how countries will be able to turn around the massive and highly institutionalised early exit into a new pattern of late exit. We assume that this change from early to late exit needs a much more complicated and fundamental change in the regulating mechanism of welfare states than is sometimes expected. At the same time, and according to the neo-institutionalist approach, dismantling a (longstanding) welfare state practice might be very difficult as a result of ‘policy feedback’ and ‘path dependencies’ (Pierson, 1994). The empirical test should be those welfare states that combine a longstanding culture of high early exit with a complex institutional structure designed to channel the process of early exit. Within the European region a number of countries seem to qualify for such a test. For empirical reference we will use France and the Netherlands to analyse the barriers and innovations required to reverse the early exit trend. Both countries are known for their high early exit cultures, but they seem to differ strongly in the success of their attempts to raise the employment activity rates of older workers. Finland is also a high exit country with a complex pathway structure. From 1995, employment activity rates among the 55-64 male age group began to increase again, in the Netherlands from 40.5% in 1993 to 48.8% in 1999 (OECD, 2000), in Finland from 36.1% in 1995 to 40.1% in 1999.