The Politics of Retrenchment in a Social Democratic Welfare State. Reform of Swedish Pensions and Unemployment Insurance

Abstract

What explains the origins and pattern of retrenchment dynamics in Swedish old-age pensions and unemployment insurance during the 1990s? While the economic crisis created pressure to scale back both programs, I argue that retrenchment only occurred when and where the Social Democratic Party and some segments of the labor movement supported change. This finding suggests that the political importance of organized labor in retrenchment politics depends on the relationship between welfare state programs and interest group structure. When interest group structure is characterized by solidaristic, centralized, encompassing organizations, the old class based power resource model has more explanatory bite than Pierson’s new politics of the welfare state approach.