Social Insurance

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Social insurance is the term used to describe a wide range of schemes designed to protect large groups of people against commonplace risks, in particular sickness, prolonged disability, accident, old age, unemployment, or death of the breadwinner. They are normally designed to provide financial support—and sometimes other benefits such as health care—for all members of the scheme out of a fund to which members contribute regular sums. Both employers and the state may also contribute, the latter from general taxation. The system of funding has varied from place to place and from time to time over the history of social insurance. Contributions are normally calculated at a level that assumes equal risk among all members. Social insurance is to be distinguished from personal insurance, which protects the contributor against individual risk calculated in accordance with her or his personal circumstances (e.g., age, health, or employment status) and is financed by contributions proportionate to that risk that are calculated to cover this risk in full. Modern social insurance schemes normally include some element of redistribution from lower- to higher-risk groups or from richer to poorer individuals.


The precursors of the large-scale, government-directed social insurance schemes that developed from the later nineteenth century were voluntary, collective, mutual organizations, privately initiated and managed by groups of people who were exposed to specific risks against which they could not otherwise protect themselves, such as miners and other blue-collar workers who risked losing their livelihoods and their capacity to support their dependents due to accident, illness, old age, or unemployment. Such organizations emerged in most European countries during the process of industrialization during the nineteenth and early twentieth centuries, mainly among better and more regularly paid workers, when such workers were not wealthy enough to insure individually for episodes of crisis but were sufficiently well and regularly paid to make regular, normally weekly, contributions to a fund that made payments on an agreed basis to all members when in need. Spreading the risk over large numbers of individuals of variable age and circumstances reduced the cost to each individual member. In most countries, the only other sources of support available to such people were charity or publicly funded poor relief. The former was highly variable in availability, quantity, and quality. Poor relief was normally minimal and granted on punitive terms. Workers sought to provide for themselves and their dependents greater certainty of support in times of crisis.

Examples of such institutions are the friendly societies that flourished in Britain between the late eighteenth and mid-twentieth centuries, and the miners' provident societies established in early nineteenth century Germany and Austria. Sometimes, as in German mining districts, employers established and contributed to such funds. They were motivated not only by concern for their workers' welfare but by the need to attract workers to, and to keep them in, often dangerous occupations in remote and inhospitable locations. Similar motives led national governments to provide pensions and other benefits for public servants, as in Britain and France where systematic pension schemes evolved out of older patronage systems in the later eighteenth and nineteenth centuries. Secure and healthy workers were perceived to be more efficient workers, and pensions enabled governments to dismiss workers rendered inefficient by advancing age without consigning them to destitution. Such benefits were financed from public funds because efficient public service was regarded as a public good.

In most countries there was a long tradition, which continued well into the twentieth century, of employers providing such support as care in sickness or a pension in old age to loyal and favored employees. Soldiers, sailors, and servants in royal households had long received pensions, though often unsystematically, at the grace and favor of royal or other official authorities. Their discretionary character makes these practices different in kind from social insurance. From the later nineteenth century, as business firms grew in scale, bureaucratized occupational provision—normally financed by the business—became more widespread and systematic, though generally confined to better-paid, more senior workers. Again, employers perceived that safeguarding key workers against hazards encouraged loyalty and efficiency.


Nation-states began to legislate for social insurance schemes from the 1880s. Since that time, most European countries have introduced such schemes, though with considerable variability in timing and structure. In 1884, German Chancellor Otto von Bismarck (1815–1898) introduced the world's first system of compulsory national insurance against disability due to accidents at work and sickness. This covered wage earners in most occupations who earned no more than 2,000 marks (about $500) per year. Pensions were funded by contributions from employers and workers. Both contributions and pensions were related to workers' earnings and subsidized from national taxation.

Most regularly employed German blue-collar workers thereafter paid weekly contributions into a national fund and received, when needed, health care and weekly benefits, though the amounts were low and accident compensation was especially difficult to obtain due to difficulty of proof and lack of employer cooperation. In 1889 the scheme was extended to include old age pensions, payable at age sixty-five, financed by further contributions. Like workers' mutual schemes, the German system was open only to those in regular employment, because only they could afford the required regular contributions. Hence it excluded some of the poorest men, because they were irregularly employed or too low-paid to afford contributions, and the great majority of women, for similar reasons. Hence classical contributory social insurance is not an effective means of alleviating severe poverty. Alleviating poverty was not, however, Bismarck's chief concern. His explicit aim was to prevent the spread of socialism among German workers by demonstrating that their needs could be met by the liberal state, and socialism was most appealing to those male workers whose lives were not dominated by grinding poverty. Bismarck's actions stood in a long-established Prussian tradition. Since the late eighteenth century, Prussia had provided certain social benefits—for example, social insurance for miners—while vigorously suppressing labor dissidence. The German social insurance scheme was extended in 1911 to include white-collar workers. This again mainly benefited males.

The next national scheme to be introduced, in Denmark (the wealthiest of the Nordic countries at this time) in 1891, was quite different in being targeted at the poorest. It aimed to reform the poor relief system by removing older people from it and providing them with an old age pension as a less punitive alternative. The pension was funded wholly from taxation. It was means-tested and granted to full citizens aged sixty or above who had records of socially acceptable behavior (i.e., no record of crime, drunkenness, or failure to work). Denmark was predominantly rural and most workers were too poorly paid for contributory insurance to be an option, especially for those at risk of greatest need in old age. The amount of the pension was locally determined, according to local needs. Similar schemes were introduced in the United Kingdom in 1908 and in the Netherlands and Sweden in 1913. All of these were nationally administered and paid uniform pension rates, though they differed in such details as pension ages, which varied between sixty and seventy. They were "non-contributory" (that is, paid from public taxation rather than social insurance payments) and targeted at the poorest, hence they generally particularly benefited women, who tended to outlive men and to suffer greater poverty in old age. It was common, as in Denmark, to confine benefits to naturalized citizens (or in the case of Britain, subjects of the Crown, including those born throughout the British Empire). In Britain, non-naturalized residents and their British-born wives were excluded from pensions and later from health and unemployment insurance. Initially this excluded mainly Jewish immigrants, whose protests forced some modification of the scheme, although as the twentieth century went on and flows of international migration intensified, the range of excluded groups grew. By the end of the twentieth century, the issue of the entitlement of migrants to benefits was a source of tension throughout Europe and most countries became more restrictive.


In 1907 the government of Denmark, where the trade union movement was strong, began to subsidize trade union unemployment funds. Britain was the first country, in 1911, to introduce national unemployment insurance, along with national health insurance, funded by contributions from workers and their employers and subsidized by the state. British unemployment insurance was restricted to five skilled trades with normally moderate levels of unemployment. Health insurance provided cash benefits during sickness and free access to a doctor for insured workers. It also provided a small maternity benefit for insured women and the wives of insured men; after a battle by representatives of working class women, this was paid directly to the wives. It was the only benefit paid to a family member of an insured worker. Everywhere, except in Norway from the beginning of its health insurance scheme in 1909, family members were excluded from health insurance benefits, which were designed to keep workers, rather than their families, fit and active. In most west European countries families began to be included between the wars, though not until 1948 in Britain and 1955 in Italy. Neither of the British national insurance schemes could accommodate low or irregularly paid workers, so, again, they benefited mainly the more secure skilled workers. Nonetheless, European labor and socialist movements, which mainly represented such workers, generally opposed contributory insurance because they resented paying compulsory contributions from relatively low incomes and it did not benefit the poorest. They argued instead for redistributive social benefits financed by taxing the rich.

Existing voluntary providers, chiefly trade unions and friendly societies, administered British health insurance, which increased trade union support for the system. Many governments preferred to subsidize voluntary health insurance schemes, as in Denmark from 1892 to 1933, Sweden from 1891 to 1947, and Switzerland from 1911 to the present. All of these covered high proportions of the male workforce. Elsewhere similar subsidized schemes were restricted to specific occupations and generally excluded workers in agriculture, as in Belgium from 1894 to 1944 and in Italy from 1886 to 1928. Levels of state subsidy varied, as did the proportion of the population covered and also levels of regulation to ensure probity and minimum standards of benefit.

Various social insurance schemes spread through Europe. In Norway, national accident insurance was provided for fishermen in 1908 and for seamen in 1911 (both groups important to the Norwegian economy). In 1909, health insurance became compulsory for regular earners of manual wages in that country. No country except Britain introduced compulsory national unemployment insurance before 1914, although in Germany twenty municipalities had introduced unemployment insurance schemes by 1914, as had Ghent in Belgium in 1901 and St. Gall in Switzerland in the 1890s. Most countries proceeded cautiously with regard to the unpredictable risk of unemployment, generally preferring to subsidize voluntary, often trade union-run, schemes of varying degrees of generosity. This was true of Belgium between 1907 and 1944, the Netherlands between 1906 and 1949, Norway between 1906 and 1938, France between 1905 and 1967, and Switzerland between 1924 and 1976, all of which introduced earnings-related, state regulated schemes. This is still the case in Denmark, Finland, and Switzerland.

Attempts to introduce any form of social insurance in France faced resistance from socialists, trade unionists, and employers, and also the problems of covering a highly fragmented labor force with a large, self-employed peasant component. In 1910, compulsory sickness and old age insurance was introduced for eight million urban and rural workers, but a legal decision in 1912 questioning the legality of compulsion enabled a high proportion of employers and workers to evade the law. In Russia in 1912, accident and sickness insurance was introduced but it was restricted to the minority of industrial workers in large firms, which were seen as essential to the economic advance of the country. The great mass of poor peasantry was excluded. Insurance was financed by workers' contributions and grants from employers, and administered (as in Britain) by representatives of workers and employers. These were the only near-autonomous workers' organizations in tsarist Russia and between 1912 and the revolutions of 1917; the Bolsheviks used them with some success not only to improve the welfare of workers but as fronts for political organization.

The relatively poor countries of southern Europe—Spain, Portugal, Greece—could least afford state provision for their mainly rural populations and had few workers able to establish and benefit from voluntary mutual organizations before World War I.


It is essential to understand the situation in Europe before 1914 to appreciate what happened later, since the basic principles that have continued to frame social insurance throughout Europe into the twenty-first century were established at that time. An effect of World War I was to extend the coverage of such schemes rather than to change the principles on which they were based. Extension resulted both from regime change, as in Russia, Germany, and the new nations formerly within the Austro-Hungarian Empire; or from the fear of it, as in Britain, where the apprehension that mass postwar unemployment would bring about revolution led to the immediate extension of unemployment insurance to most manual workers and the temporary provision of non-contributory benefits to everyone who was unemployed due to the effects of transition from peace to war and, unusually, to their dependents. There were frequent amendments to the unemployment insurance system through the Depression years, which in Britain lasted from 1920 to 1940, and the inquisitorial nature of its administration was much hated, but it provided a historically unprecedented safety-net for all unemployed workers through the interwar years. The British health insurance system remained basically unchanged until 1948, and in 1925 was extended to provide contributory old age pensions at age sixty-five for workers already falling within the system, and for the widows and orphans of insured men.

Similarly, in 1919 in Italy (during the "red years" following World War I), compulsory old age, health, and unemployment insurance was introduced for industrial workers. However, it was effectively emasculated by opposition from the Church and business interests, and little was achieved before the fascist takeover in 1920. The Italian state had subsidized limited voluntary schemes of sickness and old age insurance since 1886 and 1898, respectively.

Also after World War I, the League of Nations, and especially the International Labour Office (ILO) established under its auspices, encouraged the development of social insurance among member nations. It had most influence in the poor countries of southern Europe. Most other west European countries were in process of attaining the modest minimum standards the ILO sought. The Portuguese government (brought to power in 1910 following the revolution that ended the monarchy) apparently believed that the introduction of social insurance was a necessary condition for Portugal's admission to the League. Also, a Socialist minister of labor believed that there were votes to be gained if the state subsidized and expanded the limited number of existing mutual organizations. In 1919, Portugal introduced compulsory insurance through voluntary institutions covering sickness, workplace accidents, invalidity, and old age. But because only a tiny proportion of the largely rural and poor population could afford to belong to such institutions, the effects were slight before the dictator Antonio de Oliveira Salazar (1889–1970) took over in 1926.

The situation was similar in Spain, for similar reasons. Old age insurance was notionally compulsory from 1919, but few could afford to qualify. The Constitution of the Second Republic, in 1931, declared it the responsibility of the state to create a full system of compulsory social insurance, but plans to implement this were disrupted by the outbreak of civil war in 1936.

In Greece, the Liberal government of Eleutherios Venizelos (1864–1936) aimed to improve the security of the population, and Greece ratified the International Conventions of the first World Labour Conference in 1919 that prioritized labor protection. But with Greece's greatly expanded, largely agricultural postwar population, many of them refugees, there was little realistically that the government could do. In particular, social insurance—which best fitted the needs of urban, industrial populations—was not feasible. In 1922, a Conservative government introduced legislation compelling workers in industry, transport, commerce, and building to join subsidized workers' or employers' insurance schemes, while vigorously purging left-wing trade unions. But membership was not enforced, and by 1925 only seventeen thousand workers were insured, although, increasingly, higher paid professionals such as doctors and lawyers took advantage of state subsidies and established such schemes for themselves. When the Liberals returned to government in 1928 they sought, with the aid of the ILO, to provide improved health care and to coordinate and impose minimum standards upon voluntary insurance associations. Coverage among urban workers improved, but the problem of the rural masses remained.

In central Europe, compulsory unemployment insurance for industrial workers was introduced in post-Habsburg Austria in 1920. Austria had since the 1880s followed the German model of social insurance, building on preexisting schemes for state workers and for miners. Compulsory industrial accident insurance was introduced in 1887, compulsory sickness insurance in 1886, and compulsory pensions insurance in 1906, all on Bismarckian lines, covering mainly industrial labor. These measures applied throughout the Austrian part of the Dual Monarchy and, from 1907, in the Hungarian part, the latter fuelled by the fear of contagion from the 1905 revolution in Russia. This was the legacy inherited by the new states of Czechoslovakia and Hungary after World War I. The social insurance systems of the two countries then diverged for reasons largely linked to their economic structures. Industrialized Czechoslovakia, faced with unemployment and political unrest, established basic non-contributory unemployment assistance in 1918. From 1924 the state paid half the cost of trade union–run unemployment insurance, which covered about half of all blue- and white-collar employees. As elsewhere, better-paid workers could afford schemes that provided superior benefits. The state subsidy built in an element of redistributive subsidy for the lower paid. In Czechoslovakia, which had a relatively small rural workforce, agricultural workers were included in compulsory sickness and old age insurance. This was not so in Hungary, as in other countries with large, poor rural populations, who could not easily be fitted into a contributory system (such as France). By 1939 Hungary had a highly developed social insurance system, but it applied only to the urban minority. There was extensive poverty in the countryside.

In the Soviet Union, social insurance remained under the administration of trade unions, though their independence was extremely limited. This, again, restricted its coverage to those in regular industrial work and excluded the peasantry, though in time they were awarded basic non-contributory benefits, along with collectivization and the loss of independence. Social insurance included wage-related sickness, invalidity, and old-age benefits, but none for unemployment. Instead there was compulsory retraining and compulsory movement of unemployed labor to available jobs. Officially, unemployment could not exist in Soviet Russia. One outcome was extensive overmanning.

In Weimar Germany, the Social Democratic government in 1918 established unemployment insurance benefits that were locally administered. The scheme was frequently adjusted under the pressure of mounting unemployment, but it remained resilient and in 1927 became nationally uniform. One outcome of Adolf Hitler (1889–1945) coming to power in 1933 was the introduction of new forms of discrimination in the insurance system as access to social insurance was denied to "undesirables," chiefly Jews and gypsies, even when they were German citizens. For the remainder of the population, the health, accident, and unemployment insurance schemes were extended as the economy expanded under pressure of war production in the later 1930s. The Nazis left intact the structure of national and local administration of social insurance, although the social insurance fund was drained to help finance the war. After the war, the governments both of East and West Germany were able to build upon the structures put in place earlier in the century.

In Italy under Benito Mussolini (1883–1945), health insurance was introduced in 1929 and state support for voluntary institutions increased, again overwhelmingly benefiting urban workers. In 1943, in a desperate attempt to consolidate support for the regime, unification and rationalization of the mass of mutual associations was proposed, but it came too late, as the fascist state crumbled. In Spain under Francisco Franco (1892–1975) in 1939, minimum pensions were established, financed by employers and the state through subsidies to workers' mutual associations; as elsewhere, these could only assist the regularly employed urban minority. In Salazar's Portugal, the term social insurance disappeared from official discourse, as implying a degree of collectivism that the regime rejected. Unusually in Europe, Salazar's state discouraged workers' mutual associations for fear of their subversive potential. Instead, company and occupational funds were encouraged but not regulated, mainly for white-collar and skilled workers and artisans.

Sweden expanded its system of extensive, state-subsidized voluntary health insurance in 1931, partly under pressure of the severe slump of 1929–1931. This also helped the Social Democrats to power in 1932, promising social reform. They remained in office for forty-four years. They almost immediately increased expenditure on unemployment benefits and, more gradually, expanded government funding to voluntary sickness and pensions insurance. In Norway, the slump was followed by the election of a Labor government that introduced health insurance and compulsory pension insurance in 1936, again giving priority to seamen and fishermen; in 1938, the government introduced compulsory unemployment insurance for other regularly employed workers.

In France, state-subsidized sickness and old age insurance became compulsory in 1930 for workers in industry, commerce, and agriculture, and similar, separate schemes were established for other blue-collar and public employees. Contributions from workers and employers were mandatory.


During, and in some cases before (such as in Sweden) World War II, some countries were reevaluating their social insurance systems, mainly in the direction of rationalizing and integrating the complex variety of schemes that had grown up over the preceding half-century. In Britain in 1942, the Beveridge Report recommended the integration of the existing old age, widows', sickness, and unemployment insurance schemes and their extension to the whole working population, providing flat rate benefits in return for flat rate contributions from workers and employers, subsidized and administered by the state. Since the beginning of the century, William Beveridge (1879–1963) had advocated social insurance as a means both to eliminate severe poverty and to reinforce social solidarity, because it entailed collective mutual responsibility for risk across classes. For the same reason he had long advocated that all workers—white-as well as blue-collar—should be members of the same insurance scheme and subject to the same conditions, rather than divided by occupation as in so many other European countries. Beveridge opposed benefits targeted on the poorest, partly for this reason, but also because he believed them to be more costly to administer than universal insurance and inefficient because suitably qualified people often did not apply, due to ignorance or fear of stigma. Beveridge did not, however, believe that social insurance benefits should provide more than a minimum income adequate for survival. Those who wished to supplement insurance benefits in order to raise their living standards in periods of personal crisis should do so in the private sector, preferably through nonprofit mutual associations such as friendly societies.

For a short period after the war, the Beveridge Report was inspirational elsewhere in Europe. It was implemented in Britain from 1948 by the country's first majority Labour government, providing, however, such low benefits that, ever since, many thousands of poorer people have required targeted state supplements. Britain has never quite escaped from its centuries-old Poor Law tradition of public responsibility to prevent destitution but to do little more from collective funds. Between 1974 and 1986, a minimal income-related element was added to the state pension. Otherwise from the 1950s the state provided tax incentives to encourage employers to provide supplements to social insurance for their workers mainly through commercial rather than nonprofit insurance. These activities were regulated by the state, and workers in the large public and nationalized industrial sector received subsidized pensions, until the 1980s when Conservative governments of Margaret Thatcher (b. 1925) relaxed regulation of private insurance, denationalized extensively (for example, the railways), and reduced the size of the public sector, without safeguarding workers' benefits. The Conservatives also reduced the coverage of some state benefits, notably unemployment insurance, and reduced the real value of others such as pensions. Between 1997 and 2004, scandals in the private sector and increased poverty led Labour governments to reimpose regulation on the private sector and to increase state benefits, but through targeted assistance rather than improvements in social insurance.

The minimal British approach to social insurance was unusual in postwar Europe, with the exception of Ireland, which kept until 1952 the pre-1914 British system that had been in place when Ireland gained independence in 1920. This poor, largely agricultural country excluded agricultural workers from the insurance scheme until the 1950s. In 1952 the various insurance schemes were integrated on the postwar British model, but excluded the self-employed (including many independent small farmers) and better-paid white-collar workers. Only with entry to the European Union and the great expansion of the Irish economy from the 1980s did Irish social insurance reach the standards prevailing elsewhere in northern Europe.

Most other countries reassessed and overhauled their social insurance systems in the decade following World War II. Some, such as Germany, Italy, and the countries of what became communist Eastern Europe, did so in response to regime change. But even Portugal, which remained under Salazar's authoritarian dictatorship, sought in 1946 to harmonize and rationalize its variety of occupational and local schemes and to extend them to cover a larger proportion of the population. Coverage was further extended in the early 1960s to include most of the population, though benefits were low. The Marcello Caetano (1906–1980) government that succeeded Salazar between 1969 and 1973 increased benefits as part of an unsuccessful attempt to preserve the regime. Francoist Spain, similarly, in 1942 introduced comprehensive health insurance for low-income workers and their dependents, to which was added old age and invalidity insurance in 1947. These schemes ran alongside trade union funds. Benefits were low and the state contribution minimal, but coverage improved as part of the attempt by the Francoist state to achieve legitimacy with its opponents, and as the economy improved from the late 1950s. In 1963, the state sought to establish common principles for the plethora of independent occupational and local insurance schemes, and a non-contributory pension was introduced targeted at the poorest people over age seventy. By Franco's death in 1975 there was a high level of coverage of social insurance in Spain but the organization remained fragmented and benefits highly variable. The democratic constitution of 1978 introduced the principle of universal social security, although in 1982, 14.4 percent of the population was still excluded from social insurance. Thereafter, as the economy expanded, coverage and level of benefits improved until by the late 1990s it matched the rest of Europe.

The three poor states of southern Europe—Portugal, Spain, and Greece—all emerged from right-wing rule in 1974–1975. Thereafter they sought to improve and standardize their social insurance systems as an indicator of their new democratic principles and to signify their suitability for partnership with the rest of Western Europe. Also, as their economies expanded, they could better afford to do so, although the international recession and mounting unemployment of the later 1970s and 1980s there, as elsewhere in Europe, led governments to expand insurance schemes more cautiously than they had hoped and to rely extensively on employer and employee contributions. Also as elsewhere in Europe, the need to provide for mounting unemployment diverted potential state funds from other sources of risk. And social insurance standards in southern Europe came increasingly under pressure from the European Union as, one by one, they joined it. The European Union set out to ensure high standards of social insurance and assistance provision among member states. It could not, however, insist that its guidelines were followed: Britain, for example, continued to the end of the period to provide state pensions well below the level (50 percent of average earnings) recommended by the European Union.

Elsewhere in Western Europe, all states introduced universal social protection after World War II, some more quickly than others. Italy did not achieve a universal system until the 1970s. It had a large, poor, rural southern population that could not easily fit into a classical social insurance system. Attempts after the war to unify and rationalize the variety of occupationally based schemes surviving from before the war, and to supplement them with state-financed benefits for the poorest (the system which developed from the 1970s), also were opposed by employers and professional organizations.

Throughout Western Europe, social insurance systems varied in their mix of public and private, contributory and non-contributory schemes, but all except Britain and Ireland gave a large role to occupationally based schemes, managed by representatives of workers and employers and, in the case of Germany and Sweden, the state, with benefits related to incomes and to perceived needs in each occupation. An important effect of this approach was to ensure that potential beneficiaries were kept informed by their representatives about their rights under social insurance and about potential changes to the schemes. Hence, when governments such as those of France, Germany, and Sweden sought to cut benefits from the 1980s as they experienced economic recession while public expenditure mounted, following rapid growth from the 1950s to early 1970s, strong and effective resistance was quickly mobilized. In Britain, by contrast, where the administration of social insurance was wholly in the hands of the state, the real value and coverage of insurance benefits was eroded in the 1980s after reaching a peak in the late 1970s and the population seemed hardly to notice, until the early years of the twenty-first century when the collapse of a number of commercial and occupational pension schemes, combined with the low level of state pensions, at last caused public protest from pensioner groups and trade unions. The country in mainland Europe most similar to Britain in this respect was Denmark, which had a similar tradition of minimal state-controlled social security. There also benefits were eroded by right-wing governments in the 1980s.

Throughout the postwar period, the state played a larger role in regulating and subsidizing occupationally based insurance schemes in the Nordic countries than elsewhere in mainland Western Europe. Immediately after the war Sweden introduced universal flat-rate pensions, family allowances, and sickness insurance similar to those recommended by Beveridge in Britain. But in 1959 Sweden shifted to higher, income related benefits, under pressure from blue-collar workers who wanted more in terms of coverage and levels of benefits. Similarly, shortly after the war, Norway expanded and integrated its system on Beveridge-style lines, but from 1966 moved to an income-related system. Norway, unlike Sweden and Denmark, had not entered the European Union by 2004, but, with its oil-rich economy, it maintained high standards of social benefits without external pressure. Denmark, like Norway, recovered slowly from wartime occupation and only in the 1950s did a Social Democratic government introduce a universal, and initially modest, social insurance system.


In Eastern Europe from 1948 a fairly uniform welfare system was introduced throughout the Soviet bloc. Notions of insurance and of statutory rights were replaced by provision of benefits by the state, paid either directly through state agencies or through the workplace or trade unions. Because unemployment was deemed not to exist, neither did unemployment benefits, though these were introduced in Hungary in the late 1980s, when the extent of unemployment became impossible to ignore. The schemes were universal and so included those, such as independent farmers in Czechoslovakia, who previously had been excluded. In general, elite groups and key workers such as miners received higher benefits. After 1989, East Germany was absorbed into the West German system. Elsewhere, often encouraged by the World Bank, governments shifted to variable mixes of privatization and marketization of social insurance, retaining, at least in principle, basic, targeted, safety nets of social assistance. These were often very basic and steadily eroded, as in Russia and Hungary. The more prosperous Czech Republic retained a minimum income guarantee and relatively high levels of benefit for its poorest people. The entry of the major countries of East-Central Europe into the European Union in 2004 may be a step to greater harmonization of social insurance across the whole of Europe. However, as has been seen, national political, social, and economic differences have always profoundly shaped social insurance systems. Such differences are unlikely wholly to disappear.

See alsoOld Age; Public Health; Welfare State.


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Pat Thane