Turning vice into vice: how Bismarckian welfare states have gone from unsustainability to dualisation

This chapter traces the main and common characteristics of the reform trajectory followed by Continental European welfare systems. This trajectory can be divided into four main sequences. It then analyses what these welfare systems have become. Continental Europe witnessed the development of dual welfare systems, with a sharper line being drawn between contributory benefits and occupational insurance for core workers and a new but growing world of assistance and in-work/non-contributory benefits for 'atypical' workers and labour market outsiders. This dualisation of welfare is to be associated with transformation on labour market and developments in employment policies, but it also has to be attributed to the specificities of the politics of reforms in Bismarckian welfare systems. Negotiations between elite and representatives of core workers have indeed allowed reforms formerly conceived as unlikely, but the compromises have most often been made at the expense of outsiders