Social policy in the face of a global pandemic: Policy responses to the COVID-19 crisis.

How have welfare states responded to the coronavirus pandemic? In this introductory article, we provide a synopsis of papers that comprise this special issue on social policy responses to COVID-19, an overview of some of the key questions they raise, and some provisional answers to these questions. Our conclusions are threefold: first, these social policy responses, while entailing new developments in many countries, nonetheless reflect, at least in part, existing national policy legacies. Second, these responses can be understood as a form of "emergency Keynesianism," which is characterized by the massive use of deficit spending during economic crises, with the aim of to supporting rather than challenging core capitalist institutions. Third, there are clear differences in terms of the nature of the reforms enacted during the initial phase of the COVID-19 crisis as compared to reforms enacted as a response to the 2008 financial crisis.

INTRODUCTION

How have welfare states responded to the coronavirus pandemic? Have they implemented largely the same policy responses or have countries responded differently and, if they have, have they done so institutionally predictable ways? In this introduction to the special issue on social policy and COVID‐19, we provide a synopsis of papers that comprise it, an overview of some of the key questions these papers raise, and some provisional answers to such questions.

The pandemic is a distinct kind of crisis, with the virus spreading globally from China, where it originated, with great speed in the early weeks of 2020. Governments were forced to engage in a voluntary shutdown of substantial sections of their economies to facilitate social distancing and meaning that, within a matter of days, a public health emergency precipitated an economic crisis. To secure the economic security of households, policymakers have been forced into making numerous, significant policy enactments, many of which are assumed to be only operational as long as the current crisis continues (Moreira & Hick, 2021). In this way, social policy responses have been fundamental to crisis management (Greer, King, Massard da Fonseca, & Peralta‐Santos, 2020). As the papers in this issue demonstrate, rapid action has been taken to mitigate the impact of the crisis on household finances—albeit taking various forms and with varying degrees of generosity.

At the time of writing (February 2021), multiple vaccines have been approved by national regulators and are in the early stages of being rolled out in the countries considered here. At the same time, new and more virulent strains of the virus have recently emerged. While there is concern about further virus mutations and the possibility of one or more of these limiting the efficacy of these vaccines, it appears, for the time being, that the end of the pandemic is in sight. Not so very long ago, it was argued that transformative change, of the kind that might prompt a decisive shift towards a more equal society, was likely to follow only from a world war or from a pandemic (Scheidel, 2018). One year into this pandemic, it is far from clear whether the rapid responses enacted in the initial months of the crisis will prompt wider change and, if they do, whether this will be of a progressive variety or will consist of fiscal austerity and cuts to social entitlements. We also cannot know whether there will be unforeseen challenges ahead in the battle against the virus, and the extent to which the economic crisis outlives the health emergency remains uncertain.

The aim of this special issue is to present an assessment of social policy responses to the COVID‐19 in a wide range of country contexts. These analyses focus on initial responses, over the first months of the crisis. To that extent, they reflect a focus on more short‐run impacts than is sometimes the case in the analysis of crises (see below) and, at this point, we cannot be certain where these developments will lead. Nonetheless, they have value as studies of (in some countries) significant change that was enacted in a short‐run basis. We have sought to ensure a wide range of country coverage in terms of major regions in the developed world. Our intention is that this collection of studies can contribute to knowledge in relation to how welfare states have responded to this new type of challenge and inform about the nature of the crisis that the world continues to grapple with.

The structure of this introduction is as follows: we start by providing a brief outline of some of the theories of social policy stability and change that are relevant to understanding responses to the pandemic. Subsequently, we present an overview of the trajectory of the pandemic itself and of what we understand to be its economic impacts. We then move to describing the special issue and its remit and to provide an overview of the papers that comprise it. We conclude by drawing some key lessons from these papers.

The conclusions we draw from these studies are threefold: First, these social policy responses, while entailing new developments in many countries, nonetheless reflect, at least in part, existing national policy legacies. Second, these responses can be understood as a form of “emergency Keynesianism” (Bremer & McDaniel, 2020, p. 439), which is characterized by the massive use of deficit spending during economic crises, with the aim of to supporting rather than challenging core capitalist institutions. Third, there are clear differences in terms of the nature of the reforms enacted during the initial phase of the COVID‐19 crisis as compared to reforms enacted as a response to the 2008 financial crisis.

CONCEPTUALIZING SOCIAL POLICY STABILITY AND CHANGE

The existing theories of social policy stability and change were constructed to explain very different developments to those observed during the pandemic (for an overview of these theories see Béland and Powell, 2016). Perhaps the most influential theoretical tradition at hand here is historical institutionalism, a broad approach stresses the enduring weight of existing policy legacies and institutions, which both constraint and create opportunities for social policy change (Campbell, 2004). Associated with the work of Paul Pierson on the new politics of the welfare state (Pierson, 1994, 1996), this approach emphasizes continuity and positive feedback effects from existing social programs leading to self‐reinforcing mechanisms that complicate the efforts of political actors who seek to dismantle or retrench them (on these mechanisms see Jacobs & Weaver, 2015).

This theory is associated with the concept of path dependence and the idea that, once policies have created large constituencies and other institutional anchors, path‐departing change becomes rare and generally triggered by exogenous shocks such as large economic crises (Pierson, 2000). Such an approach is consistent with the idea of punctuated equilibrium, which suggests that path departing change is only likely to occur during rare “critical junctures” (Capoccia & Kelemen, 2007). In the field of social policy research, the widely cited work of Gøsta Esping‐Andersen (1990) on welfare state regimes is grounded in a similar emphasis on policy stability over time (Béland & Mahon, 2016).

In reaction against this stability bias, historical institutionalist scholars like Thelen (2004) and Hacker (2004) have formulated an alternative framework that identifies mechanisms of incremental yet transformative policy change such as conversion, layering and policy drift. The focus of this approach is on endogenous (internal) factors and actors and how they can bring about transformative policy change even in the absence of exogenous shocks (Streeck & Thelen, 2005).

Despite these dissimilarities, all these theories stress the importance of existing policy legacies to assess and explain the level and nature of social policy stability and change in each country, in periods of crisis and beyond. When responding to the sudden economic downturn stemming in part from confinement and public health measures, while drawing on “emergency Keynesianism” (Bremer & McDaniel, 2020, p. 439) political actors are likely to first rely on existing programs and approaches associated with their welfare regime or, at least, the specific policy areas particularly affected by the crisis. This is true when we consider issues such as the relationship between targeted and universal programs but also the territorial organization of the welfare state, which is particularly crucial in federal and devolved states.

Yet, reliance on existing programs and approaches can erode over time, especially if the crisis lingers and the uncertainty stemming from it calls into question existing policy assumptions and paradigms (Blyth, 2002; Hall, 1993). In this context, a critical juncture can arise, and existing policy legacies might become vulnerable, a situation that is more likely in the case of a sudden and dramatic crisis such as the COVID‐19 pandemic. The opening of such a critical juncture does not guarantee that a paradigm shift and/or massive, path‐departing institutional change will take place, but it makes it much more likely that alternatives to the status quo will become widely debated and, perhaps, adopted (Béland, Lecours, Paquet, & Tombe, 2020).

During massive and sudden economic crises, it is expected that governments will act swiftly to enact bold emergency programs to stabilize incomes and avoid an economic freefall. This is consistent with “emergency Keynesianism” (Bremer & McDaniel, 2020, p. 439; on this issue see also Hall, 2013), which can help save capitalism from itself through emergency economic and social programs aimed at avoiding the recession to become an outright depression, like in the 1930s.

To say this is to suggest that it is not only politics that drives, and determines the extent of, social policy change but that economic developments can also demand it. This view is prominent in Harold Wilensky's seminal work on the development of the post‐World War II welfare states. With the then available data, in The Welfare State and Equality, Wilensky (1975) suggested that in the longer term, and from a macro‐social perspective, the increase in government expenditures are attributed in part to the development of economic and societal structures (e.g., growth; industrialization; changing family structures; women's liberation; and technological developments, particularly in the area of healthcare). More recently, in Global Inequality, Branko Milanović (2017, p. 73) considers that public policy is endogenous, meaning that it is necessarily rooted in economic preconditions: “institutions and policies work within what economics allows: they are, if one wishes to use this term, ‘endogenous.’”

At this broad, theoretical level, such remarks and the policy responses to the pandemic documented in our special issue reflect the fact that welfare states are not only to be seen as “politics against markets” but also as “politics for markets” (on this issue see Iversen & Soskice, 2015): that is, avoid the most dramatic economic and social consequences of the COVID‐19 crisis, countries so different from one another all had to abandon or reject fiscal restraint while adopting costly (and generally temporary) emergency social and economic programs to rapidly support the unemployed, their families, and businesses.

Yet, since the beginning of the COVID‐19 crisis, the specific programmatic features of such emergency policies and the ways in which they have been implemented have varied significantly from country to country. Considering this, focusing on advanced economies, our special issue stresses both the common trends and the cross‐national differences in the social policy responses to the COVID‐19 pandemic, which had such a negative economic impact.

OVERVIEW OF THE COVID‐19 CRISIS

In this section, we examine the impact of the COVID‐19 pandemic in advanced economies—here defined as OECD member‐states, plus China. Contrasting with the idea that this was symmetric shock that affected all countries in a fairly similar way, we find significant differences in how COVID‐19 impacted these economies—both across countries and over time. While the measurement of case incidence is limited by national testing capacities, which have expanded significantly as the pandemic has progressed, Figure 1 shows that the median number of new cases in the second wave was much higher than that of the first wave (1,483 per million in the end of May 2020, to 33,135 per million, by the end of December). The increase in the number of cases during the second Wave translated into a higher number of deaths from COVID‐19—with the median number of deaths increasing from 56, at the end of the first Wave to 474 at the end of the second Wave (see Figure 2).

FIGURE 1

Incidence of COVID‐19, at the end of the first and second waves [Colour figure can be viewed at wileyonlinelibrary.com]

FIGURE 2

Severity of COVID‐19, first and second waves [Colour figure can be viewed at wileyonlinelibrary.com]

We also find significant differences in how the virus spread across countries. As can be seen in Figure 1, which provides a snapshot at two moments, the USA and Belgium were among the hardest hit countries in both waves. This is in sharp contrast with New Zealand, Australia, Korea or Japan—which have remained relatively unscathed during the pandemic. Other notable cases include Czech Republic, Slovenia and some of the other countries in Central and Eastern Europe, who entered lockdown with very low case numbers in the first wave, only to experience a more significant second wave of the cases in the autumn. A similar pattern can also be observed with respect to the number of deaths (see Figure 2).

Be it as result of the impact of containment measures, be it as result of individuals' decisions to restrict their social activities to reduce the risk of infection (see Moreira & Hick, 2021), the COVID‐19 pandemic has had a very detrimental impact in the economies of advanced countries—with the median drop in annual GDP at −5%. As evident in Figure 3, the economic impact of the pandemic was unevenly distributed across countries with some countries (such as Spain, the UK or Greece) significantly more affected than others—as was the case of Norway or Korea.

FIGURE 3

The impact of the COVID‐19 pandemic on the economy [Colour figure can be viewed at wileyonlinelibrary.com]

Perhaps as result of the widespread introduction/strengthening of wage‐subsidies during this period (see OECD, 2020a), the impact of the pandemic on the labour markets of advanced economies was relatively modest—especially when compared to the scale of the recession endured during this period (see Figures 3 and 4). As can be seen in Figure 4, the median unemployment rate in advanced economies grew by less than 2% (from 4.9% to 6.7%), though standard definitions of unemployment are hard to operationalise when workers may remain attached to their employers but not able to work at a given moment (OECD, 2020b). There were, however, some exceptions to this incremental increase in unemployment. As can be seen in Figure 4, Canada and the US experienced substantial rises in unemployment (from 6.3% to 13%, and from 3.8% to 13%, respectively) during the first wave of the pandemic.

FIGURE 4

Cross‐national differences of the impact of the first wave of COVID‐19 on unemployment [Colour figure can be viewed at wileyonlinelibrary.com]

Of course, an increase in unemployment is not the only way in which labour markets react to an exogenous shock. Another possibility is that people abandon the labour market altogether—even if temporarily. As evidenced by Figure 5, in most cases, the (modest) increase in unemployment was also accompanied by an—also relatively modest—increase in inactivity. As before, we identify some exceptions to this. In line with our previous findings (see Figure 4), we see that, in the US and Canada, labour market adjusted primarily through the increase in unemployment. In contrast, in Ireland, the labour market adjusted by shedding an important percentage of the workforce.

FIGURE 5

Cross‐national differences of the impact of the first wave of COVID‐19 on unemployment and inactivity [Colour figure can be viewed at wileyonlinelibrary.com]

OVERVIEW OF THE SPECIAL ISSUE AND KEY FINDINGS

In compiling the special issue, we were eager to ensure coverage of a wide range of countries representing a variety of welfare regimes. In total, the papers in this volume cover: Canada and the USA (Béland, Dinan, Rocco, & Waddan, 2021), Denmark, Sweden, Norway and Finland (Greve, Blomquist, Hvinden, & Gerven, 2021); Belgium, the Netherlands and Germany (Cantillon, Seeleib‐Kaiser, & van der Veen, 2021); the UK and Ireland (Hick and Murphy, 2021); Greece, Italy, Portugal and Spain (Moreira, Léon, Coda Moscarola, & Roumpakis, 2021); Hungary, Lithuania, Poland and Slovakia (Aidukaite, Saxonberg, Szelewa, & Szikra, 2021), and China, Japan, Korea and Taiwan (Soon, Chou, & Shi, 2021). In addition to these comparative country case‐studies, there are two additional papers—the first, comparing an initial overview of short‐term social policy responses and comparing these to the responses to the Great Recession (Moreira and Hick, 2021) and the second an examination of the changes in the EU institutions (de la Porte and Jensen, 2021).

Authors were invited to consider key institutional differences in the countries they were examining and to examine social policy responses to COVID‐19—at least in terms of employment and income protection, but potentially also including developments in a wider range of social policy areas. Contributors were asked to offer some observations on the commonalities and differences in the responses in the countries that their papers examined and, if possible, a tentative account of what might explain these observed differences.

Looking across the papers contained in this volume, one is struck by the comprehensiveness and size of the policy responses. In comparing social policy responses to COVID‐19 with those enacted during the financial crisis, Moreira and Hick (2021) argue that the policy packages in broad terms reflect the scale of the crisis and suggest that countries responded in an agile fashion to the distinctive challenges posed by COVID‐19. A central aspect of these responses has been the reliance on job retention schemes in many countries, representing a variety of welfare regimes—often, paid at high replacement rates. The precise nature of these schemes took various forms. They can be seen in terms of the differences between, for example, Greece, Italy, Spain and Portugal (Moreira et al., 2021): while Greece provided support via lump sum payments in the initial phase of the crisis, and Italy and Portugal expanded or reformed existing furlough schemes, Spain expanded its partial unemployment scheme. In this way, similar policy responses could manifest in different ways.

Moreover, there have also been enhancements to unemployment supports in many countries, with job retention schemes and enhanced supports for those who lost work representing, in one sense, two aspects of the same broad policy response but with different emphases on these elements in different countries. Hick and Murphy (2021) note how the UK and Ireland both introduced new wage subsidy schemes and enhanced unemployment supports, but while the UK constructed two very different groups—with furlough payments which could be much more generous than Universal Credit payments for those who had lost work—in Ireland, there was greater equality between retained workers and the newly unemployed, both of whom received more generous payments than the longer‐term unemployed.

In their account of developments in Central and Eastern Europe, Aidukaite et al. (2021) observe important differences in the policy responses between Poland, Hungary, Lithuania, and Slovakia with, potentially, long‐term consequences. While acknowledging the generally expansive response to the COVID crisis, they note that while Hungary did not enhance its levels of support for people who became unemployed, while Lithuania, by contrast, not only increased coverage of unemployment benefits but responded to the COVID crisis by introducing reforms which may, they argue, have lasting consequences for the generosity of its welfare state.

Responses to COVID‐19 vary sometimes greatly from country to country in ways that reflect, at least in part, existing national policy legacies. This is clearly the case when we compare Canada and the United States, where the varying relationship between federalism and existing policy legacies in the field of unemployment insurance has shaped in part national responses in each of these two liberal counties (Béland et al., 2021). At a broader level, according to Béland et al. (2021), in Canada, social policy responses to COVID‐19 proved more rapid and comprehensive than comparable US responses, a variation they attribute to specific national policy legacies, but also to divergent political institutions and patterns of cross‐partisan consensus.

As Cantillon et al. (2021) show, Belgium, Germany and the Netherlands—all sharing the same Bismarckian roots—offer another striking example of cross‐national differences in social policy response to COVID‐19 within the same welfare regime. Belgium, arguably still the most Bismarckian welfare state of the three, has relied entirely on existing systems of short‐term unemployment insurance for employees and the self‐employed. Germany also made use of existing systems, but self‐employed persons were covered by social assistance and not, as was the case in Belgium, by social insurance. The Netherlands, which has evolved the furthest in the direction of a “Bismarck cum Beveridge” model, introduced two new systems outside regular social security.

Greve et al. (2021), similarly, view policy responses in Denmark, Sweden, Finland and Norway as reflecting the longer‐term emphasis on state‐guaranteed inclusion in these countries. In this sense, responding to COVID‐19 has not required a major departure in terms of policy orientation, though, as elsewhere, there have been new developments—for example, increased coverage of the risks of the self‐employed and freelancers.

The theme of institutional resilience also features in the account of Soon et al. (2021) in relation to Japan, China, Taiwan and South Korea. They suggest that East Asian countries have had to deal with a variety of crises in recent decades—not only the global financial crisis, but the SARS outbreak in 2003 and the 2011 Great East Japan Earthquake. They stress the role of policy learning from these crises, citing the cases of Korea and Taiwan, which, despite being governed by ideologically different parties than in 2008, pursued broadly similar policy responses to those enacted during that crisis. They argue that while expansive, the policy packages enacted in response to the COVID crisis do not fundamentally reconfigure these welfare states.

The sheer uncertainty of the trajectory of the collective fight against the virus, and what the longer‐term consequences of this crisis will be for social policy, comes through clearly from many of the contributions. While we do not wish to prognosticate about the possible long‐term effects of these measures, the response of the EU institutions, analysed by de la Porte and Jensen (2021), is clearly significant. The response of the EU institutions in implementing Next Generation EU, which introduces common debt issuance and thus a new form of redistribution between Member States, is already an important departure, especially when compared to responses to the Global Financial Crisis and Eurozone crisis. Moreover, the European temporary Support to mitigate Unemployment Risks in an Emergency (SURE) provides financial assistance to help Member States deal with sudden increases in public expenditure needed to maintain employment levels, supporting national social security systems. These initiatives might be a decisive step in deepening the European social project.

CONCLUSIONS

The papers contained in this special issue examine the social policy responses to the COVID‐19 pandemic in the initial months of this crisis. Any assessment of these responses must necessarily be provisional, for a variety of reasons. The empirical validity of some of the concepts and theories discussed above, and in the papers featured in this issue, can only be assessed over longer periods (Campbell, 2004). The same goes for the understanding of the full impact and significance of the policy measures that have been discussed in this special issue. Although various international organizations produce very good and detailed overviews of national policy measures (e.g., OECD and EUROFOUND), we do not yet have empirical evidence that can tell us how the different systems work in practice, where precisely the differences lie between countries and to what extent new COVID‐19 protection systems differ effectively from the regular ones. Systems that at first glance seem very different might in practice be very similar, and vice versa. The pandemic is also a current and ongoing crisis and we must expect that the policy responses to it—even those announced on a short‐term basis—will continue to evolve. Finally, we also cannot say anything definitive about the extent to which the measures put in place in response to the first phase of the crisis will contribute to reshaping the social protection system and social policies over the longer‐term, which of these measures have already turned or will turn into more permanent ones and how welfare states will cope with rising expenditures, diminishing incomes and the social needs that will emerge once the rescue measures are lifted.

Yet, at this stage, we can draw three general analytical conclusions.

First, the design and scope of the emergency policy responses to COVID‐19 vary sometimes greatly from country to country in ways that reflect at least in part existing national policy legacies. The papers stress how early responses to COVID‐19 seeking to reduce insecurity, stabilize incomes, and prevent an economic freefall, are shaped at least in part by existing policy legacies, including those associated with specific policy areas and welfare regimes (e.g., the balance between targeted and universal benefits), as well as with concrete instruments deployed (e.g., wage subsidies vs. temporary unemployment) or territorial arrangements (e.g., centralization‐decentralization nexus). Even when we compare to decentralized federal systems such as Canada and the United States, variation in the level of centralization from one country to the next within the same policy area such as unemployment insurance can shape national social policy responses (Béland et al., 2021).

Second, these responses are generally grounded in “emergency Keynesianism” (Bremer & McDaniel, 2020, p. 439) and, at a deeper level, they are an integral part of a broad historical trend according to which welfare states work to preserve rather than challenge the core institutions underpinning capitalist market economies. As in the 2008 financial crisis, social security systems proved to be very strong automatic stabilisers. The social policy responses to COVID‐19 have been significant in size and in scope, with policy packages, in many countries, representing new departures.

Third, conversely, COVID‐19 emergency policies were inherently different from the austerity and work‐related policies pursued in several countries in the decade before the beginning of the COVID‐19 crisis. Yet, in a number of countries, we observe a continuation of the dual transformation of social protection that took place in recent decades which retrenched earnings‐related benefits for long‐term unemployed and atypically employed people on the one hand and expanded social security to so called “new social risks” on the other. The more generous treatment of COVID‐19 related social risks compared to regular unemployment might in some countries even have reinforced the disparities between well‐protected core workers and labour market outsiders, an issue future research could explore.

Economic and social recovery policy will be extremely demanding for national welfare states. GDP has fallen dramatically while social spending is reaching unprecedented levels. The corona‐related expenses come on top of the costs of ageing and the efforts needed for climate change while the increase in unemployment that will follow the lifting of the rescue measures will occur in the midst of digitalization, which in itself will have a negative impact on the employment opportunities of low skilled people. There is little doubt that the pandemic will bring the welfare state to a critical point in its history while reminding us why we have need welfare states in the first place. By focusing on the initial responses, the papers in this special issue show how welfare states, albeit with large differences, coped in an impressive way with the consequences of this unprecedented crisis. It remains to be seen how they will evolve.