Academic journal article Canadian Journal of Sociology

Pension Politics in Three Small States: Denmark, Sweden and the Netherlands

Academic journal article Canadian Journal of Sociology

Pension Politics in Three Small States: Denmark, Sweden and the Netherlands

Article excerpt

Abstract: This article emphasizes class politics and path dependence in accounting for the development of pension regimes in Sweden, Denmark and the Netherlands. The political strength of the Swedish Social Democratic Party in alliance with the trade unions resulted in the emergence of a statist pension system. In the Netherlands and Denmark, a politically weak and divided left settled for collectively regulated but privately organized supplementary pensions. However, the Dutch and Danish cases suggest that several types of pension regime structure are capable of producing "social democratic" outcomes such as poverty alleviation, reducing income inequality, and covering various risk profiles. In both countries, private occupational pensions thus produced outcomes similar to those of Sweden. These historical choices decisively shaped the subsequent development of pensions.

Resume: Cet article met l'accent sur la politique de classes et la continuite institutionnelle (path dependence) pour expliquer le developpement des regimes de pension en Suede, au Danemark et aux Pays-Bas. La puissance politique du Parti Social Democrate suedois dans le cadre de son alliance avec les syndicats a provoque l'emergence d'un systeme de pension etatiste. Aux Pays-Bas et au Danemark, une gauche divisee et politiquement faible s'est contentee d'un systeme de pensions complementaires regule collectivement mais organise de maniere privee. Cependant, les cas neerlandais et danois suggerent que differents types de structures institutionnelles peuvent produire des resultats "sociaux democrates" tels que la reduction de la pauvrete, la reduction des inegalites, et la couverture de differents profils de risque. Dans ces deux pays, des pensions privees ont donc produit des resultats semblables a ceux du systeme suedois. Ces choix historiques ont profondement influence les developpements ulterieurs de ces systemes de pension.

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Implicit in much of the welfare state development literature is the assumption that only the public sector can deliver outcomes commonly associated with the "social democratic regime" (Esping-Andersen, 1990). This is especially true for pensions, where publicly organized retirement provision was frequently considered the best vehicle for alleviating poverty in old age, reducing income inequality among pensioners, and promoting income equality between pensioners and wage earners. Comparative analysis of pension regimes in Sweden, Denmark and the Netherlands suggests that the public sector is not necessarily the only path leading to equality and solidarity. all three countries provide universal basic pensions, but the three systems diverge in terms of supplementary coverage. The Swedish system includes public, earnings-related benefits for all wage earners, whereas Danish and Dutch occupational pensions are organized in the private sector. Although occupational pensions are privately organized, the Danish and Dutch pension regimes deliver outcomes similar to Sweden's. Old age poverty levels are similar in all three countries, as is income inequality among pensioners.

Comparison of the Swedish, Dutch and Danish pension systems suggests that there are multiple institutional pathways toward similar outcomes (Huber, Ragin, and Stephens, 1993; Van Kersbergen, 1995), and this article draws on this tradition by emphasizing the role of party politics and path dependence. The article emphasizes the political mobilization of the left and its coalitions with other societal groups to explain different paths toward similar outcomes. In Sweden, Social Democratic hegemony and union strength resulted in the emergence of a statist pension system. In the Netherlands and Denmark, the weakness of the political left necessitated cooperation with confessional and liberal groups respectively, and these left their mark primarily in the organization of occupational pensions. In both countries, a politically weak left settled for collectively regulated but privately organized occupational pensions that, despite their location within the market rather than the state sphere, produce outcomes similar to Sweden's. …

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