ABSTRACT

Policy priorities have shifted in the course of the years in just about the entire industrialised world. While in the 1970s income protection was the key concept in the development of the welfare state, the priority goals of the 1990s were activation and reforming welfare state institutions, such as social security and minimum wages, into 'employment-friendly' income arrangements. Continental European welfare states in particular have been challenged in recent years to reduce high levels of benefit dependency and increase employment rates. In response, these welfare states have introduced income arrangements aimed at 'making work pay'. The underlying rationale is that it is better to take an active approach to income maintenance arrangements, i.e. to reward employers for creating jobs, or to pay people for working rather than for inactivity. The 1990s, saw the emergence of policies aimed at the 'activation of benefits', the reduction of employee social contributions and, more recently, the introduction of tax credits. France, for example, introduced a scheme in 2001 called the 'Prime Pour l'Emploi' or PPE; the Netherlands saw the implementation of a so-called 'Arbeidskorting'; and Belgium introduced an individual 'Tax credit for low-wage earners' as recently as 2002. These new income arrangements entail a stronger integration between social, fiscal and employment policies.