Since the establishment of compulsory social insurance in Wilhelmine Germany back in 1883, the welfare state has made a fundamental contribution to the modernisation of European society: its programmes have greatly contributed to consolidating democratic institutions and to harmonising economic growth with changing social needs. Yet, despite its unquestionable historical success, the welfare state is entering in its second century of life in conditions of strain and uncertainty. A child of the nation state and industrial society, it stands somewhat disoriented amidst the new socio-economic and political context, characterised by the rapid transition to post-industrialism, increasing globalisation, sweeping changes in demography and social relations, trends towards supranational integration and a new, ‘post-cold war’ politics. No institution can survive without adapting: thus the European welfare state is now faced with a difficult challenge of internal restructuring, involving a ‘recasting’ of many of its traditional instruments and objectives.