Welfare State

A welfare state is a type of government responsible for its citizens' basic social and economic security. It is an inherent function of every form of government, especially democracies. Common welfare activities undertaken by the state include free health care and education, pensions, welfare payments, etc.

The principles governing a welfare state are the equitable distribution of wealth, equality of opportunity, and public responsibility towards citizens who cannot afford necessities due to financial limitations. However, many negatively associate the term now with governments that overly incentivize their citizens beyond the reasonable limit.

• The welfare state can be a state or government that provides basic economic incentives to its people, especially those at a disadvantage.
• Such a state can be a liberal state, a social democratic state, or a conservative state, depending on the forces at play in a certain place.
• Most countries, particularly democracies, must guarantee fundamental security and oversee the welfare of their citizens. Nevertheless, monarchies like Saudi Arabia are not behind social welfare either.

The welfare state as a distinct concept is diminishing, as it has become every government's inherent and mandatory function. Most countries, including democracies and monarchies, provide for the welfare of their citizens. A few exceptions to this are dictatorships like North Korea.

The history can be traced back to ancient civilizations like India, Rome, China, and the Middle East when some rulers prioritized their subjects' welfare. However, in modern times, the concept was popularized by philosophers in late 19th-century Europe.

Since then, many countries have adopted it as a fundamental right of citizens to receive direct support from the state. Especially developed countries give immense importance to citizens' social security. This is probably due to the level of development in these countries and their ability to provide for the people. In contrast, the figure is slightly lower for developing countries. For example, here's the 2020 Social Expenditure report of the Organization for Economic Co-operation and Development (OECD) countries. According to the report, the OECD countries spend an average of 20% of GDP on social welfare.

But recently, the concept of the welfare state has been heavily criticized. This is because some states provide more incentives and welfare payments than required. This has been viewed as suspicious, with the states having ulterior motives, especially during elections. Further, over-incentivizing can put the country in debt. Many developed countries face financial issues due to the large amount disbursed via various social welfare activities. Also, it demotivates people to provide for themselves since all the basic requirements are fulfilled.

Now, let's understand the functional characteristics of welfare states. Some functions are common to most countries, and it is essential to focus on them primarily.

1. States emphasize free primary health care to citizens. This is mainly done through government healthcare facilities.
2. Like schooling, free education for all, or at least up to a certain level.
3. Pension, particularly for government employees and people above sixty or disabled, is common in most countries.
4. And lastly, thorough social security coverage is a characteristic feature of developed countries.
5. Some countries also offer specialized support and incentives for their citizens depending on their economic situation, geography, etc.

There are three major types of welfare states, according to the Danish sociologist Gøsta Esping-Andersen. 

#1 – The liberal welfare state

This type of state is market-oriented, i.e., the market and labor forces influence the state. Common benefits like health insurance and pensions depend on employment. Proponents of a liberal state argue that it supports individual rights and diversity and incentivizes based on eligibility. Here, minimum government interference is idealized.

#2 – Social welfare state

Also known as a social democratic state, it pushes the idea of social welfare as a mandatory responsibility of a democratic government, i.e., the government is the absolute guarantor of social rights. Furthermore, a social welfare state is based on equal opportunity, regardless of employment status.

#3 – Conservative/Corporatist state

This is probably the least attractive type, and as the name suggests, it is conservative in outlook. Here too, the government guarantees the basic security of its citizens, but it propagates or indirectly supports conservative ideas. For example, the decision-making hierarchy is too narrow and often based on traditional stereotypes, i.e., total male representation. 

Let's discuss some examples to understand the concept of welfare states better.

Example #1

Consider a hypothetical example of country X, which is a democracy. The government places huge importance on spending on social welfare. Being a developing country, it spends an average of 15% on welfare programs. Here's a breakdown of the activities and their share of GDP.

The figures mentioned are fractions of the total 15% share. That is, total expenditure on health care is 33% of the 15% share of GDP.

Example #2

Having mentioned the financial implications of social welfare programs in developed economies, here's recent news of the United Kingdom's debt and welfare cost situation, which is expected to surge by £50 billion or $60.7 billion, according to Financial Times. The inflation and impending recession could further worsen the situation, leading to high-interest rates and subsequent lesser tax revenue. The welfare payments are expected to rise by £23 billion annually until the next election.

This has been a guide to Welfare State and its definition. Here, we explain its concept, functions, types, and examples. You may also find some useful articles here -

• Welfare Economics
• Socialism
• Economic Stability