The welfare state as it has developed in Europe since the early days of the industrial revolution is now facing serious problems; indeed, one can argue that the Schröder government in Germany has been one of the first and more prominent casualties of a major crisis of welfare state policies. Torn between the time-honored social democratic traditions of equal opportunity and the protection of the needy, on the one hand, and the pressures of demographic change and declining public resources, on the other, European governments are finally confronting the limits of the welfare state. Costs of the traditional safety nets have begun to overburden public budgets at the same time as they have hampered the international competitiveness of the European economies. As a result, the full range of welfare services, from unemployment compensation to social security benefits and from the assurance of minimum living standards to health care, has come under review and is undergoing major changes. Much of the political dynamics in contemporary Europe needs to be understood as the conflict between those for whom this reform of the welfare state goes too far, and those for whom the reforms do not go far enough.
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