Developments since 1990

Quo Vadis? The disputed expansion of the welfare state

Strategy debates and political deadlock, austerity measures and moderate expansion – the development of social security became increasingly controversial during the 1990s. Yet, despite growing criticism, major breakthroughs did occur: including mandatory health insurance, maternity benefits or the harmonization of family allowances. At the same time, a number of sites remain under construction: the long-term guarantee of  old-age provision, better compatibility between family and work, and answers to the ‘new poverty’.

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Since the early 1990s, modifications to social insurance schemes have been complex and contentious. Compared to the previous 20 years, the rise in the welfare state burden (the ratio of social insurance revenues to gross domestic product) has slowed markedly. Against the backdrop of an unsettled economic situation and shifting political alliances, the formulation of social policy became hotly contested. The rise in the number of popular plebiscites which focused on social welfare issues reflected this. From 1971 to 1990, such plebiscites on welfare state policy constituted about 18% of all plebiscites, but this proportion rose to 31% subsequently (1991-2017). Political groupings have evidently become less and less able to bind opposing interests together and create compromises supported by a stable majority.

Particularly in health insurance and old-age provision, differing perceptions of the problems increasingly led to a stalemate between left-wing and center-right parties. It was still possible, when the compulsory health insurance system was introduced in 1994, to find a majority in favour of a moderate expansion. Since then, rising health costs have led to numerous efforts at revision, but many failed in parliament or at the ballot box. The left favored a unified public health insurance fund as a means to contain costs, but the voting public rejected popular initiatives in this vein in both 2007 and 2014. The second partial revision of the Health Insurance Act was also rejected at the ballot box in 2012, largely owing to the fear that it would no longer be possible to freely choose one’s physician. Smaller steps, such as the introduction of risk equalisation between health insurers, as well as standardizing doctors' fees, proved more successful. Rising life expectancy and the increase in illnesses among the aged have led to discussions in health care circles about how to finance the growing need for nursing care.

A discussion about more far-reaching reforms began after the latest comprehensive revision (the 10th of the AHV) was carried out in 1996. While the center-right parties, focused on demographic shifts, wanted to raise the retirement age, left-wing parties warned against the  loss of social solidarity and argued in favor of finding new sources of funding. However, proposals for an 11th  revision of the AHV failed at the ballot box in 2004 and in parliament in 2010.  In 2010, the electorate also decisively rejected reducing the conversion rate used in occupational pension schemes. The reform package entitled "old-age provision 2020" suggested simultaneously revising the AHV and the occupational pension schemes, but this too failed in a plebiscite, largely on the grounds that it would increase the retirement age for women from 64 to 65. It was not until 2019 that the electorate accepted a proposal, in the context of a tax reform, that will lead to providing additional income for the AHV. To cover the funding gap that remains, and to solve other AHV structural problems, the Federal Council drafted a new proposal. The "AHV 21" calls for an increase in women’s retirement age but with compensatory measures, a more flexible retirement age, and an increase in the VAT. Reforming the old-age pension scheme thus remains one of the most important areas under construction in the social security system, especially since employer and worker groups’ proposals for reforming the occupational pension scheme are still under discussion.

Since the 1990s, social security for mothers and fathers has become increasingly prominent, with social security instruments here greatly expanded. Thus, it proved possible to find a political majority in favor of maternity insurance (2004) and in favor of harmonizing family allowances (2006). Both confederation and cantons have invested in early childhood care, to improve the compatibility of work and family life. Nevertheless, and as in the past, Switzerland still lags behind other OECD countries in this area.

In addition, fundamental questions about the future of social security have been discussed since the end of the 20thcentury, with the "new poverty" a particular focus.  Such poverty affects single mothers, the unemployed whose rights to unemployment benefits have expired, and low-income families in particular. Unemployment insurance (1995) and social assistance are based on the premise that those who receive them will be rapidly reintegrated into the labour market. However, the “activation policy” this involves remains controversial. Critics see a concealed reduction in benefits in its measures, as well as increased control over those who receive benefits. New models of social security are also being discussed that could adequately take account of changes in work relationships (e.g., part-time work) and new types of families (e.g., single-parent or patchwork families). Proposed new instruments include, among others, general employment insurance or an unconditional basic income, though the attempted introduction of the latter was clearly rejected at the ballot box in 2016.

Literatur / Bibliographie / Bibliografia / References: Studer Brigitte (2012), Ökonomien der sozialen Sicherheit, in P. Halbeisen, M. Müller, B. Veyrasset (ed.), Wirtschaftsgeschichte der Schweiz im 19. Jahrhundert, 923–974, Basel; Obinger Herbert, Armingeon Klaus et al. (2005), Switzerland. The marriage of direct democracy and federalism, in H. Obinger, S. Leibfried et al. (ed.), Federalism and the welfare state: New World and European experiences, 263–306, New York; Année politique Suisse / Schweizerische Politik, 1990–2010.