CSB Working Paper, 2022, 6: Poverty and the tragedy of the welfare state: seven terms for a new social contract

The main mission of the welfare state is to improve the living conditions of the vulnerable in society. For many decades, however, the welfare state has failed to reduce poverty among the active population, in Belgium and elsewhere in Western welfare states. This is not only related to policy failures, there is more to it. The simultaneous increase of poverty, employment and social spending point to a systemic crisis of the welfare state: increasingly it has become more difficult to achieve dece…

The main mission of the welfare state is to improve the living conditions of the vulnerable in society. For many decades, however, the welfare state has failed to reduce poverty among the active population, in Belgium and elsewhere in Western welfare states. This is not only related to policy failures, there is more to it. The simultaneous increase of poverty, employment and social spending point to a systemic crisis of the welfare state: increasingly it has become more difficult to achieve decent incomes for all while preserving sufficient work incentives without greater efforts in terms of the size and the progressivity of social spending. To better manage climate change, digitalization and ageing a new social contract is therefore needed. That social contract should build on the achievements of the post-war social welfare state but it has to offer more security: by putting a floor under incomes, by broadening the repertoire of work, by including taxes on wealth and carbon emissions in the redistribution process and by intensifying the cooperation in the European and global context.