Welfare regime change – or lack of change – in unemployment compensation

Drawing on theoretical accounts of institutional change, this study explored the politics of welfare regime transformation in regard to Turkey's unemployment compensation system. By using the institutionalist approach, the study shows that the process of welfare regime change was one of “institutional layering” of unemployment insurance (UI) over severance pay. Also, the study demonstrates that the economic bureaucracy played a key role in pushing the establishment of UI (state‐centric approach) in contrast to the class‐based organizations that focused their struggles on the severance pay scheme (power‐resource perspective). However, the economic bureaucracy preferred a rudimentary UI design, which prevented UI from undermining the vested interests behind the severance pay scheme. Furthermore, subsequent attempts at the reformation of the severance pay scheme were not successful because the social welfare bureaucracy lacked the capacity to develop a policy alternative to resolve the stalemate between the societal actors. Lastly, the study used the successful severance pay reform experiences of South Korea and Austria to locate the Turkish case within a broader comparative framework.