Christian democracy, social democracy and the paradoxes of earnings-related social security

This article compares the retirement policies of Belgium and Sweden in order to reveal the different incentive structures built into the pensions systems prevailing in countries that are taken to represent different approaches to welfare capitalism. It addresses the question of why in a Christian Democratic welfare state that is said to grant pensions rights on the basis of merit and past work performance one can find extremely low labour-force participation rates among elderly workers, while in a Social Democratic welfare state that is supposed to grant pension rights relatively independent of past labour-market performance, one can find quite high participation rates amongst that section of the labour force. This apparent paradox is explained in terms of the different purposes of the early-retirement schemes in the two countries: in Belgium they were primarily part of a strategy to combat (youth) unemployment, in Sweden they had more to do with reforms that sought to accomplish a 'humanisation of work' by softening the abrupt transition from work into retirement.