The concept of “sustainability deficit”, or fiscal gap as it is sometimes
called, pertains to the ability of a welfare state to maintain its current
social policy programmes, spending levels, tax and other policies
for decades to come. If we look
at the sustainability deficit from a life cycle perspective, the role of
employment becomes essential for combatting the deficit. High employment rates have been a cornerstone of the
renowned Scandinavian welfare state model.

A few tentative conclusions follow from our explorations. The first one
is about the shift in the discursive focus. Economic and demographic
challenges for the welfare state have taken the floor, and consequently,
the Esping-Andersenian “decommodification” has given way to
“recommodification”, or how to put people (back) into employment.
Countries are looking for means to increase employment among the
young, to give better possibilities for mothers to work and to create
incentives for the ageing to continue to work.
Secondly, the notion of “three worlds” of welfare capitalism is
less valid today than a quarter century ago. This has to do with two
different processes. First, employment participation rates of elderly (60 to
64 years of age) workers in OECD countries have changed due mainly to the modernisation of family
policy and activation in labour market policy. Second, the old world
of the 18 OECD countries is changing by extension of the OECD and
of the EU.
The life cycle deficit inspection still reveals some welfare regimespecific peculiarities. As a rule, in Central Europe the youngsters enter
the labour markets earlier than, for example, in the Nordic cluster, but
in contrast, the older workers have an earlier exit from employment
than do, for example, the Swedes. The specific problem for many postSocialist countries is the late entry and early exit from the labour
markets. Some East-Asian countries suffer from the same problem. In
the Nordic countries, the sunny side of heavy investments in publicly
provided social services is high female employment rates, which, in
turn, effectively combats the sustainability deficit of the welfare state.
The level of employment is essential for the solvency of the welfare
state. In fact, high employment rates have been a cornerstone of the
renowned Scandinavian welfare state model. However, as can be seen
in the graphs, employment problems in the Nordic countries are
associated with the young. The issue in Central and Southern Europe
is the (too) early exit from the labour markets. In addition, a low
female labour force participation diminishes the value of production
in these countries, which is a challenge for East Asia too.
We have illustrated how countries differ when it comes to critical
phases in the economic lifecycle. The fact that countries differ not
only suggests that institutions matter but also that there is room for
policy learning. A broader understanding of how welfare, education
and labour market policies work to produce different kinds of labour
market participation patterns for youngsters, parents and elderly
people is an important lesson, and we should make good use of that
lesson if we want to benefit from best practices in research. In the end,
the lesson is about designing policies that can foster high levels of
employment in all relevant phases of the lifecycle to ensure equality
in society as well as sustainability of the welfare state simultaneously.