PERSISTENT POVERTY: PORTUGAL AND THE SOUTHERN EUROPEAN WELFARE REGIME

Poverty, in its multiple dimensions, has progressively been acknowledged by policy makers and, in several instances, by national and international bodies. At a global level, the United Nations launched the Human Development Reports at the beginning of the 1990s, which paved the way for a renewed and broader understanding of poverty and development. More recently, the Millennium Development Goals tried to achieve a new international commitment with developmental goals at the beginning of the new millennium.

In the more developed countries, poverty and social exclusion still defy the achievement of balanced and sustainable development. In the European Union (EU), tackling poverty and social exclusion continues to be an enormous challenge since nearly 57 million individuals were still at risk of relative income poverty in 2001 in the ‘old’ EU countries (i.e., the EU 15) and many more are expected to be vulnerable to poverty and social exclusion in the new and acceding countries.¹ Enduring high levels of cross-section and persistent income poverty in the EU 15, greater variance in levels of income inequality and poverty within an enlarged EU (i.e., the EU 25), coupled with the emergence of new social risks (Taylor-Gooby 2004b) associated with demographics (increased ethnic, culture and religious diversity, ageing, etc.), the labour market (changing patterns of job creation/destruction due to knowledge-based society and globalisation) and the family (increased diversity of family types, changing of family roles) – all these changes are expected to redefine the scope of social cohesion and social policy in Europe.

Greece, Italy, Portugal and Spain – the southern European countries clustered in the ‘Southern’ or ‘Mediterranean’ regime of welfare – will provide an interesting case study. The public welfare systems in these countries are relatively new when compared to their EU 15 partners, their economic development level is lower and they are facing both the ‘old social risks’ as well as the ‘new social risks’ that are increasingly becoming global. Since these countries face a similar set of challenges and also embraced a renewed policy agenda in the 1990s, their recent evolutionary paths may be of great practical interest to the new European Member States.²

This article also tries to bring a more comprehensive approach to the analysis of welfare regimes, combining perspectives of inequality and poverty dynamics with social attitudes and values in the process of construction and legitimating of social policies. It explores further the special case of Portugal – a country that belongs to the southern Europe cluster, but has some distinctive and important welfare system singularities (Capucha et al. 2005).

The rest of the article is organised as follows. In Section 2 basic features about the fight against poverty in EU are described and levels of economic development, income inequality and poverty, social policy maturity and efficiency in the south of Europe and Portugal in particular, are assessed. Section 3 tries to explore a comprehensive approach to the nature, extension and causes of social policy inefficiency in tackling current and persistent income poverty in southern Europe making a consistent comparison of Portugal with the other southern European countries. Section 4 explores further the special case of Portugal and, finally, Section 5 briefly summarises the main conclusions and sets the policy process in southern Europe in its historical context.

The fight against poverty and social exclusion has received a new emphasis since the adoption of the ‘Lisbon Strategy’ (European Council, March 2000), which stressed the importance of ‘modernising the European social model, investing in people and combating social exclusion’ (EC, 2000). In the preparation of the Lisbon European Council, Ferrera et al. (2000) stressed the need of recasting the European social model, with the reconciliation of the tradition of social solidarity with new policies that favoured labour market flexibility and inclusion and addressed new social risks.

The Lisbon European Council also adopted the principle of open coordination within the area of social exclusion, following the framework of the European Employment Strategy that includes the definition of common objectives and common indicators to monitor progress, National Plans, Community Action Plan, as well as Joint Reports on social inclusion and regular monitoring and evaluation. Despite the recognition of being a policy area in its own right and the new policy instruments developed, the field of social inclusion is still a problematic one with very different national strategies, loose coordination between states and poor articulation with other policy objectives. Moreover, the transformation process of European societies and even of the EU's frontiers are likely to add more complexity to the reshaping of the European social model.

Within the EU, the southern countries of Greece, Italy, Portugal and Spain have been clustered in a welfare model or regime – the ‘Southern’ or ‘Mediterranean’ regime (Ferrera 1996; Trifiletti 1999; Bonoli 1997; Matsaganis et al. 2003) – although some authors are prone to consider southern European countries as a part or variant of the ‘Continental’ regime (Esping-Anderson 1999; Adao e Silva 2000; Powell and Barrientos 2004) frequently characterised by ‘rudimentary’ development of its social protection (Gough 1996).

Welfare regimes in the EU have to be considered in terms of their own evolution, which is leading to a certain degree of convergence³, but is also preserving certain specificities. Southern European countries, as we shall indicate later in more detail, share some common features not only in the indicators of social protection, but more broadly in the interplay of the ‘softness’ of state institutions and the strong presence of the family in the welfare mix (Matsaganis et al. 2003; Trifiletti 1999), as well as in social perceptions and attitudes towards welfare (Gallie and Paugam 2002; Van Oorschot 2003).

We will begin by assessing some information about social protection, inequality and poverty. For this, Table 1 presents some selected social indicators for the southern European countries in comparison with the EU 15 average in the year 2001.

Per capita GDP in the southern European countries varies between 66.8% and 105.2%, and social expenditure between 56.9% and 96.6% of the EU 15 average. Portugal presents low scores in both indicators, but it is worth mentioning the rapid growth of social expenditures during the last decade, corresponding to the expansion of social protection and the development of new areas of policy, particularly in fighting poverty. In fact, Portugal combined a more rapid growth of social expenditures with a qualitative change of social policy institutions in the second half of the 1990s. Italy, on the other hand, scores around the EU average in both indicators, but has been following a pattern of growth slower than the EU average.

Standard indicators of income inequality (Gini coefficient and the quintile ratio S80/S20) and of poverty (poverty incidence and poverty intensity) have been computed for all eight waves of the European Community Household Panel (ECHP) covering the period 1994 to 2001. Eurostat adopts the ‘modified’ OCDE scale to equivalise incomes, and defines the poverty threshold at 60% of the national median equivalised income in each year. With extreme political caution, poverty incidence is labeled ‘poverty risk’. ‘Persistent poverty risk’ is defined by Eurostat as a situation of poverty risk in the present year and at least in other two out of the last three preceding years.

Although in Table 1 we have only inequality and poverty indicators from the last year of the ECHP, those indicators (and country rankings) are relatively stable over the full range of the panel. Inequality and poverty indicators are consistently high in the south of the EU 15. Persistent poverty risk in southern European countries is also higher than the EU 15 average, as is the percentage of persistent poor in the poor population (exception for Spain in this last indicator).⁴

Finally, the efficiency of social transfers in reducing poverty is relatively low in all southern European countries. Social transfers other than pensions, in particular safety nets, income support and activation programmes that are especially important in addressing current and persistent poverty, have an even lower level of efficiency in the countries under scrutiny.⁵Figure 1 presents the relative position of all the EU 15 countries in the space of the two main static dimensions of income poverty: incidence and intensity.

Tacking poverty incidence and intensity together produces a clear distinction between the performance of social democratic and conservative regimes, on the one hand, and liberal and Mediterranean regimes, on the other, with the latter featuring considerably higher scores in both poverty dimensions.⁶

As we have seen before, persistent poverty risk in southern European countries is higher than the EU 15 average and the percentage of persistent poor in the poor population is also higher in all these countries, except Spain. Barrientos et al. (2004) suggest that some empirical relation between long-term spending on social protection and chronic poverty in European countries exists and can be related to the stability and effectiveness of social protection. Taking advantage of harmonised information from Eurostat statistics, Figure 2 illustrates for each of the EU 15 countries the mean expenditure in social protection as percentage of GDP during the period 1990–2001 and the mean persistent poverty risk over the eight waves of ECHP.

The figure reveals a negative association between the two variables, with lower social expenditure efforts and higher persistent poverty rates in southern European countries. This clearly indicates the problem of insufficient funding of social policies. However, there is also a problem of efficiency in social policy, which requires a more detailed investigation of the nexus between concrete policy measures and their effects in terms of poverty reduction.

Figure 3 illustrates for each of the EU 15 countries the average level of efficiency of social protection expenditure other than pensions in reducing poverty during the period 1990–2001 against the mean persistent poverty risk over the eight waves of ECHP.⁷ Substituting efficiency of social expenditure excluding pensions in the period 1994–2001 for expenditure in social protection stresses even more clearly the low position of the southern European countries.⁸ It emerges that all four countries also have a chronic problem of low efficiency concerning their welfare systems’ ability in reducing persistent poverty.

The four Mediterranean countries share a relatively low level of welfare effort within a framework of a frail and non-comprehensive welfare system (Matsaganis et al. 2003). Their levels of social protection, approached by the expenditure on social protection as percentage of GDP, are in fact lower than their counterparts, but the social expenditure shows also much less efficiency in reducing poverty levels. What are the causes for such inefficiency and what explains that apparent social protection leakage in relatively poor countries with relatively more recent social policies?

The degree of redistribution in a society is determined by both the social protection system and the taxation system. Regrettably, the ECHP collects net of taxes data; therefore, the redistributive effect of the tax system cannot be scrutinised by microanalysis of personal and families’ incomes and taxes.⁹

Data related to taxes in the southern European countries is difficult to estimate. However, several studies have highlighted the weight of the shadow economy, the extent of tax evasion and fraud, and the relative tax burden on salaried workers and the middle classes.

The estimated size of the shadow economy in 2001 ranges from 22.5% in Portugal and Spain to 27% in Italy and 28.5% in Greece, which correspond to the highest values in the EU 15 (Dell'Amo and Schneider 2003). Despite some measures to fight tax evasion and improve tax collection, public opinion and policy decision makers do not show strong commitment to higher social justice based on tax justice and progressivity. As Schneider and Ende (2000) point out, the shadow economy may be seen as an indicator of the lack of legitimacy of the social order and existing rules, which are indeed widely defied in the south of Europe. Probably this is strongly related to ingrained attitudes towards wealth and inequality, and to a peculiar way of framing relationships with institutions and social networks.

Recent harmonised data on tax systems of the EU 15 (Eurostat 2004) revealed that tax structures in Greece and Portugal rely heavily on indirect taxation, which introduces relative regressivity in their tax systems. Italy's tax structure has a relatively higher weight in direct taxes, whereas in Spain the same occurs with social contributions.

The redistributive effect of social transfers in the EU 15, using ECHP in a comparative perspective, has been the object of analysis in several studies (Eurostat 2003b; Ras et al. 2002; Marlier and Cohen-Solal 2000).¹⁰ Relying on these studies, one can better understand the pattern of inefficiency of social protection expenditure in tackling both current and persistent poverty in southern European countries. Recent investigations of the effects of social benefits on poverty dynamics and persistent poverty in Portugal (Nunes 2003; Rodrigues 2004; Ferreira 2005) also provide some additional insights into the question under study.

Table 2 presents some selected data regarding social benefits and beneficiaries in the southern European countries in comparison with the EU 15 average in the year 1997. Social benefits are widespread in the EU 15: in 1997, it was estimated that 73% of people were living in households receiving social transfers, with 52% receiving non-pension transfers and 31% pensions. These percentages vary quite significantly between the EU 15 countries and, in this respect, southern countries do not rank together: if Greece and Italy, followed by Spain, present values far below the European average in non-pensions transfers beneficiaries, Portugal exhibits one of the highest percentages; in relation to pension beneficiaries, all four southern countries score above the European average, and Italy even presents the highest value in the EU 15 (Eurostat 2003b).

Focusing on benefits distribution by function and the importance of social transfers in beneficiaries’ disposable income can shed new light on the question of relative inefficiency of social transfers in coping with poverty. Public pensions, which perform a replacement function, constitute the main component of total social transfers, accounting for 61% of the amount of all transfers in the EU 15. Spain and Portugal present values slightly above average, while Italy and Greece highly concentrate their social benefits in this function. Conversely, other social transfers more closely related to universal rights or means-targeted support weight below average in all southern European countries. Marlier and Cohen-Solal (2000), based on the 1996 wave of the ECHP, presented similar results. They have also analysed benefits other than pensions’ coverage and amount by quintiles of population total income before social benefits other than pensions. Some of those results are summarised in Table 3.

In southern Europe, as in all the other EU 15 countries, social benefits other than pensions fall as income rises as both the relative number of social beneficiaries and the weight of these benefits in total income decreases. However, if we look at the benefits share going to each quintile, the pattern is not so sharp and, particularly in the case of Portugal, benefits spread to a significant amount into top incomes. A recent Eurostat study (Eurostat 2003b) developed this line of analysis: focusing on the working-age population allows a better understanding of the efficiency pattern of social benefits other than pensions in both reducing the poverty risk and the poverty gap. The most relevant results are summarised in Table 4.

The first panel of Table 4 reaffirms, as already noted, that social transfers other than pensions have a below-average impact on short-term poverty reduction in southern European countries. However, Spain and Portugal exhibited much better indicators of efficiency in reducing poverty incidence and intensity than Greece and Italy, even if in 1997 the new minimum income programmes in the first two countries were still at their first stage. In what concerns long-term or persistent poverty, Portugal and Greece perform much worse and have high persistent poverty rates, which can be related to structural development imbalances in both countries.

The magnitude of redistributed income and the degree of its progressivity are important factors explaining relative inefficiency in southern Europe, and the latter plays an important and yet less perceived role. As much as low level of income redistributed (by low level of benefits and/or low number of beneficiaries), the deficient targeting of benefits makes a serious contribution to southern European countries social protection inefficiency.

On the final panel of Table 4, the impact of social transfers in reducing long-term poverty risk¹¹ is assessed. In this respect, Spain and Italy have profiles similar to the EU average, whereas Greece, and especially Portugal, exhibits a very poor performance. The distinctive nature of southern Europe welfare is not so much linked to rudimentary social schemes such as pensions, but rather to several imbalances and institutional deficiencies that result in inequities and inefficiencies (Guillen and Matsaganis 2000; Matsaganis et al. 2003). After all, pensions in the south are performing well in terms of social protection against poverty, doing as well as the EU 15 average (as we can see in Table 1). Also, other social benefits accruing to the working age population (Table 4) have an important role in Portugal and Spain, and a marginal role in Greece and Italy. Probably this reflects the sharp distinction between ‘insiders’ and ‘outsiders’ in countries where the shadow economy, self-employment and careers exhibiting a history of irregular contributions still have an important social dimension.

Certainly every modern system of social protection is a complex network of different kinds of benefits with different objectives. Classical benefits related to work status and usually conforming to a contributory subsystem perform mainly an earnings replacement objective and produce horizontal redistribution (i.e., redistribution between persons belonging to different social groups). Social assistance benefits, or family and disability benefits positively discriminating within income groups, compensate for differential costs and have a distinctive vertical redistribution (i.e., redistribution between persons with different income levels) or mixed nature. Social benefits other than pensions are much more limited in scope and clearly present less effectiveness in the south European countries, both in terms of size and targeting. In this respect Spain and Portugal offer very distinctive profiles, the former with high concentration and the latter with high dispersion of benefits.

Other targeting inefficiencies embedded in social policies (e.g., ideological positions of policy staff or ‘clientelist’ approaches) add to insufficient funding, general systemic underdevelopment of social policies aimed at the most vulnerable and a significant leakage from the most needy. These characteristics co-exist, however, with strong public support for redistribution and state support of the most needy, which may be seen as a political paradox. In fact, southern European countries also share some common positions in the group of the EU 15 countries with regard to social perceptions and social attitudes towards poverty and inequality. According to the 1999–2000 wave of European Values Study and the Eurobarometer survey of 2002, people in the south of Europe perceive inequality and poverty in their countries to be high (Van Oorschot 2003; Gallie and Paugam 2002), and poverty is perceived as mainly an inherited condition (53% in Portugal and Greece, and 46% in Italy and Spain). Working with Portugal and Spain as representatives of the southern regime, Taylor-Gooby (2004a) also relates a strong perception of an unequal society in opposition with more equalitarian aspirations and a clear enthusiasm (shared with eastern ex-socialist countries) for welfare state values. Concerning the endorsement of market inequalities, however, both countries rate clearly above average. It seems that the perception of high levels of inequality goes hand-in-hand with feelings of acceptance and inevitability strongly rooted in social attitudes.¹²

Nevertheless, Van Oorschot (2003) makes important distinctions between welfare regimes in terms of social capital. Defining the latter as a threefold entity consisting of trust in other people, trust in institutions and participation in civil society, Van Oorschot (2003) places southern European countries at the bottom of the social capital scale. Relating standardised social capital score to the extent of formal welfare provision (measured by the expenditure on social protection as percentage of GDP), there emerges a clear positive association that supports the author's hypothesis of a ‘communicating vessels mechanism’ by which the increase of formal solidarity allows the increase of informal solidarity and social capital. Accepting this hypothesis will contradict the idea of a strong and highly active welfare society in southern Europe countries that could compensate for public welfare weakness.

In discussing the possible explanation for such an association, Van Oorschot (2003): 11) does not exclude the play of cultural factors – namely, ‘the more family-centered culture of the Latin countries, and the more individualised, and therefore socially more open countries of the north’. Opielka (2003) also points out ‘familialism’ as a distinctive feature of constitutive rules of human relations in southern Europe and identifies Catholicism as the ideological configuration that ultimately organises social welfare values in these societies.¹³

A closer look to the Portuguese case could give us further insights into the questions raised above – namely of social protection failures in tackling high levels of current and persistent poverty and the meaning and implications of family culture in southern Europe. Note that Portugal has been identified, in all statistics and studies surveyed, as the country in the EU 15 with the highest levels of current and persistent poverty incidence,¹⁴ as well as one presenting poor social protection efficiency in reducing poverty.

The Portuguese public social protection system is organised into three main subsystems by the social security framework law of 2002: insurance, solidarity and family protection subsystems. The first subsystem is an occupation-related one based on the principle of contributions; the second is an non-contributory scheme that aims to prevent poverty and social exclusion by guaranteeing benefits in needy situations not (or inadequately) covered by the insurance subsystem; and the third covers family, dependence and disability risks, within a principle of positive discrimination that modules benefits according to earnings and other social contingencies. In this framework, different social benefits sometimes combine different redistributive functions operating, in each year, horizontal, vertical or mixed redistribution.

In a recent paper, Nunes (2003) assessed the effect of social benefits on poverty dynamics in Portugal during the period 1994–1998 using ECHP data. The analysis adopted the standard Eurostat definitions of ‘equivalence scales’ and ‘poverty threshold’, and distinguishes social benefits of different types. The work follows Kuchler and Goebel (2003) in the combination of traditional approaches to poverty analysis in panel data, the ‘number of times poor’ approach (NIP) and the ‘smoothed income poverty’ approach (SIP) to derive a more homogeneous system of subpopulations of people in poverty: the persistent, the intermittent and the transitory poor. ‘Persistent poor’ are those whose incomes are below the poverty line in every year of the panel; the ‘intermittent poor’ have smoothed income below the poverty line, but experience non-poverty years; and the ‘transitory poor’ have experienced poverty and non-poverty years, but their smoothed income is above the poverty line. For the first two groups, classified as chronic poor by the SIP approach, poverty experiences have a stronger impact on their long-term incomes’ than the last group.

Table 5 presents the estimated effect of the different types of social benefits used in ECHP in poverty reduction in Portugal for the above-defined typology of the poor during the period 1994–1998. As in other studies reviewed, persistent poverty and chronic poverty assumes a high proportion of total poverty (22.8% and 49.8%, respectively) and social benefits impact in poverty reduction is mainly attributed to pensions. As a whole, social benefits contribute to reduce persistent poverty by near 60% and intermittent poverty by near 30%. The estimated effect on transitory poverty should be interpreted with caution since this subgroup is especially affected by the turnover originated by the other poverty subgroups. The overall effect of social benefits on people that have experienced poverty for at least one year amounts to nearly 30%.

The low level of effectiveness of the benefits less related to income replacement from work and more related to the solidarity and positive discrimination principles – namely solidarity and family benefits – is remarkable.¹⁵ This signals serious drawbacks in welfare targeting of benefits aimed to prevent poverty and social exclusion. Nunes (2003) also refers to the probability of low take-up rates on several programmes targeted on need population groups as one of the reasons of such pattern.

The effect in poverty intensity adds more information on the impact of social transfers on poverty experiences. Table 6 presents the estimated effect of total social benefits and solidarity and family benefits on poverty gap reduction for the above-defined typology of the poor. Once again the level of effectiveness of these benefits in poverty gap reduction is remarkably low. It is worth mentioning in this case that the largest reduction occurs in the transitorily poor for total social benefits as well as for the individual and consolidated benefits more related to solidarity and positive discrimination.

Ferreira (2002) studied inequality and poverty in Portugal over the period 1994–1997 using ECHP data¹⁶ and derived population decompositions of incidence, intensity, severity and prevalence of poverty. The population subgroups more affected by persistent poverty are similar to the ones affected by higher levels of classic static indicators of poverty: the elderly, single-parent families, families with many children and large families. In the population that is persistently poor, parents with adolescents are also over-represented. A strong association between persistent poverty and persistent deprivation profiles has been established in the EU countries (Whelan et al. 2003) and it is recognised that the depth and time span of poverty experiences results in serious consequences in terms of cumulative disadvantage. As persistent poverty affects disproportionately families with children and adolescents, the issue should be a matter of priority concern in the social policy agenda. Poverty and deprivation of young people corresponds not only to present experience of hardship, but also has a lasting effect on their capabilities and future life opportunities.

One has to point out that the most important programme in the solidarity subsystem of social security – the guaranteed minimum income scheme – was only fully introduced in July 1997 and the data presented above is unable to capture its effect.¹⁷ By 2001, the guaranteed minimum income scheme had benefited nearly 725,000 persons (7.5% of the population) and 354,000 persons (3.6% of the population) were then current beneficiaries. The total expenditure on minimum income benefits reached its maximum in 2000, amounting to _284 million (0.25% of GDP), and accounted for _235 million (0.19% of GDP) in 2001 (Matsaganis et al. 2003).

Rodrigues (2004) used the 2000 Household Budget Survey to simulate the application of the programme and to estimate its effects on inequality and poverty. Comparing simulation results with official data, he estimated a take-up rate of 72%. Unfortunately, the estimated impact in reducing the incidence of poverty was only 1.6% due to the combination of two facts: the minimum value of resources the programme aims to provide is lower than the estimated poverty line, and the income considered in the process of determining the actual benefit is not the full household's income.¹⁸ However, the estimated effects on reducing poverty intensity and severity (measured by standard FGT indices) were much more important: 17.7% and 36%, respectively.

Since 1995, Portugal has introduced a new generation of social policies aimed at reintroducing individuals back to the labour market with accrued competences, as well as forging in individuals and institutions a new culture of citizenship rights. Despite the positive and innovative developments, Portuguese safety nets are still rather ‘frail’ and many persons and families descend into poverty (Matsaganis et al. 2003) because they are not aware of their entitlements or fail to fulfill social benefits conditions (long-term unemployed, new entrants into the labour market, informal economy workers, immigrant workers and families, ethnic minority families, isolated rural families) or because of the inadequate amount of support received (social pensions, family allowances, disability or dependency supplements). Furthermore, political support and legitimacy to a broader scope in social policy and its universal rights foundations are not acquired definitively in Portuguese society, as shown by the policy inflexions introduced by the new centre-right government that came into power in 2002.

Poverty inertia in Portugal can be associated more generally with social and income dynamics. In a recent paper, Ferreira (2005) assesses income and poverty dynamics in Portugal over the period 1994–1997 using ECHP data.¹⁹ The study reveals declining income mobility during the period under analysis and a strong level of inertia in the extreme deciles of the income distribution. Due to the combined evolution of entry and exit poverty rates, there is also a decrease in poverty turnover with a sharp increase in the probability of staying poor after having experienced more than one year in poverty. Persistent poverty amounts to nearly 40% of the cross-section poverty, and chronic poverty amounts to nearly 50% of the panel total poverty (at least one year in poverty). The high levels of persistent poverty are one of the facets of a highly segmented society with a relatively low degree of social mobility.²⁰

Income and social inequalities in Portugal also seem to be reinforced by welfare provision stemming from informal relationships and particularly by family support (Wall et al. 1999). In fact, based on the 1999 national survey on Structure, Dynamics and Social Networks of Families with Children, Wall et al. (1999) found that a high proportion of families wish for, and obtain, systematic transfers of resources between relatives (‘familialism’), although this appear to be strongly and systematically related with social factors such as socio-educational and income positions. More diversified, sustained and higher volumes of support are to be found in the wealthier classes and this evidence holds not only for day-to-day support, but also for intergeneration transmission of wealth. Thus, in line with other family studies in Portugal, the authors conclude that there are clear imbalances in informal support networks, which suggests ‘not a welfare situation, but a system that reproduces social inequalities and asymmetries’ (Wall et al. 2001: 222). Therefore, rather than compensating for inadequate public provision in promoting social welfare, the idea of the existence of a strong welfare society in southern Europe, or at least in Portugal, has to be reinterpreted carefully in its equity implications.

This article has assessed the extent to which social policies address current and persistent poverty in the southern EU countries. The southern European regime type was retained because it seemed to be more convenient to lay a theoretical background where political and institutional factors would play a determinant role in explaining high levels of poverty and social protection inefficiencies. As Arts and Gelissen (2002) stressed, welfare typologies are to be preferred if they can lead to a more satisfying and empirically fruitful comparative analysis; the more relevant question is not just about what different configurations of welfare regimes emerge, but also why.

In southern European countries, the levels of social expenditure are relatively lower; there are significant differences between the pension system and other benefits; there are generous benefits associated with work positions and fragmented and frail minimum protection safety nets; social benefits other than pensions are relative scarce, not well targeted and present a low level of efficiency in reducing poverty; the social benefits management system is open to some particularism and discretionarities that translates into a clientelist model leading to inequities; consequently, levels of poverty incidence, intensity and persistence are relatively high; and, finally, even if there is social support to welfare state values, there is remarkable social and political inertia concerning inequality and poverty. The southern European regime also shares a special interplay of state institutional ‘softness’ and the strong presence of the family in the welfare mix. However, the importance of the family as welfare provider is not only putting a tremendous weight on women's ability to cope with multiple family and economic roles (Matsaganis et al. 2003; Trifiletti 1999), but could also prove to be a system of social inequalities reproduction (Wall et al. 1999).

New developments in social policy were introduced in south European countries in the late 1990s, especially through centre-left governments (Guillen and Matsaganis 2000; Matsaganis et al. 2003), the social impact of which are not yet taken into full account in most of the analysis presented. As a consequence of these new political ideas, there has been a clear review of the social policy agenda with an increase in and restructuring of social expenditures in Southern Europe, but with different scope and consequences. For instance, programmes of income support and activation, such as minimum income schemes, were introduced in several Spanish regions during the 1990s and nationwide in Portugal in 1997; however, the programmes lasted only few years in Italy and were never implemented in Greece (Matsaganis et al. 2003).

New social policies are established in a complex background of cultural and institutional factors, which influences political support and legitimacy as well as effective implementation and outcomes. Facing socioeconomic-specific characteristics (extended households, large shadow economies, high rates of self-employment, labour market segmentation, low administrative capacity, clientelist tensions and generalised tax evasion) and times of economic slowdown and restructuring, the construction of social safety nets and a more effective and fair social security system in southern Europe cannot simply rest on the transfer of more developed systems of social assistance associated with northern Europe (Matsaganis et al. 2003). In southern Europe, as elsewhere, policy makers need to search for original and better-fitting solutions that acknowledge and shape societies’ values and institutions because politics is neither an acultural nor an ahistorical process.

This research was partially supported by Fundação para a Ciência e a Tecnologia (Program FEDER/POCI 2010). The original paper was written during a research visit to IDPM/University of Manchester in 2005, whose hospitality I gratefully acknowledge. I also thank Luís Capucha, José Madureira Pinto, the editor and two anonymous referees for valuable comments. The usual disclaimers apply.

Leonor Vasconcelos Ferreira is with the Faculty of Economics, University of Porto and CEMAPRE/ISEG in Portugal.