Pathways of learning: Pension policies and policy learning in different political economies

Pension reforms are a major challenge for many developed countries around the world. One the one hand, aging populations demand higher expenditure for pensions and health care while, simultaneously, the number of contribution paying workers is constantly being reduced. As a result, the need to radically reform pension systems in order to deal with rising costs and reduced income has become of vital importance for governments. Whereas this is a well-known fact, there are differences regarding the degree to which governments in various countries have succeeded (or not) in translating this insight into substantive reforms. This paper reviews key phases in the reform pensions of three European countries – Greece, Germany and the UK – emphasizing on how the politico-economic institutions operating in these countries have influenced the way policy makers learn to deal with such reforms. For instance, does this learning lead to problem-solving (i.e. to implement substantive and prospective reforms of the pension system), or is it rather political (i.e. to adapt pension systems mainly according to the interests of the electorate body). Harkening back to the comparative political economy literature, this paper tests the hypothesis that learning processes should work differently, depending on the type of political economy operating within a given country – liberal market economy (UK), coordinated market economy (Germany), or mixed market economy (Greece). Based on secondary literature, descriptive statistics, and expert reports that were conducted in the framework of the INSPIRES project (www.inspires-research.eu), the paper traces learning in pension reforms from the early 1990s until 2015. The results show that there were indeed different learning processes between the three countries. In the UK, the adaptation of pension policies happened in an effective manner. Here, learning takes the form of problem solving above all. In Germany, pension reforms were the result of a highly politicized process which included several reform commissions charged with finding the best solutions often leading to compromises between the main political parties and organized interests. Nevertheless this process resulted into problem oriented learning and a number of incremental reforms. Finally, in Greece, pension reforms were delayed throughout the 1990s and 2000s. Policymakers pursued above all political interests, and were not able to translate ideas for long-term reforms into actual policies, mainly since the state and the economy are more closely intertwined than in the other two systems. As a result, the country is struggling with a number of overdue reforms in the current crisis situation. Greece is a typical case of politicized learning which however does not lead to reforms. These results contribute to the political economy literature by demonstrating that different politico-economic institutions lead to different learning pathways. Nevertheless, at least so far, not all of these pathways lead to successful reform outcomes by learning in domestic politics.