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THE POLITICS OF AUSTERITY MEASURES AND THEIR
IMPACT ON SOCIAL WELFARE PROGRAMS
I. Introduction
A. Definition of austerity measures
Austerity measures are government policies that are comprised of different parts that are all
aimed at tackling fiscal problems, making the economy stable, and attaching to the financial
stakeholders. Usually, these policies involve a mix of spending cuts, revenue increases, and
structural reforms to reduce budget deficits and to achieve the fiscal sustainability (Bohn, 2012).
Among the common austerity measures, the cut of public spending is seen as the most usual one.
This led to the cuts of social welfare programs, public services, and government salaries (Blyth,
2013). Besides, austerity measures may include the increase of taxes for the government to get
more money and decrease the deficits, and the privatization of private properties to produce more
money or to simplify the public services (Alesina & Perotti, 1997).In cases of financial crisis and
economic downfalls, the governments may be forced to apply austerity measures which will be
interpreted as the signal of their adherence to fiscal discipline and the financial policy as well
(Beetsma & Giuliodori, 2011). Like in a case when the countries are in the troubled situation of
their international creditors, financial markets, or the organizations like the International
Monetary Fund (IMF) and the European Central Bank (ECB). The governments show that they
are ready to cut down public budgets and solve the budgetary problems, and thereby they can get
investor confidence, stop capital flight, and get good credit terms.To name just one, the 2008
global financial crisis, many countries among which are those of the Eurozone, adopted austerity
measures to face the problem of the rising public debts and deficits (Blyth, 2013). Greece, for
example, put into practice strict austerity measures in exchange for bailout money from the IMF
and the European Union, which included significant reductions in public sector salaries,
pensions, and social welfare programs (Manasse, 2013). Similarly, nations like Spain and
Portugal initiated austerity programs to tackle the fiscal imbalances and gain again the access to
the international capital markets (Eichengreen et al. , 2013).
The reason why austerity is being applied in the case of a recession is two: the first one is the
fiscal austerity and the second one is the austerity gap. First of all, the purpose of the
policymakers is to persuade the creditors and financial markets that they are able to manage the
fiscal policies and, as a result, the currency depreciation and sovereign debt crises are avoided
(Alesina & Perotti, 1997). On the other hand, austerity measures also assist the government in
the reduction of its spending and deficits, thus the creation of fiscal space which is required for
the future investments is intended to boost up the economic growth and recover the long-term
fiscal sustainability (Beetsma & Giuliodori, 2011).Despite the fact that a number of scholars and
policymakers are debating the effectiveness of austerity measures in achieving their intended
goals, there is still a lot of disagreement among them (Blyth, 2013). The austerity advocates say
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that it can actually worsen the economic crisis by reducing the aggregate demand which leads to
the fall of output, employment and consumer spending (Blanchard & Leigh, 2013). Likewise,
austerity measures usually affect the poorest the most and thus, increase the gap of inequality and
social hardship (Stuckler & Basu, 2013). Thus, even though the austerity measures are carried
out with the good intention of strengthening the fiscal health and economic stability of a country,
the implementation and impact of these measures must be carefully examined in order to avoid
the unforeseen social and economic consequences (Wren-Lewis, 2014).
B. Overview of social welfare programs
Social welfare programs are the mainstay of the modern government’s intervention through
which societal inequalities are to be addressed and the safety net for the vulnerable groups are
being provided.The sentence being rephrased is, for instance, unemployment benefits, healthcare
subsidies, education grants, housing assistance, and food aid, among others (Bradshaw & Finch,
2003). Social welfare programs are the ones that provide the targeted assistance to the people in
need and thus, they are the ones that make social equity possible, poverty reducing, and the basic
standards of living for all the citizens that are not possible without them.The purpose of social
welfare programs is to decrease poverty and the socio-economic differences in the
society(Titmuss, 1958). Through the giving of financial aid, the access to the necessary public
services, and the chances for social mobility, these programs intend to make the playing field
even and to build the society that is more equal (Esping-Andersen, 1990).
Besides, social welfare programs are the way of protecting people and families against the
financial shocks that may arise from the loss of a job, illness, or disability, thus, they make sure
that they are not left in despair (Mishra & Mishra, 2011).The money for the social welfare
programs is usually raised through the combination of tax and the government spending (Pierson,
1994). The tax rate once was the one that was according to the ability to pay and now
governments collect the revenue from the individuals and the businesses and then the wealth is
distributed and the social welfare is funded (Barr, 2001). These funds are then used to support
different social welfare programs that are based on the priority of the issues such as poverty
alleviation, healthcare provision, education, and housing ( Esping-Andersen, 1990).
Nevertheless, the way of dividing and the distribution of resources in social welfare systems can
differ a lot depending on the political ideologies, the fiscal limitations, and the preferences of the
society (Korpi & Palme, 1998).
C. Significance of understanding the politics of austerity and its impact on
social welfare
Austerity measures, the ones that are the reason for the decrease of public spending, have a very
significant impact on the services and benefits that are essential for the society. (Stiglitz,
2019)An example of this is the fact that cuts to healthcare and education budgets can make
people not able to have access to the essential services, while social assistance programs
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reductions can make the vulnerable individuals to lose the crucial support systems (Bradshaw &
Finch, 2003). Thus, the understanding of the political background of the austerity policies is very
important to be able to judge their possible effects on the social welfare and to support the
measures which will help to reduce the negative effects of the austerity measures. The fact that
the decision to implement the austerity measures is politically created, that is, due to the
ideological beliefs, the interests of the certain groups and the power of thePolitical leaders often
the austerity measures and use the economic theories or the ideological frameworks, such as
neoliberalism or fiscal conservatism, which are the basic principles of the fiscal discipline and
the market-based solutions (Hay, 1995). Nevertheless, these decisions are also subjected to
political maneuvering, including the concerns of the electorate, the influence of the interest
groups, and the public opinion (Wren-Lewis, 2014). Thus, the analysis of the politics of austerity
is a tool to get to know the reasons and the priorities that drive the government to make policy
decisions, hence, to hold the policy makers to the obligation they have to the public interest. In
conclusion, it is the key to understanding the impact of austerity on social welfare and thus, is
very useful for policy makers, activists and citizens who areThe undeniable effects of austerity
measures on the weak groups and the social welfare can be seen and thus the stakeholders will be
able to find the gaps in the social protection systems and then propose the alternatives for the
policies that will result to social justice, human rights and the equitable development. This
entails, among other things, lobbying for progressive taxation, providing social spending targeted
at the most vulnerable, and increasing the public services to counter the structural inequalities
and strengthen social resilience (Pierson, 1994).
II. Historical Context of Austerity Measures
A. Origins and evolution of austerity policies
Austerity policies were first introduced by the classical economic theory which is based on the
concept of fiscal discipline and the balancing of the budget. This tradition views government
spending as excessive and a threat to the economic stability and, therefore, supports the
campaign for the measures to limit public expenditures (Keynes, 1936). Nevertheless, the 20th
century introduced the idea of austerity because of the fact that the Western countries had to face
the problems of public debt and inflationary pressures after World War II (Blyth, 2013).
Governments had to come up with a way to restore the economic stability and rebuild the public
finances while faced with the need to cut spending and deficits that are caused by austerity
measures which were used as a tool to the restoration of the economic situation.The post-war
time was characterized by the growing popularity of austerity as a leading economic policy
paradigm, with governments applying cut on spending, hiking on taxes, and devaluing the
currency to curb inflation and to bring back the fiscal stability (Blyth, 2013). The endeavours
were motivated by the conviction that the fiscal management of the economy was of the utmost
importance for the economy to be in a state of confidence and for the hyperinflation and currency
depreciation to be avoided (Friedman, 1968). Nevertheless, the success of the austerity policies
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in realising these goals was often disputed, as the opponents claimed that they could worsen the
economic crises by reducing the aggregate demand and deadlocking the growth (Keynes, 1936).
Neoliberalism's rise in the 1980s was another occasion when austerity became one of the most
important elements of economic policy-making (Harvey, 2005). Neoliberalism, which is the
theory that favours deregulation, privatization and free-market principles, gave a theoretical
explanation of the austerity measures as a way of decreasing the state intervention in the
economy and therefore the market-led growth (Mirowski, & Plehwe, 2009). Under neoliberal
economic orthodoxy, austerity was transformed into a symbol of fiscal prudence and was
regarded as the obligatory solution to the excessive government spending and the deficit
(Harvey, 2005). The financial crises of the late 20th and early 21st centuries, which were the
main reasons for the austerity policy, were the proof that the austerity policy was a good thing
and the teachers of students, the politicians, etc. became the best advocates of the austerity policy
(Blyth, 2013). After the two crises, the governments of the world became more austerity
measures as the solution to the increasing public debt and the financial instability (Blyth, 2013).
Nevertheless, the question of whether austerity is effective in solving the cause of economic
crises is still a matter of debate, because some economists think that it can make the economic
crisis worse by cutting the demand and limiting the growth (Stiglitz, 2019).At first, austerity was
thought as a reaction to the fiscal issues, the latter got embedded as a main principle of the
neoliberal economic orthodoxy, and the governments from all over the world accepted austerity
as a way of forcing fiscal discipline and market-led growth.
B. Examples of austerity measures in different countries and time periods
A lot of countries and different eras have been using the austerity measures that have been
appearing all the time, mostly as reactions to the economic crises or the fiscal constraints. In the
aftermath of the debt crisis, these programs were started with the intention of stabilizing the
economies by the enforcement of the huge cuts in the public spending, privatization of the state-
owned companies, and the deregulation of the markets in exchange for the financial help.Also, in
Europe, the appearance of the sovereign debt crisis in the late 2000s led to the general agreement
of the austerity measures in countries like Greece, Portugal, and Spain. The governments of these
countries were confronted with serious public debt problems and were also feeling the pressure
from financial markets, thus they decided to tackle these problems by applying austerity policies
which include spending cuts, tax increases, and structural reforms (Manasse, 2013).
Nevertheless, these measures were the cause of the public outrage and the social unrest as people
protested the austerity measures that made the unemployment to increase, the public services to
be reduced and the living standards to be diminished (Guajardo et al. , 2014).The same is also
valid in the United States, the global financial crisis of 2008 made austerity a major issue in the
political debates. In the period of economic downturns and the growth of the deficit, the
policymakers were faced with the task of dealing with the priority of economic stimulation and
the worry of the fiscal sustainability (Romney, 2012). This problem led to the heated discussions
of the government spending and deficit reduction, which raised the dilemma of austerity, hence,
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which was the contentious issue that divided the political parties and shaped the electoral
contests (Gawande & Jenkins, 2019). In this way, austerity turned into a main issue of the policy
discussion, with different ideas of fiscal restraint and economic revival fighting for the leading
position (Blyth, 2013).
C. The role of economic crises in driving austerity agendas
In situations of crisis, policymakers might see austerity as a way to bring about the confidence in
financial markets, attract foreign investment and thus avoid economic deterioration.The critics
are of the opinion that the austerity measures may lead to a deepening of the economic crises by
decreasing the aggregate demand, reducing the consumer spending, and hindering the economic
growth (Blanchard & Leigh, 2013). Through cutting public spending and raising taxes, austerity
measures are capable of reducing government spending, thus making the recession even worse
(Krugman, 2013). Moreover, the cutback of the state budget can result in a decrease of the output
and an increase of unemployment, which in turn will deepen the crisis (Stiglitz, 2012).
Moreover, the austerity measures can be the cause of the social problems, for instance, poverty,
the decline of public health outcomes and the widening of the inequality (Stuckler & Basu,
2013). Austerity policies cut down the expenditures on those essential services and social welfare
programs, which are the most important, and thus the poorest, segments of the society will be the
ones who will be the most affected by this. Besides, the severely reduced budget for healthcare
and social services under austerity can lead to negative health outcomes, such as increased
mortality rates and less access to the necessary medical care (Karadja & Prawitz, 2020). The role
of economic crises in triggering austerity agendas is the proof of the complicated manner of the
interrelation between economic theory, political ideology, and social policy in the formation of
the government reactions to the financial instability (Blyth, 2013). The process of austerity
measures is usually done in order to win back the confidence of the market and ensure the
financial stability, but its actual effects can be quite disastrous for the social welfare and the
economical well-being. Consequently, policy makers should, in a good way, think of the
advantages and disadvantages of austerity policies, and also consider their effects on people who
are at risk and the general welfare of a society (Wren-Lewis, 2014).
III. Political Ideologies and Austerity
A. Conservative vs. liberal perspectives on austerity
The dilemma of austerity measures shows the deep rooted ideological divisions between the
conservatives and the liberals on the part of government in the economy and society.
Conservatives usually support austerity as a way of achieving fiscal discipline, cutting the
governmental intervention in the economy and thus, encouraging the private sector to grow. The
given view is based on the concepts of the limited government and the free-market capitalism
which state that the individual is the one responsible, the private enterprise is the means and the
state interference is the least (Boettke & Coyne, 2011).From the conservative perspective, the
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austerity measures are considered as the fundamental means for regaining the confidence of the
market, attracting the investment and so on, and thus, the long-term economic prosperity is made
possible. Supporters of the idea that the government spends too much money claim that the over-
spending not only makes private investment less available but also manipulates the market
mechanisms, thus, delaying the good allocation of resources and preventing innovation and
entrepreneurship (Taylor, 2012). Besides, conservatives emphasize that if the government does
not borrow and spend carefully, it will be impossible to maintain a balanced budget, the resulting
unceasing debt will put the future generations into the burdens of the fiscal irresponsibility
(Taylor, 2012).
On the other hand, liberals are the ones who are against austerity for the most part, they stress on
the government's role in such things as social inequality, economic stability and, of course,
public welfare. By using the arguments of social justice and collective responsibility, liberals of
the country state that austerity measures can create more economic downturns by slowing down
the consumer demand, limiting the employment opportunities and worsening the social
inequalities (Stiglitz, 2019). On the contrary, liberals support policies that focus on social
spending, public investment, and progressive taxation, which are, in their opinion, the best ways
to promote economic growth and make sure that all the resources are distributed equally
(Stiglitz, 2019). The conservative-liberal difference in the views on austerity is primarily based
on the disagreement on the correct ratio of market forces and government intervention in
determining the economic outcomes. Conservatives are the ones who believe in the efficiency of
the free markets and the creativeness of the private enterprise and they think that the government
intervention is a way of getting the wrong things done and its not meant to be done at all
(Boettke & Coyne, 2011). On the other hand, liberals maintain that the government is the
principal instrument for amending the market failures, redistributing resources and providing the
basic public goods and services (Stiglitz, 2019).Besides that, the fight over austerity shows the
philosophical difference about the kind of society and the responsibilities of citizenship.
Conventionalists are the ones who stress on individual autonomy, self-reliance, and personal
responsibility, holding welfare dependency as a moral hazard that makes people lazy and
destroys social ties (Taylor, 2012). In contrast, liberals give more importance to the collective
well-being, social solidarity, and the pursuit of social justice, they advocate for policies that will
make life more equal for everyone, everybody will be able to access the same services and to
have the same support (Stiglitz, 2019). Conservatives regard the austerity as a justifiable remedy
to the over spending of the government and the intervention, whereas liberals think it is a wrong
way which can increase the economic inequality and the social hardship. The ideological
disagreement over austerity highlights the deep-rooted differences in values, priorities, and
policy preferences that are the main factors of political conversation and decision-making.
B. Political parties and their stances on austerity measures
Political parties are the major actors in the process of the application and the reaction to austerity
measures, with their stance being mostly the reflection of their ideology, their ways of
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campaigning for the election, and their policy-first priorities. The viewpoints of the right and left
on austerity measures are very different and totally reflect their opposing opinions on the part of
government in the economy and society.Conservative parties usually try to promote austerity
because of the fiscal responsibility, the reduction of government debt, and the private sector-led
growth. Being built on the basics of limited government and free-market capitalism, conservative
parties spend their time on fiscal discipline and market-based solutions to the economic problems
(Blyth, 2013). Some believe that it is imperative to reduce public spending so as to reestablish
trust in financial markets, attract investment, and create the basis for long-term economic
development (Blyth, 2013). On the conservative side, the cutting of government spending and
the shrinking of the state are the recognized means for the creation of a vibrant and competitive
economy (Blyth, 2013).
On the other hand, the liberal parties usually disapprove the austerity policies, pushing for the
other economic governance options. Liberal parties, while focusing on the concepts of social
justice and the collective responsibility, put public spending, progressive taxation, and social
welfare programs at the top of their priorities and thus, in turn, address the issues of economic
inequality and social welfare (Blyth, 2013). The old-time-olds are saying that cuts of expenses
may make the society even more unequal, cause the society to have less services and make the
life of the poor people even worse (Blyth, 2013). Besides, the liberals are the ones who prefer
policies that are mostly job creation, income support, and investing in education and healthcare
to boost the economy and, therefore, the distribution of resources is more or less equal.The
conservative and liberal parties that are opposing each other on the issue of austerity measures
have different views on how the government should play its part in the fight against economic
problems and the promotion of social welfare. Conformist parties are first of all those that are in
favor of fiscal discipline, limited government, and market-led solutions. On the other hand,
liberal parties are those that are in favor of social spending, progressive taxation, and government
intervention to address social inequalities and ensure economic stability (Blyth, 2013). The party
lines on austerity policies have a great impact on the economic policy outcomes and the
distribution of resources among people in a society.
C. Influence of ideologies on policy-making and implementation
Ideological beliefs act as the basic principles which are the main reasons for making and
implementing policies and they are the main reason for the austerity measures.Conservative
ideologies, on the other hand, give priority to fiscal discipline, limited government intervention,
and market-oriented solutions. Supporters of conservatism contend that the government spending
should be cut down and the state should not interfere in the economy, thus, austerity measures
are considered as the essential steps to regain the fiscal balance and to improve the economy
(Pierson, 1994). Conservatively speaking, austerity is considered as a way to limit the
government's spending, cut deficits, and promote the private sector growth (Pierson, 1994). On
the other hand, liberal ideologies focus on the role of government in solving the social inequality,
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the economic stability and the protection of the weak groups. Supporters of liberalism argue that
austerity measures can worsen social inequalities, cut down the public services and thus, make
the economic situation of the disadvantaged groups even worse (Pierson, 1994). Contrary to this,
liberals support the other policy means that are focused on the social spending, public
investment, and progressive taxation in order to stimulate the economic growth and to guarantee
the fair distribution of the resources (Pierson, 1994).
The role of ideological beliefs in the making and implementation of policy choices and priorities
of governments and political parties concerning austerity measures is clear in the case of the
policy choices and priorities of governments and political parties. The conservative governments
place a high importance on austerity, which helps in achieving fiscal discipline and decreasing
the size of the state, while the liberal governments usually oppose austerity measures and support
the policy alternatives which give the priority to social welfare and the economic stability
(Pierson, 1994). The way of thinking ideological beliefs are influencing the responses to
austerity, the issue of economic theory, political ideology, and social policy in the form of
government responses to fiscal challenges and economic crises is as complex as it is clear.
IV. Impact of Austerity on Social Welfare Programs
A. Reductions in social spending
Reductions in social spending in many areas are usually the reason why austerity measures are
presented (Bradshaw & Finch, 2003). These spending cuts affect the people who are already
disadvantaged, as they block their ways to the vital services and help systems, which in turn,
increases the social inequalities and worsens the poverty (Bradshaw & Finch, 2003). The effects
of cuts in social spending are usually more pronounced for the marginalized communities that
depend mostly on government aid to satisfy their basic needs. In fact, those cuts in welfare
benefits can make the poor families in a hard way to pay for the food, shelter and other the
essentials that they really need, which would put them in the poverty trap (Bradshaw & Finch,
2003). The same thing can be said about the cuts in healthcare spending as well, which can cause
long waiting times for medical treatment, limited access to preventive care, and the increase of
health disparities especially among the disadvantaged groups (Kentikelenis et al. , 2011).
Besides, the lack of educational programs is the one that prevents people from getting certain
education thus, limiting their opportunities to move up the social ladder, and this is not good
because it will be the one that promotes inequality and disadvantage. The lessening of the
housing assistance funding can cause the rise of homelessness, overcrowding, and housing
insecurity, and this in turn will result in the increasing of social exclusion and vulnerability
(Loopstra et al. , 2015). In a nutshell, cutbacks in social spending can lead to various
consequences for the well-being and life chances of individuals and communities, thus, it
generates social inequalities and counteracts the efforts of making the growth and development
inclusive.
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B. Changes in eligibility criteria and benefit levels
On the top of spending cuts, austerity measures may also involve changes to the criteria and the
level of benefits for the social welfare programs (Gillies, 2015). The following changes are going
to have major consequences for the vulnerable people, as they are going to be the ones qualifying
for help or receiving the assistance that is going to be a lower amount, which is going to bring
even more problems and insecurity in their life (Gillies, 2015).To illustrate, limiting the
eligibility criteria for the welfare benefits can drive away those people who were before the
eligibility for the support services, thus they will be deprived of the essential help (Gillies, 2015).
Also,cutting benefit levels can make the recipients to decide between their basic needs and the
other expenses, such as housing or healthcare (Gillies, 2015). These changes can aggravate
poverty, widen the social gap, and weaken the social bonds.
Furthermore, the modification of the criteria and the level of the social benefits can be
unfavorable to some groups in the society, for example children, the elderly and individuals with
disabilities who are often depending on the social welfare programs for the support (Gillies,
2015). To illustrate, the reductions in disability benefits make the disabled persons without the
necessary financial assistance to afford the medical care, mobility aids or the specialized support
services they need, thus marginalizing this already vulnerable population (Gillies, 2015).To sum
up, the modifications in eligibility requirements and the amount of benefits for social welfare
programs can have a great impact on the vulnerable populations, the situations of poverty,
insecurity and social exclusion are worsened. While governments face the struggle of financial
limitations and austerity pressures, it is important to think of the human effect of these policy
changes and make sure that they do not have a big negative impact on the already disadvantaged
people who are at the margin of the society.
C. Privatization and outsourcing of social services
Austerity measures usually lead governments to focus on privatization and outsourcing of social
services as a cost-cutting measure that aims to curb government expenditures and at the same
time, promote efficiency (Glasby & Dickinson, 2014). The term "privatization" denotes the
process of the change in ownership and control of public services to private entities, whereas
"outsourcing" refers to the procedure of contracting private companies to deliver services for the
government (Glasby & Dickinson, 2014). On the other hand, advocates of privatization claim
that it can bring the market discipline, innovation, and cost saving, whereas the opponents warn
that it can result in the lower accountability, the disappearance of quality and the rising
inequalities in the access to the essential services. Public services privatization and outsourcing
can weaken the accountability and transparency in service delivery, because of the private
companies that they are, they would prefer the profit motive over the public welfare (Glasby &
Dickinson, 2014).
Private providers might be less responsible to the people and more hidden in their operations,
thus, it is difficult for the citizens to hold them accountable for the delivery of essential services
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(Glasby & Dickinson, 2014). Also, the profit motive that is present in privatization can motivate
the measures that are intended to cut the costs that will compromise the service quality and
consequently the rights and dignity of the service users (Glasby & Dickinson, 2014).Besides,
privatization and outsourcing can worsen the situation of the disparity in access to the basic
services, because private providers may concentrate on the profitable markets or the neglected
populations, which means that the marginalized communities will be deprived of the necessary
help (Glasby & Dickinson, 2014). For instance, the private providers may be less keen to serve
remote or even poor areas where the possibility of profit is low, thus, the geographic inequities in
the service provision will result. This can deepen social inequalities and worsen the social
disparities in health, education and well-being, thus, the people will be more vulnerable to health
problems, low educational attainment and decreased social well-being.
D. Case studies illustrating the effects of austerity on specific social welfare
programs
Case studies give an excellent opportunity to look at the actual situation of the austerity measures
in the social welfare programs. To illustrate, studies on the introduction of austerity in Greece
showed that it had a negative impact on health care, the quality of education, and the social
assistance programs (Kentikelenis et al. , 2011). The austerity measures in Greece led to the
budget cuts to the healthcare services which therefore resulted in the shortages of medical
supplies, equipment, and personnel and longer wait times for the patients (Kentikelenis et al. ,
2011). This flawed healthcare access and quality worsens health inequalities, especially for the
vulnerable groups, thus leading to avoidable morbidity and mortality (Kentikelenis et al. , 2011).
Also, the research on austerity in the United Kingdom has shown its negative impacts on housing
affordability, homelessness rates, and food insecurity (Loopstra et al. , 2015). Austerity measures
in the UK were the cause of the cuts in housing assistance programs, social housing construction,
and welfare benefits which, in turn, led to the increase of homelessness, overcrowding and
housing insecurity (Loopstra et al. , 2015). This intensified the social exclusion and vulnerability,
especially among low-income families, people with disabilities, and marginalized communities
(Loopstra et al. , 2015).These case studies stress the human price of austerity measures and the
significance of knowing their actual effect on the helpless people.
V. Socioeconomic Implications of Austerity
A. Exacerbation of inequality and poverty
The austerity measures are usually the result of economic crisis or the fiscal consolidation that is
undertaken as part of the economic reforms. The main aim of these measures is to bring the fiscal
situation back to a balanced state, however, they instead of that, they worsen the social
inequalities and deepen the poverty. Stuckler and Basu (2013) point out that the austerity policies
usually demand huge reductions in public spending, especially in the sectors like social welfare
programs, healthcare, and education. These cuts do not only damage the life of the people who
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are already in hard situations but also those, who are on the way to success that is related to the
services, that these people are taking for their well-being and socio-economic advancement. The
cut-off of the services and support systems which are essential for people leads to the increase of
inequality because of the increase of income gaps and the social exclusion. For example, the cuts
to the welfare programs can bring the low-income people and families to the point of no return
and they become poorer than they are right now. Besides, the cut down of health care funding
may be the reason for the less access to the necessary medical services, especially to those
marginalized communities who are already facing the obstacle of the health care access. Thus,
the rich and the poor are increasingly far apart, which causes the poverty and marginalization to
continue circulating (Stuckler & Basu, 2013).
Besides, austerity measures usually block social mobility, hence it becomes a hard task for a
person to rise up his social status. The inadequate finances in the education industry cause the
deprivation of the opportunities to get the skills and the education to the disadvantaged groups
which ultimately limit their ability to get the better job. Thus, the problem is that those born to
poverty become even more doomed under austerity regimes, because they have no chance to
escape this poverty (Stuckler & Basu, 2013).To put it simply, austerity makes the inequality and
poverty worse by reducing the access to the important services and support systems, widening
the income differences, increasing the social exclusion and hampering the social mobility. The
negative consequences of the austerity measures need to be taken into account by the
policymakers and the social impact of these measures should be considered and the measures
that will protect the most vulnerable members of the society while they are pursuing the fiscal
consolidation should be adopted.
B. Impact on vulnerable populations
These groups are mainly dependent on social welfare programs which provide them with the
basic support and services and thus, are the most vulnerable to the effects of austerity. According
to Bambra et al. (2014), austerity measures, which are usually marked by the decrease of public
spending and the social welfare programs, affect the well-being of the vulnerable population,
hence, increasing the socio-economic divides and the marginalization. Children are the most
affected group by austerity measures among all the people. Cuts to education budgets will result
in overcrowded classrooms, the lack of educational resources, and the decrease of extracurricular
activities and thus the quality of education for children from low-income families will be
compromised. The same way, the cuts in funding for child welfare programs and social services
can lead to the children who are in need to be neglected, abused, and not well taken care of
(Bambra et al. , 2014).
The retired people, especially those depending on pensions and healthcare services, are also the
ones who are the most affected by the austerity. Pension cuts or pension age increases can make
many old people to be poor or force them to work longer, even if they have health problems.
Besides, the cuts in the healthcare funding may lead to the restriction of the access to the
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essential medical services for the elderly, which will widen the health disparities and at the same
time will affect their health. (Bambra et al. , 2014) People with disabilities have to deal with
difficult situations under austerity regimes. Penalties to disability benefits and support services
can worsen the financial difficulties and also limit the access to the vital aids and
accommodations. Besides, the cuts in the budget of disability support programs may decrease the
chances for the people with disabilities to be included and to take part in society, thus, making
them even more marginalized (Bambra et al. , 2014).
C. Effects on health, education, and social mobility
Marmot and his colleagues (2012) point out that the cuts to the essential services and chances for
people who are poor to succeed in life made a negative effect on the health equity, the
educational attainment, and the social mobility, especially among the disadvantaged
groups.Regarding public health, austerity measures can be the cause of the negative health
outcomes by the decrease of the access to healthcare services and preventative interventions. The
reduction of the healthcare sector budget will lead to the decrease of the medical resources, the
prolongation of the wait times for the treatments and the closure of the healthcare facilities, and
the most of all, the disproportionation of the marginalized communities who already on the other
hand face the barriers to the healthcare. In the end, with the weakening of the social cohesion, the
health inequalities increase, thus, the disadvantaged groups have a poorer health status and the
morbidity and mortality rates go higher (Marmot et al. , 2012).
Just like, the austerity-related cuts to education can also be the causes of the reduction in the
level of education and the social mobility. The decrease in the education budget may be the
reason for bigger class sizes, thus insufficient resources. Thus, the disadvantaged students are
more likely to drop out of school and not to go to higher education or vocational training, which
makes the poverty and inequality cycles the locality.
The limitation of the access to education, training, and employment opportunities which arises as
a consequence of austerity-related cuts, therefore, hinder the marginalized groups from
accomplishing their socio-economic status and breaking free from the poverty. This means that
social mobility decreases, which in turn, widens the socio-economic differences and this results
in the the already existing problems becoming even more severe (Marmot et al. , 2012).
D. Public perception and attitudes toward austerity measures
Public attitude and the opinion on the austerity measures are the main parts of the whole
discussion on the economic policy and the social welfare provision. The first and foremost result
of researches on the public opinion of austerity measures is the general distrust and rejection of
austerity policies, especially among those who are directly hit by the budget cuts and austerity
measures. Surveys and opinion polls have been consistently proving that a considerable
percentage of the population considers austerity as the unfair and the harmful for the social
welfare provision (Stuckler & Basu, 2013). This skepticism is usually based on the fact that the
unequal distribution of the burden of austerity is predominantly on the marginalized communities
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and low-income households, and thus, they suffer most from the spending cuts and austerity
measures.
Besides, public opinions concerning the austerity are influenced by the larger political and
ideological factors. Studies have confirmed that people's attitude towards austerity is usually
affected by their political ideology, socioeconomic status, and the perception of the authority of
the government (Hacker & Pierson, 2010). To give an example, the left-leaning political parties
supporters are usually the ones who are more critical of the austerity measures, and they think
that they are the ideologically driven attempts to undermine social welfare programs. On the
other hand, supporters of conservative ideologies may be generally more in favor of austerity
policies, considering them to be the means of fiscal discipline and economic stability.
Other than the way of the political elites and the media outlets the austerity policies are framed is
very important in the transformation of the public opinion. Various research has proven that the
way austerity measures are explained to the public can determine the manner in which they are
perceived and interpreted (Blyth, 2013). To illustrate this point, austerity can be portrayed as a
mandatory act of sacrifice for economic recovery which in turn may get more public support
than portraying it as an ideology that benefits the wealthy at the expense of the poor. The
influence of the public attitude towards the austerity measures goes beyond the opinion and has
real world effects on the political situation and the policy outcome. Public resistance to austerity
can be expressed in a number of ways, for example, through demonstrations, social mobilization,
and electoral backlash against ruling governments (Stuckler & Basu, 2013). Besides, the
legislators may be not ready to introduce austerity measures due to the strong public resistance
and choose another policy of the alternative ones that are looked by the masses as more fair and
just.
VI. Political Resistance and Alternatives to Austerity
A. Social movements and protests against austerity
Austerity measures have usually led to social movements and protests as people gather together
to fight against the policies they see as harmful and the ones which they think are not fair. These
movements, in others words, are the vehicles of the people who have been the most hit by
austerity, which thus become the peoples` voice and the advocate of the alternative economic
policy. The most notable case of the resistance to the austerity is the anti-austerity protests that
were all over Europe after the crisis of 2008, which led to the austerity measures imposed by the
governments of the European countries. Nations like Greece, Spain, and Portugal were flooded
with mass protests, strikes, and civil disputes as the citizens protested against the spending cuts,
tax hikes, and labor market reforms.
Social movements against austerity usually demand the adoption of the policies that will result in
the economic stimulation, the progressive taxation and the investment in the public services.
They say that austerity, on the contrary, increases the social inequality, diminishes the social
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harmony, and hampers the economic growth, while the other ways would be the drivers of the
recovery, the decrease of the unemployment, and the betterment of the living standards. The
movements aim at directing the debate on the economic policy from the austerity towards the
strategies that will be focusing on job creation, income redistribution, and social investment
(Blyth,2013). Even though there is a lot of opposition from the politicians and the economy
which is driven by the austerity, the social movements against austerity have created a big
change in the public discussion and policy debates. They have made the politicians to face the
social impact of austerity and the need to think of other ways of managing the economy. Besides,
these movements have been able to rally public support and have created other voices of
opposition to austerity, which have been the main reason of the changes in the political sector
and the emerging of new actors and parties that are in favor of progressive economic policies
(Blyth, 2013).
B. Advocacy for alternative economic policies
The austerity measures have been proved to be harmful, and this has led to the increase of the
number of people who are demanding for the introduction of the economic policies that are
based on the social welfare, economic justice, and sustainable development. These other methods
that are not the austerity paradigm their main aim is to face the economic problems by the means
of the fiscal stimulus, the progressive taxation and the public investment. The other way to go is
the expansionary fiscal policy; the idea of which is to cut the government spending and
investment at the toughest time to boost the demand and make the economy grow. Rather, they
suggest to rise the public spending on infrastructure, education, healthcare, and other vital
services to generate jobs, to increase the consumer confidence and to drag the economy. (Stiglitz,
2019)
A different way to deal with austerity is the generation of progressive taxation and income
redistribution which will lessen the inequality and finance the social programs. The supporters of
the progressive taxation contend that the obligation of the budget cut should be made by the
people who can bear it more, instead of the low-income individuals and vulnerable communities.
As the result they promote the higher taxes on the rich and corporations, also the methods that
are needed to close the tax loopholes and the tax evasion, so that the government can generate
the money for the public services and the social welfare programs (Piketty, 2014). In addition to
that, the supporters of the others’ curriculum of economic ideas stress the significance of the
investment in human capital and social infrastructure as the main factors of the long-term
economic growth and development. The opponents of such measures claim that cutting funding
for education, healthcare, and social services is the austerity measures, which, in turn, destroy the
human capital formation and social cohesion, thus, the prospects for sustainable and inclusive
growth are hindered. Rather, they urge for the rise of the public expenditure on education,
healthcare, and social protection in order to boost productivity, cut down on poverty, and to
create social mobility (Stiglitz, 2019).
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C. Examples of countries resisting or reversing austerity measures
Nations have different reactions to the austerity measures and some, instead of supporting these
policies, they try to oppose or to change them to the policy that is not about the austerity
measures. The recent occurrence of the global financial crisis in 2008 is one of the possible
instances of the resistance to the austerity measures, which is the tendency to cut public
expenditures in a country which is a trauma of the European Union and world economics. Yet,
these measures were not popular and gave rise to the social unrest, with the extensive protests,
strikes, and the continual political instability burgering the country. In 2015, the Greek
government, which was led by the left-wing Syriza party, proposed to reform the austerity
consensus by promoting an alternative way of the economic management. Syriza's platform was
based on the principles of social welfare, job creation and debt relief which they did not agree to
continue with the austerity. Syriza promised to renegotiate the Greek bailout agreements with the
international creditors. The government's refusal of austerity measures was the reason of the
confrontation with the European Union and the International Monetary Fund, and the referendum
on the proposed bailout terms was the outcome of this standoff. Even though there was a lot of
pressure from the European leaders and the financial markets, the Greek electorate voted against
the austerity measures in the referendum and this was the way the popular vote for the change.
Later on, in the negotiations, Greece achieved a new bailout agreement with less austerity
requirements and also with provisions for the debt relief which was a new policy compared to the
previously policies. The Greek case continues to be a complicated and disputed one, which
shows that political opposition to austerity and the search for other economic plans (Katsimi &
Moutos, 2017) is a real thing.
A clear instance of a nation refusing to go for austerity measures is Portugal, which introduced
the series of austerity measures in the course of the European debt crisis. Like Greece, Portugal
had to fulfill the demands of the international creditors which demanded them to cut down their
spending, raise the taxes and apply the reforms to the structure in order to reduce their budget
deficit and public debt. Indeed, but the Portuguese government encountered a lot of resistance to
austerity from people like civil society organizations, labor unions, and left-wing political
parties. After the 2015 elections, the Portuguese Socialist Party got to form a minority
government with the help of other left-wing parties, thus promising to abandon austerity and
focus on the expansion of the fiscal policy. The government set up the ways of raising public
investment, recovering the salaries and pensions, and the expansion of social welfare programs,
hence the change from the austerity-driven policies. Though, some people were worried about
the longevity of these measures, Portugal's economy recovered slowly, with the increases in the
growth, employment, and social indicators (Crespo & Fontoura, 2019). Although the results of
these projects differ on the basis of the political, economic and institutional factors, they prove
the existence of the countries which may follow the other ways of fiscal consolidation which are
related to social welfare and economic justice. By, in a way, the austerity consensus, these
countries challenge the fiscal policies and put forward the alternative economic strategies, they,
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in turn, become the lesson for the policymakers who want to tackle the fiscal challenges but at
the same time ensure the well-being of their citizens (Crespo & Fontoura, 2019).
VII. The Role of International Organizations and Agreements
A. Influence of IMF, World Bank, and other international bodies on austerity
policies
The International organizations like the International Monetary Fund (IMF) and the World Bank
are the ones who have great power in the austerity policies through their lending programs and
their policy advice to their member countries. In the time of economic crisis or financial
instability, many countries turn to these institutions for financial assistance and technical
expertise, and apply austerity measures as part of structural adjustment programs (SAPs), in
exchange of the financial aid and technical expertise from these institutions. The IMF, for
instance, has always been the supporter of the austerity as a tool to solve the fiscal imbalances
and to create the stability of the macroeconomic. Basically, to get IMF loans, the condition is
that the countries should have to carry out austerity measures which will be useful for reducing
budget deficits, inflation, and exchange rates (Babb, 2013). These measures oftentimes, are
aimed at reducing public spending, freezing or cutting wages, increasing taxes, and restructuring
the labor markets, pensions, and social welfare programs.
The IMF's control over austerity policies is a result of its function as a lender of last resort for the
countries that are in the balance of payments situations or sovereign debt issues. Basically, the
IMF provides financial help to the borrowing countries under the condition that the countries will
follow the economic policies and reforms that the IMF thinks are needed to restore the monetary
stability and to also encourage the economic growth (Babb, 2013). As a major supporter of the
development assistance and technical support, the World Bank usually encourages austerity
which is a part of its general approach of economic liberalization, privatization, and market
oriented reforms(Vreeland,2003).
B. Conditionality and its impact on social welfare programs
Conditionality is the setup of the obligations which are put on by the international financial
institutions, for example, the IMF and the World Bank, when granting the financial help or the
loans. These conditions generally comprise of the policy measures and reforms that lending
countries must undertake to tackle the fiscal imbalances, promote economic stability and to
achieve long-term development objectives.
Conditionality, that is, the requirements that are attached to the provision of the funds, has a vital
effect on social welfare programs. The borrowing countries are typically compelled to cut down
on the expenditures on social services like healthcare, education, and social protection as a part
of the structural adjustment programs and the lending agreements aimed at the reduction of
budget deficit and the improvement of fiscal sustainability (Mosley, Harrigan, & Toye, 1995).
This can result in decreases in social welfare benefits, increases in user fees for healthcare and
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education, and cuts in government subsidies for essential goods and services thus, this can lead
to reduction in well-being of the vulnerable and marginalized people. The implementation of
austerity measures as a condition of financial assistance can in the end undermine the social
welfare programs and worsen the poverty, inequality and social exclusion. Thus, the
conditionality is seen as the main factor that leads to the depletion of the social help, excluding
the healthcare services, lower educational attainment, and social protection for the people who
are the most in need (Mosley, Harrigan, & Toye, 1995). This can have very serious outcomes in
the developing countries, where social welfare programs are the only way for millions of people
unable to survive in impoverished and destitute conditions to get out of them.
Besides, the conditionality can be the cause of the decline of social rights and entitlements as
governments put first the meeting of the requirements of the international creditors and after that
the obligation, to provide for the basic needs and rights of their citizens. In this way, it might
result in social chaos, political instability, and a break in the relationship between the
governments and their citizens, which in turn, will cut off the possibility of long-term
development and social unity (Gupta, Davoodi, & Tiongson, 2002).
B. Implications of trade agreements on national fiscal policies
The international trade agreements can be the ones that will be the reasons for the national fiscal
policies to be involving in in the taxation, public spending and the regulatory frameworks. These
agreements are the result of negotiations between the countries to promote trade and investment
and usually have the provisions that limit the governments' capacity to execute the fiscal
measures or economic regulations that are seen as the barriers to the trade and investment. The
ISDS mechanism of trade agreements could impact the national fiscal policies by allowing
foreign investors to fight against the government policies and regulations which they consider as
biased and not beneficial to their needs (Van Harten, 2005). Under ISDS provisions, foreign
investors can claim compensation for those losses that they have suffered as a result of
governmental actions, such as the changes in taxation, environmental regulations, or social
welfare policies that influence their investments, etc. Thus, it can lead to a cold feeling on the
governments' will to take measures to safeguard public health, the environment, or social
welfare, from the fear of being suitably sued by the foreign investors. Trade agreements usually
have clauses that restrict governments from using trade-related measures to reach policy
objectives at home, such as supporting the local industry, protecting labor rights, or regulating
financial markets. For instance, trade agreements may be forbidden or limited to the use of
tariffs, subsidies, or government procurement policies which are aimed at supporting domestic
industries or the removal of market failures (Gallagher & Porzecanski, 2010). This can narrow
the policy space of governments and will be a threat to their ability to achieve their national
development strategies which are based on social welfare, environmental sustainability, or other
things with similar meaning. Additionally, trade agreements can worsen inequalities and weaken
social welfare by giving more benefit to the strong corporate interests than the public good. The
efficient exploitation of natural resources, dominance of large scale corporations, and the
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increased mobility of capital; these policies, together with a loosening of restrictions on foreign
investment, made it easier for a few people to accumulate wealth and power while marginalizing
small producers, workers, and vulnerableThe outcome of such a strategy is the widening of the
income differences, the destruction of labor rights, and the weakening of social safety nets, as the
governments concentrate on the attraction of the foreign investment and the export-oriented
growth that are the main sources of income, whereas they neglect the social needs.
Detractors say that trade agreements favor the businesses of the world and the people of the
world and the governments of the world and that it is against the democracy, the sovereignty and
the social justice. It is argued that trade agreements should be negotiated openly and
democratically, involving not only the government but also civil society organizations, labor
unions, and other stakeholders, in the hope that they will contribute to the inclusive and
sustainable development (Gallagher & Porzecanski, 2010). Through the prioritizing of trade
liberalization and investor rights, trade agreements often become the cause of increasing poverty,
inequality, and vulnerability, thus, they are the reason of the marginalization and exploitation
cycle which is continued. As nations keep on negotiating trade deals and go through the various
aspects of the globalization, it is necessary to make sure that these agreements will be inclusive
and sustainable development ones that will take care of the well- being and rights of all the
citizens.
VIII. Evaluating the Effectiveness of Austerity Measures
A. Economic outcomes: growth, employment, inflation
The supporters of the austerity policies say that these policies are the only way to restore the
fiscal sustainability, to create economic stability and, in the long run, to generate economic
growth and job creation (Blyth, 2013). Nevertheless, the opponents of the austerity policy say
that it is the one that slows down the economic recovery by lowering the aggregate demand, by
cutting the investment, and by making the unemployment more severe (Stiglitz, 2019). The
economic effects of austerity measures have been found to have mixed results in empirical
studies. The research results show that austerity is the main factor for the short-term economic
contraction, and after this, the modest recovery will be observed in the long term (Cottarelli &
Guerguil, 2016). Nevertheless, the other side thinks that austerity measures can be the reason of
prolonging recession, the unemployment rate will increase, and economic inequalities will be
aggravated, especially in countries that have weak economic foundations and limited policy
space (Blanchard & Leigh, 2013).
The real issue of austerity the control of inflation is a matter of debate. Though the austerity
policies helps in cutting down the budget deficit and thus stabilizes prices, they also can cause
deflation by lowering consumer spending and investment (Fatas & Summers, 2018). The
inflation results under austerity are depending on a complicated mixture of elements, such as the
monetary policy, the exchange rate dynamics, and the supply-side constraints, which makes it
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almost impossible to predict the inflationary effects of the austerity measures with certainty. The
success of the austerity measures in reaching the economic goals, such as growth, employment,
and inflation control, is still a question that is unanswered and it is also dependent on the context.
On the one hand, the supporters of austerity say that it is a must for fiscal consolidation and
economic stability, but the opponents of austerity claim that austerity measures are the ones that
will slow down the economic recovery. Therefore further research is necessary to better
comprehension of the economic effects of austerity measures and to find the alternative
approaches to fiscal policy that are sustainable and include the whole society.
B. Social indicators: poverty rates, access to healthcare and education
Austerity measures can affect social indicators such as poverty levels, access to healthcare, and
education, which in turn affects the whole social welfare and the well-being of the people.
Supporters of austerity contend that cutting down government expenditure and debt levels can
generate fiscal space which can be used for the investment in social programs and services,
consequently, leading to the better social outcomes in future (Blyth, 2013). Nonetheless, the
opponents of austerity measures hold the view that austerity measures can worsen poverty,
inequality, and social exclusion by cutting social welfare programs and reducing the access to the
basic services (Stuckler & Basu, 2013). The empirical studies on the social effects of austerity
measures are neutral or vague about the impact of the austerity measures on the poverty rates.
Although some studies support the fact that austerity can lead to the increase of poverty and
income inequality, especially among the vulnerable groups (Bambra et al. , 2014), on the other
hand, some researchers state that the relationship between austerity and poverty is not simple and
depends on many factors such as the design and the implementation of the social policy
(Cotarelli & Guerguil,Nevertheless, there is agreement that austerity measures can lead to the
destruction of social welfare systems and the restriction of access to essential services for the
people who are in the most urgent need. The healthcare and education sectors are the ones to
suffer from the budget cuts that can result in lower service provision, longer waiting times, and
restricted access to quality care and education, especially for the marginalized communities
(Marmot et al. , 2012). Hence, it might lead to the worsened health situation, lowering of the
education degree and the social mobility will be decreased, especially in the disadvantaged
groups (Marmot et al. , 2012). Besides, the austerity policies can make the health inequalities
worse by cutting the access to the preventive services and thus, the social determinants of health,
for example, poverty, unemployment, and housing, would be in a worse condition (Stuckler &
Basu, 2013).
C. Long-term vs. short-term effects of austerity
The issue of the long-term versus the short-term effects of the austerity measures still is not
solved since the evidence and the interpretation are in conflict with each other. Advocates of
austerity believe that pain in the present is a prerequisite for achieving long-term benefits as
austerity measures provide the needed fiscal space for investments, induce confidence in the
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financial markets, and pave the way for sustainable economic growth (Blyth, 2013).
Nevertheless, the opposers say that the austerity measures can have long-lasting negative effects
on the economy, social welfare, and public trust in the government, and as a result, the
consequences will be much more than the benefits (Stiglitz, 2019).
The majority of studies indicate that austerity is the reason for the short-term economic
contraction which is followed by the modest recovery over the time (Cottarelli & Guerguil,
2016) but, some studies find that the austerity measures can be the reason for the persistent
negative effects on growth, employment, and poverty rates especially in countries with weak
economic fundamentals and limited policy spaceBesides, the social effect of the austerity
policies, which are the access to healthcare and education is lower, can be a long-term factor, for
the human capital formation, the social cohesion, and the intergenerational mobility, with the
consequences that goes far from the economy crisis (Marmot et al. , 2012). To sum up, the
argument between the long-term and short-term effects of austerity measures is the issue that
shows the complexities and uncertainties of their effects on the economic and social outcomes.
IX. Conclusion
A. Summary of key findings
The research has proved that the austerity policies are applied to different parts of the society in
different ways and these are very much unequal. The proof that austerity is the best way to face
the economic crisis has been found in many studies to be that the socioeconomic inequalities are
further increased by austerity measures which have affected the marginalized communities and
the people who are not in position to stand. Besides, researches have also shown that political
factors are the factors that in the process of austerity decisions are taken into consideration.
Political ideologies, party politics, and institutional dynamics are the factors that are the main
determining factors of the formulation and implementation of the austerity policies (Blyth,
2013).Though the austerity measures have the goal of dealing with fiscal deficits, they usually
cause the budget cuts and the restructuring of social programs, which in turn cause the changes
to the service delivery and the accessibility. Studies have shown that austerity has a negative
impact on the essential services such as healthcare, education and social assistance programs,
especially on the people who are in the most vulnerable positions (Pierson, 2001). Moreover, the
study of the public opinion about austerity policies has shown that there is a wide spread of the
discontent and resistance to the austerity politics that was emphasized by the researchers (Hacker
& Pierson, 2010).
B. Implications for future policy-making and social welfare provision
Firstly, policymakers need to understand that austerity policies have different effects on different
societal groups and that they should focus on the measures which will protect the poor and other
groups that are in a more vulnerable position. This means the need for the specific measures to
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counter the negative impacts of austerity on access to the basic services and the social protection
programs for the people who are on the edge (Picketty, 2014).
Besides the political situation related to austerity measures, the emphasis on the necessity of the
inclusive and participatory decision-making processes in the economic governance is being
shown. The policymakers should organize meetings with different stakeholders, the civil society
organizations and the grassroots movements, to make sure that the austerity policies represent the
needs and the preferences of the wide population (Blyth, 2013). The process of making the fiscal
policy more transparent and holding the people accountable for the policy-making, it is therefore
a must for the development of the public trust and the legitimacy of the government.
Findings on social welfare provision indicate the necessity of resilient and adaptive social safety
nets which, in turn, can be used to reduce the catastrophic effects of fiscal austerity. The political
leaders should put their resources into the development of universal healthcare, education, and
social assistance programs to make sure that each and every member of the society has the right
to the required services (Pierson, 2001). Besides, the measures to reinforce social unity and the
community resilience can work as a cushion for the effect of austerity on social cohesion and
solidarity (Hacker & Pierson, 2010).
C. Areas for further research
The problem with the economy is the common strategy that the countries take to solve the fiscal
deficits and debt problems is the austerity measures. Still, the effects of such policies are not only
about the budget reduction, but they are also the social welfare programs and the citizens' health
and well-being which are greatly influenced. Despite the studies done of the various areas that
this intersection contains, there are still many other fields of study that are yet to be explored,
they include the following;
The austerity policies which mostly serve to stimulate the economic stability are not always
creating a favorable environment for the long-term economic growth and thus, the impact of
these policies on the long-term growth trajectories should be investigated further. The study on
the effects of austerity upon the economic growth of the countries that have already gone through
austerity, analysis of the GDP growth rates and on the other hand the examination of the
investment patterns, the productivity levels and finally the sectoral dynamics of the economies
that have already gone through austerity programs. For instance, rival studies of the countries
that have different experiences of austerity can disclose the fine scale of the relationship between
austerity and the long-term economic performance (Blyth, 2013). The saying that austerity
measures exacerbate the socio-economic inequalities in regards to income, wealth, and social
services is praised. Besides this, the qualitative studies on the life experiences of the people and
the communities that are affected by the austerity will be able to give us a lot of information
about the human sides of the socioeconomic inequality (Picketty, 2014). The discussions of the
scholars on the political ideologies, party politics, and institutional factors as the topics of the
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studies are the questions of how these factors influence the process of formulation and
implementation of austerity policies. The comparative studies of the austerity experiences of
different political regimes and contexts can show the political actors that are the ones that
construct the austerity agendas. Understanding the political dynamics of austerity is essential for
assessing its democratic ramifications and implications for social welfare provision (Blyth,
2013).
Austerity policies mostly comprise of budget cuts and the reorganization of social programs,
which, in turn, results in the modifications in the provision, accessibility, and quality of the
essential services. This could be done by evaluating the modifications in service coverage,
waiting times, resources allocation, and the appropriateness of safety nets in the times of
economic hardship. Besides, the case studies of the regions or municipalities with different
austerity experiences can reveal the effectiveness of the different methods of protecting the
social welfare in financial crises (Pierson, 2001). Another area that is yet to be explored is the
view of the people on the austerity measures and their consequences for the social welfare.
Through the examination of the stories, discourses, and framing strategies used by different
actors the researchers can expose the controversial aspects of austerity politics and its
consequences for democracy and social cohesion (Hacker & Pierson, 2010).
In this essay, the important features that should be researched in the future have been presented.
One of the fields where the interdisciplinary study is possible is in the research of the long-term
economic side effects and the socioeconomic inequality . By the closing of these research gaps,
the scholars will be able to participate in the policy making process and thus, they will be able to
promote the inclusive way of dealing with economic governance and social welfare provision in
the age of fiscal constraints and uncertainty.
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