Conversion and Drift in Unlikely Cases: Welfare Reform in Hybrid Regimes

• In Event: The Politics of Combatting Poverty

Abstract

This paper comparatively explores how governments use conversion and drift in reforming their welfare states in hybrid regimes. The literature adopts a binary conceptualization of institutional change, based on degree of state strength. In advanced industrialized democracies, we expect to find incremental forms of institutional change given their densely institutionalized environments. Policies may be infrequently and gradually redeployed or reinterpreted, if they ever change. In contrast, in hybrid regimes with impaired democratic credentials, we expect policies being radically and serially replaced without ever reaching a stable equilibrium. There is, after all, no need to resort to any gradual or hidden form of institutional change especially given hybrid regimes’ readiness to deploy repressive tactics.

Yet, closely examining the records of welfare state institutions in Egypt and Turkey reveals important instances of drift, where policies are deliberately held in place at a time when their context shifts in ways that alter their effects, as well as conversion where existing policies are re-engineered to promote goals radically different from ones they were created for. What explains adoption of gradual and hidden modes of institutional change in hybrid regimes just like their counterparts in densely institutionalized environments. We unpack this puzzle by addressing two further questions: Under what conditions do governments in hybrid regimes pursue hidden forms of institutional change? What does this tell us about the nature of institutions in so-called weakly institutionalized hybrid contexts? The paper is based on a structured focused comparison of Egypt and Turkey – two ‘crucial cases’ with hybrid regimes ‘least likely’ to undergo hidden institutional change. We seek to inductively generate causal inferences about institutional shifts in these cases of hybrid regimes.

We, first, demonstrate how both countries have long-standing welfare programs dating back to the 1930s and 1940s. In Egypt, our empirical focus is on (i) the renowned universal food subsidy systems, which has undergone a series of reforms since the 1990s (ii) income generation schemes like the Productive Families Association, which in recent years came to be financed from a semi-autonomous Social Fund established by major donors. In Turkey, our empirical focus is on (i) the longstanding old age pensions programs which have been brought under a single roof during the 1990s and (ii) the relatively younger unemployment insurance program that has been introduced during the late 1990s and early 2000s.

Second, we illustrate how hidden forms of institutional change have unfolded since the 1990s in both countries. In Egypt, despite the adoption of a series of reforms aimed at introducing dynamic targeting tools, rolling back state intervention and minimizing leakage, the universally accessible nature of the subsidy program was preserved and reinforced under Mubarak and Sisi, while benefit levels fluctuated over time. Our assessment of the efficiency and distributional impact of the subsidy programs shows how the program underwent institutional change through drift. Mature income generation schemes, which traditionally targeted rural marginalized women have also been officially preserved but through conversion now re-directed to state-linked unemployed youth of the middle class, known as limited income groups or mahdudy al dakhl. In Turkey, first, fragmented old age pensions programs have been consolidated and their overall coverage expanded during the 2000s. Although these developments signal expansions in formal social rights and pension expenditures, closer analysis reveals that entitlements were exposed to drift, or erosion in real terms, due to parametric status quo in the pension formula. Second, the recently introduced unemployment insurance expanded with rising benefit replacement rates. These expansions, however, mask a process of conversion whereby the program was re-engineered to promote goals radically different from those originally intended. In the end, the distributive impact of these changes increasing favored employers at the expense of employees.

We conclude by arguing that hidden processes of institutional change in Egypt and Turkey reflected the political logic of coalition maintenance and regime sustenance, as states in both countries sought to carefully restructure their social bases of power. We also stress the role of policy feedbacks in hybrid regimes whereby norms, expectation and entitlements created by long-established institutions constrain policymakers. In building our argument we rely on primary sources such as programming and legislative documents, qualitative interviews with key policymakers and beneficiaries, and a survey of print media. Our analysis has implications for theory-building on the nature of institutional change in developing countries, and sheds lights on the dynamics of social policy reforms outside the classical three worlds of welfare capitalism.

Authors

• Asya El-Meehy, UC Berkeley

• H. Tolga Bolukbasi, Bilkent University