Unemployment risks redistribution under post-industrialism: explaining employer cross-sectoral divides in Germany and Italy

Which political dynamics explain cross-country differences in the redistribution of unemployment risk in Bismarckian welfare states? Why do some countries witness persisting cross-sectoral segmentation in the structure of their unemployment insurance programs under post-industrialism? This paper seeks answers to these questions by focusing on the role of a rather disputed actor, namely employers. Through a pairwise comparison between Germany and Italy, the paper emphasizes the different collective action dilemma that have underpinned the formation of employer positions and their political behavior on the process of reform of unemployment insurance between 1990 and 2012. German employers uniformly advocated for (and finally obtained) a radical reform that considerably decreased contribution costs for all firms. Instead, though subject to similar structural and policy pressures, Italian manufacturing employers thoroughly defended costly institutional arrangements inherited from the industrial period, which led to salient cross-sectoral divides with small-firm business segments and finally to the resilience of redistributive segmentation in the Italian unemployment insurance system. The paper accounts such cross-country variance on three variables, that is, economic structure, policy legacies, and employer collective organization. In particular, it emphasizes the challenges imposed by the growing weight of small-firm business segments to the political viability of social insurance arrangements in service economies.