The Welfare State in the European Union is essentially a book intended for students and others wanting to understand the ‘actual working and expected evolution’ of the welfare states in Europe. Rather than the more common approach of undertaking a comparative analysis or organising the discussion around different typologies of the welfare state, Pestieau prefers a different approach in which the 14 chapters correspond to major questions that are at the forefront of discussion on the welfare state among academics, policymakers and citizens. With the help of these questions, the chapters explain the welfare state and its major programmes in a clear and concise manner, and discuss their performance. In order to illustrate the sometimes technical discussion, the author successfully employs case studies and examples complemented by a large number of figures and tables. Although at some points Pestieau seems to focus too much on the statistical problems of measuring and comparing poverty, inequality and efficiency, overall he manages to craft a delicate balance between description and discussion, introduction of key concepts and demonstration of major trends that characterise welfare states in the present day and in the near future.

Similar to many other books about mature welfare states, Pestieau's book offers an account of the challenges facing the welfare states, such as global economic pressures, aging, ‘vanishing compliance and increasing opportunism’ and changes in the labour market, assessing the ability of different components of the welfare state to respond to these challenges. The book's major conclusion is that we still need the welfare state in the twenty-first century, but in a fundamentally reformed way. Overall, the sense one gets from this book is that it has been written in defence of the welfare state against that faction of economists who generally regard publicly provided welfare services as inefficient and promote market solutions. The author takes one by one the charges directed against the welfare state, such as ‘it is an impediment on economic performance and international competitiveness’ or that the ‘welfare state is more inefficient than the private sector in providing social services’ and demonstrates that these allegations are yet to be supported by empirical evidence, while also underlining the positive effects of the welfare state and its distribution policies (pp. 67, 75). Pestieau seems to be worried that this focus on efficiency among economists could alienate policymakers, who also have to consider the distributional impact of their decisions (p. 9), thus widening the gap between the two parties.

Perhaps as a consequence of this concern, the book mostly focuses on the spending and financing side of the welfare state and defines the crisis of the welfare state in terms of the inability to carry out double functions of assistance and insurance. Adopting a ‘pragmatic’ approach, he proposes the ‘abandonment of some of its insurance missions and focus on uniformity of benefits’ (p. 101) which leads to the establishment of a two-tier system of social protection where social assistance is financed by general revenue and a flat benefit is ensured to all, supplemented by actuarially fair schemes (p. 33). While this opens up the huge debate on how to restructure the welfare state to meet changing risks and growing demands, the author's proposal may require a more detailed discussion of questions such as what would happen if the middle classes shifted their loyalty away from the universal welfare system and high taxes it demanded, especially in the absence of comprehensive benefit packages and strict regulation of quality? If the middle classes were allowed to ‘exit’ from the public insurance system or simply buy supplementary private insurance, what would its implications be especially regarding the creation of a two-tiered or dual welfare system, as the recent experience of Eastern European countries demonstrates?

Also in the present context of restructuring, depending on the relative strengths of market, family and civil society, states are expected to make choices about on which functions to focus their limited capacities, something which Pestieau also proposes. However, such a choice involves provision and regulation functions that have been historically carried out by welfare states, as well as shifts among the various policymaking levels such as local or supranational. These dimensions receive scant attention in the book. As Obinger et al. (Reference Obinger, Leibfried, Bogedan, Gindulis, Moser, Starke, Leibfried and Zürn2005) rightly point out, welfare state transformation includes changes in the funding principles and structures of benefits but it equally involves the patterns of generosity or comprehensiveness and different ways of benefit provision as well as patterns of regulation. In many European Union countries, the introduction of market mechanisms into welfare programmes was accompanied by a new interest in the regulatory capacity and delegation of some responsibilities to lower levels of government, and to a lesser extent to supranational institutions. The book may benefit from an additional chapter reflecting on these debates, and perhaps more importantly, on the relationship between the European integration and the future of welfare states, as the title of the book promises. Except for a brief discussion on the Open Method of Co-ordination, Pestieau does not deal with the emergence of this supranational level of policymaking and its implications for national welfare states.

Despite these limitations, The Welfare State in the European Union, covers much ground, both empirical and discursive, and will certainly provide a useful companion to those wanting to understand the workings of the welfare states today and in the future.’