There are numbers of decommodification concepts developed by scholars during 19th century. Holden pointed out that Offe presented a contradictory concept of decommodification but Esping- Andersen based his decommodification on Polanyi’soriginal work (Holden, 2003). Decommodification is a kind of tool to measure and makes comparisons between different welfare regimes. Esping-Andersen used decommodification to analyse welfare regimes.

This essay is constructed according to the following structure. Firstly, I will discuss commodification, so that will help to explain decommodification later on. After that I will give a full explanation of the decommodification. Then I will compare the degree of decommodification in three welfare regimes: liberal, social democratic and conservative. Following this, I will explore the processes of decommodification and how it works in the real world. Finally, I will examine New Zealand’s welfare reforms and the concept of recommodification followed by an evaluation of the usefulness of decommodification in comparative social policy.

Before I explore the concept of decommodification, I would like address a commodified period. The treatment of labour as a commodity is not new, however, the degree of decommodification and treating labour as commodity has changed its approach over time. Even in the hunter gatherer era, people have used labour to achieve wellbeing, for example going into the forest to collect food and wood. As Esping-Andersen said “…it was not labour contract, but the family, the church, or the lord that decided a person’s capacity for survival”(Esping-Andersen, 1990, p.35). To clarify, the lords were not there just to ensure people survival, so people Thad to work for him even if people did not depended on cash, they depended on food.

However, in the industrialisation period, people were drove to the workplace and their labour became commodified. People become completely depending on the market. Even though workers could choose between jobs and employers, or whether they wanted to work or not, but as the market become hegemonic, workers had fewer and fewer choices. As Marx, Polanyi and Lindblom (1977), cited in Esping-Andersen, (1990), the freedoms for workers are freedoms behind wall. They can do anything but within market influential. What it means is that worker did have the right to choose employers but most of the employers follow the same principle of the market.

Definition of Decommodification

Decommodification was coined by Polanyi (1980) who argued that, in the capitalist society, labour is regard as a commodity which you can sell and buy. Later, in 1990, Esping-Andersen used the same concept to explain the differences in the contemporary welfare system (Holden, 2003). Decommodification is the idea that “The degree to which individual, or families, can uphold a socially acceptable standard of living independently of market participation” (Esping Andersen, 1990, p.37).

What this means is that a person does not have to sell his or her labour in order to achieve wellbeing. Wellbeing is a right rather than something that can be delivered by the market. People should be independent from the market for their survival. If you are unemployed, you are entitled to the government benefit until you find another job. The Government has the responsibility and obligation to provide welfare for its citizens.

In a highly decommodified welfare state, people receive welfare benefits mainly from the government rather than through private insurance schemes. In contrast, commodified states were mostly reliant on the market for its citizens’ wellbeing. In other words, your level of wellbeing is based on your labour. If you work hard and earn more, you will achieve a higher level of wellbeing and if not, your level of wellbeing is low. There is no welfare provision from the government, because you are commodified. However, the degree of decommodification varies according to the type of government welfare system.

Degree of decommodification in Three world welfare regime

The degree of the decommodification varies depends on the welfare system. According to Esping Andersen (1990), there are three types of welfare regimes, even though a number of scholars have criticised his limited typology of analysis of the welfare state. These three types are liberal, conservative and social democratic regimes. The liberal regime is characterised by the least provision of welfare for people. This regime restricts the role of state to provide welfare and instead preferred the market to provide it (Powell and Barrientos, 2004). The state provides essential needs for the market to function properly and continuously, so that state has less responsibility for welfare provision. People are very much reliant on the market to achieve a better livelihood, which means they have to sell their labour at any price they can to earn better living in return. The risk under this regime is individualisation, which means that you have to take care of yourself, and if you fail to achieve wellbeing, it is your fault. This relates to negative rights which are the right to be free from any state intervention but you have to look after yourself. Even if you fail to achieve wellbeing, it is less likely that the state will give you a hand. Most employers prefer to invest in this type regime because they have to pay less tax and provide less responsibility to their workers (Kennett, Lecture, 22, March). Under this regime, the government has a very limited role in the labour market. Decisions are mostly made between worker and employer. Markets are central to this regime, so the level of decommodification is very low.

The social democratic welfare regime is manifested by big government which provides adequate welfare for its citizens. However, it doesn’t mean that the social democratic regime has the perfectly decommodified system. As socialism was born in response to capitalism, decommodification became one of its principles. (Powell and Barrientos, 2004). In a social democratic regime, the state plays the most important role in welfare provision. The government encourages people to participate in the labour market by providing skills training and just enough welfare to survive, so people know that they cannot rely on the state benefit forever. They have to work to be better off but if they are unemployed, the government has the responsibility to provide welfare. This regime believes that welfare is developed as nature and so it is universalistic. Socialisation of risk leads to equality because if a person fails to achieve wellbeing, society has to help through government institutions. This relates to income equal distribution. Under this regime, citizens enjoy positive rights which means that state and society will provide the resources to achieve your own wellbeing, so the degree of decommodification in this regime is higher than liberal’s.

In the conservative regime the family plays key role in providing welfare, so the role of the market is very minimal and the role of the state is low. The social policies of the conservative are reflect to value of families and churches. The conservative social system is highly stratified and leans towards to the pre-industrial class structure, which means your wellbeing is based on the class you belong to. The level of decommodification in this regime is modest but it is high for some groups which mean that if you belong to well respected and elite class, you are more likely to be decommodified because you are important in contributing to society. People in a higher class will have better wellbeing than someone who is from the working class.

Process of Decommodification

Real decommodification occurs when people can access a benefit program easily and income distribution is equal. However, unfortunately, the social benefit you receive tied to the contribution you made to the country. At the same time, pension requires length of time to receive, and entitlement for sickness benefit requires a doctor’s confirmation that you are legitimately sick. If you cannot prove that you are legitimately sick, it is less likely that you will get the sickness benefit, so you will have to continue selling your labour for your survival even though you are sick. Even though you can get welfare benefit as long as you can find job and you are well, welfare benefit came from your own pocket because you pay taxes and you receive benefit. It is impossible that the government can provide welfare benefit without any contribution from its citizens. Even if the citizen who did not ever pay any taxes can access to welfare benefit, however, that welfare were pay by other citizens. If you are not skilful enough to enter the labour market, you might be required skills training for the sake of your future. As soon as you gain skills, you will have to at least try to enter labour market to sell your labour. When you are employed, you will have to pay tax which can be for your future welfare or indirectly though contribute the welfare you received when you were unemployed. According to Esping-Andersen “if programs provide benefit for only limited duration, clearly their capacity to de-commodify is diminished (Esping-Andersen, 1990, p. 47) which means that if the access to benefit is difficult and just for certain length of time, we cannot treat it as decommodified system.

Recommodification and New Zealand’s current welfare reform

In an era of globalisation, countries’ policies grow more similar. Some countries are forced to reform their welfare policies such as in New Zealand today. As industrialised countries have developed similar welfare system, globalised country policies become convergent due to the link between international economies even though national politics still matter sometime. As Schroeder said in his speech at Davos, whichtheir country has no choice, so they have to reform their policies (Kennett, Lecture, 10, March).

Policies that favour the market and push beneficiaries into the labour market are called recommodified policies. I would like to give an example of New Zealand’s recent welfare reforms. New Zealand had been given a low decommodification score by Esping-Andersen (1990) and identified as a liberal welfare regime. It is more correct now (because of the recent welfare reforms) than when he scored it. New Zealand was forced to make reforms because it faced pressure from the IMF to cut government spending. New Zealand has been showing the budget deficit from 2008 and also predicted to continue until 2016 according to the finance minister. According to Businessweek, the IMF suggested to New Zealand to review the spending on payment to families, student loans and subsidies for doctor visited (Wither, 2010). Even though the Prime Minister, John Key, said that the government could not make any further budget cuts, however welfare reform policies were announced a month after IMF pressure.

We can say that New Zealand had moved from decommodification to the recommodification welfare system. Recommodification is when the welfare system moved to encourage people on benefits to enter labour market. The New Zealand government had said that they would like to end the welfare cycle. The minister of Social Welfare, Paula Bennett, said that the “dream is over” and people responded as if the dream is over and the nightmare begun (John, 2010).

New Zealand becomes what Holden termed as “welfare to workfare” because people on benefit need work-test and even people on sickness benefit require part-time job. People on benefits such as the unemployment, sickness and DPB are all required to meet new requirements in order to remain entitled to the benefit. The unemployment beneficiaries will require a work-test under the welfare reform. People on the sickness benefit will also require a part time job and a sole parent whose youngest child is six should also be available to work 15 hours per week. It is obvious that New Zealand’s welfare reforms aim to get people into the workforce. This means the reliance is more on the market for wellbeing, so the government can cut its spending. While workfare policies aim to reduce the total cost of welfare provision, welfare policies expected that benefit levels will increase (Kennett, Lecture, 22, March).

Decommodification and Stratification

Stratification can be uses to cluster welfare regimes as used decommodification. These two concepts work in the same direction. For Marx, class can be abolished by eliminating waged labour but, according to Esping-Andersen, class can be maintained and eliminated through decommodification, so decommodification can also stratify class as well as abolish it. The welfare system Tstratify class rather than abolished it because the benefit entitlement indicates which class in society you belong to, so the benefit system is stigmatising.

The welfare reform in New Zealand is good example to explain stratification. The reform in New Zealand has targeted sole parents and sickness beneficiaries. The idea is that sole parents and sickness beneficiaries should work part time in order to remain entitled to the benefit. The government believes that those on benefits are free riders (recall Bennett’s “dream is over” statement), so now they want those people to go back to work force. In this way labour is recommodified. This is the government division of class in society. As Esping-Andersen stated in his Three World Welfare book, “the welfare state is not just a mechanism that intervenes in, and possibly correcst, that structure of inequality; it is, in its own right, a system of stratification” (Esping-Andersen, 1990, p. 23). Different classes in society have different levels of decommodification and a highly stratified welfare state has low decommodification for some groups…

The analysis of welfare regime using the decommodification excludes some other important factors such as gender and unpaid work. In the decommodification concept, Esping-Andersen’s labour as commodities refers to paid labour only. Paid labour was mostly dominated by male workers in the 19th century. As Pyle (1990) cited in Lewis, “..government policy, particularly that of the Industrial Development Authority, played a decisive role in ensuring that men had priority in the labour market”(Lewis, 1992,p.163). In Europe according to Lewis ), married women who tried to enter the labour market faced harsh treatment, such as high taxes and less access to child care. Women were seen as dependent on their husbands. Their wellbeing depended on their husband labour. In New Zealand, if a woman’s husband has full-time employment, they are not entitled to the benefit for their children. The decommodification of Esping-Andersen in comparative social policy is too focused on the labour market, according to Gough (1999). Similarly, the gendered concept of labour because it assumes that labour is paid, so Lewis argues that, unlike men, decommodification for women can be unpaid work. (Kennett, Lecture, 29, March).

Considering all the points above, a commodity is something you can sell and buy in market. Human labour is treated as a commodity. People have to sell their labour to survive. Decommodification occurs when people can be less dependent on the market for their wellbeing. However, the level of decommodification varies in different welfare regimes. Based on his research, Esping-Andersen (1990) gave different scores to three welfare regimes. The liberal welfare regime scored the lowest for decommodifion, the social Democratic was the highest and the conservative the middle. These three welfare regimes were scored based on the accessibility to and equal distribution of, unemployment and sickness benefits and the pension.

Decommodification and stratification can be uses together in clustering countries according to their welfare regime. Different classes in society enjoy different levels of wellbeing. The welfare system is a stratified system because it favours some groups more than others. The current welfare reform in New Zealand of recommodification is stratified in the same way because it targets a particular group of people. Decommodification alone is a very narrow way to analyse social policy in different welfare regimes: it ignores unpaid labour and focuses on class stratification rather than gender and race. Women are discriminated in market and in receiving benefit. Even though a decommodification model is useful in comparative social policy, it overlooks some important points that should be included in the analysis.