Capability of welfare states to foster inclusion through employment-related measures

Introduction

The choice by workers to exit or enter the labour market has long-lasting consequences for societies. The proactive role of social policies to prevent the rise of unemployment is integral to active public and social policy measures. Insufficient social protection systems cause problems related to employment and pose new risks regarding social inclusion. As Zimmermann (2014, 84) has argued, the capability to work, of “having (or not having) a job serves to position people in society and confers a certain social status” on them. Previous studies have found that especially when young people become unemployed for the first time during a recession, the experience has scarring effects in terms of longer unemployment spells and poorer health (Egdell and Beck, 2020). Furthermore, those forced to exit the workforce prematurely face risks of isolation and lower incomes in older age (see Anand et al., 2020). This study employs the capability approach as an analytical tool to qualitatively investigate employment-related measures and their continuity as a result of the COVID-19 pandemic.

The COVID-19 pandemic was the most severe global health crisis for societies in over a century, with profound socioeconomic consequences. Studies have focussed on the cumulative effects of the pandemic to understand its preliminary impacts on workers and vulnerabilities in the labour market. Comparative research (Moreira et al., 2021) on southern European welfare states, namely Greece, Italy, Portugal and Spain, suggest that in the early phase of the pandemic, Spain suffered more from a drop in GDP and employment than other studied welfare states.

A comparative study of Brazil, Costa Rica, Mexico, Poland, Portugal, the United Kingdom and the United States analysed that employment-related measures significantly lessened the volatility of labour markets (Soares and Berg, 2022). Wage compensations proved more helpful than redistributive income support measures. Nevertheless, the pandemic helped exacerbate existing inequalities. The measures taken in Europe have been able to mitigate effects better than in the United States (Soares and Berg, 2022). Workers particularly in the service sector have been placed in a vulnerable situation in the United States (Han and Hart, 2021), with not only low-income workers but also middle-class families being affected, much like during the Great Recession of 2007–2009. Researchers estimate that the situation is just as precarious now for those with part-time jobs, those making low wages or those only doing contingent work (Han and Hart, 2021). Certain countries in western and southern Europe and various liberal welfare states have resorted to short-time work schemes more than the Nordic countries or Central and Eastern European countries (Ebbinghaus and Lehner, 2022). Researchers argued that the Nordic countries chose to rely more upon labour support logic, while the former countries based their measures on supporting business (Ebbinghaus and Lehner, 2022). Although the impacts have been more severe in emerging economies, the effects of the pandemic in advanced economies have spread unequally as well. Koczan (2022) has reported that COVID-19 has especially impacted women and young people with lower levels of education or income, the self-employed, workers in the gig economy, those with zero-hour contracts or variable hours chosen at their employers' discretion, informal workers and minorities. For instance, lockdowns in Italy impacted almost half of all workers (Galasso, 2020). Notably, blue-collar workers and low-income service workers were more adversely affected because of work stoppages and income losses compared to workers who were able to work remotely. Another recent study (Tassinari, 2022) from Italy notes critical issues in the labour market have become more acute during the pandemic, like segmentation, youth unemployment, low female labour-force participation, stagnant wages and high incidences of informal and precarious work. In early 2021, Italy announced a comprehensive transformation in the labour market as part of the country's recovery and resilience plan. The idea is to transform Italy's labour market through structural reforms that include different forms of unemployment support, such as active labour market programmes (ALMPs) (Tassinari, 2022).

In Portugal, unemployed workers received more forms of protection than before, for instance in the tourism sector (Almeida and Santos, 2020). On a larger scale, early estimations by the IMF and OECD provided evidence that particularly preventive employment measures have positively impacted employment situations. If such measures had not been taken, then the loss would have been 11% during the first six months of 2020 (OECD-employment Outlook, 2021, 99). In turn, the IMF has estimated that unemployment would have been 2.5% higher than in the rest of Europe in 2022 without the interventions.

A recent literature review of comparative studies showed that overall, social policy measures particularly in Europe have focussed mainly on the risk of unemployment and responses to the increased care-related needs of families due to COVID-19 (Mäntyneva et al., 2023). Welfare states introduced a broad array of social policy responses. The measures, though, have been more expanding than reforming existing practices in Europe (e.g. Seemann et al., 2021). This has been the case in the Nordic countries of Denmark, Sweden and Finland (Greve et al., 2021; Bariola and Collins, 2021), as well as in the eastern European countries of Lithuania, Slovakia, Poland and Hungary (Aidukaite et al., 2021). A comparative study of responses in the Netherlands, Belgium and Germany showed that they have had the greatest impact on self-employed persons, flexible workers and low-wage earners (Cantillon et al., 2021). A study concentrating on the European welfare states of Denmark, France, Germany, Italy and the UK found evidence that measures linked to livelihood and employment were highly novel for “non-standard workers” based on their scope but not on a normative and legal basis (Seemann et al., 2021). Cook and Grimshaw (2021) focussed on short-time work schemes in the European welfare states of the UK, Germany, Norway and Italy, finding that in the early phase of the pandemic, for example, domestic workers in Italy and those working mini jobs in Germany were not included in the short-time work schemes, which might leave precarious workers and women in a worse position.

To date, there is a lack of COVID-19 crisis-related research using a capability framework to study governmental measures in a comparative and explorative manner. We demonstrate that the capability approach can bring a more comprehensive understanding of the governmental measures used to sustain and increase inclusion in times of pandemic. Thus far, questions regarding the continuity of measures adopted as a result of COVID-19 have not been researched systematically.

This article addresses employment promotion and unemployment protection measures implemented in 2020. Our interlinked research questions are as follows:

1. What major mitigative and preventive employment-related measures did countries implement due to COVID-19?

2. Did the measures continue from the advent of the pandemic and form new path creations?

This article proceeds as follows. First, we present the framework for studying changes and continuity using the capability approach. After that, we discuss the research design and present the results. Finally, we offer conclusions and, in the discussion section, reflect on our findings.

During times of crisis, both mitigative and preventive measures play essential roles in supporting people's lives. While mitigative measures focus on stabilising current living conditions in the long run and generally enhancing human capabilities, preventive measures are more proactive and aim to enlarge human capabilities beyond reactive responses. This working hypothesis serves as inspiration to examine employment-related measures through the lens of the capability approach. By considering both mitigative and preventive strategies, we can better understand how to support individuals and ensure their well-being during challenging times. However, it is essential to recognise that social protection remains a crucial human right under all circumstances.

Capability approach as a research design and data

The main aim or purpose objective of the capability approach is to encourage people to pursue and achieve valuable life goals, like having decent work and incomes that allow them to escape the poverty trap (Sen and Nussbaum, 1993; Sen, 1999; Robeyns, 2005, 2017). The added value of the capability approach is that researchers can use it to explore how social security and public policies function at various levels of welfare states (Vero et al., 2012; Yerkes et al., 2020; Carpenter, 2022; Den Braber, 2013; Deneulin and McGregor, 2010; Bonvin and Orton, 2009; Laruffa, 2018). Within the context of COVID-19, they can use the capability approach as a methodological tool to identify a range of problems across all areas of life that represent potential targets for policy reform (Anand et al., 2020). Recently, one study surveyed the multidimensional scale of capabilities experienced by citizens in Sweden due to COVID-19 (Meili et al., 2022). The study provided evidence of negative changes in people's financial situation, health and political resources based on the multidimensional scale of capabilities. People with a low income faced greater difficulties.

Emerging research has already shown evidence concerning capability deprivations and losses like unemployment, which ongoing pandemic has caused. We have chosen to analyse the employment-related policies and particularly governmental employment related measures–used due to COVID-19 from the capability approach perspective.

According to the capability theory (Nussbaum and Sen, 1993), public and social policies play a critical role in enabling capabilities and imposing certain conditions on people's capabilities and agency across various life situations and throughout their lifespans (Sen, 2009; Nussbaum, 2009; Robeyns, 2005; Alkire and Deneulin, 2009; Cox and Pawar, 2013; Den Braber, 2013). Welfare states face challenges, particularly when the capabilities they provide (including social security and social services) fail to support individuals and create positive transitions in different life situations, as exemplified during the pandemic context. Amartya Sen (1999) identifies distinct freedoms, which are achieved through capabilities, actions, and functionings—referring to both what individuals can be and do in their lives. These freedoms encompass socio-economic aspects such as opportunities for employment to promote people's well-being Our research focusses on these socio-economic dimensions, which are closely interconnected. We adopt and further develop the capability approach (Sen, 1999) as an analytical tool in our examination (Cox and Pawar, 2013, pp. 105–144; Den Braber, 2013, p. 72; Mäntyneva and Isola, 2019). In Table 1 below, we illustrate the links between these dimensions.

Our perspective on the capability approach is to study capabilities of welfare states that include the policy measures of various governments, particularly employment-related measures, as a unit of analysis (Robeyns, 2005, 2017; Bonvin and Orton, 2009). Classification of preventive and mitigating measures was the first phase of analysis. The data related to this study focus on two themes: unemployment protection and employment promotion.

In our analysis, mitigative measures represent tools designed to address traditional risks, such as unemployment and loss of human capital in this case. These measures, including unemployment protection, serve as crucial safety nets in societies. Social policy defined through social risks primarily adopts a reactive approach. However, employment promotion measures take a more proactive stance, aimed at fostering employment opportunities. During times of crisis, both mitigative and preventive measures play a vital role in providing bridging support in people's lives. Mitigative measures focus on stabilising current living conditions in the long term, while preventive measures are oriented toward proactive solutions. In this context, we conducted a thematic analysis of the primary mitigative and preventive measures to assess their quality and effectiveness. By examining both types of measures, we gain a comprehensive understanding of how to strengthen social protection and promote employment opportunities, thereby enhancing the overall well-being of individuals in society.

In our thinking mitigative measures are representing tools to tackle traditional risks like unemployment in this case. Mitigative measures such as unemployment protection provides an important safety net in societies. The emphasis in social policy is, however, reactive. In turn, employment promotion measures are more precative and proactive. In times of crisis both mitigative and preventive measures can work as bridging support in peoples' lives, as the emphasis in former is to stable current living conditions eventually. The primary mitigative and preventive measures were also thematically analysed to study quality of the measures (see Table 1, Figures 3 and 4 in the following sections).

Examinating the COVID-19 responses of governments as capabilities thus makes it possible to estimate their performance during the pandemic. Second, we examined whether such employment-related measures have continued and led to new path creations (Hogan et al., 2022). Path creations begin with certain trajectories, continue to develop, and ultimately might change direction or speed until leading to a clear path clearing or resolution (Hogan et al., 2022). Thus, the question of timing and continuity also might reduce the cost of social expenditures (Zimmermann, 2014, 76). Challenges arise when a system's incentives do not coincide with how people operate and with their possibilities (Honneth, 1995).

The primary focus lies on the achievements and outcomes that individuals can attain (functioning as achievements) through government actions and the governments capability set (performance and transitional aspect). The latter perspective takes into account the means and measures through which these valued outcomes are accomplished (Sen, 2009, pp. 228-230).

The sample of OECD countries (13) included in this study was based on welfare regime theory. The study includes ideal-type corporatist-conservative countries (Germany and the Netherlands), several liberal countries (the UK and US), the Nordic welfare states (Finland, Norway, Sweden, Denmark and Iceland), several Mediterranean regime countries (Italy and Spain), as well as several Asian regime countries (South Korea and Japan). The Nordic welfare states are considered ideal-type representatives of universalism, with a high proportion of welfare distribution. This is one of the reasons that all the Nordic welfare states were included.

The empirical data used in this study were primarily gathered from domestic sources, like government websites and bulletins and secondary material from COVID databases (IMF, World Bank, Eurofound, ISSA, OECD). The primary data and references were published in a working paper (see Mäntyneva et al., 2021), and updated with follow up related to the continuities of the measures.

First, the data collection phase included assessing significant changes and measures taken in the year 2020, in total 87, to best answer our first research question. Also, we gathered updated data about continuities from domestic sources on the Internet, particularly from the open official documents and bulletins of governments and ministries, international COVID-19 databases and reports, and a few media sources. In our analysis, we complemented the study with relevant statistics and data concerning the unemployment situation and the utilisation of job retention schemes. Additionally, we incorporated findings from previous research to explore initial estimations regarding achieved outcomes and functionings in the context of our study.

Performance during the 2020 pandemic and estimations of achieved functionings

Table 2 shows the data on preventive social policy measures, which mainly aimed at saving jobs. Countries also changed or introduced new unemployment protection initiatives, which we call mitigative measures. This distinction is also used as part of the analytical framework to analyse and interpret the research findings.

The structure of the various labour forces in the studied populations differed significantly throughout the OECD countries. Some countries are more dependent on tourism, such as the Mediterranean countries and Iceland, meaning the corona crisis affected them in different ways (Almeida and Santos, 2020). More than a quarter of the workforce is self-employed in Korea, whereas in Spain it is 16.1% and in Italy 22.5%, compared with only 6.5% in Norway. In South Korea and Spain, one-fourth of all workers are temporary workers; for example, in the US (4%) and the UK (5.3%), those percentages are much lower. The Netherlands stands out with a high proportion of people working in part-time jobs (36.9%) (OECD indicators). Part-time employment has been more common among women (25 %, year 2020) than men (9,9 %), year 2020, placing women in a more vulnerable position among OECD-countries (OECD, 2023).

All 13 of the studied OECD countries implemented changes to avoid unemployment and protect workers during the first year of the pandemic. To summarise, countries adopted preventive measures and made changes to existing short-time work schemes, wage subsidies and layoff systems due to the pandemic. Generally speaking, the crisis caused governments and states to take more responsibility in offering increased compensations to workers. Unemployment compensations offered to employees varied from approximately 60% to 100%. Also, some welfare states changed the eligibility criteria for compensations and the compensation levels during the pandemic.

The United Kingdom and Iceland both introduced new preventive measures to avoid an increase in unemployment. The United Kingdom enacted a job retention scheme, while Iceland enacted a short-time scheme with wage compensations. The same was done in the United States, where some states enacted short-time compensations for the first time. In addition, the Netherlands replaced its former short-time scheme with a new wage compensation scheme (NOW). In addition, various countries made concessions to employers' contributions that included delays, exemptions, and reductions in social contributions. Eight of the 13 countries studied (Denmark, Finland, Norway, Sweden, Spain, Italy, Japan, and South Korea) used these tools to alleviate the immediate socioeconomic effects on employment. Due to the COVID-19 crisis, welfare states extended the use of such schemes to groups previously excluded from preventive schemes, including, for example, those in part-time jobs and co-owners of companies and self-employed persons in Denmark, Sweden and Germany, those in apprenticeship training in Denmark, persons performing temporary work in Finland and Spain, those doing chartered work and atypical work in Germany, and persons engaged in atypical seasonal work (Spain) and flex-work (The Netherlands). Table 3 demonstrates the above-discussed changes to compensation schemes in the different countries.

Typical mitigative measures also included increasing the basic unemployment allowance levels. This was the case particularly in the Nordic countries, namely Sweden, Norway and Iceland, when the compensation period was about to conclude. Unemployment security was extended to new groups in Finland (labour market support for entrepreneurs), Norway, Denmark, the United States, Germany, the Netherlands, Spain, Italy, South Korea and Japan. In the UK, the level of universal credit (UC) was increased. UC general support replaced several allowances and targeted unemployed people in a different manner than in other welfare states. In addition, it extended the unemployment period by reducing the deductible period and extending the period for receiving unemployment security benefits. This kind of flexibility was likewise implemented by authorities in Denmark, Finland, Norway, Sweden, Germany and the United States. Furthermore, the dataset included measures that reduced the boundaries between different social security risk categories. The COVID-19 responses in several welfare states allowed students to combine unemployment and student allowances more appropriately. In addition, a partial unemployment befit was made available to students studying during the summer months to help improve their incomes (e.g. Norway, Denmark and Iceland). The combination of adjusted pensions and income support helped ensure an adequate labour supply, especially in the health sector.

The unemployment situation was likely impacted by the number of measures taken in 2020. As we can infer, countries where the unemployment rate was low on average in 2020 adopted a smaller number of employment measures. In contrast, countries like Spain made several changes to offer better coverage for distinct types of employees and workers through enhanced unemployment benefits and to include them in the Temporary Employment Regulation (ERTE) scheme. Figure 1 illustrates this relationship.

Continuity as a transitional aspect and the use of the preventive measures

To take the analysis further, we conducted a follow-up assessment of the measures taken in 2020, whether employment-related measures have continued and whether the changes were still valid by July 2022. As Figure 2 illustrates, trends in mitigative and preventive employment promotion measures first appeared, then continued and ultimately ended almost simultaneously. At the end of the first year of the pandemic, 82% of changes to employment protection measures were still in effect, while 72% of employment promotion measures continued. By the beginning of 2021, 63% of the employment protection measures were in still effect, but only 43% of employment promotion measures were in effect. During this same period, new measures also appeared, but even though the early initiatives led to the general formation of new path creations, except with respect to a few significant schemes, authorities soon discontinued changes stemming from the pandemic. Most employment-related measures (about 60%) have undergone changes since 2020 (e.g. Hogan et al., 2022). We conclude that once a measure has been implemented, it further develops and the eligibility criteria for receiving aid changes or even targets groups most affected by the pandemic.

Figures 3 and 4 focus on the continuities in employment-related measures in detail, tracing their increase or decline between 2020, 2021 and July 2022. Most changes to unemployment protection measures are related to horizontal changes, with unemployment protection extended to cover new groups. Preventive measures mainly changed existing short-time and layoff schemes and employers' social contributions (see Figure 5).

The focus on continuities shows that authorities generally favoured unemployment protection measures over employment promotion measures, albeit several job retention schemes did enjoy success in Spain (ERTE I–VI) and the Netherlands (NOW I–VI). Authorities in the UK introduced the Coronavirus Job Retention Scheme in March 2020. It has enhanced income security for millions of employees by allowing them to work part-time and receive subsidies for the time they did not work. The scheme has continued and been changed several times. In Italy, as part of the preventive measures and “Agosto” degree, the government provided workers with a four-month period of exemption from making social security contributions to employers participating in salary support schemes between May and June of 2020. Following a brief lull, authorities then added an extra four-week period in December 2020.

In January 2021, decision-makers then decided to continue the scheme for another eight weeks. Employers were also encouraged to shift fixed-term employment contracts to open-ended ones or hire new employees to stimulate permanent contracts, exempting them from social security changes for six months with certain conditions. Also, novel changes were made to, for example, economically support jobs in regions considered economically depressed, with high unemployment rates.

In Sweden, authorities offered companies in 2020 the chance to temporarily halt social security contributions for three months due to the pandemic. At the beginning of 2021, they lowered payroll taxes (from 31.4% to 19.7%) for young people aged 19 to 23 by deducting them from employers' social security contributions. This change in policies will be in force until 31.3.2023.

By the end of June 2022, only four significant employment protection measures and five employment promotion measures remained in effect. Major preventive scheme changes that continued after June 2022 included the Kurtzarbeit scheme in Germany, which had changed the eligibility criteria for receiving support, the Swedish initiative of lowering social security compensations for young people, the employee retention subsidy in South Korea and expansions to the employment adjustment subsidy in Japan. In turn, such mitigative measures as extending the unemployment period and giving self-employed persons the right to apply for a jobseekers' allowance (Grundsicherung für Arbeitssuchende) in Germany were extended to the end of December 2022 (22.8.2022). The right to combine unemployment benefits with training has become more open-ended in Norway. The COVID-19 pandemic accelerated initiatives, public discussion and actions taken to comprehensively reform the social security system. One aim, part of the “Korean New Deal”, is to reform the employment insurance system to account for the increasing trend of people engaging in irregular employment. Already, steps have been taken toward creating a national insurance system. For example, self-employed persons and freelancers now have easier access to unemployment benefits due to COVID-19. The aim for the year 2022 is to develop and expand the employment insurance system to account more for the gig economy.

In The United Kingdom and Italy, furlough, wage subsidy and short-time work schemes covered more than 30% of the labour force, whereas in Japan, South Korea, the United States and Finland less than ten per cent of the workforce took advantage of such schemes in the spring of 2020. Likewise, far fewer people took part in job retention measures in East Asia and the United States compared to the Mediterranean countries. According to the OECD-employment Outlook (2021), preventive measures — mainly layoff schemes — helped to save jobs, but there is still uncertainty about how many have been saved. The schemes targeted (Q12020–Q3/2022) approximately 60 million jobs, which is ten times more than in the Great Recession. The job retention schemes covered one-fifth of employed workers in April 2020, but the number had declined to 7% by September 2020 for OECD countries and to less than 6% in the first months of 2021. Job retention schemes strongly impacted sectors affected by government restrictions, like hotels and restaurants, arts and entertainment, retail and the wholesale trade (OECD-employment Outlook, 2021).

In most of the studied countries (Iceland, Italy, the Netherlands, Norway, Korea, Denmark, Spain, Finland, the UK, Germany and Sweden), the unemployment situation had eased by the spring of 2022. However, the unemployment rate has either remained the same or fallen below OECD averages in the UK, Germany and Sweden. Despite the positive changes in the unemployment situation with respect to potential layoffs and short-time schemes, the overall situation is more complex than the outcomes might indicate. At time of second quarter of 2021, approximately 1.4 million people disappeared from the labour market, and were considered economically inactive in Europe (European Central Bank, 2021, 49). The OECD's labour force statistics give an overview of the change in percentages among those belonging to the labour force. For instance, in Spain and Italy roughly 1.6% of persons disappeared from the labour force between 2020 and the end of 2021. In Iceland, the pandemic hit young people (16–24) in the employment force especially hard for a brief period. Overall, young people's share in the labour force dropped by 5.5% between 2019 and 2020 in OECD countries, increasing the risk of poverty and social exclusion for many.

Discussion

This article has addressed employment interventions and the continuity and use of measures applying the capability approach to examine the capabilities of welfare states in a sample of OECD countries (e.g. Robeyns, 2017). The performance of employment-related measures in the studied welfare states demonstrated a capability to balance fluctuations in the labour market with longer-term economic strategies.

Early initiatives in the year 2020 generally involved disruptive changes, as Hick and Murphy (2021) have termed them. During the rather exceptional COVID-19 pandemic, welfare states have trusted more in core institutions and enacted flexible social policy responses (e.g. Cantillon et al., 2021; Leisering, 2021; Moreira and Hick, 2021; Seemann et al., 2021). The pandemic prompted them to make changes to the number of people covered by job retention schemes. This is one example of how governments broadened peoples capabilities in crisis situation. We suggest that these vertically expanding changes are also examples of the differentiation and dualisation occurring in the employment sector in recent years, to a lesser or greater extent depending on the country. For example, Soon et al. (2021) found that the pandemic forced the governments of Japan and South Korea to address social problems in a way that can further accelerate change and reforms in the future. Similarly, Eastern European countries have adopted more welfare-state measures as a result of the pandemic (e.g. Aidukaite et al., 2021).

Furthermore, emergency measures have made visible the problems and vulnerabilities in societies that welfare states have been incapable of solving in recent years. From capability approach perspective these changes can be crucial for livelihood, but compared to preventive employment measures they are narrowing capabilities and bringing discontinuity. Insufficient social protection is a critical issue in countries where the number of temporary workers, self-employed workers and those performing informal work is high, particularly in countries where social assistance is inadequate. The types of employment-related reforms differ from one welfare state to another. Notably, in Mediterranean countries like Spain and Central European countries like the Netherlands the share of part-time and diverse flex-workers is significant, consisting of much non-voluntary part-time or hourly work. Natili et al. (2022) argue that in the short term, COVID-19 has been a catalyst of double dualisation and resulted in income losses especially in Southern European countries, where those persons outside the labour market have the severest burden. However, even Nordic welfare states, which emphasise universal social protection, have not been exempt from this problem.

The situation has raised the question of the extent to which it is possible to prepare for different risks, and how to do so in welfare states, and what new risks prevent such measures from being enacted, prompting a recent European survey to ask state actor what risks matter most. The growing disparity in life courses has, in turn, led to the need to establish firmer boundaries, which increases pressures on social transfers. It is obvious that employment measures and policy interventions are not enough to solve all the public policy problems made visible by the crisis. New innovative solutions might well be needed in the future. What has changed is that the new risks are often systematic, like climate change or the ongoing COVID-19 pandemic. Kempf and Dutta (2021) have argued that if these transformative social policies become part of development policies and universal social protections, then those countries will be better prepared for future crises.

Issues still exist that cast a shadow over the outcomes and performance of welfare states, like people disappearing from the labour force, increased youth unemployment and the share of temporary, part-time precarious jobs in some countries. One component of the European 2030 strategy addressing poverty and the risk of social exclusion is the low work intensity indicator. According to this indicator, people whose total working time is equal to or less than 20% of their total combined work-time potential during the previous year are thus in danger of being non-voluntarily marginalised in work and society. Even full-time employment is not a complete escape from poverty, though the risks of exclusion are far smaller than for the unemployed (66%) and people who are outside the labour force but have not retired (43%).

Finally, we outline the limitations of this study. The data consisted only of major employment-related measures and changes in the studied countries. We focussed our study to domestic-level solutions. Thus, sub-national or sector-specific responses, for example tripartite agreements in certain employment sectors or social transfers in certain areas (e.g. southern Italy), were excluded. This comparative study primarily focussed on major governmental measures, with less emphasis on individual employability aspects. Instead, we relied on employment rates and the utilisation of employment-related measures during the pandemic as relevant indicators to demonstrate achieved functionings. Our examination suggest that these indicators may significantly influence the measures taken and their continuity in response to the crisis.

It is both methodologically and empirically challenging to compare a number of different welfare states. We assessed the employment measures adopted as a result of the COVID-19 pandemic as representative of institutional (temporary) change (Streeck and Thelen, 2005) using the capability approach. Our findings can be extended by focussing on new initiatives presented after the year 2020. The case-studies of differences in the implementation schemes might yield new insights into how they function, as with Cook and Grimshaw's (2021) analysis of patterns evident in short-time work schemes. When interpreting the outcomes, we did not discover straightforward causal link between governmental measures and, for instance, unemployment rates (e.g. Vero et al., 2012), albeit as our examination and conclusions suggest these indicators may have an impact on measures taken and measures continued.

In some countries, the disappearance of people from the labour force might well have influenced the statistics, even if it is not visible in this study. From capability standpoint, the quality of work matters in terms of creating more secure pathways for people.

One essential theme during the COVID-19 pandemic has been protecting workers in the workplace and expanding access to paid sick leave. Some countries also opted to provide them with compensation to prevent COVID-19 infections, for example among risk groups and within families. The work done by parents has also depended on care possibilities (Daly, 2022). Welfare states that support the dual caregiver model or dual breadwinner model instead of pushing women out of the workplace might well have survived better (e.g. Bariola and Collins, 2021). The interconnections between different risk categories should be included in future studies.

The capability approach, including the proactive role of social policies, has lent a unique perspective on public policies, which might also have an impact on how governments approach social policies in the future. Our study has demonstrated how governmental capabilities interact and mediate people's everyday life and human capabilities. The added value of the capability approach is that it can make the public and social policy more sustainable.

Conclusions

Our empirical analysis has yielded one general and three specific conclusions. Our study suggests in generally, that even in the times of crisis the governments capability set has broadened individuals' capabilities fostering employment.

Some countries concentrated on more immediate priorities, while others had more long-term plans. Usually, countries adopted a combination of both dimensions (see Lipscy, 2020), as our results show. First, most employment measures were preventive (66%), which justifies the fact that countries were not just concentrating on immediate priorities but also exhibiting a capability to formulate inclusive transitions that would last beyond the crisis. In our study, Mediterranean countries—Italy and Spain—tended to use more preventive measures in quantitative terms, in contrast to welfare regimes elsewhere. Certain countries also implemented significant changes with respect to job retention schemes or else initiated completely new schemes (e.g. the UK and Iceland). Nevertheless, improvements in social protection measures for the unemployed were also needed.

For countries to make positive transitions, they also needed to address the crucial question of continuity as a means of saving people's jobs and helping them avoid income losses. In our second research question we examined if employment related measures have continued and formulated new path creations. During the pandemic, countries further developed both mitigative and preventive measures, though most such measures ultimately ended in what can be called path termination, or abruption, and a return to pre-pandemic policies (Hogan et al., 2022; Streeck and Thelen, 2005). In our study, approximately 60% of the studied measures within a noticeably short time period, often quarterly or even every two months, and typically in the early phase of the pandemic, in the spring of 2020. Thus, the time horizon for making decisions and implementing them has been short, in many cases less than a quarter of a year. Except for a few changes (11%), most changes made to employment-related measures ended by July 2022. Long-lasting changes have been rare, with few exceptions, such as a layoff scheme in the UK combining unemployment benefits and training in Norway. Germany is one of the welfare states that has also left changes made to employment-related measures in place after June 2022. One explanation can be that when the energy crisis hit, especially in Germany, social and political decisions became part of a package that has included one-off payments to the most vulnerable. An emphasis on the male breadwinner model might have also affected the continuation of such measures.

To conclude, preventive employment-related measures have been essential for countries seeking to avoid a rapid increase in unemployment in an abbreviated period, though short-time schemes, wage compensations and furlough schemes significantly varied between countries. In the early phase of the pandemic, in April 2020, such measures covered one-fifth of the labour force in OECD countries, varying greatly from one welfare state to another. Our results are quite similar to those presented by Ebbinghaus and Lehner (2022), who found that Mediterranean and more liberal countries used short-time schemes more often than other welfare regimes during the spring of 2020. The number of unemployment insurance expansion schemes carried out in Spain differed in quantity in the research data. The government's decision to expand existing ERTE scheme improved the financial situation of workers in non-typical jobs. The current unemployment situation in Spain relates rather weakly to the situation in other welfare states; Spain had already moved to make permanent structural changes, which the COVID-19 pandemic only accelerated. In our study, one key difference related to the United States, where the use of preventive measures remained quite low compared to our sample of OECD countries.

Furthermore, we have suggested that one explanation for our findings is that the unemployment situation in a sample of welfare states might explain the number of employment-related measures. In welfare states, where the unemployment rate was generally high in 2020, authorities implemented more quantitative employment measures than in countries where unemployment rates were at a moderate level. In Southern Europe, the role of policy measures in stimulating the economy, work and social recovery was stronger in Spain and Portugal than in more universalist welfare states. These findings are somewhat similar to those reported by Pereirinha and Pereira (2021) in their comparative study of European welfare states. On the other hand, countries with low unemployment rates and a small number of employment-related measures might have made more comprehensive, longer-term choices, like the UK's Coronavirus Job Retention Scheme (CJRS). Likewise, Germany built on the longstanding Kurtzarbeit scheme during the pandemic, making changes to the eligibility criteria and the amount given by the government to avoid an increase in unemployment. Japan expanded its employment adjustment allowance significantly.

The primary focus of this study lies in conducting a cross-national comparison at the societal level. However, it is worth noting that further research exploring the actual impact of these measures on individuals' lives, including their perceptions and experiences, would be of great importance and interest, warranting its own separate investigation.