This article attempts to highlight the interaction of developments in European social and employment policy-making with the changing conditions and patterns in national political economies, labour markets and labour relations. It argues that a shift is taking place from traditional social policy, aiming at equality of outcomes, to an activating employment policy, directed towards achieving equality of opportunity. This shift is analysed against the background of the demise of the Fordist model, the Keynesian compromise of the mixed economy, the increase in product market competition and internationalization of the European economy, the externalization of social policy from large firms, the rise in unemployment, Europe's continued high-cost welfare states and the decline of organized labour.
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