Dismantling of welfare systems leads to abandonment of any full employment policy, accompanied by an erosion of rights to unemployment benefits; reduction in financial resources to alleviate poverty; reduction in the general level of social security; and reallocation of resources for the promotion of equal opportunities.
The welfare state systems are becoming increasingly over-extended and it is expected that they will have to be cut back sharply. The dismantling is most advanced in the UK and the USA, although the process has profoundly affected the social landscape in Canada and western Europe, although until the 1990s these effects were kept within limits in Germany, the Netherlands and Scandinavia. The slow developments towards a social contract in Japan and Southeast Asia are now being curtailed. This is also true of the embryonic developments of a social contract in developing countries, notably those subject to structural adjustment programmes.
2. The welfare state is weakening worldwide. This is especially worrying in developing countries since the security of the poor and economically vulnerable is directly affected, notably with respect to food distribution.