widening wage disparity and rising poverty revealed a deep popular com­mitment to their welfare states. This helped return social democratic par­ties to office in the majority of West European polities, including the four largest countries. The character of the reforms pursued under Center-Left governments in the 1990s is best captured in terms of institutionally bounded policy change. Altogether, the European welfare states, based on the principles of social justice and equity as a source of economic com­petitiveness, embedded in political institutions favoring negotiated re­forms, have proven to be far more responsive than is generally given credit for. As prevailing employment and social policies ran into severe problems of sustainability, because they were built on political, eco­nomic, demographic, and household conditions that no longer prevailed, With fifteen different welfare states, not to forget a possible enlarge­ment with ten candidate countries, there obviously does not exist any single»European social model« towards which member states of the European Union could possibly converge in the next decades. Clearly, the issue is not one of subordinating domestic policy to EU directives but rather one of joint policy learning and cooperation. this triggered a dynamic of renovation and re-casting of current policy so as to achieve a better»fit« with new societal challenges and pressing eco­nomic constraints. Moreover, the precise policy mixes that have ensued reveal that the underlying normative, cognitive and institutional princi­ples of the European social model are fairly robust. But most important of all, the reform experience shows that welfare policy adjustment has not only been shaped by past policy legacies and institutional structures of de­cision-making, but more critically by policy makers’ capacity for innova­tion, intelligently using the normative, cognitive and institutional re­sources at their disposal(Crouch, 2001). Welfare Regimes and the Service Sector Trilemma We can identify three welfare regimes, each with a rather unique welfare design and institutional attributes, based on deeply held national aspira­tions of equality, social justice and solidarity: a Nordic, an Anglo-Saxon, and a Continental European model. The three vary significantly in their ipg 4/2002 Hemerijck, European Social Model(s) 41