The presentation explores patterns of employment in social services and the public sector in different EU member states in the broader context of labour market and welfare state development. The analysis shows how EU countries pursue their fiscal policies in social services, how they develop modes of governance and the change in the public/private mix in social services, and what new patterns of employment in social services are seen in light of the challenges for welfare states both due to recent fiscal pressures as well as expected demographic changes. The double challenge of the growing demand for social services and fiscal pressures have repercussions on the way welfare states are governed as well as on how to ensure their sustainable development. The findings indicate variety in social service development and employment, with two contrasting scenarios: ‘the low road’ and ‘the high road’, both very much influenced by political choice. Innovations in governance (in regulation, financing and delivery) may help overcome the pressures emerging from fiscal consolidation by mobilising available national and local sources, public and private, formal and informal.