"The more is given the less the people will work for themselves, and the less they work the more their poverty will increase."
Introduction to reforms
Once you understand how the political system in Victoria works, you can consider granting reforms. There are two types of reforms: political and social. These work in different ways. Political reforms extend rights to your population. These include such things as public meetings and the right to form unions. Social reforms, on the other hand, involve the state shelling out cash to provide services to the people. Such services include health care, pension funds, and minimum wages. Both kinds of reforms reduce the militancy of your population, but neither is free, monetarily or otherwise.
This is perhaps the most important political reform, as it can determine what kind of government your country takes as a whole. There are several levels of voting rights. First, there is the "None" option. This is pretty self-explanatory, so we'll leave it at that. Second is the "Landowners only" choice. This means that you will be allowing your Aristocrats and Capitalists to vote, but no one else. "Wealth" means that suffrage is extended through the middle class, enveloping Clergymen, Officers, and Clerks. And finally, "Universal Suffrage" means everyone can vote (note: this does not include women until late in the game, if at all; note 2: cultural minorities can vote only under parties with Full Citizenship).
The people allowed to vote determine what kinds of governments are elected. The upper classes tend to be quite conservative, even reactionary, in their leanings, so with very restrictive voting rights, those are the kinds of parties you will see elected. The lower classes tend to be more liberal and later, socialist, and granting them voting rights may get those kinds of parties elected. Before extending voting rights, look at the parties that can currently be elected and make sure you understand what kinds of restrictions they could put on your government.
Effect of voting rights on government type
The type of voting right you have also tends to determine your overall form of government. Many states with no voting rights, when granted suffrage of any sort, become Constitutional Monarchies. Extending this to Universal Suffrage tends to shift the government to a democracy, though with the more conservative nations of Central and Eastern Europe they will stay Constitutional Monarchies.
The classes that are newly allowed to vote are happy to be able to do so and generally receive a decrease in militancy, but understand that those who can already vote are unhappy to see the privileges extended, and will be unhappy.
This is where you choose whether to allow public meetings, one of the staples of popular government. Prohibiting them will make your liberal classes angry, but it will reduce your crime fighting costs as everyone (including criminals and political protestors) can no longer congregate without breaking the law. Allowing them will keep your crime fighting costs up, but it will mollify your more liberal POPs.
This is how you choose how much of a license the press in your country gets. Providing the "State Press" option puts the newspapers in the control of the government. Make no mistake, people are not fooled by this, and though it helps keep people in control, they can get unhappy. "Censored Press" means that the newspapers have some freedom, but they are being watched by government censors. This allows for a reduction in militancy among the population without suffering the burdens of a truly free press, and seems to be a balance point with which many players are comfortable. "Free Press" means that you remove all restrictions on your newspapers, allowing them to print whatever they want. You will find that this can often include government criticism, which can itself lead to an increase in Consciousness and Militancy for a segment of your population.
This is where you choose what kind of power you will have over the parties in your country. The first choice "No Political Parties" is self-explanatory. The second is Right to Ban. Selecting this means that you are allowing elections, but that the monarch retains the right to dissolve a government with which he is unsatisfied. This allows you to expel a party from power if it has imposed restrictions on you with which you are unhappy. All Allowed means that you agree to allow whatever party gets elected into office, and agree to go along with that they legislate. Banning a party or expelling it from power creates a tremendous amount of unrest among the adherents to that party within your citizenry.
As with press rights, the more freedom there is the lower the militancy of the majority of your population, but remember that allowing all parties can lead to the election of Pacifist or Socialist parties that restrict how you can manage your military or economy.
Here you select what kind of collective bargaining rights you assign. You can of course select the "No Trade Unions" choice. Besides that, you can select the "Non-Socialist" choice, which makes all POPs, besides socialists, happy. Choosing "Only Socialist" makes the socialist POPs happy while angering all the rest. "All Allowed" means that all trade unions, even the most extreme, are free to form.
All political reforms will reduce the Militancy of one or more strata of your population, but they will increase the Militancy and Consciousness of others. A good rule of thumb to follow: whoever benefits from the political reforms will be happier, but whoever loses political power will be unhappy. For example, if you extend voting rights from landed to wealth, you will include Clerks. These will be happy, while the Aristocrats and Capitalists will be upset. Furthermore, if you then extend voting rights to universal suffrage, the Clerks, who will have less power after the next reform than before, will be upset by it.
All social reforms are a good way to reduce militancy, but they cost a great amount of money. As you can see, the social reforms come at several levels, from "trinkets" to "good". The higher the rate, the more money it costs to run. There is both an establishment cost and a daily cost that comes out of your budget.
This sets how much of a minimum wage your workers get.
This sets a limit on how long employers can force their employees to work. Reducing the number of workhours also reduces the efficiency of your workers, as they have less time to produce.
These set how much safety your workers should be provided. This, again, reduces efficiency as it leads to slightly slower rates of production.
This establishes a national health care system for your POPs. Unlike the previous reforms, this one counts both employed and unemployed POPs. On the positive side, though, it leads to an increase in population growth as well as the typical decrease in militancy.
These provide an allowance for your unemployed citizens. Recall how it was mentioned that all POPs have desired goods. Unemployed POPs, since they do not have a salary, will quickly run out of cash, lose the ability to purchase their desired goods, and become unhappy, leading to revolts or emigration. Unemployment subsidies reduce this by giving those without a job some money so that they can still purchase goods.
Although there are no "retired" POPs in Victoria, pension funds are also a good way to reduce militancy overall, for, like health care, it is calculated for all POPs, employed or unemployed.
The cost of social reforms depends on the size of your population as a whole, not on who is actually using it. For example, even if you have no actually unemployed POPs in your nation, you will still have to pay for unemployment subsidies (Reforms, their costs and their effect on militancy says otherwise?). Furthermore, if you fund your social reforms more than fifty percent, you increase their effects. In other words, they will reduce Consciousness, and through it, Militancy (see section "The Big Three").
Note that all social reforms will reduce the militancy of one or more strata of your population, but most of them raise the Militancy and Consciousness of rich POPs.