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European Social Model(s): From Crisis to Reform. Contents: 1. Welfare States in perspectives 2. Problems and Challenges 3. Social Model and Competitiveness.

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Presentation on theme: "European Social Model(s): From Crisis to Reform. Contents: 1. Welfare States in perspectives 2. Problems and Challenges 3. Social Model and Competitiveness."— Presentation transcript:

1 European Social Model(s): From Crisis to Reform

2 Contents: 1. Welfare States in perspectives 2. Problems and Challenges 3. Social Model and Competitiveness 4. EU integration of Social Systems?

3 Welfare States in Perspectives I. Welfare States in Perspectives 1. Definition 2. History and Strategies 3. Types of European Social Systems 4. Social Expenditures

4 Welfare States in Perspectives Welfare State: Definition The Welfare State consists of a number of programs through which governments pursue the goal of social protection against economic and social risks of life & well-being. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1. Definition

5 Welfare States in Perspectives Welfare State Objectives to protect individuals and groups against economic and social risks of life and changes in society; to secure income and conditions to live a life in human dignity with fullest participation in society; to combat discrimination and inequalities; to promote social cohesion and inclusion and to avoid marginalisation; to combat poverty and extreme gaps in the distribution of wealth in society. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1. Definition

6 Welfare States in Perspectives It redistributes income from the working young to the retired old, from the rich to the poor, etc. It also helps to solve many problems with risk, market failures, ethical norms, poverty and inequality, justice, etc. Welfare State Aims Welfare systems are financed on the basis of solidarity; the access for all citizens to high-quality services of general interest at reasonable prices; economic democracy through social dialogue and collective bargaining. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

7 Welfare States in Perspectives Welfare State Spendings Social Protection Social Protection Social assistance - Income support Social insurance - Retirement - Unemployment - Health care Benefits in kind Benefits in kind Education Housing Public goods - Public transport - Public service broadcasting 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

8 Welfare States in Perspectives The European Social Model 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition It is a set of principles and values, common to all European regions: Solidarity Social Justice Social Cohesion Equal access to employment Gender equality Equal access to health and social protection Universal access to education Universal access to health and social services Equal opportunities for everybody in society, in particular the elderly, the young, the disabled, the socially excluded and minority groups

9 Welfare States in Perspectives Social rights and European citizenship European citizenship includes social citizenship Social citizenship is a cluster of rights to: education health social security public services etc. Such rights are supposed to make political citizenship effective. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

10 Welfare States in Perspectives Acceptance of the ESM Such rights have costs, costs in monetary terms, in terms of restraints on rights of others and in terms of market rigidity. For example: my right to free education or health care constraints the right of others to spend their income. My right to employment protection constraints the employers' freedom to dismiss me. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

11 Welfare States in Perspectives The ESM is only possible because, unlike Americans, Europeans accept the important role of the state, which means that they accept a public sphere. Acceptance of the ESM A public sphere is a part of society which belongs to all citizens and where things are done not for profit, but for the general good. Services are provided for the public: they are public services. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

12 Welfare States in Perspectives Acceptance of the ESM The acceptance of public services means to accept public employees. With the expansion of the Welfare state duties in the second half of the 20 th century, the number of its employees increased hugely. The counterpart of the social rights are duties: welfare rights in Europe involve the obligation to look for work. Problem is unemployment, question is: isn't unemployment caused by market rigidities? (see chapter 2) 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

13 Welfare States in Perspectives Main characteristics of EU WS Relatively high level of taxes, of state activity, of redistribution & social cohesion Universal public services (health, education, housing) Comprehensive social protection: illness, old age, unemployment, maternity, etc. Extensive workers' rights and social dialogue Commitment to macroeconomic stability through monetary and fiscal policy 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

14 Welfare States in Perspectives Contribution of WS to Europe The European Social Model was the success story of the post-war period. It is not expressing a sort of European essence, even if it is part of European citizenship. It has only emerged after World War II. But it now is a defining feature of Europe. ''The simplest difference between the USA and Europe is that we have welfare states, they do not'', James Wickham. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

15 Welfare States in Perspectives Social Security Systems and the EU Europeans have high expectations in the EU, but they now feel eurosceptics, as discussions about the EU Treaty showed it. Europe will exist as a social Europe, or it will not exist at all. When asked about the areas in which the EU should act, employment and social policy are frequently cited as top priority. EU is justified if it provides for more social security, otherwise not. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 1.Definition

16 Welfare States in Perspectives Historical Roots of Social Security The European Social Model as defined in the 1 st & emerged only after W W II, but its roots can be traced back to the early 16 th century. Different traditions of social security evolved in Europe from the 16 th century on, forming ideas and strategies as to how different social problems should be approached. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

17 Welfare States in Perspectives Key References Dixon, J. (1999), Social Security in Global Perspectives, Wesport, London. Esping-Andersen, G. (1990), The Three Worlds of Welfare Capitalism, Cambridge, Polity Press. Esping-Andersen, G. (1999), The Social Foundations of Post-Industrial Economies, Oxford, OUP. Ewald, F. (1986), L'Etat providence, Grasset, Paris. Ferrera, M. (1998), ''The Four Social Europe(e): between Universalism and Selectivity'' 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

18 Welfare States in Perspectives Three Social Security Traditions The Poor Law tradition The Social Insurance tradition The Welfare State tradition 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

19 Welfare States in Perspectives The Poor Law Tradition It originates from the secularization of poor relief stated in the English Poor Law Acts from 1598 and 1601 under the reign of Queen Elizabeth the 1 st. It is rooted in economic liberalism and Christian values, with respect to the principle of individual responsibility and work ethics. It distinguishes between ''deserving poor'' (=orphans, aged, disabled) and ''undeserving poor'' (=vagrants and beggars) 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

20 Welfare States in Perspectives The Social Insurance Tradition It originates in the Prussian Social Security Statutes of the 1880s (Bismarsk), which evolved in reaction against the Poor Law tradition (criticized by the classical school: '' the poor laws may be said to create the poor which they maintain'', Malthus) It protects workers against increasing insecurtity in the course of industrialization. It is based on personal responsibility & the principle of solidarity implicit in risk pooling. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

21 Welfare States in Perspectives The Welfare State Tradition It originates in the ideas of Lord Beveridge exposed in his reports: Social Insurance and Allied Services (1942) and Full Employment in a Free Society (1944). It is rooted in humanistic convictions that there is a common responsibility of the society as a whole for the well-being of all citizens. It is to promote social integration and progress towards an equal society with full employment by state intervention: social expenditure is seen as desirable. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

22 Welfare States in Perspectives Three Social Security Strategies From these three social security traditions emerged three types of social security strategies in Europe that can be coined as: The Social Assistance strategy originating in the Poor law tradition The Social Insurance strategy originating in the Prussian insurance tradition The Social Allowance strategy originating in the welfare tradition Esping-Andersen 1990: 20ff. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

23 Welfare States in Perspectives Social Assistance Strategy The redistributive goal is to reduce poverty, that is to provide a socially acceptable minimum support. Vertical redistribution. Social assistance is targeted on individuals meeting certain criteria of neediness. Criticism: economists have argued that it can discourage labour supply because of the risk of poverty-traps and that it can increase costs of administration and surveillance. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

24 Welfare States in Perspectives Social Insurance Strategy The redistributive goal is horizontal redistribution from workers to retired old, from childless to families with children, from healthy to the sick, etc. Benefit entitlement is dependent on and related to past contributions or earnings. The social security goal is poverty prevention. It provides a social security the market can hardly supplie. Criticism: it leaves outside of the coverage the non regular full-time employees: self-employed, atypical forms of contracts, etc. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

25 Welfare States in Perspectives Social Allowance Strategy This strategy aims at universal coverage and vertical redistribution is considered as a goal. It consideres a guaranteed minimum income as a right of nation- state citizenship. Social allowances are granted according to demographic criteria such as children and age. Criticism: very expensive, today facing financial crisis; risk of inadequate levels of benefits with persistent poverty; risk of welfare-dependent underclass. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 2.History & Strategies

26 Welfare States in Perspectives European Social Security Models types of Social Models or Systems The previously exposed strategies are ideal- types that are not to be found in the real-world. We rather find mixtures of these strategies, differing from member state to member state, according to funding, benefit levels and entitlements. These mixtures define wellfare regimes we can stylized in types of Social Models or Systems. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 3.Types of ESS

27 Welfare States in Perspectives Key references Bertola, G., Boeri, T., Nicoletti, G. (Eds), (2001), Welfare and Employment in a united Europe, Cambridge, MIT Press. Esping-Andersen, G. (1990), The Three Worlds of Welfare Capitalism, Cambridge, Politiy Press. Ferrera, M. (1998), ''The Four Social Europe(e): between Universalism and Selectivity'' in Martin Rhodes and Yves Meny (Eds), The Future of European Welfare, Macmillan, London: Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 3.Types of ESS

28 Welfare States in Perspectives 4 main types of social models Scandinavian (social-democratic) Model Continental (corporatist/conservativ) Model Anglo-American (liberal) Model Mediterranean (family-centred) Model 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 3.Types of ESS

29 Welfare States in Perspectives Scandinavian Model Based on equality, comprehensiveness, social inclusion, universality Supply of social services of high quality and affordable High employment rates, gender equality Unemployment benefits and health system financed on taxes Highly progressive taxation, low taxes for business High minimum wages, high replacement rates, generous minimum standards for pensions Cooperation between social partners Strongly dependent on homogeneity of society It is the more expensive of the four models Sweden, Denmark, Finland, (Norway) 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 3.Types of ESS

30 Welfare States in Perspectives Continental Model Based on the preservation of social status, tries to prevent social problems rather than solving them Income-related transfers with low minimum standards (minimum wage, pension, etc.) Social insurance system for health, pensions, unemployment is based on contribution: levels of benefits depend on how many did individuals contribute to the system Low redistributive efforts: low wealth taxation, high taxes on labour and consumption Cooperation between social partners and coordinated wage bargaining Does not distinguish wether individuals really need social benefit: unvoluntary unemployment or voluntary unemployment? Germany, France, Belg, Netherlds, Aust. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 3.Types of ESS

31 Welfare States in Perspectives Anglo-American Model Based essentially on the markets, minimal role of the State Low degree of regulation Workfare strategies instead of welfare Basic levels of social benefits, just sufficient to survive, provided to everybody who needs them Social benefits are frequently checked Public health system and publicly financed schools Does not prevent social problems, only focused on solutions Excludes poors from society, does not provide social cohesion Low social expenditure, relatively cheap United Kingdom, Ireland 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 3.Types of ESS

32 Welfare States in Perspectives Mediterranean Model Based on supportive family networks Low transfers Employment protection legislation is rigid High gender inequality Low participation rates for the younger and female Pension-related transfers Traits of paternalistic society remained Italy, Spain, Portugal, Greece 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 3.Types of ESS

33 Welfare States in Perspectives Current evolution These four types or models are slowly converging together, but there still exists four distinct social Europes. In the fourth part I will examine the conditions of this convergence and the possibility of an integration of these models at the EU level. The important question is the selection of the optimal model, balanced between cost and social benefits. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 3.Types of ESS

34 Welfare States in Perspectives Source: ESSPROS Social expenditure in % by European types of SSS 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 4.Social Expenditures

35 Welfare States in Perspectives Expenditure on social protection as % of GDP in the EU in 2004 Source: Eurostat- ESSPROS 27.3% of GDP spent on social protection In 2003, 27.3% of GDP spent on social protection. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 4.Social Expenditures

36 Welfare States in Perspectives Expenditure on social protection in PPS* per capita in 2003 Source: Eurostat-ESSPROS Disparities in SP per capita are related to different levels of wealth and reflect differences in Social Models, demographic trends, U-rates, and other factors. *Purchasing power standards 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 4.Social Expenditures

37 Welfare States in Perspectives Structure of social protection expenditure in EU-25, 2004 Source: Eurostat-ESSPROS. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 4.Social Expenditures

38 Welfare States in Perspectives Benefits on social protection in cash & in kind, 2003 Source : Eurostat-ESSPROS main form of social expenditure is paid in cash in the EU The main form of social expenditure is paid in cash in the EU. In 2003 they accounted for 67.5% of all SP benefits, or 18.1% of GDP. 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 4.Social Expenditures

39 Welfare States in Perspectives Social benefits by function group in 2004 as % of total social benefits (TSB) and of GDP Source: Eurostat-ESSPROS 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 4.Social Expenditures

40 Welfare States in Perspectives Social protection receipts by type – 2004 (% of total receipts) Source: Eurostat- ESSPROS (1) Employees, self- employed, pensioners and other persons 1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures 4.Social Expenditures


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