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European Social Model(s): From Crisis to Reform

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Presentation on theme: "European Social Model(s): From Crisis to Reform"— 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 I. Welfare States in Perspectives
1. Definition 2. History and Strategies 3. Types of European Social Systems 4. Social Expenditures Welfare States in Perspectives

4 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1. Definition 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. Welfare States in Perspectives

5 Welfare States in Perspectives
1. Definition 1. Definition History & Strategies Types of ESS Social Expenditures 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. Welfare States in Perspectives

6 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition Welfare State Aims 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 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. Welfare States in Perspectives

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

8 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition The European Social Model It is a set of principles and values, common to all European regions: 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 Solidarity Social Justice Social Cohesion Equal access to employment Gender equality Equal access to health and social protection Universal access to education Welfare States in Perspectives

9 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition 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. Welfare States in Perspectives

10 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition 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. Welfare States in Perspectives

11 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition Acceptance of the ESM The ESM is only possible because, unlike Americans, Europeans accept the important role of the state, which means that they accept a public sphere. 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. Welfare States in Perspectives

12 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition 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 20th 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)‏ Welfare States in Perspectives

13 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition 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 Welfare States in Perspectives

14 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition Contribution of WS to Europe ''The simplest difference between the USA and Europe is that we have welfare states, they do not'', James Wickham. 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. Welfare States in Perspectives

15 Social Security Systems and the EU
1. Definition History & Strategies Types of ESS Social Expenditures 1.Definition 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. Welfare States in Perspectives

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

17 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 2.History & Strategies 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'' Welfare States in Perspectives

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

19 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 2.History & Strategies 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 1st. 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)‏ Welfare States in Perspectives

20 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 2.History & Strategies 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. Welfare States in Perspectives

21 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 2.History & Strategies 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. Welfare States in Perspectives

22 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 2.History & Strategies 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. Welfare States in Perspectives

23 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 2.History & Strategies 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. Welfare States in Perspectives

24 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 2.History & Strategies 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. Welfare States in Perspectives

25 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 2.History & Strategies 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. Welfare States in Perspectives

26 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 3.Types of ESS European Social Security Models 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. Welfare States in Perspectives

27 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 3.Types of ESS 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: Welfare States in Perspectives

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

29 Sweden, Denmark, Finland, (Norway)‏
1. Definition History & Strategies Types of ESS Social Expenditures 3.Types of ESS 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)‏ Welfare States in Perspectives

30 Germany, France, Belg, Netherlds, Aust.
1. Definition History & Strategies Types of ESS Social Expenditures 3.Types of ESS 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. Welfare States in Perspectives

31 United Kingdom, Ireland
1. Definition History & Strategies Types of ESS Social Expenditures 3.Types of ESS 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 Welfare States in Perspectives

32 Italy, Spain, Portugal, Greece
1. Definition History & Strategies Types of ESS Social Expenditures 3.Types of ESS 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 Welfare States in Perspectives

33 Welfare States in Perspectives
1. Definition History & Strategies Types of ESS Social Expenditures 3.Types of ESS 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. Welfare States in Perspectives

34 Social expenditure in % by European types of SSS
1. Definition History & Strategies Types of ESS Social Expenditures 4.Social Expenditures Social expenditure in % by European types of SSS Source: ESSPROS 2004. Welfare States in Perspectives

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

36 Expenditure on social protection in PPS* per capita in 2003
1. Definition History & Strategies Types of ESS Social Expenditures 4.Social Expenditures Expenditure on social protection in PPS* per capita in 2003 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 Source: Eurostat-ESSPROS Welfare States in Perspectives

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

38 Benefits on social protection in cash & in kind, 2003
1. Definition History & Strategies Types of ESS Social Expenditures 4.Social Expenditures Benefits on social protection in cash & in kind, 2003 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. Source : Eurostat-ESSPROS Welfare States in Perspectives

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

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


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