European Social Model(s): From Crisis to Reform. Contents: 1. Welfare States in perspectives 2....

European Social Model(s):

From Crisis to Reform

Contents:

1. Welfare States in perspectives

2. Problems and Challenges

3. Social Model and Competitiveness

4. EU integration of Social Systems?

Welfare States in Perspectives

I. Welfare States in Perspectives

1. Definition

2. History and Strategies

3. Types of European Social Systems

4. Social Expenditures


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 Expenditures1. Definition


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 Expenditures1. Definition


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 Expenditures1.Definition


Welfare State Spendings

Social ProtectionSocial Protection Social assistance - Income support Social insurance - Retirement - Unemployment - Health care

Benefits in kindBenefits in kind Education Housing Public goods - Public

transport - Public service

broadcasting



The European Social Model


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


Social rights and European citizenship

European citizenship includes social citizenshipEuropean 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.



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.



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.




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)



Main characteristics of EU WS

Relatively high level of taxes, of state activity, of redistribution & social cohesionUniversal public services (health, education, housing)Comprehensive social protection: illness, old age, unemployment, maternity, etc.Extensive workers' rights and social dialogueCommitment to macroeconomic stability through monetary and fiscal policy



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 EuropeBut 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.



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 Europe will exist as a social Europe, or it will not exist at all.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.



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.

1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures2.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''



Three Social Security Traditions

The Poor Law tradition

The Social Insurance tradition

The Welfare State tradition



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)



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.



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.



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.



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.



Social Insurance StrategyThe 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.



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.



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 types of Social Models or SystemsModels or Systems.

1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures3.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: 81-96.



4 main types of social models

Scandinavian (social-democratic) Model

Continental (corporatist/conservativ) Model

Anglo-American (liberal) Model

Mediterranean (family-centred) Model



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)



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.



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



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



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.



P e n s io n s F a m il y S o c ia l a ss is ta n c e

U n e m p lo y m e n t b e n e fits

S c a n d in a v ia n 3 8 .8 1 0 .0 5 .1 4 6 .1 C o n tin e n ta l 4 2 .8 1 1 .7 2 .8 4 2 .7 A n g lo -a m e r ic a n 3 7 .0 1 0 .5 6 .1 4 6 .4 M e d ite r r a n e a n 5 2 .2 4 .5 2 .4 4 0 .9 Source: ESSPROS 2004.

Social expenditure in % by European types of SSS

1. Definition 2. History & Strategies 3. Types of ESS 4. Social Expenditures4.Social Expenditures


Expenditure on social protection as % of GDP in the EU in 2004

Source: Eurostat-ESSPROS

In 2003, 27.3% of 27.3% of GDP spent GDP spent on social on social protectionprotection.



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



Structure of social protection expenditure in EU-25, 2004

Source: Eurostat-ESSPROS.



Benefits on social protection in cash & in kind, 2003

Source : Eurostat-ESSPROS

The main form of social expenditure is paid in main form of social expenditure is paid in cash in the EUcash in the EU. In 2003 they accounted for 67.5% of all SP benefits, or 18.1% of GDP.



Social benefits by function group in 2004 as % of total social benefits (TSB) and of GDP




Social protection receipts by type – 2004 (% of total receipts)


(1) Employees, self-employed, pensioners and other persons


European Social Model(s): From Crisis to Reform. Contents: 1. Welfare States in perspectives 2....

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