State, market and civil society Lecture 3. Welfare Triangle StateMarketCivil socitey.
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Transcript of State, market and civil society Lecture 3. Welfare Triangle StateMarketCivil socitey.
State, market and civil society
Lecture 3
Welfare Triangle
State
Market Civil socitey
Roles?
• Financing• Delivery• Impact on degree of solidarity• Logics and rationality behind
Change in welfare mix, the combination of state, market and civil society, over time – not a static issue. Care of children as an example – historically civil society – today often either market and/or state
Routes to welfare
• Public• Fiscal• Occupational
They can be used independently or in various combinationsAnalysis often looks at one aspect – and data often mainly public welfare through direct public sector spendingIn most welfare state public spending also imply sales of goods and services from the private sector and employment of people
Two case examples: Housing and pension
Housing: Public support for construction and/or renovation of building, housing benefit, tax-rebate on housing loansPension: State pension, indirect support through the tax-system (lower payment of tax) for savings to pension purposes
From gross to net social spendingF
ran
ce
Be
lgiu
m
Ge
rma
ny
Sw
ed
en
Un
ited
Sta
tes
Un
ited
Kin
gd
om
Italy
Au
stri
a
De
nm
ark
Ne
the
rla
nd
s
Po
rtu
ga
l
Ca
na
da
Jap
an
Fin
lan
d
Sp
ain
Au
stra
lia
No
rwa
y
Ice
lan
d
Lu
xem
bo
urg
Cze
ch R
ep
ub
lic
Ne
w Z
ea
lan
d
Po
lan
d
Ire
lan
d
Slo
vak
Re
pu
blic
1
4
7
2
23
12
65
3
15
9
1918
8
10
21
11
22
13
1716
14
20
24
12
34
56
78
910
1112
1314
1516
1718
1920
2122
2324
Gross public social expenditure Net total social expenditure (↘)
Market-failure
• Monopoly/duopoly• Risk of a limited supply if limited demand ( for example,
services to people with disabilities)• Unemployment – and historically inflation• Externalities – pollution (negative), vaccination (positive)Market failure is an argument for public sector intervention, but not necessarily public sector deliveryIntervention also in order to ensure efficiency – care of elderly as an exampleMoral limits to what a market can provide – for example organs
Types of regulations
• Public delivery• Use of taxes and duties• Ministerial order • Other types of regulation • Recommendation, best practices • Control
Marketization of welfare states
• Different degree in the different welfare regimes – highest in Liberal, least in Nordic welfare states
• When can market be used to provide welfare without negative implications for users?:
• Many providers – be able to reduce or avoid cream-skimming
• Reduced transaction costs• Complete transparence and full information
When is private market solutions cheaper than state solutions?
This might be due to one or several of the following reasons:• Wage level for the employed are lower than in the
public sector• More effective ways of working• Management is better• Quality of services is reduced• Working environment with more worn-out employees
– implies a risk for higher public sector spending at a later time
Government -failure
• If the size of the public sector is greater than what is from a welfare perspective is efficient
• Bureaucracy• Interest, pressure or lobby groups influence• The difficulty in steering and managing the
public sector – the principal-agent problem
Relation between the public and private sector
• Private sector delivers goods and services to the public sector
• Income transfers are often used to buy products in the private sector
• Demand from public sector helps to develops new products –for example – welfare technology
• Delimitation public private is therefore not simple and clear
Civil society – and the risk of Voluntary failure
• A question being: Is voluntary work supplementary or areplacement for public welfare
• Risk in differences in who has access to and options for receiving welfare services if provided by civil society
• Supply might be limited – and can quickly vanish• Transaction cost might arise• Welfare states demand for documentation – implies a
conflict between professionals and voluntary workers• A need therefore to define where possible and where it is
not• Number of voluntary people differs among welfare states
Role of the family
• Supply care and economy among a group of people• Historically many welfare issues regarding care and
income transfers has been solved in the family• A new risk being the splitting up of families – and
also that some might be in risk of not having anyone to discuss intimate matters with – especially for elderly people loneliness might also be a problem
Labour market
• Has a special role and function in welfare societies • They often are the main access to income and
consumption possibilities• Social contact and relations can also be influenced hereby• Work is seen as an important element in order to have a
high level of welfare (measured by GDP) in many countries
• There is many and different types of labour market, divided due to geography, education and experience, and also different types of unemployment ( for example: season, business cycle, search)
Relation between unemployment and growth in GDP in the EU27 since 2000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Unemployment level Growth GDP EU27
Nordic welfare states and labour market
• High employment rate - also for women• Historical a focus on reduction of unemployment –
including through a reduction in unemployment also by public sector intervention
• Women are to a larger degree than men working part-time
• Gender divided labour market – and difference in wage income
• Focus on active labour market policy – but to a larger degree than earlier on work-first
Labour market and welfare regimes – a comparison
Labour Market Policy / Welfare Regime
Coverage unemployment benefit
Focus on ALMP Goal of labour market policy
Ideological approach
Nordic Comprehensive –although replacement rate has been reduced
Yes - central Integration, full employment
Equality, Keynesian intervention, however increased focus on work-first
Corporatist/Continental European
Less Strong – lower replacement rate
Relatively important Reduce pressure public sector spending
State with corporatist inclusion labour market partner
Liberal Weak Only limited If, then focus on business
Efficiency, liberal non-intervention
Southern/Eastern Europe
Very incomplete Only weak developed
To reduce use of benefit system
Emphasis on civil society
High replacement in Nordic – low in Liberal – also some convergence
Country Single Two earner married couple
Czech Republic 65 84
Denmark 57 74
France 66 80
Germany 59 83
Hungary 54 73
Italy 55 74
Spain 58 75
Sweden 46 68
UK 13 49
Public welfare and the labour market
• Day –care for children• Maternity and paternity leave• Education
However, also often either at the work place or in collective agreements possibilities and discussion on how to combine work and family life
Summing -up
• State, market and civil society has different and changing roles and it differs among the different welfare state regimes
• Consequences hereof can be difficult – and needs to be analysed empirical in the different countries
• The balance between the three sectors can influence the degree of equality in a society – including inequality in access to welfare