European Social Model(s): From Crisis to Reform Patrick MARDELLAT © Dr. Prof. In Economics Institut d'Etudes Politiques de Lille - F

European Social Model(s):

From Crisis to Reform

Patrick MARDELLAT ©Dr. Prof. In Economics

Institut d'Etudes Politiques de Lille - F

Contents:

1. Welfare States in perspectives

2. Problems and Challenges

3. Social Model and Competitiveness

4. EU integration of Social Systems?

Social Models & Competitiveness

III. Social Models and competitiveness

1.European types of SSS and economic performance

2.Social performance


In the long run, during the last thirty years, there are rather small differences between the European types of social security systems. But the differences widened over the last decade

In the last decade GDP growth per capita and real GDP growth was higher in Anglo-American and Scandinavian countries than in Continental and Mediterranean countries

Public sector activities, tax rates and public expenditures are much higher in the Scandinavian and Continental models than in the Anglo-Amercian one

1.EU Types of SSS & eco. performance 2.Social Performance

General Remarks


Unemployment is relatively low in the Anglo-American countries, but the number of persons living on welfare benefits is relatively high

The employment rate is the highest in the Scandinavian model and much lower in Continental Europe and Mediterranean countries

Hours worked per year is significantly higher in the Anglo-American and Mediterranean countries than in the Scandinavian model and Continental Euope

1.EU types of SSS & eco. performance 2.Social performance

General Remarks


Public services largely explain the high employment rate in Scandinavia

Marketization of household services assiociated with low-wage and part-time jobs largely explains high employment rate in the Anglo-American model

Scandinavian countries have already reached the employment rate target for older workers of 50% by 2010, according to the Lisbon strategy, Continental and Mediterranean countries are far below


General Remarks


Labor skill is higher in the Scandinavian countries

Investments in human capital (education and life long learning = spending on human resources) is significantly higher in the Scandinavian countries and much lower in Anglo-American countries

Investments in R&D and ICT are high in Scandinavian and Anglo-American countries

Scandinavian model is the closest to the Lisbon targets


General Remarks



Should we blame the Welfare State?

Many economists blame the WS for low growth and weak competitiveness. But the Scandinavian countries performed very well in economic terms, even with high taxes and large social expenditures. WS is not responsible for bad economic outcomes.

And, social cohesion, education and health are productive resources as they are constitutive part of human capital. On the other hand, social exclusion and large inequalities are costly in terms of public security and health.



Should we blame the Welfare State?

The choice between solidaristic or individual risk-taking is not a matter of economics, nor of laws of economics, it is rather a matter of preferences, of social preferences. Europeans clearly express a preference for equality and social justice, social cohesion and human development over efficiency and competitiveness associated with inequality and social exclusion

The trade-off between competitiveness and equality or between efficiency and social cohesion is shaky and cannot be simply clear-cut with the means of economic analysis



General Remarks

The goal is not only high economic performance, growth, competitiveness and efficiency, but it is also high social and environmental performance. According to the Lisbon strategy EU should become ‘the most dynamic and knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment’ by 2010.



General RemarksAs it is clear in the previous quotation, focus has also been pointed on social and environmental performance, not only as a by-product of economic performance, but because it is assumed that good social and environmental performance enhance economic performance. The Lisbon Strategy is not only an economic policy, it rather is a balanced project for the future of European societies. Each element participates to the success of the whole strategy.



General Remarks

The aim of the EU is to promote peace, values and well-being of people. Promoting people’s well-being is a primary goal of EU social policies.

The simplified Treaty states that ‘the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health.’



Indicators of social performance

Life satisfaction (CF. Petra Böhnke (2006), First European Quality of Life Survey: Life satisfaction, happiness and sense of belonging, European Foundation for the Improvement of Living and Working Conditions)

Income inequality

Poverty rate

Life and health expectancies



Determinants of subjective well-being

The study of Petra Böhnke considers the impacts of these four determinants on subjective well-being in Europe. (Source: P. Böhnke 2006: 9)



Life satisfaction in Europe, 2003



Comment

Life satisfaction is measured on a one to ten point scale (one = very dissatisfied; 10 = very satisfied). The higher the mean value of satisfaction is, the more satisfied a nation’s population is with the general living conditions. Satisfaction with life varies widely thruighout Europe, with a clear divide between EU-15 and the 10 NMS (New Member States). The most satisfied are the Scandinavians, and the least satisfied outside the 10 NMS are the Mediterranean countries.



Inequality of Income distribution

Countries with the lower level of average income tend to have higher level of inequality. Apart from the NMS, the Mediterranean countries have the lowest level of income and inequality; the Scandinavian countries have the more equal distribution of income. Confirmation with Gini coefficient in the next chart.



Gini coefficient, 2003 or 2004



Risk of poverty rate before & after social transfers, 2003 or 2004 The risk of poverty

before social transfers is higher in the Anglo-American and the Scandinavian countries. It is much lower after the social transfers in the Scandinavian countries, and significantly higher in the Mediterranean countries.



Life and health expectancies



Concluding Remarks

The social performance are higher in the Scandinavian and Continental European countries than in the Anglo-American and Mediterranean ones:

Poverty rate and risks are significantly higher in the liberal model, which reflects uniequal income distribution

Life and health expectancy is lower in the Anglo-American countries

Life satisfaction is the highest in the Scandinavian countries

High GDP per capita in the liberal countries can largerly be explained by the higher number of hours worked

Contents:

1. Welfare States in perspectives

2. Problems and Challenges

3. Social Model and Competitiveness

4. EU integration of Social Systems?


EU integration of Social Systems?

Europeanizing Social Protection?

The integrated economy enhances competitiveness inside the EU single market economy between the member states. It forces European societies to scrutinize their practices and policies. Is the coexistence of four social security systems in Europe, apart from the new member states’ system, sustainable? How can European societies respond to the challenge of unprecedented competitiveness and at the same time preserve their social objectives? Shouldn’t they europeanize the social protection like they did with respect to the monetary policiy or the agricultural policy?



Social integration of EU in perspectives

First step: 1961 – European Social Charter sign in Turin (Italy): 19 basic civil rights of EU citizens concerning housing, health, education, employment, legal and social protection, movements of persons, non-discrimination. It was the first international document to recognize the right to strike. It is a Council of Europe Treaty that protects human rights.

Second step: 1996 – European Social Charter revised in Strasburg: ads another 12 new rights to protection against poverty and social exclusion; right to protection in cases of termination of employment; rights to protection against sexual harassment; rights for workers with family responsibilities to equal opportunities and equal treatment; rights of workers’ representatives in undertakings.



Social integration of EU in perspectives

Third step: 2000 – Lisbon Strategy pointed out that it is very important to modernize EU social model and that the main social problems of EU are unemployment, poverty and exclusion from society. ‘People are Europe's main asset and should be the focal point of the Union's policies. Investing in people and developing an active and dynamic welfare state will be crucial both to Europe's place in the knowledge economy and for ensuring that the emergence of this new economy does not compound the existing social problems of unemployment, social exclusion and poverty.’ (point 24 of the LS). The challenge can be better addressed as part of a cooperative effort so that the Council has to ‘strengthen cooperation between Member States by exchanging experiences and best practice on the basis of improved information networks which are the basic tools in this field’.



1994 – EU White book about social policy

The key for the future of EU social model is employment. High employment is a condition for competitiveness with good labour conditions

Social development is linked to economic development. The European economy has to take the turn of new technologies and to focus on knowledge economy

Social convergence is not realistic, diversity of the social models must be respected. Diversity is a chance for the future of EU, it helps to adapt to new challenges. Member States must exchange experiences and best practices

EU has to define collective minimal social standards to prevent the tenptation of social dumping, that is of lowering social rights to increase competitiveness


Thank you for your attention

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European Social Model(s): From Crisis to Reform Patrick MARDELLAT © Dr. Prof. In Economics Institut d'Etudes Politiques de Lille - F