1945-2015: Welfare State in France.

1. Welfare State?

2. Welfare State in France1. Health

2. Family Allowances

3. Pensions

3. Future and Welfare State

1. Welfare State ? A welfare state is a concept of government in which the state plays a key role in the protection and

promotion of the economic and social well-being of its citizens not limiting itself to kingly functions such as External and Internal National Security.

The Bismark Model: Named for the Prussian Chancellor Otto von Bismarck, who invented the welfare state as part of the unification of Germany in the 19th century. This model uses an insurance system usually financed jointly by employers and employees through payroll deduction. Bismarck-type health insurance plans have to cover everybody, and they don't make a profit. Doctors and hospitals tend to be private in Bismarck countries; Japan has more private hospitals than the U.S. Although this is a multi-payer model -- Germany has about 240 different funds -- tight regulation gives government much of the cost-control clout that the single-payer Beveridge Model provides.

Named after William Beveridge, the social reformer who designed Britain's National Health Service. In this system, health care is provided and financed by the government through tax payments, just like the police force or the public library. Many, but not all, hospitals and clinics are owned by the government; some doctors are government employees, but there are also private doctors who collect their fees from the government. These systems tend to have low costs per capita, because the government, as the sole payer, controls what doctors can do and what they can charge.

1. Welfare State ?

Welfare State is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. The general term may cover a variety of forms of economic and social organization.

Modern welfare programs are distinguished from earlier forms of poverty relief by their universal, comprehensive character. The institution of social insurance in Germany under Bismarck was an influential template.

Due to the world-wide Great Depression in which brought unemployment and misery to millions, attitudes changed to support the move to the welfare state in many countries. Welfare state was seen as a "middle way" between the extremes of communism on the left and unregulated capitalism on the right.

In the period following World War II many countries in Europe moved from partial or selective provision of social services to relatively comprehensive "cradle-to-grave" coverage of the population.

1. Welfare State ?

The idea of the "welfare state" means different things in different countries:

An ideal model. The "welfare state" often refers to an ideal model of provision, where the state accepts responsibility for the provision of comprehensive and universal welfare for its citizens.

State welfare. Some commentators use it to mean nothing more than "welfare provided by the state". This is the main use in the USA.

Social protection. In many "welfare states", notably those in Western Europe and Scandinavia, social protection is not delivered only by the state, but by a combination of government, independent, voluntary, and autonomous public services. The "welfare state" in these countries is then a system of social protection rather than a scheme operated by government.

2. Welfare State in France

Social protection in France is based on the principle of solidarity: the commitment is declared in the first article of the French Code of Social Security. People insured within national schemes (les assurés sociaux) are called to contribute and benefit on an equal footing.

The French welfare state is a mixed system combining elements of various models: it lies between the Beveridge and Bismarck models, with insurance funds and strong state intervention, and relies both on wage related contributions and general taxation.

It is a publicly funded system characterized by freedom of choice and unrestricted access for patients along with freedom of practice for professionals. These factors combine to make it difficult for the state to control expenditure, taking into account that health insurance funds have no real financial responsibility.

2. Welfare State in France & Social Security

The present social security system came into being in 1945. A major reform took place in 1967: « Sécurité sociale » was separated into four branches:

Health insurance (largest share of expenditures devoted to social protection), Pensions, Family allowances, Insurance for work-related accidents and occupational illnesses.

At first the social security system was aimed at workers and their families . The principle of expanding coverage to the whole population was put into practice only in stages. The final step has been made in 2000 with the Universal Health Coverage Act (CMU) which establishes universal health coverage on the basis of residence in France.

2.1 Health

Management of the boards of health insurance funds has traditionally been shared between the state and the “social partners” (representatives of employees and employers appointed by trade unions).

With the funds running ever increasing deficits throughout the 90s this balance has been shifting towards increasing state intervention, particularly since the issue of cost-containment has figured prominently on the political agenda.

The CMU Act further shifted the balance of the insurance system away from a work-based system. The objective of equality has prevailed over cost containment as the CMU explicitly aims to increase access for people on low incomes who are exempt from paying contributions.

Many of the measures taken to reduce expenditure growth have so far been ineffective and have always been strongly opposed by professional associations.

2.2 Family Allowances

The family policy branch of the Social security system provides flat rates family allowances (Child Benefit). At first (1932) provided to employees only; it extended its payments to all families in 1975: parents no longer needed to be in work, thus breaking with the principle of work-related benefits.

In accordance with a long-standing historical natalist approach only families with 2 or more children are granted family allowances. Social Partners (including family organizations) are supposed to determine intervention in family policy but decisions are made by the Government, whether approved or not by Social Partners.

Until July 2015 Family allowances were not income-related and not taxable. They had been targeted by the government as part of its efforts to reduce the budget deficit to levels set by European Union guidelines. The move, which should take effect on July 2015 and affect 12 per cent of French families, is expected to save 700 million Euros per year.

2.2 Family Allowances

The family policy helps to explain France high fertility rate (2,01). France ranks just behind Ireland. France therefore stands out from the rest of the EU, where the average fertility rate is approximately 1.6 children per woman

France was the first country to introduce an active family support policy characterized by: The payment of family benefits (housing benefit, family allowance, early

childhood benefit) The introduction of specific forms of leave (maternity leave, paternity leave), Tax allowances (quotient familial (number of people in the family)) or specific

benefits (cartes famille nombreuses (large family card), retirement benefits, etc.) Child care facilities available from a very young age

2.3 Pensions

France's pension system is made up of a public pillar financed on a pay-as-you-go basis, a mandatory occupational system, and voluntary occupational and personal arrangements.

A public pension reserve fund (FRR) was established by the Social Security Financing Act 1999. The fund will play an important role to secure the sustainability of public finances by cushioning the high burden on the pension system predicted between 2020 and 2040. It is funded predominantly by social tax on income from estates and investments, surplus sums from the French National Old Age Fund and the proceeds from the sale of certain state-owned assets.

The statutory pension insurance scheme is a compulsory basic social security system, which provides earnings-related benefits for employees in the private sector.

Low-income earners are expected to receive a pension that equals at least 85% of the French minimum wage.

2.3 Pensions The required number of years to qualify for a full pension is gradually increasing in

order to save money. For example it now takes 43 years for people born after 1972.

Employees who decide to keep on working after having reached the statutory retirement age, and having paid contributions for 40 years or more, are granted an additional 0.75% for every additional quarter.

There are also dedicated public sector pension schemes and special schemes for employees of state and local authorities, employees working in arduous professions and employees in certain branches. Altogether, these special pension schemes cover approximately 500,000 workers and 1.1 million pensioners.

2.3 Pensions

The pension branch also underwent significant changes: in 1993, the Government decided on a reduction of benefits in the scheme covering private sector employees.

Two years later, an attempt at cutting pensions for public sector employees resulted in a massive protest movement which forced the right-wing Government to withdraw their plans.

Under the pressure of workers’ trade unions, the Government also set up an ‘Old Age Solidarity Fund’, financed through general taxation. This fund has since taken on the financial responsibility for providing minimum pensions.

Age and pension

Average pension (monthly)

3.Future and Welfare State

The advanced capitalist welfare states developed their characteristics in the decades following World War II under conditions in which the state was able to exercise a historically exceptional degree of control over its own economic boundaries.

As governments were able to regulate capital movements, to determine exchange rates and to adjust tariffs on imports, external economic factors had little or no influence on domestic policy choices. Politics did matter very much in the post war decades.

These conditions changed after the early 1970s, when the viability of advanced capitalist economies was tested by the stagflation crisis following the first oil-price shock, the second oil-price crisis in the early 1980s or the dramatic rise in real interest rates in international capital markets to name a few.

Countries differed greatly in their capacity to cope with the new international turbulences and those that failed to find effective responses found themselves confronted by rising mass unemployment and/or runaway inflation and, in any case, high public sector deficits.

3.Future and Welfare State

Welfare state is facing a funding crisis mostly caused by:

Aging of the population;

Increasing life expectancy (related to health developments and technology);

Significant and long term unemployment.

In most rich and democratic countries the post World War II baby boom generation starts retiring, birth rates have fallen since the early 1960s, unemployment has rised meaning that the generation of workers to follow the "baby-boomers" will have a bigger struggle to support the cost of their parents in retirement.

Jeanne Fagnani. Family Policy in France. Tony Fitzpatrick, Huck-ju Kwon, Nick Manning,James Midgley, and Gillian Pascall. International Encyclopedia of Social Policy, 3, Routledge,pp.501-506, 2006. <halshs-00101703>

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/countries/models.html

http://www2.rgu.ac.uk/publicpolicy/introduction/wstate.htm

Work by T. Euro and 1.Euro students. Supervised and edited by Patrick Raty