Transcript Dia 1 - Henry Leerentveld

History of social security in Europe
Quick view on EU history of social security
Medieval - Renaissance times:
 Poorhouses & charity
 Controlling role of the State
 Guilds, fraternities and commons
 Craft guilds; in particular in the Low Lands
 Both
“employers organisations and trade unions”
 Unite members of the same occupational group
 Serving members’ economic interests
 And the general well-being of their group
 Achieving agreements: negotiation and collective action
 Income security and social security
 Contributions to secure income
2
We’re getting closer….
Industrial revolution 1750-1850
 Classical liberalism (A. Smith):
 Economic
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doctrine of free enterprise
Urbanisation
From family economy to industry economy:
workers – no correction mechanisms
 Child labour
 Rightless
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Need for organisation of workers’ interests
1848…
3
Beginning of institutionalised social security
1850-1900
 Upcoming socialism (Marx)
 Upcoming trade unions:
 First
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priority for wages and working hours
and Christian social thinking (Rerum novarum):
 First
labour laws (child labour and women)
 Laws for the poor
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1889 Germany (Von Bismarck):
 Retirement
benefits (70 years)
 Disability benefits
 Sickness insurance
4
Beginning of institutionalised social security
1900-1950
 Trade unions:
 Funds
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for income support unemployment & sickness
WW 1: this never again….
 Beginning
social dialogue (Low lands, Nordic countries)
 Beginning overarching international institutions
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Russian revolution: state communism
Crash of 1929
John Maynard Keynes
5
Beginning of institutionalised social security
1938-1950
 WW II … this never again….
 Rebuilding Europe: (Nordic & Rhineland countries)
 Institutionalisation
social partnership
 Strict, central policies: economy rules
 Social security arrangements and laws
 Social security institutions
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Start “Europeanisation”: ECSC
6
Social Security Models
Bismarck
1880
Germany
Beveridge
1942
United Kingdom
Mixed
1950-1960
Nordic
Defence against socialism
Economic competitiveness
Result controlled wage policy
Sector organisations
Government
Both
Assuring standard of living,
income stability
Securing subsistence level
Standard of living, followed by
social assistance
- Employees are Insured
- Entire population is insured
- Schemes for both
- Financed via income-related
contributions
- Primarily financed from the
state budget
- Contributions and state
budget
- Benefits based on wages
- Uniform, lump-sum benefits;
flat rate
- Benefits based on wages and
minimum
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8
Initial concept and basis social security
continental Western-Europe 1950-1980
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Mostly based on (non-extended) family with one
breadwinner
Tendency to cover “each risk” – limited personal risk
Open-end arrangements: cradle to grave
Wage related
Division between general social security and employee
insurances
Sharp division responsibilities employer - SSI
Mostly financed by contributions employer – employee
Building initial systems finalised 1960-1970
9
Europe: one and undivided?
Economic models in Europe
Subjects
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(Socio-) economic models in Europe:
 Rhineland
 Anglo-Saxon
 Mediterranean
 Nordic
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Exercise…
Performances of the models
Where does Turkey stand?
11
Size of EU countries
EU parliament seats
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o
o
o
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o
o
o
o
o
Germany
France
Italy
UK
Poland
Spain
Romania
Netherlands
Belgium
Cczech
Greece
Hungary
Portugal
Size of national GDP
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Germany
France
UK
Italy
Spain
Turkey
Netherlands
Belgium
Sweden
> Poland
Austria
Greece
Denmark
Ireland
12
Many differences in Europe
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Differences in:
 Economic
characteristics
 Stage of development and
 Performances
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Differences in history and applied economic
models
Two illustrative indicators: GDP and Minimum
Wages
13
Gross Domestic Product per head
GDP per capita PPS 2008
35000
30000
25000
20000
15000
10000
5000
0
14
Minimum wages 1/1/2009
1600
1400
1200
1000
800
600
400
200
0
NL
BE
FR
IE
UK
ES
EL*
PT
EE
LT
LV
PL
CZ
SK
HU
SI
MT
RO
BG
TR
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4 economic models (A. Sapir)
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Nordic
 Denmark,
Finland, Netherlands, Norway, Sweden,
 1730 Billion USD
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Rhineland
 Austria,
Belgium, France, Germany, Luxemburg
 6750 Billion USD
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Anglo-Saxon
 UK,
US, Australia, Ireland, some Eastern European
countries
 2425 Billion USD
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Mediterranean
 Spain,
Italy, Portugal, Greece
 4120 Billion USD
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Nordic model
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Productive, well educated work force
Strong state, balanced with strong labour actors
High public spending (social protection and education)
Unregulated labour markets, though with big public sector
Flexicurity
Universal welfare.
Low wage inequality
High grade of institutionalization
Strong trade unions / social partnership
Public private partnerships in social security
17
Rhineland model
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These countries typically have:
Stake holder economy (owners, government, employers,
employees, costumers)
Market economy based, striving for balance between free
market forces and social responsibility
Unemployment benefits and easy access to government
payments.
Public-funded pensions, early retirement wages.
High taxation
Social partnership, active social dialogue, government
interventions
Strong trade unions that variably strive for high labour
protection and/or high wages.
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Anglo-Saxon model
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These countries typically have (or had):
 Share holder economy (stocks)
 Competition based
 Social assistance policies designed to serve as a safety
net.
 Unregulated labour markets.
 Weak social partnership
 Limited government interventions
 Class oriented societies
 High income inequality, possibly without a minimum
wage.
 Low ratios of public debt to gross domestic product.
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Mediterranean model
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These countries typically have:
 Strong labour protection; highly regulated labour market
 Costly state pension systems; early retirement age
 Low level of social partnership
 Strong family-oriented income transfers – low social
security
 Low participation rate (women)
 High public debt – GDP ratio
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MODELS’ PERFORMANCES
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GDP per capita 2009
GDP per capita PPS
In USD, average, Eurostat
Index EU27=100, average 1997-2008, Eurostat
Mediterranean
Mediterranean
Anglo-Saxan
Anglo-Saxon
Rhineland
Rhineland
Nordic
Nordic
0.00
10000.00
20000.00
30000.00
40000.00
0.0
40.0
60.0
80.0
100.0 120.0 140.0
Unemployment rate
Employment rate
Average 1998-2009, Eurostat
Average 1997-2008, Eurostat
Mediterranean
Mediterranean
Anglo-Saxon
Anglo-Saxon
Rhineland
Rhineland
Nordic
Nordic
0.0
20.0
2.0
4.0
6.0
8.0
10.0
50.0
60.0
70.0
80.0
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Implicit Tax rate on labour
Tax wedge on labour costs
Average 1996-2007, Eurostat
Average 1997-2008, Eurostat
Mediterranean
Mediterranean
Anglo-Saxon
Anglo-Saxon
Rhineland
Rhineland
Nordic
Nordic
0.0
10.0
20.0
30.0
40.0
50.0
0.0
10.0
20.0
30.0
40.0
50.0
Productivity per working hour
in GDP pps, Index EU15=100, average 1997-2008
Eurostat
Mediterranean
Anglo-Saxon
Rhineland
Nordic
80.0
90.0
100.0
110.0
120.0
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Participation rate
80
75
70
65
60
55
50
Nordic
Rhineland
Mediterrenean
Anglo saxon
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GDP cp pc 1970-2008
60000
50000
40000
Mediterrenean
Rhineland
30000
Nordic
Anglo-Saxon
20000
10000
0
1970
1975
1980
1985
1990
1995
2000
2005
2008
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WHERE DOES TURKEY
STAND?
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Employment
Unemployment rate
Unemployment rate 2009
Average 2006-2008, Eurostat
Turkey
Turkey
Romania
Croatia
South East Europe
Bulgaria
Mediterranean
Greece
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0
2
Employment Rate
4
6
8
10
12
14
Employment Rate 2008
Average 2006-2008, Eurostat
Turkey
Romania
Turkey
Macedonia
South-East Europe
Croatia
Bulgaria
Mediterrenean
Greece
0.0
20.0
40.0
60.0
80.0
0
20
40
60
80
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Economic growth
GDP per capita PPS
GDP per capita PPS 2008
Index EU27=100, average 1997-2008, Eurostat
Index EU27=100, Eurostat
Turkey
Romania
Turkey
Macedonia
Croatia
South-East Europe
Bulgaria
Mediterrenean
Greece
0.0
20.0
40.0
60.0
80.0
100.0
0
120.0
Real GDP Growth
20
40
60
80
100
Real GDP Growth 2009
Annual average 2000-2009, Eurostat
Turkey
Romania
Turkey
Macedonia
Croatia
South-East Europe
Bulgaria
Greece
Mediterrenean
0.0
1.0
2.0
3.0
4.0
5.0
-8
-6
-4
-2
0
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Taxation
Tax wedge on labour costs
Tax wedge 2008
Average 1997-2008, Eurostat
Turkey
Turkey
Romania
South-East Europe
Bulgaria
Mediterranean
37.0
Greece
38.0
39.0
40.0
41.0
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32
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36
38
40
42
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Exercise 1
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Which model is closest to Turkey and why? (please
do not let the performances be leading, motivate
your answer relating to culture and social &
economic structure)
Is that the best model for Turkey’s development?
Are there areas in socio-economic development
where you see a need for change?
If so: how?
Where and how will this possibly effect social
security?
40 minutes discussion, 10 minutes prepare report
10 minutes presentation.15 minutes plenary
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Productive, well educated work force
Strong state, balanced with strong labour
actors
High public spending (social protection and
education)
Unregulated labour markets, though with
big public sector
Flexicurity
Universal welfare.
Low wage inequality
High grade of institutionalization
Strong trade unions / social partnership
Public private partnerships in social security
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Share holder economy (stocks)
Competition based
Social assistance policies designed to
serve as a safety net.
Unregulated labour markets.
Weak social partnership
Limited government interventions
Class oriented societies
High income inequality, possibly without a
minimum wage.
Low ratios of public debt to gross domestic
product.
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Stake holder economy (owners, government,
employers, employees, costumers)
Market economy based, striving for balance
between free market forces and social
responsibility
Unemployment benefits and easy access to
government payments.
Public-funded pensions, early retirement
wages.
High taxation
Social partnership, active social dialogue,
government interventions
Strong trade unions that variably strive for
high labour protection and/or high wages.
Strong labour protection; highly regulated
labour market
Costly state pension systems; early
retirement age
Low level of social partnership
Strong family-oriented income transfers –
low social security
Low participation rate (women)
High public debt – GDP ratio
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Who profits most from EU?
GDP cp development 1970-2008
index 1970=100
2500
2000
1500
Mediterrenean
Rhineland
Nordic
Anglo-Saxon
1000
500
0
1970
1975
1980
1985
1990
1995
2000
2005
2008
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GDP pc cp 1970-2008
UNDATA
40000
35000
30000
25000
Greece
Italy
20000
Portugal
Spain
Turkey
15000
10000
5000
0
1970
1975
1980
1985
1990
1995
2000
2005
2008
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GDP pc cp development 1970-2008
index 1970=100
3500
3000
2500
Greece
2000
Italy
Portugal
Spain
1500
Turkey
1000
500
0
1970
1975
1980
1985
1990
1995
2000
2005
2008
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