Transcript The social investment state: a challenge

Towards a
European social investment model
Joakim Palme
Institute for Futures Studies
and
Uppsala University
The European Social Model
Goal
”The European social model is about social
inclusion and equality of opportunity.”
Barrosso July 12, 2005
Reality in Europe I: income levels and poverty
Figure 1: Percentage of population with income <50% of EU median income
100%
90%
80%
70%
60%
50%
The Reality in Europe:
Goal of social inclusion
40%
30%
20%
10%
Examples from
European Inequalities
Ward, Lelkes, Sutherland and Toth (eds.)
Budapest: Tárki/Applica, 2009
0%
LT LV PL EE SK HU PT CZ GR ES IT
SI UK DE SE FR
IE CY BE DK AT NL
FI LU EU
Source: European Inequalities (Budapest: Tárki 2009)
Reality in Europe: cross-national variation in poverty
Figure 2: At-risk-of-poverty rates (<60% of median income) across European countries
30%
25%
20%
15%
10%
5%
0%
CZ NL SI SK DK SE FI AT DE FR LU BE CY HU EE IE PT PL UK IT
ES LT GR LV EU
Source: European Inequalities (Budapest: Tárki 2009)
Redefining social inclusion: adjust poverty targets
”Policies exclusively designed for
the poor tend to be poor policies.”
Amartya Sen
European social models are also about:
the means to achieve common goals
• Institutional typologies useful tool for simplifying
complex patterns of differences and similarities
• different strategies and principles for determining
eligibility and entitlement levels, as well as
financing
• strict focus on institutional aspects of the social
protection programs; not to be confused with
their political driving forces/potential outcomes
European strategies of redistribution
Model
• Targeted Model
• Basic Security Model
• State Corporatist
Model
• Encompassing Model
Strategy
• Robin Hood
• Simple Egalitarianism
• Within Group
Redistribution
• Mattew’s principle:
Give to those who
have
Paradox of redistribution:
Middle-class inclusion thesis –
encompassing social insurance institutions
tend to reduce levels of poverty and
inequality better than targeted
- example: quality of last resort
Shaping inequalites
• Gerhard Lenski’s perspective on
inequality:
- inequalities in human societies are
shaped by political conflicts as well as
economic structures
Factors explaining variation among 16
OECD-countries 1970-2000
Child poverty
• Genorisity of dual earner support • Prevalence of lone-parent families +
Poverty among working-aged
• Unemployment insurance: level and duration –
• Time trend +
Old-age poverty
• Generosity of residence based benefits • Time trend -
Factors explaining variation among 16
OECD-countries 1970-2000
Child poverty
• Genorisity of dual earner support • Prevalence of lone-parent families +
Poverty among working-aged
• Unemployment insurance: level and duration –
• Time trend +
Old-age poverty
• Generosity of residence based benefits • Time trend -
Social protection and inclusion I
• Income replacement:
Financial support to workers to cushioning
transition to new employment
• Social safety net:
Benefit programs also protect marginalised
segments of the workforce against poverty
• Rewarding labour force attachment:
Generous benefits makes it attractive to qualify
via employment
Social protection and inclusion II
Unemployment insurance
• Improved matching:
Generous benefits allow people to stay unemployed for
long enough to find a job that suits their skills (“search
subsidy”)
• Macroeconomic stabilization:
Reduce the volatility of households’ disposable income;
automatic stabilizer over the business cycle
• Promoting economic restructuring:
Reduce workers’ resistance to such changes
Social protection and inclusion III
-
• may create benefit dependency:
• this is why conditions and active measures
are important
• productive aspects:
reproduction of a highly skilled workforce
Protection programs in Europe
Qualifying conditions
Coverage
Replacement rates
Waiting days, benefit duration
Sickness insurance net
replacement rates
Figure 5. Sickness Insurance Net Replacement Rates in the EU Member States, 2005.
Source: SCIP and MISSOC.
Rehabilitation and inclusion
Increased emphasis on rehabilitation
Systematic reassessment of benefit claims
Reducing the scope of programs that
regulate the pathways to an early exit from
the labour market
Tougher pressure on insured persons
Unemployment insurance net
replacement rates
Figure 12. Unemployment Insurance Net Replacement Rates in the EU Member States.
Source: SCIP and MISSOC.
Active labour market policy
• Participants in active labour market programmes
relative to the number of unemployed may be
viewed as a measure of the of active labour
market policies.
• Proportion of the unemployed participating is
highest in a number of Northern-European
countries
• Average levels of spending on those
participating in active labour market policies
reinforce the pattern
Conclusions: protection and
inclusion
• Good reasons for taking a program specific approach to
the study of social protection
• Yet any comparison among nations based on just one
type of program is almost doomed to be misleading
• What is warranted is a more comprehensive approach if
we are serious about:
- understanding the sources of cross-national variation in
social exclusion and inequality
- assess the impact of different policy proposals
Redefining social inclusion:
a dynamic approach
• Beyond minimum income levels: identifying the
various critical capabilities – health, skills, housing
• Policies that can open up access to the social goods
(welfare state programs) and spheres (social, labour
market, politics) of society: ensure a just
intergenerational transmission of knowledge and
capabilities in society
Securing a sustainable development
Time to change perspective:
What future for social investment?
• Without losing the academic rigour and without
losing sight of the practical instruments needed
to be successful policy wise
• The economic crisis and climate change will in
many ways impose constraints
• It also provides a chance to innovate, and
prolong the time horizons for policy making
• Human capital investments have been getting
less attention in the debate, especially the social
dimension
Capability formation: a life course perspective
Publicly funded child-care invests
in cognitive skills essential for
life chances of children
Quality of compulsory education –
PISA studies of core
competencies: reading,
mathematics, science
Skill needs in advanced industrial
societies have changed –
polarization among youth is a
reality and a threat
The ”learning economy” requires
a constant renewing of
capabilities in firms and
competences of workers
• If the current crisis results in a longer period of
high and persistent unemployment,
strengthening work incentives may be an
inadequate response
• Policies that target human capital seem
preferable, including job creation programmes
aimed at slowing the process of human capital
depletion associated with unemployment
Social investment and learning
• No way around; investment today less resources for
consumption today
• Possible or not to extract the necessary taxes now
and in the future will depend on what people want,
and probably on international co-operation
• A balanced approach: a synthesis involving a
concern with the way that the social investment
supports different groups in society and a realistic
view of how society works
• ‘Learning’ as a part of European integration carries a
great - but largely under-utilized - potential
EU 2020 Agenda
• Focus on the expanding sectors of the
knowledge-based economy; innovation
• Employment targets; gender neutral
• Skills, and educational attainment
• Social inclusion; primarily in poverty terms
Flaws of the EU 2020 Agenda
• Focus on expenditure cuts, instead of
increasing the revenue, might block
potential of social investment approach
• Missing targets concerning secondary
education
• Sustainability of social protection
• Poverty focus without meaningful targets
Political economy of social
investment
• European social models are attempts to
apply ‘strategies of cooperation’, time to
revitalise
• Social investment approach is
unattainable and elusive, unless boldness
and willingness to take political and other
risks
The road to hell is paved with
good intentions…
We should make sure that we
base our policy
recommendations on a
knowledge-based and realistic
assessment of how the world
works, not on wishful thinking
Research Report
2009/2, edited by
Morel, Palier and
Palme: What Future
for Social
Investment?
www.iffs.se
Hrvoje Kap and Joakim Palme. ’Analysis of the social and
economic situation in Europe – challenges for social
inclusion ahead.’, www.iffs.se
Joakim Palme, Kenneth Nelson, Ola Sjöberg, Renate
Minas. 2009. European Social Models, Protection and
Inclusion. Institute for Futures Studies, Research Report
2009/1
Joakim Palme. 2006. ’Welfare states and inequality:
institutional designs and distributive outcome.’ Research
in Social Stratification and Mobility 25