Transcript 02. Social Policy in a changing world(SNU)

Social Policy in a changing world
Seminar presentation:
School of Public Health, Seoul National University
3 May, 2007
Willem Adema
Head, Asian Social and Health Outreach, OECD
(www.oecd.org/els/social)
Overview
• The changing socio economic context
• Does globalisation doom social protection?
• Why does social policy nevertheless need to
change focus?
• What are the main challenges in reforming social
protection?
Populations are ageing everywhere, but
nowhere more rapidly than in Korea
Population aged 65 and over, relative to the population aged 20-64, 2000 and 2050
2000
80
2050
OECD-2000
OECD-2050
70
60
50
40
30
20
10
0
SWE
JPN
FRA
UK
Source: OECD (2007), Society at a Glance: OECD Social indicators..
DEU
NL
USA
AUS
KOR
Birth-rates have fallen, while the relationship
between fertility and work has changed
1980
Female employment rates, and total fertility rates
3.5
3.5
3.5
3.0
3.0
2.5
2.5
2005
IRL
3.0
PRT
GRC
2.0
ESP
AUS
NZL
ITA
TFR (2004)
TFR
2.5
BEL
USA
FRA
SWE
JPN
1.5
NLD
AUT
CHE
FIN
DEU
1.0
20
30
40
50
Employment rates of women
60
70
MEX
MEX
USA
USA
NZL
NZL
IRL
FRA
GBR NOR
GBR NOR
FIN DNK
FIN DNK
AUS
AUS
NLD
NLD
LUX
LUX
SWE
SWE
BEL
BEL
OECD
OECD
CAN
CAN
1.5
1.5
AUT
AUT
CHE
CHE
PRT
PRT
ESP
ESP
DEU
DEU
POL
POL JPN
ITA
ITA HUN
JPN
HUN
SVK CZESVK
CZE
GRC
GRC
KOR
KOR
1.0
1.0
40
40 50
50 60
6070
7080
EmploymentEmployment
rates of women
rates of women
2.0
GBR
TFR (2004)
KOR
2.0
ISL
IRL
FRA
8090
90
Family networks are weakening in Korea..
• From 1970 to 2000 the proportion of
extended families (couples with children and
parents) has fallen from 17 to 7%
• Over the same period, the proportion of
married couples without children has
increased from 5 to 15% of all households
…with fewer children in families than before
Thousands of new-born children in a given year
400
350
300
250
200
150
100
50
0
1981
1990
First child
Source: Korea National Statistical Office.
Second child
2004
Third child and over
Some fear that ‘globalisation’ will generate a
‘race to the bottom’ in social standards
• Open economies are richer, but not all gain
• Open economies are more subject to shocks
Good economics says we need social
protection to ensure political support for
globalisation and to provide insurance
‘Good economics’ also says that cutting
needed social protection will not reduce
labour costs significantly
• If people need social protection, they will
pay for it
• Cutting needed public social provision
will lead workers to demand more pay
Skill-biased technological change leads
to widening market income, which can
exert upward pressure on social spending
Change in share of total income between mid 1980s and 2000
Denmark
France
Germany
Italy
Japan
UK
US
Lowest 20%
=
=
=
Middle60
=
=
+
-------
Top 20%
=
=
=
+++
+++
+++
+++
Evidence: public social spending has increased,
despite recent slowdown, with Korea still well
below the OECD-average
40
40
Sweden
Norway
Canada
Korea
35
Denmark
OECD
United States
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
1960
1965
1970
1975
1980
1985
1990
1995
2000 2003
Social spending reduces poverty
M EX
20
USA
TUR
JPN
Poverty rate (%)
15
IRL
ITA
PRT
GRC
GBR
AUS
DEU
CAN
POL
OECD-25
AUT
HUN
10
CHE
5
NZL
LUX
NOR
FRA
NLD
FIN
SWE
CZE
DNK
0
0
5
10
Non-health public social spending towards working-age population (%GDP)
15
The story so far:
• Social protection is not being destroyed by
globalisation directly
• But technological change in the labour
market puts it under strain
• Demographic and social-economic change
also demand a focal change in approach
towards a more active social policy.
At present, most countries focus public
social support on senior citizens
Ko
rea
Me
xic
o
Ire
lan
d
Ita
ly
Slo
va Jap
k R an
ep
ub
lic
Sp
ai
Gr n
e
Lu
xe ece
mb
ou
rg
Ne Pola
n
w
Ze d
ala
n
Po d
rtu
g
Ca a l
na
d
OE
CD Aus a
av tral
Cz erag ia
ec
h R e (2)
e
Ne publ
the ic
rla
nd
Fin s
lan
d
Au
str
Un Ger ia
m
ite
d K any
ing
do
m
Ice
lan
d
Fra
nc
Be e
lgi
um
N
o
Un
ite rway
dS
tat
Hu es
ng
De ary
n
Sw mar
k
itz
erl
an
Sw d
ed
en
…and with population ageing, pension and
health and LTC-expenditures will rise further
Total increase in health and long-term care spending, 2005-2050
In percentage points of GDP
12.0
10.0
Cost-pressure scenario
Cost-containment scenario
8.0
6.0
4.0
2.0
0.0
-2.0
Direction of OECD pension reforms
• Higher pension eligibility age
– for men and women, e.g. Italy, US
– or for women alone, e.g. Australia, UK
• Improved incentives to delay retirement
– e.g. France, Germany, Italy, UK, US
• Tighter qualifying conditions for retirement
– e.g. France, Italy
• Links to life expectancy or financial sustainability
–
–
–
–
in earnings-related schemes (Germany, Japan)
in qualifying conditions (France)
through notional accounts (Italy, Poland, Sweden)
through defined-contribution schemes (Australia, Hungary, Mexico,
Poland, Slovakia, Sweden)
• Direct cuts in generosity are rare
– lower accrual rates (Austria and Japan)
Gross pension benefit replacement rates
for low and average income earners
Low
Avg
120
100
80
60
40
20
0
UK
JPN
DEU
US
AUS
FRA OECD SWE
KOR
NL
Sustaining social protection warrants an
‘Active Social Policy’:
• aims to address root causes of widening
market income
• Reorient spending towards investment in
families, children, and youth
• Put heavy emphasis on employment
But we can only afford to do this if we control
spending on ageing.
erlan
d
ds
Unit
ed S
tate
s
Zeal
and
ingd
om
Ita ly
Irela
nd
Port
ugal
Cana
da
Unit
ed K
New
any
ce
Aust
ri a
Germ
Gree
Aust
ralia
Neth
erlan
Fra n
ce
Swit
z
p
m
Czec
h Re
Belg
iu
Swe
den
Norw
ay
Finla
nd
Denm
ark
In response to high child poverty rates…
Percentage of children in poverty, OECD countries, 2000
25
20
15
10
5
0
…,strengthen redistribution within tax/benefit
systems, e.g. Australian and French systems are
very effective in reducing child poverty, and…
Difference between market and disposable income poverty, percentage points
20
15
10
5
Fr
an
ce
us
tr
al
ia
A
K
U
en
w
ed
S
Ze
al
an
d
D
N
ew
O
EC
d
Ir
el
an
ds
et
he
rla
n
SA
N
-5
U
Ja
pa
n
0
…orient Social Policy around work
• Some 35% of the OECD working-age
population (i.e. 265 million people in 2005)
do not have a job.
• The bulk of them (almost 230 million) are
not unemployed.
• They mainly consist of students, women,
early retirees and the disabled, many of
whom rely on welfare benefits.
Parental employment reduces poverty risk…
Child poverty rates (%) for couples with children by parental employment status
None employed
1 employed
2 employed
90
80
70
60
50
40
30
20
10
US
A
d
Ire
la
n
Ne
th
er
la
nd
s
Ja
pa
n
Au
st
ra
lia
Ne
w
Ze
ala
nd
EC
D
O
Fr
an
ce
UK
Sw
ed
en
0
Welfare to work is policy success
•
•
•
•
Activation
Mutual obligations
Make work pay
Get public sector to work
In addition:
• Older workers: incentives in pension systems
still wrong; age discrimination
• For sickness: confused messages, lack of
interventions, incentives to work
• For women: tax penalties, misguided leave
policies, lack of childcare, old-fashioned
workplace practices
Public spending on education is close to
OECD average, but is frequently wasted…
Public Expenditure on Education as a percentage of GDP by level of education, 2003
Primary
% of GDP
Secondary
Tertiary
7.0
6.0
5.0
OECD Average
4.0
3.0
2.0
1.0
0.0
SWE
USA
FRA
UK
OECD
NLD
Countries ranked in descending order of total spending on education as a percentage of GDP
AUS
GER
KOR
The potential gains for Korea of a more
equitable sharing in caring and working are huge
Total labour force from 1980 to 2000, and projections from 2005 to 2030, in thousands
30
13
Australia
Korea
28
12
26
11
24
10
22
Constant rates
9
Female workers
20
2000
2005
2010
2015
2020
2025
2030
170
2000
2005
2010
2015
2020
2025
2030
2015
2020
2025
2030
210
United States
EU-15
200
160
190
150
180
170
140
160
Constant rates
Female workers
130
150
2000
2005
2010
2015
2020
2025
2030
2000
2005
2010
‘Constant rates’: assumes constant labour force participation rates for men and women from 2000 to 2030; ’Gender equity in
participation rates’: assumes that female participation rates reach current male participation rates in each country by 2030.
To sum up
• Don’t blame globalisation for threatening social
protection
• Weakening family networks, population ageing, and
skill-biased technological change all add to increasing
demand for public spending.
• Health and pension spending will have to be kept in
check
• Social justice must therefore aim to reduce inequality
through investing in children, women and work.