Public Economics: Welfare states and inequalities University of Castellanza Session #1
A European Social Model?
8 November 2010
Public Economics: Welfare states and inequalities University of Castellanza Session #1
A European Social Model?
8 November 2010
Three sessions
The European Social Model
Does it exist? A good thing or a bad thing?
One or many Europes
Three worlds of welfare
Flexible and inflexible Europe
Europe 2020
Income inequality and social inclusion
Inclusive growth?
Learning Objectives
By Friday morning you should be able to…
Identify key differences between the social structure of Europe and the USA
Identify the different forms of labour market participation and non-participation
Differentiate between the main groups of European societies and welfare states
Explain different employment rates across Europe
Understand the concepts of income distribution and poverty
Evaluate possible relationships between economic growth and European social policy
This first lecture Welfare state as defining Europe
Social cohesion and social inclusion
Elements of the European Social Model
Social citizenship
Restrained egalitarianism
Backbone state
Economic citizenship
The EU and the ESM
Some quotes “There won’t be a bill to pay. We do it a bit differently here. In the National Health Service, we don’t charge for medical treatment’. (British nurse to American visitor in casualty ward)… quoted in Reid, The United States of Europe, p. 145.
‘This widely shared sense of the government’s social responsibility to everybody is another unifying force that makes Europeans feel they all belong to a single place – a place they believe, that is definitely not American.’ Reid, p.146.
A European Good Thing? Europe has built a distinctive economic and social model that has combined productivity, social cohesion and a growing commitment to environmental sustainability. (Kok, 2004: 7)
Preserving our European social model - our specific combination of market economy, welfare state and democracy - requires action not only at the European level but also at the global level. (Lamy, 2004:18)
COHESION FRAGMENTATION INCLUSION EXCLUSION Inclusion & Cohesion Vertical axis is about (in)equality Horizontal axis is about trust and ‘social capital’ Measures for vertical axis:
Poverty rates (% below y% of median income);
Income inequality (Gini coefficients, decile ratios) Meausures for horizontal axis:
Level of social capital and trust; crime
COHESION ANOMIE INCLUSION ÈXCLUSION Inclusion & Cohesion Fascism Millenarian egalitarianism (Bolshevism…Pol Pot…Taliban Claudillo dictatorships; China? Cyber populism Scandinavian social democracies Continental corporatism UK USA Settler demo-cracies Medi-terranean familism Representative democracies European Social Model
Social citizenship Education, health, housing, income support…
Rights not charity
Baseline for participation in society
Financial costs (taxation)
Rights means obligations
Restrictions on diversity (‘thick citizenship’)
So involves both inclusion and cohesion
Egalitarian Europe (1) Income distribution No European country has such a large proportion of its population with less than 50% of median income The US has a larger proportion of its population with more than double the median income, but here Sweden is the outlier
Egalitarian Europe (2) Attitudes to inequality Swe Ger Aus NZ Can USA ‘It is the responsibility of the government to reduce the differences between people with high incomes and those with low incomes’ (% agreeing) 53.7 65.5 42.6 53.1 47.9 38.3 Legitimate income difference between ‘unskilled factory worker’ (income=100) and ‘Chairman of a large national company’ 239 711 480 419 512 1,114
Backbone state Public realm
NOT market, NOT personal
Importance of state service (Beamte, service public, civil servant)
‘This social capability is supported by a conception of the public realm whose underwriting of public science, public transport, public art, public networks, public health, public broadcasting, public knowledge and the wider public interest gives European civilization its unique character while offering many of its enterprises competitive advantage.’ (Hutton, 2002: 258-259).
Especially contributes to cohesion
Economic Citizenship Labour market regulation
Employment protection
Working time
Health and safety
Rights to information
Rights to representation
Trade union membership
Trade union coverage
Workplace representation (Betriebsrat, European Works Council)
Anti-discrimination
Equal pay (including pensions, benefits)
Equal opportunities (recruitment, promotion)
Work-life balance
Parental leave
Right to flexible working
Major contribution is to cohesion
Emergence of social Europe 1956 Treaty of Rome
Retraining for those effected by industrial change
1974 Social Action Programme
Response to enlargement; 1960s militancy
Employee rights, equal opportunities
Maastricht Treaty 1991
Social Charter of Fundamental Rights of Workers
1990s Delors promoting ‘European Social Model’
‘A market economy, not a market society’ (Jospin)
Social expenditure to contribute to competitiveness
In parallel to single market programme
2000 Lisbon Declaration
The Union has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion
An employment-based social policy
Intervogernmentalism (‘Open Method of Co-ordination’) and ‘Soft law’
So ending European Social Model or reformulating European Social Model?
Europe 2020
Smart growth with “smart sustainable and inclusive growth’
Explicit inclusion targets
The EU and the ESM Positive integration:
Floor of social and economic rights
But limited, core remains national
Negative integration
Removal national barriers to competition
Destroying public services?
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