The world does not owe us a living!

Transcription

1 European Social Model The world does not owe us a living! Anthony Giddens The European Social Model (ESM) is, or has become, a fundamental part of what Europe stands for. The ESM is not only European, not wholly social and not a model. 1 If it means having effective welfare institutions, and limiting inequality, then some other industrial countries are more European than some states in Europe. For instance, Australia and Canada surpass Portugal and Greece, not to mention most of the new EU Member States after enlargement. The ESM is not purely social, since however it be defined it depends fundamentally upon economic prosperity and redistribution. It is not a single model, since there are big divergences between European countries in terms of their welfare systems, levels of inequality and so forth. Hence there are many different definitions of the ESM around, although they all home in on the welfare state. We should probably conclude that the ESM is not a unitary concept, but a mixture of values, accomplishments and aspirations, varying in form and degree of realisation among European states. My list would be: A developed and interventionist state, as measured in terms of level of GDP taken up by taxation. 6 } progressive politics { vol 4.3

2 A robust welfare system, that provides effective social protection, to some considerable degree for all citizens, but especially for those most in need. The limitation, or containment, of economic and other forms of inequality. A key role in sustaining these institutions is played by the social partners, the unions and other agencies promoting workers rights. Each trait has to go along with expanding overall economic prosperity and job creation. Underlying the ESM is a general set of values: sharing risk widely across society; containing the inequalities that might threaten social solidarity; protecting the most vulnerable through active social intervention; cultivating consultation rather than confrontation in industry; and providing a rich framework of social and economic citizenship rights for the population as a whole. The Past and the Future It is agreed by more or less everyone, supporters and opponents alike, that the ESM is currently under great strain, or even failing. The demise of Keynesianism in the West, and the collapse of Soviet Communism, were brought about by much the same trends intensifying globalization, the rise of a world-wide information order, the shrinking of manufacturing (and its transfer to less developed countries), coupled with the rise of new forms of individualism and consumer power. These are not changes that came and went; their impact continues today. It is also essential to recognise that the problems of the ESM today do not just stem from changes happening in the global environment. Some of the core difficulties are internal, or at most only loosely connected with wider transformations in the wider world. They include primarily demographic changes, especially the ageing population, the associated issue of pensions, and the sharp decline in birthrates; changes in family structure, with many more one-parent families than before, and more women and children living in poverty; and high levels of unemployment coming in some part from unreformed labour markets. There is therefore good reason to support the conclusion that over recent years the sustainability of the European Model has become more and more questionable. European Variations Some EU states, however, have fared considerably better than others. A minority of nations, especially the Nordic countries (including the non-eu nations Norway and Iceland), the Netherlands, Austria and the UK, have performed relatively well. The Nordic countries have simultaneously the most developed form of the ESM and the highest rates of employment. It is significant that the countries that have prospered most have also been the most reformist in respect of welfare and pensions, education, labour markets, and use of ICT. The picture is different elsewhere in Europe. Germany and Italy have low growth rates, combined with elevated levels of unemployment and underemployment. France has a better growth record in recent years, but has high unemployment, including much youth and long-term unemployment. In these countries a combination of tight labour market regulation and union influence creates insider/outsider labour markets. Those who have jobs may prosper, but those on the outside do much less well. The recent history of Scandinavia suggests that it is in fact possible to have sound public finances, low inequality and high levels of employment. vol 4.3 } progressive politics { 7

3 European Social Model Anthony Giddens Having a job is the best route out of poverty. As it stands, the ESM has little current applicability to the new Member States. Enlargement has in fact exacerbated both national and regional inequalities across Europe. The per capita income of the less developed EU-25 countries is under half the EU average; in some of the richer states it is up to 140 per cent of that average. Yet the future of the ESM actually is a very relevant question to the new member countries, since they will have to seek to radicalise their reforms, and to build new welfare systems as they become more wealthy. Policy Controversies There is intense debate among policy specialists about how far in European welfare systems there is path dependency, inhibiting mutual learning. Following the work of Gosta Esping- Andersen it is widely accepted that there are three or four main types of welfare capitalism in Europe. These are the Nordic type, based upon high taxation and extensive job opportunities provided within the welfare state itself; the Central European type (Germany, France), based mainly on payroll contributions; and the Anglo-Saxon type, which supposedly is a more residual form of welfare system, having a lower taxation base and using more targeted policies. The fourth type, alongside the three Esping-Andersen originally recognised, is the Mediterranean one (Italy, Spain, Portugal, Greece), which also has a fairly low tax base and depends heavily upon provision from the family. The recent history of Scandinavia suggests that it is in fact possible to have sound public finances, low inequality and high levels of employment. Moreover, the various types are not very clear-cut. The Nordic states differ quite widely from one-another, for example. It is not obvious that Germany and France belong to a single type. The UK is supposed to be a residual welfare state, but its net taxation levels are now about the same as Germany s. In the shape of the NHS, it has the most socialised system of medicine in Europe. Hemerijck has concluded that the welfare states that have adapted best to changing conditions have created hybrid models, borrowed in some part from elsewhere. Lisbon and After Unlike other major achievements of the European Union, such as the Single Market, the Single Currency and enlargement, the ESM has been only minimally shaped by the EU itself. The welfare state was built by nations, not by international collaboration. Some of the member countries with the most established welfare institutions signed up to the EU only relatively late on. Given the grip that Member States have on social policy most real change will have to come from within nations. There is no lack of reports suggesting what should be done to get the underperforming parts of Europe back on their feet again, and generally to make the EU states more competitive. They stretch back well before the proclamation of the Lisbon Agenda in There is a good deal of unanimity on policies to be followed. Andre Sapir s six points would be agreed upon by many: 1. Make the Single Market more dynamic. 2. Boost investment in knowledge. 3. Improve EU macroeconomic policy. 4. Reform policies for convergence and restructuring. 5. Achieve more efficiency in regulation. 6. Reform the EU budget, cutting back on agricultural spending and deploying the resources elsewhere. The Single Market has certainly benefited Europe. It is estimated that EU 8 } progressive politics { vol 4.3

4 GDP in 2002 was 1.8 per cent higher than it would have been without the progress that has been made. However the Lisbon Agenda has proved much harder to implement, and the ambition of making Europe the most competitive knowledge-based economy in the world by 2010 has come to seem remote indeed. Debate about the ESM has a special significance in this context. For it could be argued that although the Lisbon Agenda, Sapir report, Kok report and other similar contributions all talk about the ESM, social exclusion and so forth, they have little to say about them in a direct way. They lack a systematic discussion of how the innovations they propose can be reconciled with social justice. One could even say that this missing dimension is part of the reason why their prescriptions have been so hard to realise. 2 Lessons to be Learned Let us set out what the experience of the past few years in Europe shows us about combining competitiveness and social justice. As given here, the points are schematic each could be developed in far more detail. And the devil, one should remember, is always in the detail. i It is right to put growth and jobs at the forefront. A high level of employment, above a decent minimum wage, is desirable for more than one reason. The greater the proportion of people in jobs, the more money is available other things being equal to spend on social investment and social protection. Having a job is also the best route out of poverty. The Lisbon aim of getting an average of 70 per cent or more of the workforce into jobs is not in principle unrealistic. ii Many factors, of course, go into creating more net jobs. However it cannot be accidental that all the countries that have employment ratios of over 70 per cent in Europe have active labour market policies. Such policies provide training for workers who are unemployed or threatened by unemployment and also try actively to match up workers with job vacancies. The most effective combine social partnership and universal access to benefits that provide for retraining and resettlement flexicurity. Those on the right side of the political spectrum argue that only low-tax economies can prosper in a world of intensifying competition. Yet the evidence to the contrary seems unequivocal. There is no direct relationship between taxation as a proportion of GDP and either economic growth or job creation. There probably is an upper limit, as is indicated by the case of Sweden, which has for some while had the highest tax rate among the industrial countries, but saw its level of income per head slip markedly in relative terms. But more important than the size of the state is how effective the state institutions are and the nature of the economic and social policies pursued. iii Flexibility in labour markets is an essential part of the policy framework of the successful states. It does not mean American-style hire and fire. In an era of accelerating technological change, however, employability being willing and able to move on becomes of prime importance. Flexibility has a bad name, especially among some on the left. For them it means sacrificing the needs of the Investment in education, the expansion of universities, and the diffusion of ICT are crucial parts of the modernisation of the ESM. vol 4.3 } progressive politics { 9

5 European Social Model Anthony Giddens Most of the core difficulties facing the ESM are not specific to any country; they are structural. In a globalising era, solutions can be generalised. iv v workforce to the demands of capitalistic competition. But the nature of labour market regulation is at least as important as its extent. Many labour rights can and should remain. They include rights of representation and consultation, the regulation of working conditions, laws against discrimination and so forth. The much-touted knowledge economy is not just an empty term, although it should be more accurately called a knowledge and service economy. Only 17 per cent of the labour force on average in the EU-15 countries now work in manufacturing and that proportion is still falling. Full employment is possible in the knowledge economy it has been attained in some of the betterperforming European economies. But there is a price to be paid. More than two thirds of the jobs created in the knowledge economy are skilled. Investment in education, the expansion of universities, and the diffusion of ICT are crucial parts of the modernisation of the ESM. vi It is often said that our societies are becoming more unequal, but in many respects this is not the case. Income inequality has grown in most industrial countries over that period, but there are signs this process is now levelling off. We can and must sustain values of equality and inclusiveness. We do not all have to become Scandinavians in order to do so, at least if this means having highly elevated tax rates. The superiority of the Nordic countries in terms of their low levels of inequality does not come primarily from redistribution through taxes and transfers. The main explanation is their superior investment in human capital. We have to invest heavily in early years education since so many capabilities are laid down then. Investment in early education and child care is a key element in reducing levels of child poverty. vii Ecological issues must be brought much more to the forefront than in the past. The best way to do so is through the theme of ecological modernisation. The idea was developed in conscious opposition to the limits to growth arguments coming from an earlier generation of ecological thinking. Ecological modernisation means seeking wherever possible to find environmental innovations that are compatible with economic growth. These can involve green technologies and the use of market-based and tax-based incentives for consumers, companies and other agencies to become more environment-friendly in their actions. viii Immigration has become one of the hottest of hot topics across Europe, far too complex to discuss in any detail here. As societies become multicultural, will the majority be prepared to support policies aimed at helping those who are newcomers and culturally different? Comparative studies seem to suggest a tentative yes to this question, so long as certain conditions are in place. These include ensuring that immigrants cover all skill levels that they are not predominantly unskilled; that access to full welfare benefits is deferred; and that concrete steps are taken to ensure that immigrants accept the overall norms of the host culture. ix The ageing population should be seen as an opportunity, not just as another problem. We know what has to happen the difficulties in most 10 } progressive politics { vol 4.3

6 x countries depend upon mustering the political will to make the changes. The state has to provide people with incentives to have more children, and make sure the right type of welfare measures are in place. There is only one way to solve the issue of unaffordable pension commitments. We have to persuade or motivate older people to stay in work longer. Such a goal is surely not just a negative one. We have to contest ageism both inside and outside the workplace. If it means people over 55, or over 65, old age is no longer the incapacitating factor it once was. Continuing reform of the state itself, and of public services, is just as important to the future of the ESM as any of the factors noted above. Where needed, decentralisation and diversification are the order of the day. The relations of national states within the EU, with power moving both upwards and downwards, are a core example, but nevertheless only one example, of the inevitability of multi-layered governance today. Public services should become just as responsive (in some ways, more responsive) to the needs of those they serve as commercial organisations are. Although there are those who insist otherwise, the future of the ESM does not come down to a choice between a Keynesian Europe and a deregulated, Anglo-Saxon Europe. A Template for Reform Most of the core difficulties facing the ESM are not specific to any country; they are structural. In a globalising era, solutions can often, or even normally, in principle be generalised. A future ESM, to repeat, would not be the British model. It would not be the French model. It would not be the Swedish or Danish one either. What I sketch in below is something of an ideal type a list of traits that might be adopted in varying ways by specific reforming countries. A template for a Revised ESM (RESM) might be guided by the following overall characteristics: A move from negative to positive welfare. When William Beveridge developed his plan for the post-war welfare state, he thought as did almost all others of the welfare state as a corrective device. The point of his innovations was to attack the five evils of ignorance, squalor, want, idleness and disease. We should not forget about any of these, but today we should seek to much more to make them positives. In other words, we should be promoting education and learning, prosperity, life choice, active social and economic participation, and healthy lifestyles. Such goals presume incentives as well as benefits, and obligations as well as rights, since the active compliance of citizens is required. The connection of welfare with citizenship is not, as TH Marshall suggested in his classic formulation, brought about only by the expansion of rights, but by a mixture or rights and obligations. Passive unemployment benefits were defined almost wholly as rights and proved to be dysfunctional largely for this reason. The introduction of active labour market policies makes it clear that the able-bodied unemployed have an obligation to look for work if they receive state support, and there are sanctions to help ensure their compliance. The traditional welfare system sought to transfer risk from the individual to the state or community. Security was defined as the absence, or reduction of risk. But risk in fact has many positive aspects to it. People often need to take risks to improve their lives. Moreover, in a fast-moving environment it is important for individuals to be able to adjust to, and if possible actively prosper from, change. This statement is as true of the labour force as it is of entrepreneurs; it is as valid for those affected by divorce or other social transitions as it is for the economic world. The creative use of risk, however, does not imply the absence of security far from it. Knowing that there is help when things go wrong may often be a condition of entertaining the risk in the first place. I take it this is part of the logic of flexicurity in active labour market policy. A Revised ESM has to be, at least in many spheres, contributory. Services designed to be free at the point of use may be designed with nobility of purpose, but are prone to essential difficulties. Since they have few mechanisms to contain demand, they become over-crowded and over-used. Two-tier systems tend to develop, in which the affluent simply opt out. Contributions, even if relatively small, can help not only with this issue, but can also promote responsible attitudes to the use of services. The contributory principle contributions from direct users is therefore likely to play an increasing role in public services, from pensions and health through to higher education. A RESM must be de-bureaucratised. The pre-existing welfare state was based almost everywhere upon treating citizens as passive subjects. Collectivism was acceptable in a way it isn t, and shouldn t be, today. De-bureaucratising means standing up against producer interests, vol 4.3 } progressive politics { 11

7 European Social Model Anthony Giddens The creative use of risk, however, does not imply the absence of security far from it. 1 Anna Dianantopolou: The European social model myth or reality?, speech at Labour Party Conference, Bournemouth, 29 Sept The Lisbon Strategy has recently been supplemented by a new five-year Social Agenda. See European Commission: Communication on the Social Agenda, Brussels, 9 February Anthony Giddens is former director of the London School of Economics and Political Science (LSE). He is currently life Fellow of King s College, Cambridge and a member of the House of Lords. Among many other books, he is the co-editor with Patrick Diamond of The New Egalitarianism (Polity, 2005). 12 } progressive politics { vol 4.3 promoting decentralisation and local empowerment. In more detailed policy terms, I would propose a 13-point sketch of a Revised European Social Model: Progressive income tax remains in place, as a means of limiting inequalities. Post-tax income in all industrial states is more egalitarian than pre-tax income. Those countries now making use of flat income taxes should ensure that they have a progressive outcome. There is an overall move from labour to consumption taxes with progressive elements again introduced as far as possible. Fiscal prudence is a guiding principle of welfare funding, although with flexibility in certain situations. This principle is a long-term one, covering for example, the capacity to meet anticipated future pensions commitments. Active labour market policies are in place, with an appropriate balance of incentives and obligations. They apply to older age-groups as well as to others in the labour force. Job creation plays a central role both in promoting growth and in containing poverty the best route out of poverty is to hold down a decent job above a minimum wage. Part-time work is actively encouraged. Part-time work is not stigmatised, but attracts the same benefits, pro rata, as full-time work. Egalitarianism is a thread running through all policies: the whole point of the RESM is to combine economic dynamism with social justice. Levelling-up is much more important than stinging the rich, since the rich is a tiny category, while the poor is a very large one. Targeted anti-poverty strategies are deployed to cope with embedded forms of poverty and social exclusion. Special attention is given to those in low-level service jobs, to ensure that, as far as possible, they have promotion chances. This means not just state provision for training, but collaboration with employers to redesign some sorts of jobs. Targeted policies are also aimed at the greater integration of ethnic minorities and immigrants. The relation between benefits and contributions is structured so as to minimise opt-out on the part of the more affluent. The state spends less in relative terms than before on the old, and more on the young, with particular attention given to child-care, early years education and incentives to have children. Investment in science, technology and higher education is the leading influence both in industrial policy and the creation of new jobs. All policies are looked at in terms of their ecological impact. States treat their Kyoto targets as binding. Member nations sign up, and seek to promote, the shorter and longer-term ecological aims of the Commission.