1. History of social security in Europe

2. 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
Refer to Machiavelli: role of the state; generosity: don’t show it, concept of republican state with important role for guilds
Nowadays guilds would probably be considered a Mafiosi closed market conglomerates…
After these times: mercantilism: more emphasis on trade… also plain imperialism: colonies – gradual introduction to homo economicus

3. We’re getting closer…. Industrial revolution 1750-1850
Classical liberalism (A. Smith):
Economic doctrine of free enterprise
Urbanisation
From family economy to industry economy:
Rightless workers – no correction mechanisms
Child labour
Need for organisation of workers’ interests
1848…
Always thought Smith was close to a villain; theory based on “homo economicus”, however theory is more subtle than practice
Plain capitalism and extortion, short term focus: Human resources were not seen as valuable.
What happened in 1848?

4. Beginning of institutionalised social security
Upcoming socialism (Marx)
Upcoming trade unions:
First priority for wages and working hours
and Christian social thinking (Rerum novarum):
First labour laws (child labour and women)
Laws for the poor
1889 Germany (Von Bismarck):
Retirement benefits (70 years)
Disability benefits
Sickness insurance
Rerum novarum: pope encyclical 1891, defence to upcoming socialism: cooperation state, employers, workers: corporatism; “blessings for trade unions”
Also Bismarck was inspired by finding ways to counteract against socialism

5. Beginning of institutionalised social security
Trade unions:
Funds for income support unemployment & sickness
WW 1: this never again….
Beginning social dialogue (Low lands, Nordic countries)
Beginning overarching international institutions
Russian revolution: state communism
Crash of 1929
John Maynard Keynes

6. Beginning of institutionalised social security
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
Start “Europeanisation”: ECSC
European Community Steel and Coal

7. Social Security Models
Bismarck
1880
Germany
Defence against socialism
Sector organisations
Assuring standard of living, income stability
- Employees are Insured
- Financed via income-related contributions
- Benefits based on wages
Beveridge
1942
United Kingdom
Economic competitiveness
Government
Securing subsistence level
- Entire population is insured
- Primarily financed from the state budget
- Uniform, lump-sum benefits; flat rate
Mixed
Nordic
Result controlled wage policy
Both
Standard of living, followed by social assistance
- Schemes for both
- Contributions and state budget
- Benefits based on wages and minimum

9. Initial concept and basis social security continental Western-Europe 1950-1980
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

10. Europe: one and undivided? Economic models in Europe

11. Subjects (Socio-) economic models in Europe: Exercise…
Rhineland
Anglo-Saxon
Mediterranean
Nordic
Exercise…
Performances of the models
Where does Turkey stand?

12. Size of EU countries EU parliament seats Size of national GDP Germany
France
Italy UK
Poland
Spain
Romania
Netherlands
Belgium
Cczech
Greece
Hungary
Portugal
Germany
France UK
Italy
Spain
Netherlands
Belgium
Sweden
> Poland
Austria
Greece
Denmark
Ireland
Turkey

13. Many differences in Europe
Economic characteristics
Stage of development and
Performances
Differences in history and applied economic models
Two illustrative indicators: GDP and Minimum Wages

14. Gross Domestic Product per head

15. Minimum wages 1/1/2009

16. 4 economic models (A. Sapir)
Nordic
Denmark, Finland, Netherlands, Norway, Sweden,
1730 Billion USD
Rhineland
Austria, Belgium, France, Germany, Luxemburg
6750 Billion USD
Anglo-Saxon
UK, US, Australia, Ireland, some Eastern European countries
2425 Billion USD
Mediterranean
Spain, Italy, Portugal, Greece
4120 Billion USD

17. Nordic model 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

18. Rhineland model 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.

19. Anglo-Saxon model 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.

20. Mediterranean model 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

21. Models’ Performances

25. GDP cp pc

26. Where does Turkey stand?

27. Employment

28. Economic growth

29. Taxation

30. Exercise 1
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

31. 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
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.
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.
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

32. Who profits most from EU?