1. European Social Model(s): From Crisis to Reform Patrick MARDELLAT © Dr. Prof. In Economics Institut d'Etudes Politiques de Lille - F

2. Contents: 1. Welfare States in perspectives 2. Problems and Challenges 3. Social Model and Competitiveness 4. EU integration of Social Systems?

3. Social Models & Competitiveness III. Social Models and competitiveness 1.European types of SSS and economic performance 2.Social performance

4. Social Models & Competitiveness In the long run, during the last thirty years, there are rather small differences between the European types of social security systems. But the differences widened over the last decade In the last decade GDP growth per capita and real GDP growth was higher in Anglo-American and Scandinavian countries than in Continental and Mediterranean countries Public sector activities, tax rates and public expenditures are much higher in the Scandinavian and Continental models than in the Anglo-Amercian one 1.EU Types of SSS & eco. performance 2.Social Performance General Remarks

5. Social Models & Competitiveness Unemployment is relatively low in the Anglo- American countries, but the number of persons living on welfare benefits is relatively high The employment rate is the highest in the Scandinavian model and much lower in Continental Europe and Mediterranean countries Hours worked per year is significantly higher in the Anglo-American and Mediterranean countries than in the Scandinavian model and Continental Euope 1.EU types of SSS & eco. performance 2.Social performance General Remarks

6. Social Models & Competitiveness Public services largely explain the high employment rate in Scandinavia Marketization of household services assiociated with low-wage and part-time jobs largely explains high employment rate in the Anglo-American model Scandinavian countries have already reached the employment rate target for older workers of 50% by 2010, according to the Lisbon strategy, Continental and Mediterranean countries are far below 1.EU types of SSS & eco. performance 2.Social performance General Remarks

7. Social Models & Competitiveness Labor skill is higher in the Scandinavian countries Investments in human capital (education and life long learning = spending on human resources) is significantly higher in the Scandinavian countries and much lower in Anglo-American countries Investments in R&D and ICT are high in Scandinavian and Anglo-American countries Scandinavian model is the closest to the Lisbon targets 1.EU types of SSS & eco. performance 2.Social performance General Remarks

8. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Should we blame the Welfare State? Many economists blame the WS for low growth and weak competitiveness. But the Scandinavian countries performed very well in economic terms, even with high taxes and large social expenditures. WS is not responsible for bad economic outcomes. And, social cohesion, education and health are productive resources as they are constitutive part of human capital. On the other hand, social exclusion and large inequalities are costly in terms of public security and health.

9. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Should we blame the Welfare State?  The choice between solidaristic or individual risk-taking is not a matter of economics, nor of laws of economics, it is rather a matter of preferences, of social preferences. Europeans clearly express a preference for equality and social justice, social cohesion and human development over efficiency and competitiveness associated with inequality and social exclusion  The trade-off between competitiveness and equality or between efficiency and social cohesion is shaky and cannot be simply clear-cut with the means of economic analysis

10. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance General Remarks The goal is not only high economic performance, growth, competitiveness and efficiency, but it is also high social and environmental performance. According to the Lisbon strategy EU should become ‘the most dynamic and knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment’ by 2010.

11. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance General Remarks As it is clear in the previous quotation, focus has also been pointed on social and environmental performance, not only as a by-product of economic performance, but because it is assumed that good social and environmental performance enhance economic performance. The Lisbon Strategy is not only an economic policy, it rather is a balanced project for the future of European societies. Each element participates to the success of the whole strategy.

12. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance General Remarks  The aim of the EU is to promote peace, values and well-being of people. Promoting people’s well-being is a primary goal of EU social policies.  The simplified Treaty states that ‘the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health.’

13. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Indicators of social performance  Life satisfaction (CF. Petra Böhnke (2006), First European Quality of Life Survey: Life satisfaction, happiness and sense of belonging, European Foundation for the Improvement of Living and Working Conditions)  Income inequality  Poverty rate  Life and health expectancies

14. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Determinants of subjective well-being The study of Petra Böhnke considers the impacts of these four determinants on subjective well-being in Europe. (Source: P. Böhnke 2006: 9)

15. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Life satisfaction in Europe, 2003

16. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Comment Life satisfaction is measured on a one to ten point scale (one = very dissatisfied; 10 = very satisfied). The higher the mean value of satisfaction is, the more satisfied a nation’s population is with the general living conditions. Satisfaction with life varies widely thruighout Europe, with a clear divide between EU-15 and the 10 NMS (New Member States). The most satisfied are the Scandinavians, and the least satisfied outside the 10 NMS are the Mediterranean countries.

17. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Inequality of Income distribution Countries with the lower level of average income tend to have higher level of inequality. Apart from the NMS, the Mediterranean countries have the lowest level of income and inequality; the Scandinavian countries have the more equal distribution of income. Confirmation with Gini coefficient in the next chart.

18. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Gini coefficient, 2003 or 2004

19. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Risk of poverty rate before & after social transfers, 2003 or 2004 The risk of poverty before social transfers is higher in the Anglo- American and the Scandinavian countries. It is much lower after the social transfers in the Scandinavian countries, and significantly higher in the Mediterranean countries.

20. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Life and health expectancies

21. Social Models & Competitiveness 1.EU types of SSS & eco. performance 2.Social performance Concluding Remarks The social performance are higher in the Scandinavian and Continental European countries than in the Anglo-American and Mediterranean ones:  Poverty rate and risks are significantly higher in the liberal model, which reflects uniequal income distribution  Life and health expectancy is lower in the Anglo-American countries  Life satisfaction is the highest in the Scandinavian countries  High GDP per capita in the liberal countries can largerly be explained by the higher number of hours worked

22. Contents: 1. Welfare States in perspectives 2. Problems and Challenges 3. Social Model and Competitiveness 4. EU integration of Social Systems?

23. Social Models & Competitiveness EU integration of Social Systems? Europeanizing Social Protection? The integrated economy enhances competitiveness inside the EU single market economy between the member states. It forces European societies to scrutinize their practices and policies. Is the coexistence of four social security systems in Europe, apart from the new member states’ system, sustainable? How can European societies respond to the challenge of unprecedented competitiveness and at the same time preserve their social objectives? Shouldn’t they europeanize the social protection like they did with respect to the monetary policiy or the agricultural policy?

24. Social Models & Competitiveness EU integration of Social Systems? Social integration of EU in perspectives  First step: 1961 – European Social Charter sign in Turin (Italy): 19 basic civil rights of EU citizens concerning housing, health, education, employment, legal and social protection, movements of persons, non- discrimination. It was the first international document to recognize the right to strike. It is a Council of Europe Treaty that protects human rights.  Second step: 1996 – European Social Charter revised in Strasburg: ads another 12 new rights to protection against poverty and social exclusion; right to protection in cases of termination of employment; rights to protection against sexual harassment; rights for workers with family responsibilities to equal opportunities and equal treatment; rights of workers’ representatives in undertakings.

25. Social Models & Competitiveness EU integration of Social Systems? Social integration of EU in perspectives  Third step: 2000 – Lisbon Strategy pointed out that it is very important to modernize EU social model and that the main social problems of EU are unemployment, poverty and exclusion from society. ‘ People are Europe's main asset and should be the focal point of the Union's policies. Investing in people and developing an active and dynamic welfare state will be crucial both to Europe's place in the knowledge economy and for ensuring that the emergence of this new economy does not compound the existing social problems of unemployment, social exclusion and poverty.’ (point 24 of the LS). The challenge can be better addressed as part of a cooperative effort so that the Council has to ‘strengthen cooperation between Member States by exchanging experiences and best practice on the basis of improved information networks which are the basic tools in this field’.

26. Social Models & Competitiveness EU integration of Social Systems? 1994 – EU White book about social policy  The key for the future of EU social model is employment. High employment is a condition for competitiveness with good labour conditions  Social development is linked to economic development. The European economy has to take the turn of new technologies and to focus on knowledge economy  Social convergence is not realistic, diversity of the social models must be respected. Diversity is a chance for the future of EU, it helps to adapt to new challenges. Member States must exchange experiences and best practices  EU has to define collective minimal social standards to prevent the tenptation of social dumping, that is of lowering social rights to increase competitiveness

27. Social Models & Competitiveness Thank you for your attention Do you have any questions?