1. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Meagre Collective of Country-specific Social Models Arjan Lejour

2. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 European Social Policy 1957 Treaty of Rome ► Closer cooperation 1974 Social Action Programme ► Equal treatment of men and women, employment laws, working conditions 1986 Single European Act: qualified majority 1989 Social Charter 1992 Treaty of Maastricht: ► Subsidiarity Principle 1997 Treaty of Amsterdam ► Social Chapter ratified by all Member States ► European Employment Strategy 2000 Lisbon Summit

3. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 European Social Model? In a sense, there is a European Social Model: 1.Idea of solidarity is firmly embedded 2.Shared belief that Social cohesion can be a productive factor 3.Institutionalised dialogue between government and social partners However, huge differences in welfare states in Europe

4. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 EU Social Acquis (see Pelkmans) areaEUMember States Social spendingNone, some adaptation (EGF, ESF) transfers and insurance (25% of GDP) Labour market regulation -health and safety - minimum rules Mainly national, strong links with welfare state Industrial relations Social dialogueMainly national Free movement & establishment much-restrictions mig. -host country cntrol

5. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 First conclusion Primary role in social models is for MS ► budget ► regulation So Europe is social by MS policies. What is the rationale for division is tasks between MS and EU ► use subsidiarity principle What are the challenges and threats? Does this require shifts in tasks?

6. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 How to divide the tasks? Treaty definition and shared competences The Subsidiarity Principle: Arguments pro Decentralised policy ► Diversity ► Local preferences Arguments pro Centralised policy ► Scale Effects –better insurance –lower costs implementation ► External effects –social dumping – migration

7. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Epsing – Anderson classification Continental model (Lux, Fra, Be, Ger, aus) -low efficiency - high equity Nordic model (Fin, Swe, Den, Neth) -high efficiency - high equity Mediterranean model (Ita, Spa, Gre, Por) -low efficiency - low equity Anglo-Saxon model (UK, Ire) -high efficiency - low equity

8. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Welfare States in Europe

9. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Trade-off? Employment Inequality

10. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Trade-off? Production-Inequality

11. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Scale effects? NO

12. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Social dumping? NO

13. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Second conclusion No economies of scale No external effects (hardly) Yes diversity Current division of tasks between MS and EU is largely OK No reason to centralize at least. Will this also be the case in future?

14. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Pressure on European welfare states ageing welfare state wage inequality heterogeneitymobility tax bases

15. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Three Rs of welfare states Redistribution Risk and insurance ► vs moral hazard Redistribution over life cycle Ageing, wage inequality, heterogeneity and mobility tax bases affect them all... and differently in MS.

16. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 National challenges Retreat or reform? ► retreat: Anglo-Saxon ► reform towards Scandinavian ► depending on preferences Or need for larger even welfare state to cover risk of external shocks (Rodrik story)? ► more open countries have bigger governments Ageing, wage inequality and heterogeneity threaten distribution/solidarity in each MS but EU-solidarity is limited, mainly national solutions.

17. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Reforms Redistribution: subsidies to increase female participation, individualized tax income system, subsidize employers for low-skilled labour. Risk and insurance: ALMP, employment protection redistribution life cycle: life-long learning, higher female participation, more flexible labour markets for elderly.

18. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Role of EU Incentive structure like OECD Coordination and information and policy exchange Dealing with tax competition if necessary! Dealing with labour mobility issues and consequences of different social models ► subsidies ► one shop idea Still mobility will be hampered by differences in social models, but this is a choice.... immigration scheme to affect active/inactive ratio... or let Turkey in!

19. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Final conclusions EU role is limited, mainly some coordination and general rules. Chunk is national in particular on budgetary items, social model are types rooted in national traditions. But social models have to be reformed due ageing wage inequality, heterogeneity, mobile tax base. These are mainly national challenges. Role of EU is supplementary.

20. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 as expressed a long time ago

21. ESM=MCCSMESM=MCCSM Brussels, 05-11-07 Literature Pelkmans, 2007, How Social is European Integration?, BEEP paper. CPB/SCP, 2003, Social Europe, European Outlook 1. De Mooij and Tang, 2003, Four Futures of Europe, CPB. De Mooij, 2006, Reinventing the Welfare State, CPB. Sapir, 2005, Globalisation and the reform of European Social Models, Bruegel policy brief CPB contribution in EFN, 2007.