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Meagre Collective of

Country-specific Social Models

Arjan Lejour

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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

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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

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EU Social Acquis (see Pelkmans)

area EU Member States

Social spending None, 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 dialogue Mainly national

Free movement & establishment

much -restrictions mig.-host country cntrol

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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?

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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

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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

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Welfare States in Europe

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Trade-off? Employment Inequality

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

PortugalFinland

SwedenUnited Kingdom

50

3 3,5 4 4,5 5 5,5 6 6,5 7 7,5

Inequality

Em

plo

ymen

t

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Trade-off? Production-Inequality

Belgium

Denmark

Germany

Greece

Spain

France

Ireland

Italy

Luxembourg

Netherlands

Austria

Portugal

FinlandSweden

United Kingdom

50

3 3,5 4 4,5 5 5,5 6 6,5 7 7,5

Inequality

GD

P p

er h

ou

r w

ork

ed

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Scale effects? NO

United Kingdom

Sweden

Finland

Portugal

Austria

Netherlands

Luxembourg

Italy

Ireland

France

Spain

Greece

Germany

Denmark

Belgium

15

20

25

30

35

3 3,5 4 4,5 5 5,5 6 6,5 7

Inequality

So

cia

l s

ec

uri

ty s

pe

nd

ing

(%

GD

P)

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Social dumping? NO

10

20

30

40

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Social-democratic The Netherlands Corporatist Liberal Mediterranean

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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?

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Pressure on European welfare states

ageing

welfare state

wage inequality

heterogeneity mobility tax bases

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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.

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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.

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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.

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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!

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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.

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as expressed a long time ago

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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.