Labour-market policy spending since the crisis: A multiplier of inequality between European countries?
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1 Labour-market policy spending since the crisis: A multiplier of inequality between European countries? René Lehwess-Litzmann (SOFI) Presentation at the 15th ESPAnet conference, 15 September 2017, Lisbon
2 Intro The Great Recession fuelled the discussion about social policies for the future. To counter the crisis effects, the EU-Commission in 2013 launched its Social Investment Package. Social investment approach to social policy: Instead of cushioning or repairing damage, rather endow people with what it takes to prevent or overcome difficult situations. The conception of social investment and its place remain contested: purely employment oriented, economic approach? What is considered as pay-off?
3 The Re-InVEST research project EU-funded network project Main objectives: Diagnosis of the social damage of the crisis Revision of social investment with regard to the effective promotion of human rights and capabilities Application of this perspective to key social policies Research teams from 13 countries, emphasis on qualitative research 8 Re-InVEST papers at ESPAnet conference
4 The present analysis Efforts in terms of active and passive labour-market policy (LMP) made by European countries in the years between 2006 and 2015 Database on LMP provided by Eurostat and DG EMPL Interventions aimed at three groups: unemployed, employed at risk and inactive persons willing to work LMP = Services + Measures (ALMP) + Supports (PLMP) Expenditure as: aggregate or per person wanting to work; relative (% GDP) or absolute (PPS)
5 LMP expenditure in Europe as a whole PLMP continues to dominate ALMP, also as response to the crisis Expenditure on aggregate goes up, spending per head declines
6 LMP expenditure trends in Italy,
7 LMP expenditure trends in Norway,
8 LMP expenditure trends in Sweden,
9 LMP expenditure trends in Luxembourg,
10 LMP expenditure trends in Greece,
11 LMP expenditure trends in Germany,
12 Trends of LMP expenditure on aggregate Trends in absolute LMP spending (PPS) on aggregate, from 2006/2007 to 2014/2015 ALMP rising stable falling rising AT, CY, EE, FI, FR, IE, LT, LU, SI, SK NO BG, ES, IT, LV, NL stable CZ, EL, MT, PT falling BE, DK, HU, PL, SE DE, RO PLMP Rising aggregate spending on both ALMP and PLMP in the largest group of countries
13 Trends of LMP expenditure per head Trends in absolute LMP spending (PPS) per person wanting to work, from 2006/2007 to 2014/2015 ALMP PLMP rising stable falling rising CZ, EE, LV, SI LT BG, DE, IE, IT, NO stable AT, SK FI BE, CY, DK, EL, ES, FR, LU, NL, PT, RO falling HU, MT, PL, SE Declining per-head spending on both ALMP and PLMP in the largest group of countries
14 Are there ALMP- and PLMP-countries? Active and passive relative LMP expenditure per % of population wanting to work, mean of
15 Are there ALMP- and PLMP-countries? Active and passive relative LMP expenditure per % of population wanting to work, mean of
16 What drives LMP expenditure? Mean yearly LMP expenditure on aggregate as % of GDP, Absence of any link between aggregate LMP expenditure and unemployment rate?!
17 What drives LMP expenditure? Mean yearly LMP expenditure per % of population wanting to work, as % of GDP, Rather a negative link between LMP expenditure per head and unemplyoment rate!
18 What drives LMP expenditure? Mean yearly LMP expenditure on aggregate as % of GDP and GDP p. capita, Aggregate LMP expenditure correlated with countries wealth (GDP).
19 What drives LMP expenditure? Mean yearly LMP expenditure per head as % of GDP and GDP per capita, Also LMP spending per-head correlated with GDP.
20 What drives LMP expenditure? Real mean yearly LMP expenditure per head and GDP per capita, In real terms: LMP spending per-head grows with countries wealth.
21 Some signs of convergence of LMP in Europe Initial spending amount and subsequent change (p.p.). Need-weighted LMP expenditure as % of GDP Big spenders markedly reduce LMP, while small spenders show various trends
22 Summary The growing labour-market challenges mirror in the combination of an increased LMP spending on aggregate and a decreased spending per head There are no clear ALMP- und PLMP-countries in Europe, though spending profiles have sharpened a bit LMP expenditure is at very unequal levels between countries. Rather than need, countries wealth seems to determine how much is spent (even in relative terms). Small signs of convergence: big spenders tend to decrease expenditure, some small spenders stepped up their LMP spending
23 Discussion: Is Europe headed for a common pool labour-market policy? (I) In order to function as (one) society, Europe needs to secure some homogeneity of chances and living conditions between countries. Social policy traditionally has a compensatory function. But currently, the social effects of unequal economic conditions in Europe are exacerbated by unequal welfare state generosity. Social investment ascribes a productive role to social spending. If (?) investment in labour-market policy yields a pay-off, social policy gets a source of growing inequality between countries: asymmetric spending in Europe impedes economic and social convergence and fuels divergence.
24 Discussion: Is Europe headed for a common pool labour-market policy? (II) Proposition: The only way out for Europe is a policy steered and financed at the European level. Yet, building a social Europe can make populations of donor countries turn their back on the EU. The European narrative alone might not be convincing enough for making majorities. But possibly, preserving the welfare state requires supranational (European) policies anyway, due to globalisations pressures. If so, how to get the message across to voters?
25 Thank you for listening! More at invest.eu Further Re-InVEST papers at ESPANET 2017 The impact of social disinvestment on vulnerable groups during the crisis in Europe (Ides Nicaise) Welfare states in transition bringing light into the black boxes of reform processes. Comparing Irish activation and social housing reforms; shifting implementation paralysis? (Mary P. Murphy) Social Investment, Human Rights and Capabilities in practice; the case study of homelessness in Dublin (Rory Hearne) African women facing the crisis in a poor Parisian Suburb (Isabelle Droy / Jean-Luc Dubois) Enhancing Capabilities? Rethinking European Social Policies from a New Perspective. Towards a normative framework for welfare reform in Europe: a capability and human rights approach (Jean-Michel Bonvin / Francesco Laruffa) Capability, Evaluating Collectivities, Participatory Re-search and Social Change (Ortrud Leßmann) individual financial capabilities across European countries using EU-SILC data. (Anna Ruelens)
26 Appendix: The (evolution of the) ALMP mix Relative ALMP spending, European mean,
27 Appendix: The evolution of the ALMP mix Mean change in relative ALMP spending in European* countries, from 2006/2007 to 2014/2015
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