From Protection to Investment? New Frontiers for the European Social Model(s)
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1 From Protection to Investment? New Frontiers for the European Social Model(s) Maurizio Ferrera University of Milan Presentation prepared for the 6 th EU-India Joint Seminar on Employment and Social Policy, Brussels, June 2013
2 Outline The traditional fordist model of social protection and its variants The new Social Investment (SI) model Where are we now: summary data The EU role Maurizio Ferrera - Universiy of Milan 2
3 The way we were: social welfare models («Fordist») Common traits: 1. Emphasis on social protection (compensatory logic) 2. Ex post benefits for traditional risks/needs 3. Large role for «passive» transfers during non employment (pensions, unemployment, disability, sickness, maternity, family dependants etc.) 4. Residual safety nets (poverty) 5. Target: households with various family members (female carers) 6. Education & training: outside social protection Maurizio Ferrera - Universiy of Milan 3
4 Variations in the «fordist» theme (regimes, models, families, clusters..) Maurizio Ferrera - Universiy of Milan 4
5 1. Continental Europe Bismarckian insurance schemes (BIS) insider/outsider divide transfer heavy, lean on services male breadwinner model (MBM) Maurizio Ferrera - Universiy of Milan 5
6 2. Southern Europe BIS + national health services (BIS very acute insider/outsider divide) Transfer (pension) heavy, very lean on social services MBM + high familialism ( low exclusion ) Weak/non existent safety nets ( very high poverty) Maurizio Ferrera - Universiy of Milan 6
7 3 Anglo-Saxon Europe: Beveridgean encompassing schemes, weak universalism Occupational/fiscal welfare for the middle classes Means-tested benefits for the poor (including working poor) poverty cum exclusion Maurizio Ferrera - Universiy of Milan 7
8 4 Nordic Europe Strong universalism Service rich (including Active Labour Market Pplicies ) already a Social Investment element Dual earner model (DEM), female employment, gender equality Strong but limited safety nets, low poverty, high inclusion Maurizio Ferrera - Universiy of Milan 8
9 5. Central/Eastern Europe Transition from socialist collectivism (productivist welfare model) to mixed or hybrid models (social insurance + residual safety nets, poor services, female earner/carer model) high poverty and exlusion Maurizio Ferrera - Universiy of Milan 9
10 The way we ought to be? The social investment model Was introduced in the debate by Esping Andersen et al. (Why We Need a New Welfare State, 2002) Became popular in the context of the Lisbon Strategy ( ). With different meanings: orientation, paradigm, analytic concept/framework, a rethorical platform Has been gradually endorsed by the EU, especially with the shift from the Lisbon to the Europe 2020 agenda Has recently become the object of a fully fledged «package» of measures proposed by the European Commission Maurizio Ferrera - Universiy of Milan 10
11 The Social investment model Core traits: Emphasis on social promotion (enablement logic) Ex ante (early) prevention of risks and needs (ECEC) Large role for capacitating social services during the life cycle Robust safety nets and activation (inclusion) Individuals within households (dual earner/dual carer model) Support for reconciling paid work and family life Education (schooling, training, LLL) as integral part of welfare sphere Encouragement of «social innovation» Maurizio Ferrera - Universiy of Milan 11
12 Social Investment: what rationale? More growth: human capital + labour market participation Better growth: knowledge based, quality jobs More cohesion: safety nets, inclusion policies, elderly care More equal opportunities: early child education and care, work-life balance, capacitating services More social justice: containment of inter-generational transmission of advantage/disadvantage, greater mobility chances Maurizio Ferrera - Universiy of Milan 12
13 Rates of Return to Human Capital Investment: the Heckman curve Source: Heckman (2003) Maurizio Ferrera - Universiy of Milan
14 Investment Oriented Social Expenditure as a % of total (ALM, childcare, education, research, rehabilitation) >20%: EL,IT,LU 20%-25%: ES, PT UK,IE BE,DE,FR,NL,AT PL,RO,SL,SK,BG,CZ 25%-30%: FI,SW EE,EE,LV,LT >30%: DK Maurizio Ferrera - Universiy of Milan 14
15 Social Investment and Employment Maurizio Ferrera - Universiy of Milan 15
16 Social Investment and Poverty (AROP) Maurizio Ferrera - Universiy of Milan 16
17 Childcare and mothers employment Maurizio Ferrera - Universiy of Milan 17
18 ALMP spending and persistence in unemployment Maurizio Ferrera - Universiy of Milan 18
19 Lifelong Learning and employment Transition rate to employment for unemployed and inactive persons, depending on participation in LLL, (EU13) Maurizio Ferrera - Universiy of Milan 19
20 Social investment policies: a tentative map Childhood/youth Working age Old age Social protection Unemployment, sickness, disability benefits pensions Social investment Early Childhood Education and Care Education Active labour market policies Long-life learning Social care services Active aging Training and labour market insertion Work/life balance and family services Health promotion/prevention rehabilitation General Health care, safety nets, social inclusion. Maurizio Ferrera - Universiy of Milan 20
21 Broad challenge the logic of social investment entails a tendency to underestimate the workings of labour markets and the strong gravitational pulls of social class, and to consequently overestimate the potentiality of activation.and depreciate the question of redistribution, of social protection and of care for the most vulnerable (Bea Cantillon) How to generate a virtuous circle between social protection and social investment? Maurizio Ferrera - Universiy of Milan 21
22 Towards a virtuous nesting? European Union D National governments SOCIAL PROTECTION A SOCIAL INVESTMENT B C Sub-national governments
23 National level Social Protection: Continue «recalibration»: functional (across risks) and distributive (across social groups); selective universalism («progressive universalism», especially in high private savings countries) liberate some financial resources Social Investment: Expansion/enhancement: innovative and experimental approach; coordination, monitoring, evaluation Maurizio Ferrera - Universiy of Milan 23
24 Sub-national level Crucial for social investment policies: cf. ALMP, childcare and «capacitating» services, inclusion etc. broad partnership and territorial anchoring (differentiated universalism); pubic/private mix in financing («second line» welfare state) Maurizio Ferrera - Universiy of Milan 24
25 The EU Promote and support social investment Find a new equilibrium between macroeconomic and fisca stability and growth objectives Contrast «excessive social unbalances» across the member states Maurizio Ferrera - Universiy of Milan 25
26 EU: the social investment package March 2013 communication on Towards Social Investment for Growth and Cohesion including implementing the ESF Main points: Achieve adequate and sustainable budgets through a better reflection of social investment in the allocation of resources. Fully implement without further delay, including through use of the ESF, the Active Inclusion Recommendation of 2008, integrating its three pillars: adequate income support, inclusive labour markets and enabling services. Implement the Recommendation on 'Investing in Children: breaking the cycle of disadvantage' in an integrated way through a combination of cash and in kind benefits. Make early childhood education and care (ECEC) more visible and available, in line with the Barcelona targets on childcare and the EU targets on ECEC. Use the ESF and the European Agricultural Fund for Rural Development (EAFRD) to promote access to health and social services and to ECEC; Use the active ageing index, which monitors older people in employment, their social participation, and independent living and the opportunities the European Innovation Partnership on Active and Healthy Ageing offers in this regard. reshaping EU governance for social policies, monitoring and communicate to citizens Maurizio Ferrera - Universiy of Milan 26
27 Will it happen? Social impact of the crisis very high Euroscepticism on the rise Europe needs growth and cohesion, the EU needs legitimation Time is short, June EC will be crucial If no step forward, 2014 EP elections: DEMOCRATIC DISASTER ( Enrico Letta to Angela Merkel) Maurizio Ferrera - Universiy of Milan 27
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