A Developed Welfare State in an Unqual Society

1
A Developed Welfare State in an Unqual Society

• Italy as a Case Study
• Bolzonaro Fabio
• Department of Sociology
• University of Cambridge

2

• It is commonly assumed that social expenditures
  have equalizing effects on income distribution
• We will aspect that those contries having
  generous welfare states are also those more
  economically equal
• Is this conclusion always confirmed?

3
Fig.1 Income inequality on a sample of OECD
countries in 2007

• Source Eocd www.eocd.com

4

Tab. 1 Total social expenditure in some OECD
countries (percentage of GDP)
Year 1980 1985 1990 1995 2000 2005
Country
Sweden 27.1 29.4 30.2 32.1 28.5 29.4
France 20.8 26.0 25.1 28.6 27.9 29.2
Denmark 24.8 23.2 25.1 28.9 25.8 27.1
Germany 22.6 23.2 22.2 26.5 26.2 26.8
Finland 18.0 22.5 24.1 30.9 24.3 26.1
Italy 18.0 20.9 20.0 19.9 23.2 25.0
Norway 16.9 17.8 22.3 23.2 21.3 21.6
United Kingdom 16.7 20.0 17.0 20.2 19.2 21.3
Spain 15.6 17.8 20.0 21.4 20.3 21.2
OECD Total 16.0 17.8 18.1 20.0 19.6 20.6
Greece 10.2 16.0 16.5 17.3 19.2 20.6
Slovak Republic ---- ---- ---- 18.6 17.9 16.6
Canada 13.7 17.0 18.1 18.9 16.5 16.5
United States 13.1 13.1 13.4 15.3 14.5 15.9
Mexico ---- 1.9 3.6 4.7 5.8 7.4
Portugal 10.2 10.4 13.0 17.0 19.6 ----
5

• There seems to be a fairly consistent
  correspondence between generous welfare states
  and low levels of income inequality
• Ex Sweden and Denemark are the two most
  economically equal societies and, at the same
  time, they have two of the most developed systems
  of social protection
• Conversely limited welfare regimes are typical
  of the more unequal societies (Mexico, US etc)
• However Mediterranean countries and in particular
  Italy partially contradict this general
  conclusion
• from 1980 to 2005 the Italian total social
  expenditure increased of 7 of its GDP reaching
  the level of 25
• at the same time, from the biginning of 1980s
  income inequality in Italy steadly increased
  registering between 1986 and 1989 rates not
  dissimilar to those of the US and the UK

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Are Welfare States Always Redistributive?

• We should question any straightforward link
  between higher levels of social spending and more
  income redistribution (Esping-Andersen, 2009,
  644)
• The common assumption that the welfare state has
  always redistributive impacts derives from a
  misunderstanding of what a wefare state is
• Any system of social protection has at least two
  purposes
• it spreads risks and benefits along the
  life-cycle
• it spreads risks and benefits between different
  social groups
• The second dimension has a very limited
  redistributive impact and it generally absorbs
  the largest portion of the social expenditure in
  the majority of contemporary welfare regimes

7

• A welfare state is an answer to basic and
  long-term developmental processes and the
  problems created by themit is a general
  phenomenon of modernisation on the one hand and
  of processes of social and political mobilisation
  on the other (Flora, 1981, 8). The
  competitive political dimension is an essential
  perspective to understand the role and fuctions
  of any system of social protectionWelfare
  states are instruments of social
  stratificationEsping-Andersen (1990) cosiders
  the Italian welfare state as a typical
  conservative regime. As such its main
  characterestics are
• preservation of status differntials
• strong role of the family
• preservation of gender discrimination

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A Very Unbalanced Welfare State

• Although some incisive reforms in the 1990s the
  Italian welfare states still presents its
  traditional features
• According to Ferrera ( 2007) it is possible to
  individuate by two main distorsions
• an unbalanced distribution between different
  risks (funtional distrosion)
• an unbalanced distribution of benefits between
  different social categories (distributive
  distorsion)
• These two anomalies can be recognised by
  comparing the Italian distribution of social
  expenditure by function with the average spending
  of other European countries

9
Source Eurostat ec.europa.eu/eurostat

• Fig. 2 Social Expenditure by function in
  Italy in 2006
• 
  (percentage values on total social
  expenditure)

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• In 2006 Italy spent around 60 of its total
  budget in old age and survivors pension in
  contrast with an European average of 46
• What is more impressive is the limited funding
  destinated to other periods of the life-cycle or
  voices having a potentially stronger
  redistributive impact
• Family policies are quite under-represented
  although their crucial role in overcoming
  different forms of social inequality and the high
  incidence of child poverty in Italy. The largest
  part of social services are administrated at
  local level. As a consequence there are great
  disparities among different geographical areas

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Tab. 2 Poverty rates in 2007 in some OECD
countries

• __________________________________________________
  ____________________________________
• Country All Children Children in Two Parent
  Below 60 of population median Families
• __________________________________________________
  ____________________________________
• United States 23.8 30.2 14.8
• United Kingdom (1999) 22.0 28.8 11.2
• Greece 21.3 18.7 11.7
• Spain 20.8 24.0 14.6
• Italy 20.0 26.4 16.4
• France 13.7 15.9 5.1
• Germany 13.4 14.2 4.7
• Denmark 13.4 14.1 2.0

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Reforms with inequalitiesA closer consideration
of the Italian pension reforms

• Italian pension have traditionally been very
  generous
• A political bargain between different forces
  aimed at preserving their national and local
  costituencies and clienteles lies behind the
  over-exmpansion of the pension system
• If it is generally true that the redistributive
  impact of old age pensions is quite limited, to a
  certain extent the Italian context is an
  execption with this regard. Becasue of the
  limited economic support offered by public
  institution to younger generations, old age
  pensions have become the main source of an
  informal channel of income redistribution within
  the same family

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• Putting into question the equality of Italian the
  pension system means considering the equality of
  an important, although informal, part of whole
  the Italian system of social protection
• The first half of the 1990s has seen the approval
  of two major pension reforms aimed at
• introducing more uniformity and equality
• garanting the long-term financial sustainability
  of the system
• Have these reforms promoted more equality?

14
The Traditional Features of the Italian Pension
System untile the Beginning of the 1990s

• Until the reforms of the 1990s the Italian
  pension system still presented its traditional
  features
• It was organized along occupational lines
• it was administrated by many different
  institutions having their own rules in terms of
  contribution and benefits
• it was an highly fragmented system with evident
  privileges especially in favour of public workers

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• Amato Reform 1992
• Introduced by the Prime Minister Amato, it had
  two important results
• it harmonized the pension regime between private
  and public workers
• it changed the reference period on the basis of
  which to calculate the future amount of the
  pension. The new regime will be only applied to
  new entrants in the labour market
• Dini Reform 1995
• after the defeat of the first Berlusconi
  government which tired to introduce a more
  incisive pension reform, the new appointed Prime
  Minister, after a strenuous bargain with labour
  unions reached an agreement for a new reform. Two
  important aspects affecting the equality of the
  whole system should be underlined
• the passage to a contributory related mechanism
  to calculate the future pension
• the new method of calculus will particularly
  affected workers, especially women and young
  people, having precarious and low paid jobs
  during their professional career (Ferrera, 2007)
• the reform will start to be implemented only in
  2013 and it will be fully operative in 2035

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A Sort of Conclusion

• Some points I would like to remark after this
  brief analysis of the Italian welfare state
• devoting the largest part of social expenditure
  to old age pensions and a very limited part to
  other voices implies a clear inter-generational
  inequality
• Italian families are asked to assumed excessive
  responsabilities to garantee a sort of safety
  net. This is especially true for low and medium
  income families
• Demographic changes will put into question the
  future sustanability of the Italian system of
  social protection