Meagre Collective of Country-specific Social Models

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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
• Idea of solidarity is firmly embedded
• Shared belief that Social cohesion can be a
  productive factor
• 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
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Trade-off? Production-Inequality
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Scale effects? NO
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Social dumping? NO
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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
wage inequality
ageing
welfare state
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.