Figure I:10 Child benefit (as percentage of an average

Report
The Nordic Welfare States:
Characteristics and Challenges
Joakim Palme
Institute for Futures Studies
www.framtidsstudier.se
The Characteristics of the
Nordic Welfare States
Nordic model of social protection
• Universal benefits
• Earnings-related social
insurance
• Targeted benefits to poor
• Social services
-universal
-decentralized
-separated from cash
benefits
• Individual social rights
•
•
•
•
Taxation
Employer contributions
Central/local taxes
Local taxes with state
subsidies
• Dual-earner model
Full employment and active
labor market policies
The merits of the model
•
•
•
•
•
•
Low life-cycle poverty
Reduced inequalities
High employment
High female participation
Strong support for social security
Incentives and cost control?!
Equality and efficiency
• Universal coverage – combating poverty and
exclusion
• Transaction costs - low with nationwide systems
• Portability – good for labour mobility
• Incentive structure – poverty traps avoided
• Investments in health and education –
productive labour force
• Stable institutions positive for growth: social
rights as property rights
• Expenditure levels not the critical factor but
program design
Poverty
-
10
low
high
Rowntree’s Poverty Cycle
0
Childhood
Youth
Family
Empty nest
Old age
Strategies of Redistribution
• Tawney
- Welfare State as a
Strategy of Equality
• Tullock and Le Grand
- middle class
inclusion damages
the poor
The Paradox of
Redistribution
• Robin Hood
• Simple Egalitarianism
• Within Group
Redistribution
• Mattew’s principle:
Give to those who
have
a) Targeted
b) Voluntary State Subsidized
d) Basic Security
c) Corporatist
e) Encompassing
Shaping the Nordic Model
• Lenski’s perspective
on inequality:
- inequalities in
human societies are
shaped by political
conflicts as well as
economic structures
• The emergence of
universalism
• 1930s Population crisis
and Depression
• Social citizenship
• Earning related social
insurance
• Modern family policy
- dual earner model
 What about ageing
societies?
People’s pension
1948
People’s pension + ATP
1960
People’s pension+ ATP +
Supplement 1969-
The ‘Great’ Pension Reform
1994/98
• Ageing society
• Problems of cost
control
• Incentive problems
• Individual choice in a
compulsory system
• Political compromise
in the most
controversial policy
field
• Defined contribution formula
18,5 % of income
• 16 % Notional Defined
Contribution Accounts
• 2,5 % Fully Funded
Accounts
• Pension Credits: childrearing etc.
• Guarantee pension, no
means-testing!
• Buffer funds and automatic
balancing
People’s pension+ ATP +
Supplement 1969-
Reformed system:
Income pension and universal guarantee (+supplement)
Dimensions and Models of Family Policy
DUAL EARNER SUPPORT
A
B
General
family policy
model
High
Contradictory
family policy
model*
GENERAL
C
FAMILY
SUPPORT
Low
D
Market-oriented
family policy
model
Dual earner
family policy
model
Low
High
Family policy generosity in different models of family
policy in the mid- 1990s
Family
policy
index
45
Dual earner family
policy model
40
35
30
General family
policy model
25
20
Market-oriented
family policy model
15
10
5
0
SWE FIN
DEN NOR
HUN FRA BEL
ITA
CZE AUT GER POL SPA NET
IRE
UK
USA
Net parental leave benefits first year
after confinement in 2000
2000
100
90
Dual earner model
80
70
General model
60
50
40
Market-oriented model
30
20
10
0
NOR
Maternity ins urance
DEN
FRA
Maternity Grant
AUT
GER
IR E
C AN
Dual parental ins urance
UK
AUS
Childcare leave
US A
P aternity Ins urance
Generosity of paid parental leave and poverty
among families with infants
Poverty
35
USA
30
25
UK
20
AUS
CAN
FRA
AUT
SWI
GER
ITA
BEL
NET
15
10
DEN
FIN NOR
5
SWE
0
0
r= -.826**
20
40
60
80
**significant at the 0.01 level, one-tailed test
Sources: LIS, SCIP
100
Total
Paid
Leave
Erosion of the Nordic Model
•
•
•
•
•
•
Nominal cost limits and insurance
Choice, segregation and no voice
Legitimacy and support
Reforms and trust
Social, occupational or fiscal welfare policy
Grand coalition?
Organisation of social services
14
12
Public
companies
10
Procent
Common trends:
Decentralization
• Consumer-financing
• Privatization – see
graph right:
Employment in private
provision of publicly
financed social
services
8
Profit
6
Non-profit
4
2
0
1993 1994 1995 1996 1997 1998 1999 2000
Welfare and welfare institutions
• Welfare:
• Individual resources
making it possible to
control living conditions
• Several dimensions:
health, work, income,
education etc
• Institutions as individual
resources: state, family ,
market
• Misfortune: social policy
challenge
Welfare institutions:
• Resoures for the
individual as user
• Insurance for future
needs
• Investment in the future
• Access and quality
• State, municipalities,
market, voluntary sector,
family
Common European
Challenges
Common EU Trends in Family
Formation
•
•
•
•
•
•
•
•
Marriage Rate down
Age at First Marriage up
Age at First Birth up
Extramarital Births up
Divorce Rate up
Female Labour Force Participation up
Inequalities up
Total Fertility Rate down
Rethinking social policy in
ageing societies
• Social security is strongly redistributive over the life
cycle: the ageing of societies puts tough fiscal pressures
on public spending
• The debate on ageing issues has been overly focussed
on pension reforms and savings
• How social policy interact with fertility, education and
labour supply (the future tax base) is of vital concern
• We need to reform the system of social protection in
order to make it sustainable for the future
Framework for reform: increase the
number of taxpayers
• Incentives; individual taxation and rights,
universal benefits and earnings-related
social insurance vs. means-testing,
• Human resources; lifelong learning starts
at age 1
• Social services; child care, elderly care
• Employment opportunities; goals and
priorities of macro-economic policy,
rehabilitation in social security
Personal desired fertility, 1989 and 2001, EU 15 (except Luxembourg)
2,7
2001
1989
2,6
2,5
2,4
2,3
2,2
2,1
Age 55+
Age 40-55
Age 25-39
Age 16-24
Women
Men
Total
Age 55+
Age 40-55
Age 25-39
Age 16-24
Women
Men
Source: EB 37.1 (1989) and
EB 56.2 (2001)
Total
2,0
Perceived Consequences of Family
Formation among Europeans – EU15
Questions in Eurobarometer
1998
Cut short education
Limited promotion chances
Reduced working time
Took a break with working life
Took a job below qualifications
Stopped working for good
Improved quality of life
Improved social networks
Men
<44
5
6
6
4
5
2
80
66
Women
<44
13
23
37
41
15
25
70
61
What Europeans think Governments should
prioritise - to influence the number of children
1. Reducing unemployment, Flexible
working hours, Childcare
2. Family allowances, Tax advantages
3. Cost of children’s education, Housing
4. Parental leave, Maternity benefits
Source: Eurobarometer
Modernisation of European
social policy should be about
recasting:
Gender and work in ageing
societies
Open Method of Coordination
• Lisbon Strategy on Employment
• Sustainable pension systems
• Health insurance
• Social inclusion indicators
Why not?
• Family policy and the rights of children
Why the founding principles of
social security rights are important
• How benefits are distributed: coverage
and adequcay
• How social security create interest
coalitions and political support
• How social security programs may
contribute to increase the number of
taxpayers
The European Social Model
Goals
• ”The European social
model is about social
inclusion and equality
of opportunity.”
Barrosso July 12,
2005
The European Social Model
Goal
”The European social
model is about social
inclusion and equality
of opportunity.”
Barrosso July 12, 2005
Strategy
• Middle class inclusion
• Universalism
• Human capital
response to ageing
societies
• Employment
• Equality of conditions

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