European Social Model(s):
From Crisis to Reform
Patrick MARDELLAT ©
Dr. Prof. In Economics
Institut d'Etudes Politiques de Lille - F
Contents:
1. Welfare States in perspectives
2. Problems and Challenges
3. Social Model and Competitiveness
4. EU integration of Social Systems?
I. Welfare States in Perspectives
1. Definition
2. History and Strategies
3. Types of European Social Systems
4. Social Expenditures
Welfare States in Perspectives
1. Definition
1.
Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Welfare State: Definition
The Welfare State consists of a number of
programs through which governments
pursue the goal of social protection against
economic and social risks of life & well-being.
Welfare States in Perspectives
1.
1. Definition
Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Welfare State Objectives
to protect individuals and groups against
economic and social risks of life and changes in
society;
 to secure income and conditions to live a life in
human dignity with fullest participation in society;
 to combat discrimination and inequalities;
 to promote social cohesion and inclusion and to
avoid marginalisation;
 to combat poverty and extreme gaps in the
distribution of wealth in society.

Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Welfare State Aims
It redistributes income from the working young to the
retired old, from the rich to the poor, etc. It also helps
to solve many problems with risk, market failures,
ethical norms, poverty and inequality, justice, etc.
Welfare systems are financed on the basis of
solidarity; the access for all citizens to high-quality
services of general interest at reasonable prices;
economic democracy through social dialogue and
collective bargaining.
Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Welfare State Spendings



Social Protection
Social assistance
- Income support
Social insurance
- Retirement
- Unemployment
- Health care




Benefits in kind
Education
Housing
Public goods
- Public transport
- Public service
broadcasting
Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
The European Social Model
It is a set of principles and values, common to all European regions:







Solidarity
Social Justice
Social Cohesion
Equal access to
employment
Gender equality
Equal access to health
and social protection
Universal access to
education


Universal access to
health and social
services
Equal opportunities for
everybody in society, in
particular the elderly,
the young, the
disabled, the socially
excluded and minority
groups
Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Social rights and European citizenship
European citizenship includes social citizenship
Social citizenship is a cluster of rights to:
 education
 health
 social security
 public services
 etc.
Such rights are supposed to make political
citizenship effective.
Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Acceptance of the ESM
Such rights have costs, costs in monetary
terms, in terms of restraints on rights of
others and in terms of market rigidity.
For example: my right to free education or
health care constraints the right of others to
spend their income. My right to employment
protection constraints the employers'
freedom to dismiss me.
Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Acceptance of the ESM
The ESM is only possible because, unlike
Americans, Europeans accept the important
role of the state, which means that they accept
a public sphere.
A public sphere is a part of society which
belongs to all citizens and where things are
done not for profit, but for the general good.
Services are provided for the public: they are
public services.
Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Acceptance of the ESM
The acceptance of public services means to accept public
employees. With the expansion of the Welfare state duties
in the second half of the 20th century, the number of its
employees increased hugely.
The counterpart of the social rights are duties: welfare
rights in Europe involve the obligation to look for work.
Problem is unemployment, question is: isn't unemployment
caused by market rigidities? (see chapter 2)
Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Main characteristics of EU WS
Relatively high level of taxes, of state activity, of
redistribution & social cohesion
Universal public services (health, education,
housing)
Comprehensive social protection: illness, old age,
unemployment, maternity, etc.
Extensive workers' rights and social dialogue
Commitment to macroeconomic stability through
monetary and fiscal policy

Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Contribution of WS to Europe
''The simplest difference between the USA and
Europe is that we have welfare states, they do
not'', James Wickham.
The European Social Model was the success story
of the post-war period. It is not expressing a sort of
European essence, even if it is part of European
citizenship. It has only emerged after World War II.
But it now is a defining feature of Europe.
Welfare States in Perspectives
1.
Definition
1.Definition
2. History & Strategies
3. Types of ESS
4. Social Expenditures
Social Security Systems and the EU
Europeans have high expectations in the EU, but
they now feel eurosceptics, as discussions about
the EU Treaty showed it.
Europe will exist as a social Europe, or it will
not exist at all.
When asked about the areas in which the EU
should act, employment and social policy are
frequently cited as top priority. EU is justified if it
provides for more social security, otherwise not.
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
Historical Roots of Social Security
The European Social Model as defined in the
1st & emerged only after W W II, but its roots
can be traced back to the early 16th century.
Different traditions of social security evolved
in Europe from the 16th century on, forming
ideas and strategies as to how different social
problems should be approached.
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
Key References
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Dixon, J. (1999), Social Security in Global Perspectives,
Wesport, London.
Esping-Andersen, G. (1990), The Three Worlds of
Welfare Capitalism, Cambridge, Polity Press.
Esping-Andersen, G. (1999), The Social Foundations of
Post-Industrial Economies, Oxford, OUP.
Ewald, F. (1986), L'Etat providence, Grasset, Paris.
Ferrera, M. (1998), ''The Four Social Europe(e):
between Universalism and Selectivity''
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
Three Social Security Traditions
The Poor Law tradition

The Social Insurance tradition

The Welfare State tradition

Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
The Poor Law Tradition
It originates from the secularization of poor relief stated in
the English Poor Law Acts from 1598 and 1601 under the
reign of Queen Elizabeth the 1st.
It is rooted in economic liberalism and Christian values,
with respect to the principle of individual responsibility and
work ethics.
It distinguishes between ''deserving poor'' (=orphans,
aged, disabled) and ''undeserving poor'' (=vagrants and
beggars)
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
The Social Insurance Tradition
It originates in the Prussian Social Security Statutes of the
1880s (Bismarsk), which evolved in reaction against the
Poor Law tradition (criticized by the classical school: '' the
poor laws may be said to create the poor which they
maintain'', Malthus)
It protects workers against increasing insecurtity in the
course of industrialization.
It is based on personal responsibility & the principle of
solidarity implicit in risk pooling.
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
The Welfare State Tradition
It originates in the ideas of Lord Beveridge exposed in his
reports: Social Insurance and Allied Services (1942) and
Full Employment in a Free Society (1944).
It is rooted in humanistic convictions that there is a common
responsibility of the society as a whole for the well-being of
all citizens.
It is to promote social integration and progress towards an
equal society with full employment by state intervention:
social expenditure is seen as desirable.
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
Three Social Security Strategies
From these three social security traditions
emerged three types of social security strategies in
Europe that can be coined as:
 The Social Assistance strategy originating in
the Poor law tradition
 The Social Insurance strategy originating in the
Prussian insurance tradition
 The Social Allowance strategy originating in
the welfare tradition
Esping-Andersen 1990: 20ff.
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
Social Assistance Strategy
The redistributive goal is to reduce poverty, that is
to provide a socially acceptable minimum support.
Vertical redistribution.
Social assistance is targeted on individuals meeting
certain criteria of neediness.
Criticism: economists have argued that it can
discourage labour supply because of the risk of
poverty-traps and that it can increase costs of
administration and surveillance.
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
Social Insurance Strategy
The redistributive goal is horizontal redistribution from
workers to retired old, from childless to families with
children, from healthy to the sick, etc. Benefit
entitlement is dependent on and related to past
contributions or earnings.
The social security goal is poverty prevention. It
provides a social security the market can hardly
supplie.
Criticism: it leaves outside of the coverage the non
regular full-time employees: self-employed, atypical
forms of contracts, etc.
Welfare States in Perspectives
1. Definition
2. History &
& Strategies
Strategies
2.History
3. Types of ESS
4. Social Expenditures
Social Allowance Strategy
This strategy aims at universal coverage and vertical
redistribution is considered as a goal. It consideres a
guaranteed minimum income as a right of nationstate citizenship.
Social allowances are granted according to
demographic criteria such as children and age.
Criticism: very expensive, today facing financial
crisis; risk of inadequate levels of benefits with
persistent poverty; risk of welfare-dependent
underclass.
Welfare States in Perspectives
1. Definition
2. History & Strategies
3.
Types of
of ESS
3.Types
ESS
4. Social Expenditures
European Social Security Models
The previously exposed strategies are idealtypes that are not to be found in the real-world.
We rather find mixtures of these strategies,
differing from member state to member state,
according to funding, benefit levels and
entitlements. These mixtures define wellfare
regimes we can stylized in types of Social
Models or Systems.
Welfare States in Perspectives
1. Definition
2. History & Strategies
3.
Types of
of ESS
3.Types
ESS
4. Social Expenditures
Key references



Bertola, G., Boeri, T., Nicoletti, G. (Eds), (2001),
Welfare and Employment in a united Europe,
Cambridge, MIT Press.
Esping-Andersen, G. (1990), The Three Worlds of
Welfare Capitalism, Cambridge, Politiy Press.
Ferrera, M. (1998), ''The Four Social Europe(e):
between Universalism and Selectivity'' in Martin
Rhodes and Yves Meny (Eds), The Future of
European Welfare, Macmillan, London: 81-96.
Welfare States in Perspectives
1. Definition
2. History & Strategies
3.
Types of
of ESS
3.Types
ESS
4. Social Expenditures
4 main types of social models

Scandinavian (social-democratic) Model

Continental (corporatist/conservativ) Model

Anglo-American (liberal) Model

Mediterranean (family-centred) Model
Welfare States in Perspectives
1. Definition
2. History & Strategies
3.
Types of
of ESS
3.Types
ESS
4. Social Expenditures
Scandinavian Model
Based on equality, comprehensiveness, social inclusion,
universality
 Supply of social services of high quality and affordable
 High employment rates, gender equality
 Unemployment benefits and health system financed on taxes
 Highly progressive taxation, low taxes for business
 High minimum wages, high replacement rates, generous
minimum standards for pensions
 Cooperation between social partners
 Strongly dependent on homogeneity of society
 It is the more expensive of the four models

Sweden, Denmark, Finland, (Norway)
Welfare States in Perspectives
1. Definition
2. History & Strategies
3.
Types of
of ESS
3.Types
ESS
4. Social Expenditures
Continental Model
Based on the preservation of social status, tries to prevent
social problems rather than solving them
 Income-related transfers with low minimum standards
(minimum wage, pension, etc.)
 Social insurance system for health, pensions, unemployment is
based on contribution: levels of benefits depend on how many
did individuals contribute to the system
 Low redistributive efforts: low wealth taxation, high taxes on
labour and consumption
 Cooperation between social partners and coordinated wage
bargaining
 Does not distinguish wether individuals really need social
benefit: unvoluntary unemployment or voluntary unemployment?

Germany, France, Belg, Netherlds, Aust.
Welfare States in Perspectives
1. Definition
2. History & Strategies
3.
Types of
of ESS
3.Types
ESS
4. Social Expenditures
Anglo-American Model
Based essentially on the markets, minimal role of the State
 Low degree of regulation
 Workfare strategies instead of welfare
 Basic levels of social benefits, just sufficient to survive,
provided to everybody who needs them
 Social benefits are frequently checked
 Public health system and publicly financed schools
 Does not prevent social problems, only focused on solutions
 Excludes poors from society, does not provide social cohesion
 Low social expenditure, relatively cheap

United Kingdom, Ireland
Welfare States in Perspectives
1. Definition
2. History & Strategies
3.
Types of
of ESS
3.Types
ESS
4. Social Expenditures
Mediterranean Model
Based on supportive family networks
 Low transfers
 Employment protection legislation is rigid
 High gender inequality
 Low participation rates for the younger and female
 Pension-related transfers
 Traits of paternalistic society remained

Italy, Spain, Portugal, Greece
Welfare States in Perspectives
1. Definition
2. History & Strategies
3.
Types of
of ESS
3.Types
ESS
4. Social Expenditures
Current evolution
These four types or models are slowly converging
together, but there still exists four distinct social
Europes.
In the fourth part I will examine the conditions of this
convergence and the possibility of an integration of
these models at the EU level.
The important question is the selection of the
optimal model, balanced between cost and social
benefits.
Welfare States in Perspectives
1. Definition
2. History & Strategies
3. Types of ESS
4.
Social Expenditures
4.Social
Expenditures
Social expenditure in % by European
types of SSS
Scandinavian
Continental
Anglo-american
Mediterranean
Pensions
Family
38.8
42.8
37.0
52.2
10.0
11.7
10.5
4.5
Social
assistance
5.1
2.8
6.1
2.4
Source: ESSPROS 2004.
Welfare States in Perspectives
Unemployment
benefits
46.1
42.7
46.4
40.9
1. Definition
2. History & Strategies
3. Types of ESS
4.
Social Expenditures
4.Social
Expenditures
Expenditure
on social
protection
as % of GDP
in the EU in
2004
In 2003,
27.3% of
GDP spent
on social
protection.
Welfare States in Perspectives
Source:
EurostatESSPROS
1. Definition
2. History & Strategies
3. Types of ESS
4.
Social Expenditures
4.Social
Expenditures
Expenditure on social protection in PPS* per capita in 2003
Disparities in SP per capita are related to different
levels of wealth and reflect differences in Social
Models, demographic trends, U-rates, and other
factors.
*Purchasing power standards
Source: Eurostat-ESSPROS
Welfare States in Perspectives
1. Definition
2. History & Strategies
3. Types of ESS
4.
Social Expenditures
4.Social
Expenditures
Structure of social protection expenditure in EU-25, 2004
Source: Eurostat-ESSPROS.
Welfare States in Perspectives
1. Definition
2. History & Strategies
3. Types of ESS
4.
Social Expenditures
4.Social
Expenditures
Benefits on social protection in cash & in kind, 2003
The main form of social expenditure is paid in
cash in the EU. In 2003 they accounted for
67.5% of all SP benefits, or 18.1% of GDP.
Source : Eurostat-ESSPROS
Welfare States in Perspectives
4.
Social Expenditures
4.Social
Expenditures
Social benefits by function group in 2004 as % of total social benefits
(TSB) and of GDP
1. Definition
2. History & Strategies
3. Types of ESS
Welfare States in Perspectives
Source: Eurostat-ESSPROS
1. Definition
2. History & Strategies
3. Types of ESS
4.
Social Expenditures
4.Social
Expenditures
Social protection receipts by type – 2004 (% of total receipts)
(1)
Employees,
selfemployed,
pensioners
and other
persons
Source:
EurostatESSPROS
Welfare States in Perspectives
Thank you for your attention.
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