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MINISTERIE VAN FINANCIE – BELGIE 61′ jaargang nr 3 mei-juni 2001 D O C U M E N T A I B L THE ACTIVE WELFARE STATE : EUROPEAN AMBITION Speech at the “Commission for Social Development” of United Nations Fra nk VANDENBROUCKE Minister Affairs and Pensions Belgium ew York 13 Febmary 1. COMMON CHALLENGES FOR SOCIAL POLICY IN UNION series major demographic economic social changes over past 20-25 years across European Union have profom1d implications protec­ tion systems will conti nue to do so in future yea rs According 1997 (1) 1999 (2) Eu ropean Commi ssion Reports on Protection four trends are particular importance: l ) First ageing po1mlation all Member States prospective i ncrease rate growth number elderly people from 20 10 onwards The largest expansion be of75 who tend greater demands towards pension health care services At a time when increased female participation workforce is likely reduce available pool ofunpaid family carers demand long-term increase markedly fa lli ng birth many also causes decline working age thus potentiall y underminin g financing capacity system 2) Secondly changing gender balance growing women labour force which has been accompanied by increasing support both child with disabilities aswell as infirm This evolution puts issues importance ensuring equality opportunity men forefront national political agendas 3) Thirdly persistence high unemployment low \YOrkforce especially among older workers trend toward s earlier retirement 4) Finally munber households average size (or other words rise living their own) \Yith no one work made it more difficult provide su1>port within increases availability income peopl e not paid employment We may adopt neutral attitude these facts themselves even positive some them But they require systematic adjustments welfare state’s architecture ( COMMI SSION OF CO:Vt MUN ITIES Socwl Protect1on 111 Europe Luxembourg Oflice Official Publication Commu nit es 1998 160 p COMM ISSION EU ROPEAN CO’ ! IUNITIES Protectwn Ollice Oflicia Publications Europea n Communities 2000 124 5 An population means that resources spent essentially traditional areas security notably pensions sickness insurance same gives new risk: long-tenn dependency an ageof individualisation Chronic illnesses such Alzheimer ’s disease gradually playing larger part inequality between those affected conditions aren’t dramatic feminisation market itself development Yet this pushes objective further beyond our reach Full was understood most countries full mainly associated male breadwinner model operated states When we target today mean menand Even if tha ever before participate (which case contrary popular belief) become far attain rendered state only req uire lot effort than Some tasks added too does adequately meet needs combining life training Neither t answer poverty due yet unfinished emancipation pl us -a nd devoid importance-the asyet incomplete withi clearly risk having manage alone changeover post-industrial society goes problems problem confronted significa ntly higher exclusion inadequate schooling phenomenon because refers statistical ten11S predictable ln matter armoury solutions fails Exclusion caused either advanced accident or illness nor tempora ry fluctuation business cycle main cause “new requi rements turn productive into disabled people’· (3) In cases raditional offers benefits but way out material comfort offer opportunities short ambitions re co-exist challenges If look composite measure strain mature already experience use simple ratios ratio non-working active 1970 employed livi benefit 2: 1 Today shifted Greatly simplified can say halfof half J DONZELOT “L ‘avemr du ” Esprit March 1996 pp 58-81 6 indicator course refinin image fixed group ‘payers ·is poised against ‘recipients ‘ misleading shift position back categories Nevertheless dependence must stopped frequenlly quoted reason sustainability protection coming under undue pressure That certainly trne Let me quote important conclusion drawn recently L11e Conunission its projections Europe: “fa J)anding would help alleviate fimding least much refonn arrangements per se” (4) real issue significant worki (especially actively seeking work) there another why give fundamental questions: lesser extent n1lnerability Part vulnerability cannot avoided Another avoidable though hence reduced latter mea ns denied partici pate There arc still indicators showing today” reduction characterised my country 70s 80s ground halt faced wil11 patients experienci financial difficulties embarrassing policy choices longer match possibiliti Belgian government coined expression summarise challenge: wa nt ransform “active state” poi nts two different ideas: goal rate: ‘Ye achieve without giving up old ambition adequate EUROPE <\ "!\/ COMJ\ !UNITI ES Office Conununiti 30 2. FROM CONVERGENCE IDEAS ON EMPLOYMENT­ CENTRED REFORM govermnent approach instance Europe-wide convergence views what sometimes called "employment-centred refonn" Notwithstanding instih1tional cult1ual backgrou nds notwithstanding wide variety think safely makers agree following general guidelines reform ": 1) Welfare key Moreover natme changed --Full employment" conceived underlyin traditiona concepts challenge It points need rethink certai aspects distribution individuals spontaneously emerges Thewelfare should cover risks aswe traditionally defined (unemployment disability age) (lack skills causing poor single parenthood) respond (namely reconcile education able negotiate workplace one's entire cycle) sense predominantly passive institution result bad outcome then safety net spread various institutions intelligent \velfare preventive As corollary stressed engage "social spending" investment" (e education) Personally like emphasise here investment substitute spending idea replace unreal given live agei dependent come cheap tl1e nm During nineties consensus policies agenda upgraded quantity quality tailoring effectively individual situations Active presuppose correct obligations incentives involved Hence taxes lead situation indi iduals th ei r milies) face very marginal tax rates thei hours wages take job "Poverty traps" '·unemploy ment raps"- discomagi low-skilled taki upjobs characterise selective welfa universal wel differing degree Activa ion keyword therefore necessary subsidise low-skill ed topping ·pay and/or selectively subsidising employers combi ned wi h decent mi ni mtun More generally mechanisms current ocial securi ty discourage ratl1er encourage hould d isca rded possible 5) Such fare environment based upon competi tive sector exposed nternational competition private service less \Yhi ch 10\r-ski lied find newjo b-opportuni ties Continental typically lags behi de\'elopment Wage subsidies ca lso inst ru mental tlrn respect Wit hout his kind politica process set motion Luxembou rg Job u m di fficul (see below section he reasons thed iscussion National Action Planson Employment elaboration ropea Guideli nes Policie turned substa ive exercise contra \\·h sceptics might feared 3. TOWA RDS VIEWS EURO­ PEA MODEL? Of cour comprehensive view enta ls five point sted requires horough discussion cine focus pen ions broad perspective ensures long­ sta nding objectives fully taken nto accou prepa On debate often conducted one- ided manner focusing ensuri fina ncial sustai nabi ity equally related posi impact Notably context debates about relative strengths weaknesses publ ic pay-as-you-go versus privately managed funded Peter Orszag Joseph Stiglitz rightly emphasised "we keep mind OUT ultimate objective" (5) Ideological discussions public indeed distract attention truly relevant question precisel insight allowed gain momentum make simultaneous progress three domains: thorough modernisation fight generation efficiently: creation reserve so-called "Silver Fund" safeguard first pillar (a guarantee everyone access pension) Silver Fund budgeta device (one "disciplinary" device) uses earmarked debt build absorb acceleration expenditure baby-boomers pensioners democratisation second 1>illar rather underdeveloped compa rison legislation introduced Pa rliament shortly supplementa via ‘social funds privilege ma ny few Pension plans offered company ll criteria supportive regime (and moreover transparancy regard strategy publish whether pursue Socially Responsible Investment) forward robust sectoral entrenched existing collective bargaining believe how safcgliard n-built solidarities: develop supplementary complementary structure well Lisbon Summit (March 2000) put fim1ly adva ncing priori co-operation field govern organ ise Presidency year wants carry fonvard trying establish common P ORSZAG en STIGLITZ (1999) “‘Rethrnkrng Reform: Ten Myths About Sec11nty Systems”‘ paper presented Conference “‘ Tew Ideas Old Age Security” World Bank Washington September 14-15 defining start 10″principles objectives’· Commission hasproposed last Communicat “Safe Sustainable Pensions” revolve arotmd adequacy intergenerational fairness solidarity etc (6) Itis decide want ensure finai1cial fundainental share Clearly ifwe succeed defi tangible 4 DUA BENCHM ARK SOCIA MODEL: PARTICIPATION AND LOW POVERTY Earlier said rate; Indeed promoting Consider graph ai1d (7) 25 + USA Q) Italy UK “@ >- Australia+ +Canada t::’ France Germany 0 • Cl Netherlan•ds Sweden Belgi Finland• Denmark 40 45 50 55 60 65 70 75 80 Participation (6 COMMISSION COMMUNITIES Futu Evolution Long-Term Point View Safe COM(2000) 622 11 October 20p Source: MAR “X Low Pay Po\·erty OECD Countries”‘ Au dit winter automatically imply US see continental By contrast Demnark reconciling extensive participa relation (activation) levels (social protection) “if (employment) (no poverty)'” mutually exclusive rela “either poverty)” “and-and’ ‘: aim promotion considerations lies heart governments · plea complementing cormnon Just where explicit clear agreed targets forwarded after peer review leads exami ne learn best practices around Itwould whereby takes competencies ·’Best practices” iterally What area establishment “”standards excellence'” standards mediocrity benchmarks essential commit excellence battle systematically exchange information fighting Although isby benchmark conceivable Ido fact exists “iron law policy”: credible commitment combat presupposes firm fully-fledged state: finn itspreservation continuous adaptation define -the formally proposed January being direction methodology PROMISE METHODOLOGY mentioned emergence « -centred » Transforming action easy post-Th atcher brought thinking did everybody ready act together Not were differences every had built own divergent constitutional fear rules dictated Brussels whose burdens member So any headway tread lightly And exactly doing open co-ordination method fi rst element decided (Luxembourg 1997) broader (Nice quite precise whereas others qualitative revised possibil concrete quantitative terms timing ··excellent standard reached ··This ··benchmarkin left choice Every present plan effect These pla reviewed ·· peer-review To reinforce call involvement trade unions creating famous Dutch Wassenaar agreement (1982) taught dialogue condition introduction \Velfa partners responsibility lend knmvledge Where inclusion stake tl1enon-governmental organisations soft merit forget roads hard-law remain valuable outset wrote Treaties ham1onisation could achieved regulation taking fonn minimum nonns Because frequent unani mity requirement however road harmonisation always disregarded met solely relate internal trans- character companies citizen mobil They free movement persons (including indispensable ial sti long go Regulation 1408/71 aims migrants rights urgent sunplification extension) cohesion (structural funds) international (workers’ multinationals enterprises transferred) include minimal prevent dumping organisation pa rt-ti employees measmes aimed shares advisable Obviously category finds foundation justifica­ Treaty illustrated examples equal non-discri mination Much areas- realises Unfortuna tely Nice injecting Qualified Majority Voting AGENDA rope ? summing purpose Luxem bou 11rocess (October bring accepted headi ngs i. Increasing labour-market Specific indicated school-leavers months ii innovating entrepreneurship iii flexibility iv chance Second whole modernisi got impetus Council Over w”hich strengthened quantifying overall C0tmcil \\ider council stipulated marked % 2010 %-threshold crossed (These reinforced intentions Swedish intermediate 2005 (56% 66 men) ii. “Steps decisive eradication setting end Policies combating initiative iii. cooperation ro1lean (December heads State approved six strategic orientations constituting agenda: better jobs finding discri iv. v. bet\veen vi. integrating om foreign just mention ; rerun described elsewhere stress recogn mto rei nforcing worked hard complement Luxembour proce conrn1on For side coin minted bourg Withi gave pa1iicular objec tives particul arly dear add mbomg dimensions Fi hting discrimination fore­ invited priorities framework thefollowing objectives: facilitateparticipation goods services; vulnerabl mobilise bodies specified detail refer housing scope ojectives surprising multid imensional feature recognised throughout dealing probl em tL impossible monitor withou comparable outcomes complex sensitive Fortuna hereto scratch Recently \Vith (the quintile ratio): line (before socia transfers) jobless regional disparities amount early school leavers (8) appropriate needed States’ developments Achieving shared linking (More TO\;vards Policy turning principles effective http ://www va ndenbroucke fgov be/T-00 l11 htm) Following Conclusions each Plan including descrirtion (nationally determi ned) follow-up methods June 200 basis analysis Plans hope summer Open Method Co-ordination really get vay Drawing conclusions feasible priority secu rity rticular argued long-standi account high-level officials created Olli ttee sufficiently visible counter veight narrower perspectives vise dominate endeavour Given currently undertaken Committee during Presidencies Our domain established namely thi \Viii enable equilateral triangle »(9) history Communication commissio Stmctural 1nd1cators COM(2000 594 27 75p (9) concept ··European triangle’·was introdu ced Anna Diamantopoul ou Commissioner She used addressing Parliament gust