History of social security in Europe

1. History of social security in Europe

2. Quick view on EU history of social security Medieval - Renaissance times: Poorhouses & charity Controlling role of the State Guilds, fraternities and commons Craftguilds; in particular in the Low Lands • Both “employersorganisations and tradeunions” • Unitemembers of the sameoccupationalgroup • Servingmembers’ economicinterests • And the generalwell-being of theirgroup • Achievingagreements: negotiation and collectiveaction • Incomesecurity and socialsecurity • Contributions to secure income

3. We’re getting closer…. Industrial revolution 1750-1850 Classical liberalism (A. Smith): • Economic doctrine of free enterprise Urbanisation From family economy to industry economy: • Rightless workers – no correction mechanisms • Child labour Need for organisation of workers’ interests 1848…

4. Beginning of institutionalised social security 1850-1900 Upcoming socialism (Marx) Upcoming trade unions: • First priority for wages and working hours and Christian social thinking (Rerumnovarum): • First labour laws (child labour and women) • Laws for the poor 1889 Germany (Von Bismarck): • Retirement benefits (70 years) • Disability benefits • Sickness insurance

5. Beginning of institutionalised social security 1900-1950 Trade unions: • Funds for income support unemployment & sickness WW 1: this never again…. • Beginning social dialogue (Low lands, Nordic countries) • Beginning overarching international institutions Russian revolution: state communism Crash of 1929 John Maynard Keynes

6. Beginning of institutionalised social security 1938-1950 WW II … this never again…. Rebuilding Europe: (Nordic & Rhineland countries) • Institutionalisation social partnership • Strict, central policies: economy rules • Social security arrangements and laws • Social security institutions Start “Europeanisation”: ECSC

9. Initial concept and basis social security continental Western-Europe 1950-1980 Mostly based on (non-extended) family with one breadwinner Tendency to cover “each risk” – limited personal risk Open-end arrangements: cradle to grave Wage related Division between general social security and employee insurances Sharp division responsibilities employer - SSI Mostly financed by contributions employer – employee Building initial systems finalised 1960-1970

10. Europe: one and undivided? Economic models in Europe

11. Subjects • (Socio-) economic models in Europe: • Rhineland • Anglo-Saxon • Mediterranean • Nordic • Exercise… • Performances of the models • Where does Turkey stand?

12. Size of EU countries EU parliament seats Size of national GDP • Germany • France • Italy • UK • Poland • Spain • Romania • Netherlands • Belgium • Cczech • Greece • Hungary • Portugal • Germany • France • UK • Italy • Spain • Netherlands • Belgium • Sweden • > Poland • Austria • Greece • Denmark • Ireland Turkey

13. Many differences in Europe Differences in: • Economic characteristics • Stage of development and • Performances Differences in history and applied economic models Two illustrative indicators: GDP and Minimum Wages

14. Gross Domestic Product per head

15. Minimum wages 1/1/2009

16. 4 economic models (A. Sapir) Nordic • Denmark, Finland, Netherlands, Norway, Sweden, • 1730 Billion USD Rhineland • Austria, Belgium, France, Germany, Luxemburg • 6750 Billion USD Anglo-Saxon • UK, US, Australia, Ireland, some Eastern European countries • 2425 Billion USD Mediterranean • Spain, Italy, Portugal, Greece • 4120 Billion USD

17. Nordic model Productive, well educated work force Strong state, balanced with strong labour actors High public spending (social protection and education) Unregulated labour markets, though with big public sector Flexicurity Universal welfare. Low wage inequality High grade of institutionalization Strong trade unions / social partnership Public private partnerships in social security

18. Rhineland model These countries typically have: Stake holder economy (owners, government, employers, employees, costumers) Market economy based, striving for balance between free market forces and social responsibility Unemployment benefits and easy access to government payments. Public-funded pensions, early retirement wages. High taxation Social partnership, active social dialogue, government interventions Strong trade unions that variably strive for high labour protection and/or high wages.

19. Anglo-Saxon model These countries typically have (or had): • Share holder economy (stocks) • Competition based • Social assistance policies designed to serve as a safety net. • Unregulated labour markets. • Weak social partnership • Limited government interventions • Class oriented societies • High income inequality, possibly without a minimum wage. • Low ratios of public debt to gross domestic product.

20. Mediterranean model These countries typically have: • Strong labour protection; highly regulated labour market • Costly state pension systems; early retirement age • Low level of social partnership • Strong family-oriented income transfers – low social security • Low participation rate (women) • High public debt – GDP ratio

21. Models’ Performances

25. GDP cp pc 1970-2008

26. Where does Turkey stand?

27. Employment

28. Economic growth

29. Taxation

30. Exercise 1 Which model is closest to Turkey and why? (please do not let the performances be leading, motivate your answer relating to culture and social & economic structure) Is that the best model for Turkey’s development? Are there areas in socio-economic development where you see a need for change? If so: how? Where and how will this possibly effect social security? 40 minutes discussion, 10 minutes prepare report 10 minutes presentation.15 minutes plenary

31. Stake holdereconomy (owners, government, employers, employees, costumers) • Marketeconomybased, strivingforbalancebetween free marketforces and socialresponsibility • Unemploymentbenefits and easy access to governmentpayments. • Public-funded pensions, earlyretirementwages. • High taxation • Social partnership, activesocialdialogue, governmentinterventions • Strong tradeunionsthatvariablystrivefor high labourprotection and/or high wages. • Shareholdereconomy (stocks) • Competitionbased • Socialassistancepoliciesdesigned to serve as a safety net. • Unregulatedlabourmarkets. • Weaksocial partnership • Limitedgovernmentinterventions • Classorientedsocieties • High incomeinequality, possibly without a minimum wage. • Low ratios of public debt to grossdomestic product. • Strong labourprotection; highlyregulatedlabourmarket • Costly state pension systems; earlyretirementage • Low level of social partnership • Strong family-orientedincome transfers – low socialsecurity • Low participationrate (women) • High public debt – GDP ratio Productive, well educated work force Strong state, balanced with strong labour actors High public spending (social protection and education) Unregulated labour markets, though with big public sector Flexicurity Universal welfare. Low wage inequality High grade of institutionalization Strong trade unions / social partnership Public private partnerships in social security

32. Who profits most from EU?