STRATEGIC CHOICES FOR SOCIAL POLICY1
Frank Vandenbroucke
The Herman Deleeck Centre for Social Policy requested me to give a presentation in support of the
Centre’s internal deliberations on its research priorities. I read the Centre’s self-evaluation with
great interest and was impressed with the Centre’s productivity. So what then do I expect from
social research from the perspective of my policy experience? Scientific research needs to help
policy makers in making strategic choices. It must confront policy makers with facts – hard,
sometimes unpleasant facts, inconvenient truths – but also with the necessary nuance in the analysis.
Hence, strategic choices in research should be the mirror image of strategic policy choices that
impose themselves.
In the first part of this presentation I explain why social policy in our country should be making clear
choices now. These choices have to do with the objectives, the priorities behind the objectives, and
the architecture of social policy. Architecture refers to the question: which instruments do we
deploy, and who deploys them? With ‘clear’ I mean: clearer and more explicit than in the past. Mind
you, a choice should not always follow the pattern ‘all-or-nothing’. It often involves finding the right
balance, but then also an explicit and well-considered reflection must be made.
In the second part of this presentation, I briefly sketch some developments in the international
debate on the welfare state in the course of the last 15 years, and ask the question to what degree
policy in our country has found any connection to this debate. In a sense, the international debate
on the welfare state had a ‘programmatic’ character. It mainly revolved around the question which
programme was at hand – which tasks lay ahead – when we talk about the future of the welfare
state. From different angles people pleaded for a new social programme – e.g. answering ‘the new
social question’, ‘insuring new social risks’, or ‘the social investment state’. Such a program is
actually a bundling of strategic choices. In the second part I argue that in our country we have
reacted rather half-heartedly to the programmatic debate on the welfare state, precisely because
coherent strategic choices are hard to realize. That is an Achilles heel of our social policy, and it
should change.
In the third part of my presentation I zoom in on the essential benchmark of any social program: to
what degree is it redistributive? I first consider an empirical question: Why did poverty and inequality
not decrease in the past decennium, and in which countries did it increase? Would that have
anything to do with a shift in the welfare states’ programme, by which attention has drifted too far
away from redistribution? Or conversely, would inequality and poverty be a consequence of too
little innovation in the welfare states’ programmes? Or would changes have occurred in an
incoherent way? These questions make up a very sizeable research project. Subsequently, I will
address a normative issue: why should we not accept that poverty and inequality increase even when
other serious societal challenges demand attention and resources?
1
Text of a presentation for the collaborators of the Herman Deleeck Centre for Social Policy (CSP) on a seminar concerning
the Centre’s research choices (Ostend, 26 January 2010).
1
In the fourth part of my presentation I finally present a list of ‘strategic choices’ that policy should
make, and for which social research could make itself very useful. You may be rather disappointed or
even frustrated by the fact that it concerns a list rather than one or a couple of core questions. This
is a conscious choice. A speech would undoubtedly sound nice and strong if everything could be
reduced to ‘one big question’, but unfortunately reality is not reducible to a few simple questions.
In this presentation, I try not to cover everything. Here and there I will illustrate a point, but many
issues will not be touched upon. I will extensively dwell on aspects of social policy that up until now
have been addressed less within the world of social research (namely the budgetary situation), while
I will only very briefly touch upon other important issues as they are sufficiently known in social
research and have already been extensively treated elsewhere (such as the evolution of minimum
income protection). I especially want to stress the need for strategic choices. This also entails a
certain mentality – a mindset – with which we look at these choices. I will further consider this issue
in the epilogue.
1. Explicit and implicit choices in Belgian social policy: the end of a path
In the course of the past 20 years, some important choices have been made in our country in the
field of social policy, sometimes very explicitly sometimes implicitly. For example, an explicit choice
has been made to face population ageing with essentially a budgetary strategy: we would make
savings to provide for a growing pension burden. An example of an implicit choice is the emphasis on
minimum income protection in social security: maintaining the minima rather than guaranteeing a
standard of living for every socially insured person was the priority. Next to these strategic choices
that I discuss in this part of my presentation, other choices were made, such as an important
emphasis on the combination work/family. I deal with this latter choice in the next part of my
presentation when I talk about ‘programmatic’ changes in conceptions of the welfare state.
1.1 The budgetary strategy on population ageing
In the 1990s an explicit choice was made for a budgetary strategy to pay for the costs of population
ageing. In a way the strategy consisted in turning vice into virtue: Belgium has a high debt ratio and
associated with it relatively high fiscal and parafiscal pressure. If we would succeed to reduce the
debt ratio considerably, then the state’s fiscal and parafiscal income could be used to pay for
increased spending on pensions instead of for interest on its debt. Put differently, the growing
implicit (pension)debt proper to a repartition system of pensions of an ageing population, would be
tackled when the explicit (public) debt would decrease. Society can indeed handle debt, but not the
sum of growing public debt and growing pension debt. Work by the Federal Planning Bureau
indicated that a decrease in government deficit and public debt necessary to comply with the
Maastricht criteria – to be allowed in the eurozone – corresponded precisely with a deficit and debt
decrease that was needed to tackle the cost of population ageing.2 The consequence of this strategic
2
I elaborated on this budgetary strategy before in Frank Vandenbroucke, “Vergrijzing en het Belgische regeringsbeleid:
terugblik en vooruitblik”, in J.B. Kuné (red.), Leven in een ouder wordende samenleving: generatiebewust vooruitzien in de
ste
21 eeuw, 2003. The budgetary strategy, with reference to the EMU conditions, has been substantiated and made explicit
in M.J. Festjens, “Het pensioen. Een lange termijn contract versus het schrikbeeld van de vergrijzing”, in M. Despontin en M.
2
choice was double. On the one hand it supported the motivation of the political and social world to
actually take forward the budget cuts necessary to comply with the Maastricht criteria and to join
the monetary union. But on the other hand it also had a rather numbing effect on the debate about
the welfare state’s architecture. We indeed presumed that the challenge of population ageing could
be tackled through saving, without systemic changes to the welfare state.
At the beginning of this century the strictly budgetary strategy was broadened to a double track: on
the one hand setting aside budgetary reserves, on the other hand increasing the employment rate.
This double track was explicitly part of the objectives of the Governments Verhofstadt I and II and
was consistent with the idea of the ‘active welfare state’. But in practice it was still presumed that
no thorough systemic changes, about which a thorough and explicit debate would have to be held,
would be necessary. This does not mean that during this period, apart from the activation of the
employed, no other new developments and shifts in social policy happened,3 but they were often
more implicit than explicit.
Today we are confronted with the fact that this budgetary strategy has been insufficiently put into
practice, and has been met head-on by a serious financial and economic crisis. We also have to make
another observation. A few years ago the budgetary strategy could be presented as the alpha and
omega of a credible answer to population ageing, today budgetary restructuring is only one of the
conditions to succeed – a hard and crucial condition, next to other hard and crucial conditions. The
societal debate will have to focus on reforms within the social system, parametric reforms and/or
structural reforms.4
Let me illustrate this with a number of figures. The High Council of Finance (HCF) asks the
governments to reach an overall balanced budget by 2015, and presumes that in this way in the long
run 80% of the expected cost of population ageing can be financed through a reduction in
government debt.5 (the HCF puts different scenarios on the table regarding the distribution of the
effort of various levels of government; in what follows I take as a starting point the 65/35distribution of the effort that the HCF presents by way of illustration in its last note of January 2010)
The HCF’s underlying reasoning presumes the following:
ste
Jegers (eds.), De sociale zekerheid verzekerd? Referaten van het 22 Vlaams Wetenschappelijk Economisch Congres, Brussel,
VUBPRESS, 1995, pp. 271-331. See for a ‘mid term review’ M.J. Festjens, ‘Hoe het Belgisch beleid zich voorbereidt op de
financiering van de vergijzing. Een bondig overzicht’, in Bea Cantillon, Karel van den Bosch and Stijn Lefebure (red.), The
elderly in Flanders 1975-2005. Looking back into the future, Leuven/Voorburg, ACCO, blz. 231-243.
3
E.g. easing the combination work/family was clearly present as a policy line, also explicitly. Another explicitly present
policy line was the attempt to accomplish a generalisation of the second pillar pensions that would have to comply with a
number of social criteria (so-called social pension plans).
4
In the domain of pensions, examples of ‘structural reforms’ are the switch from capitalisation to repartition (or vice versa),
or a switch from a system of defined benefits to a system of defined contributions. In the pension system thorough reforms
are also possible while at the same time keeping the same basic system. In that case we talk of ‘parametric reforms’
because they mainly affect the values of the parameters used to calculate pension entitlements (the career that is taken
into consideration, the pension age, bonus-malus regulations, the revaluation of the wages on which contributions are paid
and the adaptation mechanisms of the current pensions…). See for a difference between structural and parametric reforms,
and for an overview of what took place in a number of other countries is P. Bisciari, D. Dury, B. Eugène & L. Van Meensel,
‘De hervormingen in de pensioenstelsels van de landen van de EU15’, Tijschrift van de Nationale Bank van België, December
2009, p. 21-47.
5
For the advice regarding overall state finances, see High Council of Finance (HCF), Evaluatie 2008-2009 en
begrotingstrajecten ter voorbereiding van het volgende stabiliteitsprogramma, January 2010. For the argument that with
this strategy 80% of the expected cost of ageing can be financed, see HCF, Begrotingstrajecten op korte en middellange
termijn voor het aangepaste stabiliteitsprogramma 2009-2012, September 2009, p. 9.
3
(i)
(ii)
(iii)
(iv)
That the primary balance of the joint levels of governments (i.e. the budget outcome
without interest) with respect to GDP will improve by 5% between 2010 and 2015; 6
That the so-called Entity I (the federal government and social security), i.e. the Entity that
is in charge of the cost of population ageing, would still have a deficit of 1% of GDP in
2012; 7
That budgetary margins that can be created until after 2050 by the joint levels of
government, to make additional expenses without endangering the intended long term
stabilisation of government debt on a tenable level, are used entirely to tackle the rising
cost of pensions and health care;
That despite these strict demands, 20% of the rising cost of ageing is still not ‘covered’ by
this strategy, in other words that more budgetary austerity or other measures are
needed;
But also
(v)
That the poverty risk among the elderly which is now relatively high, would decrease
substantially between 2010 and 2030 despite the fact that the average ‘replacement rate’
for pensions in relation to the last earned wage for male pensioners (and at the end of
the period also for women) would decrease systematically.8
I discuss each one of these five presumptions.
The first presumption, an improvement of the primary balance of the joint levels of government with
5% of GDP over a period of 5 years, implies budget cuts that our country has not faced in the past 40
years. To compare this task with previous experiences, we can divide the history of our country in
periods of 5 years and examine when over a period of 5 years the strongest improvement of the
primary balance has been realised. When we do that we see for the 1970s and 1980s and the two
following decennia the following periods of severe austerity: 9
-
The primary balance of the joint levels of government improved between 1981 and 1986
with 8% (strongest performance in the 1970s and 1980s; by the centre-right governments
Martens);
6
HCF, January 2010, p. 80.
HCF, January 2010, p. 22.
8
Study Commission on Ageing, Annual report, June 2009, p. 60-67. The report of FPS Social Security, Indicatoren van
sociale bescherming in België, December 2009, refers to stable and even rising theoretical individual net-replacement rates
for employees with an average, respectively smaller than average wage during this period (p. 28).
9
The ‘hit list’ of the 10 most spectacular improvements of the primary balance of the joint levels of government over a
period of 5 years looks like this : 1981-86 (+8.0%) ; 1983-88 (+7.5%) ; 1982-87 (+5.3%) ; 1984-89 (+4.7%) ; 1985-90 (+4.6%) ;
1986-91 (+3.14%) ; 1993-1998 (+3.09%) ; 1992-1997 (+2.7%) ; 1996-2001 (2.4%) ; 1995-2000 (+2.2%).
7
4
-
The primary balance of the joint levels of government improved between 1993 and 1998
with 3.1% (strongest performance for the two consecutive decennia: by the centre-left
governments Dehaene).
Next to the fact that our country’s institutional and budget structure has changed strongly after the
1980s (due to the state reform and finance act of the end of the 1980s) and next to the fact that the
political coalition was different, there were two strong points of difference between the period 19811986 and the period 1993-1998. After the crisis of 1981 not only has there been a devaluation (an
economic weapon that was not part of the arsenal in the 1990s anymore, and of course not now
either), but more importantly, budget cuts were for an important part the result of a sizeable
reduction of government investment expenses and other capital expenses. Investment expenses and
other capital expenses reached a peak of 8.2% of GDP in 1981, not only because the government in
those days systematically invested more than today, but also because previous capital expenses had
been strongly beefed up due to aid to the so-called national sectors. Investment expenses and other
capital expenses decreased from this peak to a level of 3.8% of GDP in 1986, to fluctuate between 2.5%
and 3% of GDP. 10 When we disregard government investment and capital expenses, the
improvement of the primary balance in the period 1981-1986 is not much bigger than in the period
1993-1998: a reversal of respectively 3.7% and 2.6% of GDP over a period of 5 years. Twice this
reversal was accompanied by social and political commotion.
In other words, the aspiration to improve the primary balance of the joint levels of government with
5% of GDP over the period 2010-2015 implies budget cuts that will significantly surpass the big
budget cuts of the past 40 years in terms of impact on the current operations of our governments.
This will not happen with efficiency gains alone: if one wishes to accomplish this, one will have to
intervene in government outlook and objectives and in the way governments collect their resources.
Whether we want it or not, with such a budgetary objective the whole house is getting a major
makeover and with this come strategic choices with regard to the kind of house one wishes.
Do I say that Belgium is therefore a ‘Greece at the North Sea’ as we just heard being proclaimed? No.
It is incorrect and not intelligent to compare our situation with the Greek one. It is not the case that
we stand at the edge of the financial abyss. What I am saying is that the plan to attain budgetary
balance by 2015 supposes budget cuts that cut deeper than what we have been through in the 1980s
and 1990s. When we formulate this ambition we should also know its magnitude.
For a good insight into the last period of budget cuts (1993-1998) we need to add the following: the
improvement of the primary balance of 3.1% was almost to the same degree the accomplishment of
Entity II (Regions and Communities and local authorities), of which the primary balance improved by
1.4%, as it was of Entity I (the federal government and social security), of which the primary balance
improved by 1.7%. In view of the Maastricht criteria the question which government in Belgium
would make the budget cuts was irrelevant. But in view of the cost of population ageing this
question is indeed relevant. The level of government on which the future of pensions and health
care funding must be guaranteed, given our current state form, is the federal level, Entity I. The
10
This consideration is in line with what Herman Daems rightly notes about the fact that instruments that used to be in our
tool box are not available anymore (‘Het herstel wordt moeilijker dan ooit’, De Morgen, 30 January 2010, p. 18).
5
government that needs to make savings for the future is the federal government.11 This brings me to
the next point.
The HCF assumes that the period of austerity of 2010-2015 will again be borne partly by the federal
level (Entity I), and partly by the Regions, Communities and local authorities (Entity II). In one of the
scenarios presented by the HCF it involves a ratio of grosso modo 65/35. Entity II books a surplus of
1% of GDP, while Entity I has a deficit of 1%. The HCF’s second assumption is that the state reform or
an institutional agreement would ensure that such a surplus would be transferred to the federal level,
or that Entity II would take over part of the cost of ageing or another budgetary burden of Entity I in
another way.12 The HCF scenario that I clarify here does not involve a small sum: 1% of GDP
corresponds to about 3.4 billion euro. To compare: at the time of the Flemish government formation
one presumed that the Flemish government, among others thanks to budget cuts, would have a
margin for new policy at its disposal that could grow in favourable circumstances to 1.4 billion by
2014. The margin that Flemish policy is looking forward to would in its totality amount to less than
half of the effort that the HCF would ask to Entity II to prepare for population ageing. I will not
express my opinion here on the political conditions and in which way the Flemish government can
make a real contribution to this budgetary strategy (it is obvious that the Flemish government cannot
simply be willing to yield its own policy margin). But anyhow a threefold conclusion imposes itself.
Primo, an institutional debate is inevitable. Secundo, the stake of an institutional debate is the future
of our social model.13 Tertio, whatever the solution to this puzzle would look like, a solution would
inevitably be at odds with the necessity for the Regions and Communities to make additional
investment efforts, e.g. in the field of research and development, higher education, child care and
kindergarten… A modern concept of social policy does not only include ‘protection’, but also
‘investment in human capital’, and the former will have to be balanced with the latter within
particularly small margins, not to say ‘negative margins’. I will come back to this point later, because
finding a good balance between ‘protection’ and ‘investment’ is one of the strategic choices that we
face.
The third assumption in the prevailing ‘budgetary strategy to pay for population ageing’ is the most
controversial. I simplify somewhat but not too badly, when I say that with this strategy we presume
that pensions and health care have priority as a budgetary claim over any other societal problem that
is coming our way now and in the coming decennia. From a demographic point of view alone this is
disputable: at present we are facing in our bigger cities an increasing need for child care and primary
education for which new policy and budgetary efforts will be needed. But many other issues lie
before us, such as the ecological one, the problems with the judicial system, … that all bring about
budgetary claims. Is it realistic to think that all these claims will be tackled in a budgetary
straightjacket that is implied by the prevailing ‘budgetary strategy to pay for population ageing’? For
this issue I also refer to my list of ‘strategic choices’ below.
11
The difference between the saving task that the government is facing and the investment task faced by the Regions and
Communities, penetrates very difficultly in the political and social budget debate. See Vandenbroucke, ‘Vertrouwen
scheppen vraagt daden’, De Morgen, 14 October 2008 in which I address this problem succinctly.
12
See HCF, January 2010, Point 2 of the General Conclusion on p. 24 for a rather cryptic formulation of this argument.
13
Cf. my plea for a ‘social state reform’ in Vandenbroucke, ‘hoog niveau of eerlijke verdeling? Slim investeren en
hervormen kan er ‘èn-èn’ van maken’, WRR and SER symposium ‘Naar een nieuwe sociale investeringsagenda’, Den Haag,
16 January 2007 – the integral publication ‘Naar een nieuwe sociale investeringsagenda – de toekomst van de Nederlandse
verzorgingsstaat’, and in Vandenbroucke, ‘Lakmoestest voor de sociale staatshervorming’, De Morgen, 4 April 2007.
6
But even if we overcome all these problems, still the budgetary strategy will be insufficient: that is
the consequence of the fourth presumption that I pointed out before. Whatever is the
organisational and financial model for pensions, the policy menu out of which can be chosen further
contains only four possible recipes:
(i)
(ii)
(iii)
(iv)
The government can start borrowing more, in other words push the burdens further back
into the future (a recipe that I mention here for the sake of comprehensiveness, but that
evidently is contrary to the very concept of a budgetary strategy);
The average quality of pensions can decrease (i.e. become lower than the level on which
our presumptions are based; a recipe that I also mention for the sake of
comprehensiveness, but which we obviously do not wish);
The government and/or pension funds can raise more contributions from citizens and/or
companies in proportion to what people earn on average, on top of the contribution and
tax increases that may be needed to balance the budget by 2015;
The period that people will have to work to enjoy the same quality of pensions can
become longer on average.
Options (ii), (iii) and (iv) can be the result of ‘parametric reforms’. I am not saying that all this needs
to take dramatic proportions. But these actually are the choices that have to be made now.
However, before we finish we must consider the social result that is projected by the High Council for
Finance and the Study Commission on Population Ageing (SCvV). This social result that I referred to
before as the ‘fifth presumption’ is more nuanced than is often thought. The SCvV indeed presumes
that in the coming 20 years a sizeable reduction of the poverty risk for pensioners will occur: the
relatively high poverty risk that we observe today for the elderly would decrease to the relatively low
poverty risks for working individuals.14 Concerning the conservation of the acquired standard of living,
the average individual replacement ratio for retired employees and civil servants would decrease
over the course of the projection period. For men this decrease takes place over the entire
simulation period, while for women it would only occur after a phase of small growth and
stabilisation that would last until about 2020.15 The decrease of the replacement ratios would be
more outspoken for pensions that are situated above the average level.
This (projected) positive result regarding poverty is related to the increase of pension minima and
the development of the Guaranteed Income for the Elderly (IGO)(and namely an increase of the IGO
with about 14% and the minimum entitlement per career year with 17% in 2006) and with an
increasing activity rate for women: the decrease of poverty for pensioners in this simulation is to a
great extent due to the improvement of female pensions. This (projected) social result is related to
two strategic choices that Belgian social policy – partly explicitly, partly implicitly – has made: a
strong focus on the employment of women and on minimum income protection in social security. I
will soon come back to these strategic choices.
Obviously we must ask ourselves the question how robust this projected result is, and what it
concretely means for concrete people. I do not only refer to the insecurity that is inherent in this
kind of simulations. The question arises if this rather spectacular decrease of pensioners’ poverty
14
15
See Studiecommissie voor de Vergijzing, Jaarlijks verslag 2009, p. 65, Figure 14. In ScVV (2009).
See SCvV, 2009, p. 61, Figure 12.
7
risk is not partly a statistical artefact since the policy simulated in the model aims to allow as little
pensioners as possible to drop beneath a poverty threshold. To reason in function of a poverty
threshold is good but also somewhat concealing: a pensioner whose income is 1 euro higher than the
threshold is ‘not poor’, a pensioner whose income is one euro less than the poverty threshold is
‘poor’. It is apparently proper to our pension situation that relatively many pensioners are situated
relatively close to the poverty line, i.e. just above or just below. To judge what this simulation result
means one should perform a sensitivity analysis with different poverty thresholds, or even better,
map the income distribution among pensioners precisely. Subsequently, one should also bring in
second and third pillar pensions and homeownership. Here lies an important and urgent task for
social researchers in our country, as an extension of the creditable work of the SCvV and the experts
of the planning bureau. It is indeed impossible to find social support for reforms in the pension
system if the expected distribution of the living standard among pensioners has not been mapped
accurately.16
Moreover the issue arises if an improvement of the poverty risk that now begins to take place is any
consolation for pensioners that live in poverty today, in other words if any additional policy is needed
for this in the short term.
Concerning long term pension quality the fundamental question then arises if it is still possible to
make choices that differ profoundly from the scenario sketched by the SCvV. In view of the
budgetary and societal challenge that lies before us, do we still have degrees of freedom to make
substantially other social choices, e.g. in the direction of a strong improvement of the replacement
ratios for employees with above average wages and/or in the direction of an individualisation of the
pension system – without giving in on the objective of ‘minimum income protection’? Detailed
simulations and social research should increase our insight into the matter. Intuitively this seems
doubtful, at least if no evolution towards working significantly longer is initiated. Indeed, when we
want to bear fully the cost of population ageing as it is projected now by the SCvV , then we will
already have to make additional efforts for which we have to choose from the menu that I presented
before. In other words, if in addition we want to improve pension quality, then we again end up with
the same menu. I do not think it is possible to pick from the menu twice while disregarding the
option ‘working longer’, as that would mean that everything must rely on the payment of more
contributions, i.e. more expensive labour. In my next point I come back to the difficult balance
between ‘minimum income protection’ versus the ‘insurance principle’ in a more general sense.
Second pillar pensions can play a role to maintain the individual replacement ratios for employees
with above average wages and even to improve them. That was the ambition of the Act on
Supplementary pensions (ACP). The possible role of the second pillar, as conceived in the ACP brings
about a complex discussion which I do not elaborate at this point except for one remark. One should
not underestimate the size of employers’ financial contribution to improve significantly replacement
ratios through the second pillar. In Table 1, I present a rough calculation of the percentage of wages
16
Of course research already exists concerning the living standard of pensioners, cf. the interesting work by the CSP and
others, compiled by Bea Cantillon, Karel Van den Bosch & Stijn Lefebure (red.), Ouderen in Vlaanderen 1975-2005. Een
terugblik in de toekomst, Leuven/Voorburg, ACCO, 2007; and in Bea Cantillon, Karel van den Bosch, Stijn Lefebure (red.),
Ouderen in Vlaanderen en Europa. Tussen vermogen en afhankelijkheid, Leuven/Den Haag, ACCO, 2009. The challenge lies
in the establishment of a credible connection between developed and developing micro simulation models on the one
hand, and data on the second and third pension pillar ànd the macro-simulations of the Federal Planning Bureau on the
other hand.
8
that must be paid annually as a contribution in the complementary pension system (in case of
capitalisation), to guarantee an employer of 65 years of age an additional pension equal to 10% of
the last earned wage for (i) an employee who still has 10 years to go before his retirement, (ii) an
employee who still has 20 years to go before his retirement, (iii) an employee who still has 30 years
to go before his retirement, (iv) an employee who still has 40 years to go before his retirement.17
Table 1.
10 years to go
20 years to go
30 years to go
40 years to go
Man
12.8%
5.9%
3.7%
2.6%
Woman
15.2%
7.1%
4.5%
3.2%
If one wants to improve replacement ratios through supplementary pensions then one will have to
trade wage increases for contributions to supplementary pension programmes for a certain period of
time. This also entails a choice that has not or not sufficiently been made after the introduction of
the ASP. As many employers who do not yet provide supplementary pensions (or do so at a very
modest level), are actually public or subsidized employers, this is indirectly also a question of
spending additional public money.
1.2. Minimum income protection in social security
An implicit strategic choice made by Belgian policy in the past decennia is the emphasis on minimum
income protection. This happened on the one hand by mainly paying attention to the minima in the
social security system and on the other hand by updating income selective protection systems such
as the Guaranteed Income for the Elderly. This has been extensively documented in scientific
research, namely by the Centre for Social Policy, so I will not dwell on this any longer.18 It is useful to
highlight that the focus on ‘the weakest group’ has not been limited to policy on pensions and other
allowances: with the maximum bill (MAB) in health care a specific system of income related
protection for the most vulnerable concerning health care has been introduced. Recent research
indicates that the maximum bill despite its income selective character is not only important for low
income families: also people from the middle class and even higher earners can come across
situations where the health care maximum bill is important to them.19 Hence income selectivity, a
feature feared and criticized by some at the time of the introduction of the MAB, does not preclude a
universal reach of this protection system which is important to its legitimacy. I think it would be
useful for social policy research to examine the precise way in which income selectivity has been
introduced in the different branches of social security in recent years (compare e.g. income and
17
Calculations on the following basis : the mortality tables MR/FR (those used by insurers), an actualisation rate of 4%, a
retirement age of 60, an inflation of 2%. The benefit is an annuity and tied to inflation and the retained earnings increase
over the course of the career by 3%.
18
See N. Van Mechelen, K. Bogaerts, B. Cantillon, De welvaartsevolutie van de bodembescherming in België en de ons
omringende landen, Working Paper Sociale Zekerheid Nr. 5. Hence, the road taken by the Belgian welfare state does not
correspond to the hypothesis of ‘dualisation’ that Bruno Palier uses in a soon to appear impressive series of studies on
reforms in Bismarckian welfare states (Palier (ed.), A long Goodbye to Bismarck? The polictics of Welfare Reforms in
Continental Europe, forthcoming).
19
Erik Schokkaert et al, Evaluatie van de effecten van de maximumfactuur op de consumptie en financiële toegankelijkheid
van de gezondheidszorg, KCE reports 80A, Brussel, 2008. See p. 42-46.
9
capital criteria in the Guaranteed Income for the Elderly and the maximum bill) and what its societal
meaning is.
The question is whether the choice for minimum income protection and the attention to the most
vulnerable is still reversible at all. Even though it would be good to reinforce the insurance principle
once again, I think it may prove difficult to implement. I refer here not only to the budgetary
scenarios that I drew before, but also, and more fundamentally, to the altered ratio of the number of
active employees who pay contributions for social security and the number of people who are
financially dependent from these contributions. In the employees’ system the ratio of the number of
people on benefits and the number of contributing people amounted to about 40% in the beginning
of the 1970s; for 20 years now this ratio fluctuates between 80% and 100% and population ageing
implies that it would rather increase than decrease. In Figure 1, I present the dependency ratio from
1970 till today, supplemented with a projection by the Federal Planning Bureau as of 2010 (on the
basis of which population ageing scenarios are being calculated).
Figure 1. Dependency ratio/social security employees
Dependency ratio, social security employees
100
90
80
70
60
50
40
30
20
10
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
0
beneficiaries of replacement income/salaried employment
Source: K. Vleminckx, DG Policy support, FPS Social Security
Organising an insurance and solidarity system with a ratio 40/100 is an essentially different thing
than organising an insurance and solidarity system with a ratio 100/100. That is why it is very hard to
return to the features of social security that were more pronounced 40 years ago, such as the
insurance of the standard of living, also for the higher earners. Still I do not think that the erosion of
the insurance system inevitably undermines the legitimacy of social security completely. I explain
this in the last part of my presentation.
10
2. ‘The new welfare state’: did Belgian policy join?
2.1. New tracks in thinking about the welfare state
In recent years, the international debate on social policy evidently revolved around the question
whether welfare states would remain fundable in the context of population ageing, and which
budget cuts and/or reforms would be needed. In quite a few countries serious reforms were
implemented in view of the sustainability of social systems, more so than in Belgium. Apart from this
discussion other lines of thinking were also developed in the international debate on the future of
the welfare states: they dealt with the need to establish a ‘new welfare state’, e.g. as an answer to
‘the new social question’. These days literature on the development of welfare states sometimes
gives the impression that the social and political actors faced a choice whether or not to go for one
coherent innovation track. It is tempting to reconstruct the political debate and political practice as
if everything revolves around one big story, but that is not necessarily true. In practice it concerned
(and still concerns) different tracks between which there was (is) a less logical or spontaneous
cohesion than the advocates of the new concepts sometimes make out. At least two tracks need to
be distinguished: the track of ‘new social risks’ and the track of the ‘social investment state’. And on
both tracks lies an important switch in terms of instruments: the question whether ‘new social risks’
and ‘investing in people’ would lead to a more service providing (and less benefit paying) welfare
state or not.
The ‘new social risks’ that literature started to distinguish from the classical social risks (income loss
at an elderly age, sickness, unemployment, labour accidents…) can be summarized as follows:20
(i)
(ii)
(iii)
(iv)
(v)
The impossibility to reconcile family responsibility and paid labour;
Single parenthood;
A family member that is dependent on care for a long period of time;
Low or unadjusted schooling;
Insufficient coverage by social security, e.g. because one does (or did) not have
access to an adequately insured ‘insider’-position on the labour market (check).
The first three situations become ‘risks’21 in a society where family bonds become more unstable and
women anyway more than in the past have the need for a decently paid job.
Investing socially is related to the idea that it is better to prevent social risks than to remediate them
afterwards, for example through training and activation of jobseekers, through investing in education
and lifelong learning… Investing in human capital and resilience is the central message here. In such
a conception of social policy the emphasis lies on people’s own responsibility to seize the investment
opportunities that are offered to them. The expression ‘social investment state’ is usually linked to
Giddens who as the ideologue of the so-called Third Way gave the impression that social investments
could take the place of social benefits. Consequently, the concept often gets a very one-sided
interpretation and is quite charged.
20
Here I take the ‘risks’ as listed by Bonoli in Klaus Armingeon and Guiliano Boloni (eds.), The politics of Post-Industrial
Welfare States? Adapting post-war social policies to new social risks, Routledge, London & New York, 2006, p. 5-8.
21
The expression ‘risks’ that dominates in this literature is in my opinion somewhat misleading as it partly (but not always)
concerns situations that people control themselves on the basis of needs that they have, and not risks that ‘strike’ them. It
may be better to speak of ‘new risks and needs’. Cf. Cantillon…
11
The ‘active welfare state’ as I advocated in 1999 stood for a combination of both tracks (addressing
new social risks, act preventively and activate) but at the same time also, contra Giddens, the
necessity to retain the classical social risks and adequate social benefits. Hence the ‘active welfare
state’ was an attempt to develop an ’ànd-ànd’ strategy: to not forget the classical tasks of the
welfare state, but add new tasks.22 The Belgian government pleaded the same in 2000 on the Lisbon
Summit at the launch of the Open Method of Coordination on Social Inclusion (and it is among others
this balance that increasingly went missing in European discourse in the course of the second half of
the decennium).
Both pleas – addressing new social risks and investing in people – can be tied to the argument that
our welfare states need to develop ‘services’ next to ‘benefits’. When we stimulate women to
participate fully in the labour market then childcare is needed, and not only a system of career
breaks, let alone only family benefits. Active labour market policy and education are developed as a
service, not on the basis of benefits. The Bismarckian welfare states (to which Belgium historically
belongs) are regarded as ‘cash-heavy’ (and insufficiently geared towards social services).
Researchers who developed this critique on the Bismarckian tradition had the Scandinavian model in
mind. There the ratio between budgets for social benefits and budgets for social services is very
different than ours.23
The international debate on the welfare state was ‘programmatic’ in a certain sense. It dealt with
the question which programme, which tasks, lie before us when we talk about the future of the
welfare state. I use the word ‘programme’ as literature on new social risks, on the social investment
state… usually talks about a coherent bundle of different strategic choices.
The answers to ‘new social risks’, and ‘investing in human capital’ partly overlap, namely when we
discuss new social risk (v) ‘low or unadjusted education’. It is hard to imagine that policy looks for an
answer to this issue without going in the direction of training and activation. But except for this one
example there is no compulsory political, institutional or sociological logic that in practice brings
welfare states to choose simultaneously for a focus on new risks, ánd social investment policy, ánd
services. The actual evolutions that we observe in the European Union do not correspond to such
presupposed coherence. This lack of coherence certainly also applies to Belgium.
2.2. Did Belgian policy choose for a ‘new welfare state’?
At present, quite some research is being published about the question whether European welfare
states indeed took the turn towards a ‘new welfare state’. In research on Belgium, the impression
prevails that not much has changed in the Belgian system compared to what happened in other
countries. Sometimes, but not always, one considers the expression ‘frozen landscape’ as quite
applicable to us.24 I do not intend to provide an answer to the question to what degree the Belgian
22
Vandenbroucke, De actieve welvaartsstaat. Een Europees perspectief, Den Uyl-lezing, Amsterdam, 13 December 1999 ;
also published in Onze Alma Mater, Leuven 2000/1, February 2000 ; Vandenbroucke, « Hoog of eerlijke verdeling… », Op.
Cit.; Vandenbroucke, ‘European Social Democracy and the Third Way: Convergence, Divisions and Shared Questions’, in
Stuart White (ed.), New Labour and the Future of Progressive Politics, London, Macmillan, 2001.
23
OECD, Social statistics.
24
See e.g. Palier, Op. Cit., containing contributions by Anton Hemerijck and Ive Marx about the Netherlands, respectively
Belgium. Armingeon and Bonoli, Op. Cit….; ‘Belgium. The quest for sustainability, legitimacy and a way out of ‘welfare
without work’, in Klaus Schubert, Simon Hegelich and Ursula Bazant (eds.), The Handbook of European Welfare Systems,
Routledge, London & New York, 2009, p. 49-64. We can find another perspective on the evolution that we are going
12
social system has taken a new direction; that would require a much more thorough analysis. I merely
wish to point to a few elements that are useful for the rest of my argument.
The ‘new risks’?
We can take the first ‘new social risk’ on our list as a first test case: did we invest in the possibility to
reconcile paid labour and family responsibility? The answer to this question seems to be an
unequivocal ‘yes’. Not only was this an explicit policy line for many years on every level of
government, but there is also a clear result. When we measure the difference between the
employment rate of women with children below 6 years of age and the employment rate of women
without children, Belgium scores exceptionally well: where in most countries women with small
children are less employed than women without children, that is not the case in Belgium. Figure 2
illustrates this.
Figure 2. Difference in employment rate of women (25-49) with children (< 6) and without children (2007)
Source: OECD
The employment dynamics in our country have been particularly feminine in the course of the past
12 years and this in a double sense: on the one hand there has been an increase in women’s
employment that was as significant as the relevant European average; on the other hand the
increase of employment in Belgium has been exclusively a women’s affair, as male employment
evolved less favourably than the European average. Figure 3 illustrates that Belgium, together with
Luxembourg and Portugal, is the only EU-country where between 1996 and 2008 the increase of
employment is exclusively due to women’s employment rate.
through in Koen Vleminckx, Towards a New Certainty: A Study into the Recalibration of the Northern-Tier Conservative
Welfare States from an Active Citizen Perspective, Doctoraatsthesis n° 99, Faculteit Sociale Wetenschappen, KUL, 2005.
13
Figure 3. Increase in employment rate (25-54), 1996-2008
Source: OECD
This result is no coincidence. Figure 3 illustrates the connection between the availability of child care
and employment of women below 40: more women working and more child care go hand in hand.
Belgium fits perfectly into this picture. With more child care and a high employment rate of women
below 40 we clearly shifted in the direction of the Scandinavian model on this point (compare
Belgium e.g. with Germany). But at the same time there is still room for improvement.
Figure
y)
4.
Employment
rate
for
women
(25-39)
to
child
care
(min.
2
14
Belgian and Flemish policy also sought answers to other ‘new social risks’. This was for example
explicitly the case with the Flemish care insurance and the development of specific ‘thematic leaves’
that were geared towards such care (as answers to new risk (iii)). But also the gradual expansion of
social security coverage to other groups than classical employees (the so-called ‘universalisation’ that
was a clear dimension of policy in the past decennia) fits into this picture as an answer to new social
risk (v).
Whether an adequate answer has been given to new social risk (iv) ‘low and unadjusted education’ is
another issue: despite policy (selective tax cuts, education …) the employment rate of the low skilled
remains low in our country in comparison with other countries. I will come back to this when I
discuss the investment dimension of our welfare state.
Service instead of cash?
The question whether new developments in social policy should focus on services rather than
benefits has rarely been raised in our country’s policy discussion. When we look at general data we
observe that in Belgium and Flanders in the course of the past decennium a lot has been invested in
services, e.g. in the further development of health care and welfare policies. Nevertheless, in
contrast with what people may think, we did not invest exceptionally more than other countries in
employment in this collective service sector. Figures 5 and 6 map the development of the public and
commercial service sector, with ‘public’ also containing non-profit and education. In Belgium public
employment grew strongly, but we are no real outlier in this matter. Employment growth was
nevertheless comparatively strong in public administrations but not so outspoken in the sector of
‘social services and health care’ (which I do not present here). The difference between Belgium and
other countries rather lies in the fact that employment in our commercial service sector has been
less dynamic than in other countries, as a consequence of which the relative centre of gravity of our
employment dynamics was situated more than elsewhere in these subsidized service sectors.
Figure 5.
Increase of the share of the population (15-64) employed in services, 1996-2008
15
Source: Eurostat
Figure 6. Share of the population (15-64) employed in services
Source: Eurostat
On the basis of the general ratio between social spending ‘in cash’ and social spending ‘in services’
Belgium remains part of the type of welfare states that are ‘cash-heavy’. When we dig deeper than
macro data but look at concrete policy records the image is mixed. The development of child care is
an example of a choice for services, but policies in support of the combination work/family also took
the form of new benefit systems (premiums for career break): so the question is whether we have
attained a proper balance here. In my opinion, additional investments need to be made in child care,
not in the extension of career breaks. In the case of care dependency the most important Flemish
policy innovation concerns the Flemish care insurance, a prime example of a choice for ‘benefits’:
one could indeed have spent the resources of the new care insurance to the further development
and accessibility of home care and residential care. In a way this last option would have been a
rather logical choice in view of the existing institutional structure in our country. Without any
institutional problem (and without any problems with Europe) one could have strengthened and
broadened the existing service provisions in the Flemish region and in Brussels. The fact that this
choice was not made has everything to do with the political dynamics in the institutional debate:
Flemish policy makers wanted to prove that it was capable to develop a form of ‘insurance’ for longterm dependency and the most visible way to do this was through cash benefits. This in turn
resulted in a federal ‘reaction’ in the form of a reinforcement of federal benefits for care dependent
elderly… In a way the same political dynamic counts for the policies on the work/family combination:
Flemish policy wanted to prove that it could not only innovate in the field of services (child care), but
also in the field of benefit systems (incentives), and thereby entering the domain of the federal level
of government.
16
I am not saying that this was wrong per se. I do have doubts however, about the social efficiency of
the Flemish care insurance in its present form, as uniform benefits do not necessarily match the
extent of people’s individual needs, but I do not plead for scaling back the choice for benefits. The
question for the future is whether we should repeat this pattern over and over again, e.g. when we
talk about family benefits. Now that it gradually becomes clear how great the budgetary problem
will be one should ask the question if it would not be better that the Flemish government makes
efforts in child care and school benefits as a matter of priority rather than in a new Flemish child
allowance that is not substantially innovative compared to the federal instrument (school benefits
are a selective benefit that is not at the disposal of the federal government, with which one can gear
financial benefits towards financially insecure families; child benefits are not selective towards
financial insecurity). But that is a ‘strategic choice’.
Investing in human capital and activate?
Did our social policy shift the emphasis from merely protecting people to investing in human capital
and resilience? Putting it so generally the question is very hard to answer. Recently, there have been
attempts to formulate an unambiguous answer by means of quantitative indicators, such as the
relative importance of expenses for education versus expenses for social protection, the budgetary
weight of ‘training’ in the expenses for active labour market policy, standards for income protection
through unemployment benefits, etc. Hudson and Kühner try to classify 23 welfare states on the
basis of such general data, on dimensions ‘protecting’ and ‘investing’ (they use the expression
‘productive’). 25 Their conclusion is that actually few welfare states have made the move to
investment states. Belgium is classified as unchanged in this overview, as ‘protecting’ and not
investing. Weistra tries to grasp the dimension ‘investing’ as well as the dimension ‘new social risks’
in one integrated comparison, while at the same time adding the development of diverse forms of
service and support to families, etc.26 Again Belgium (but not only Belgium) emerges as a country
that did not really make the transition towards these new conceptions of the welfare state.
These publications are challenging, but still I am sceptic as their data pose many problems concerning
comparability, and because a good evaluation of the pursued policies also supposes a qualitative
analysis. But one cannot deny the observation that the macro look of the Belgian welfare state does
not show an evolution towards an investment model. In Figure 7, I present spending for social
protection in Belgium and the EU15 of the last 6 years next to the evolution of budgets for education.
25
Hudson and Kühner, ‘Towards productive welfare ? A comparative analysis of 23 OECD countries’, Journal of European
Social Policy, 2009, 19.
26
Thijs Weistra, Towards a social investment regime in the member states of the European Union?, Master Thesis 2009,
under the supervision of Janneke Plantenga & Anton Hemerijck, Amsterdam.
17
Figure 7. Social protection and education spending (%GDP), 2000 & 2006
Source: Eurostat
Note: EU15 education spending of 2006 comprise Greek education spending 2005 (Greek education
spending 2006 are not available through Eurostat).
Belgian social spending is also much more than in other countries oriented to unemployment
spending as is clear from Figure 8.
Figure 8. Relative weight of functions in social protection spending
18
Activation policy in most countries followed a double track: on the one hand there were thorough
interventions in benefit systems (reducing and shortening of unemployment benefits in terms of
duration; transition to assistance systems); on the other hand there were flanking policies in the
form of stricter counselling and monitoring of job seekers. Hence, to an important degree activation
used a ‘financial’, often harsh, instrument: by reducing unemployment benefits job seekers were
more than before forced financially to accept available work. This latter measure has not been
introduced in Belgium. The benefit system did not change and activation policy was developed as
flanking policy in the existing benefit system. Therefore, activation policy as we implement it is often
experienced as ‘annoying’ and ‘administrative’ by the people involved: they receive benefits but are
very regularly called to account for their ‘behaviour’. I think this is inevitable in view of the choice we
made. If we would activate the way other countries did, by abolishing or reducing benefits, we
would indeed have to take less recourse to ‘monitoring’ and ‘administrative procedures’. This
financial approach however is harsher than the administrative one.
In practice activation has been implemented for people younger than 50.27 For people over 50,
namely victims of restructuring, the Generation Pact developed new initiatives. I agree with Jan
Vanthuyne and Tom Bevers28 that the Generation Pact did not engender a thorough change of the
existing exit mechanisms. One counted mostly on an ‘encouraging’ approach of which the effect
remains limited.
An inclusive and participatory model?
Whether we deal with addressing new social risks or developing a social investment model, the three
ultimate litmus tests for success are in my opinion:
(i)
(ii)
(iii)
The level and equitable distribution of the employment rate in the population;
Reducing income poverty;
Reducing inequality of chances in education.29
In this part I first look at the employment rate. I do this by means of three features in people: their
age, level of education and gender. What I am interested in is the question what is the decisive
factor in the relatively low employment rate typical for our country. Is it the way employment
evolves with age? Is it the way employment is associated with the level of education? Or is it the way
employment is associated with gender? (I disregard the difference between ethnic minorities and
natives for now, even though we know that unfortunately this is a very important factor in our labour
market.30) On the one hand I look at the evolution in itself in the course of the past decennium (in
which subgroups of the population did the employment rate grow or decrease respectively?) and on
the other hand I compare the evolution in Belgium with the EU15 average benchmark.
27
Recently in Flanders decisions have been taken aiming at an adapted activation of people above 50, but it is too early to
tell what the impact is.
28
Jan Vanthuyne and Tom Bevers, ‘Actief ouder worden na het Generatiepact’, Samenleving en Politiek, December 2009, p.
4-12.
29
I will not dwell on this third litmus test. See Frank Vandenbroucke and Dirk Malfait, ‘De tienkamp mag niet stilvallen’,
Samenleving en Politiek, December 2009, p. 60-71.
30
See further also Vandenbroucke & Malfait, Op. Cit.
19
The evolutions are coloured, ranging from dark green for ‘very positive’ to dark red for ‘very
negative’.
x ≥ 10%
3% ≤ x < 5%
-3% ≤ x < 0%
-10% ≤ x < -5%
5% ≤ x < 10%
0% ≤ x < 3%
-5% ≤ x < -3%
x < -10%
Table 2. Difference between employment rate in 1998 and 2008 (in ppt)
Belgium
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
F
M
F
M
F
M
F
Low
Skilled
-8,9
-2,8
-6,2
-3
-5,6
3,6
-1,6
9,7
3,1
16,3
3,1
13,6
6,4
7,9
Middle
skilled
3,5
1,6
-0,1
4,5
1,3
7,4
-1,5
9,8
1,9
12,7
3,3
19,1
4,8
14,1
High
skilled
-1
1,2
-2,2
3,3
-1,7
3,4
0,4
3,1
-1
4,5
1
9,8
8,8
13,5
Flanders
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
F
M
F
M
F
M
F
Low
Skilled
-9
-7
-2,9
0,5
-3,9
8,4
-0,9
17,4
5,9
23,2
5
18,5
7,9
9,3
Middle
skilled
2,3
3
0,5
9,6
2,5
12,2
0,5
14,5
4,3
17,5
4,5
23,9
3,7
14,3
High
skilled
-1,6
1,9
-1,6
3,2
-1
5
0,5
6,3
0,2
4,2
-0,1
14,5
8,5
12,7
Wallonia
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
F
M
F
M
F
M
F
-9,9
3,9
-10
-1,9
-5,5
6,9
-0,3
5,4
0,4
9,7
1,3
11,2
3,6
6,3
Low
20
Skilled
Middle
skilled
7,2
5,9
-2,2
2,6
-0,3
3,4
-3,6
4,8
-1,4
5,5
3,7
14,8
5,5
14,4
High
skilled
-1
2
-0,7
4,1
-2,9
4,3
3,4
1,7
-1,3
7,7
2,3
1,5
11,6
13,9
Note: the above table indicates per subgroup the evolution in percentage points between 1998 and 2008 of the population,
for Belgium, Flanders and Wallonia respectively.
Source: Eurostat and Steunpunt Werk en Sociale Economie (WSE)
Table 3. Difference employment rate Belgium and EU15 (in ppt)
1998
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
M
F
M
F
M
F
M
Low Skilled
-2,7
8,9
1,5
-1,5
2,3
-6,3
3,6
-7,3
5,5
-13,3
6,5
-15,7
18,2
-14
Middle skilled
2,7
2
0,9
1,6
0,8
-0,5
0,6
-3,9
0,7
-6,3
2,9
-13,3
-9,8
14,6
High skilled
8,2
8,3
3,2
4,8
1,6
2,4
0,2
-0,8
0,7
-4,3
1,5
-9,4
13,6
23,4
2008
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
M
F
M
F
M
F
M
Low Skilled
10,2
9,7
5,5
-7,4
7,1
-7,4
4,6
-1,8
1,9
-5
6,8
-11,8
17,8
13,3
Middle skilled
4,8
0,6
0,1
1,6
0,6
0,6
1,7
0,8
0
-2,8
2,2
-6,6
11,7
11,6
High skilled
3,9
6,1
0,1
4,3
0,4
3,1
0,8
1,4
0,4
-1,8
0,6
-5,6
-8,6
18,3
21
Note: the above table presents per subgroup the deviation between the Belgian figure and the EU-average, first for 1998
and then for 2008.
Source: Eurostat and Steunpunt Werk en Sociale Economie (WSE)
Table 4. Difference employment rate Flanders and EU15 (in ppt)
1998
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
F
M
F
M
F
M
F
Low Skilled
5,5
5,9
4,1
6,8
2,5
0,7
1,7
-2,3
-0,4
-12,1
-3
-15,8
-18
-15,1
Middle skilled
8,2
9,3
4,3
6,2
1,2
1,2
2,3
-4,7
-0,1
-7,2
-1,2
-14,7
-8
-15,7
High skilled
10,3
12,7
5,7
8,1
2,6
3
1,4
-1,1
1,5
-3,5
0,3
-14,3
-15,4
-25,1
2008
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
F
M
F
M
F
M
F
Low Skilled
-2,1
0,9
3,4
4,4
-0,6
4,4
1,4
10,9
6
3,1
-1,4
-7
-16,1
-13
Middle skilled
9,1
8,1
3,9
11,3
2,6
7,1
2
4,7
3
1,1
0,7
-3,2
-11
-12,5
High skilled
5,4
11,2
3
7,5
1,3
5,3
2,1
4,3
1,6
-1,3
0,1
-5,8
-10,7
-20,8
Note: the above table presents per subgroup the deviation between the Flemish figure and the EU average, first for 1998
and then for 2008
Table 5. Difference employment rate Wallonia and EU15 (in ppt)
1998
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
F
M
F
M
F
M
F
Low Skilled
-8
-22,5
-4,1
-10,6
-6,1
-15,4
-11,3
-15,3
-10,8
-14,9
-9,8
-18,9
-18,8
-12,5
Middle skilled
-3,9
-8,5
-0,9
-5,2
-2,7
-4,7
-1,1
-3,9
-0,7
-5
-6,5
-14,6
-12,1
-14,2
High skilled
8,1
2,1
0
2
1,9
0,5
-2,3
-0,6
-0,7
-6,7
-2
-0,6
-15,7
-23,7
22
2008
Age 25-29
Age 30-34
Age 35-39
Age 40-44
Age 45-49
Age 50-54
Age 55-64
M
F
M
F
M
F
M
F
M
F
M
F
M
F
Low Skilled
-16,5
-16,6
-11,9
-15,4
-10,8
-13,2
-11
-14,1
-9,9
-13,2
-11,9
-17,4
-21,2
-13,4
Middle skilled
1,9
-6,8
-4,0
-7,1
-4,1
-7,6
-5,5
-4,2
-3,3
-8,7
-5,4
-12,2
-13,3
-10,9
High skilled
3,8
0,7
-1,8
2,3
-1,3
2,1
1,3
0,2
-2,1
-1
0,2
-5,1
-7,9
-18,2
Note: the above table presents per subgroup the deviation between the Walloon figure and the EU average, first for 1998
and then for 2008.
Obviously one should interpret these figures correctly and hence also carefully. They are based on a
large scale survey which is known to always have an error margin. More importantly, the social
position of ‘low skilled people’ in 2008 is not always the same anymore as the social position of ‘low
skilled people’ in 1998, and the same goes for middle educated and highly educated people. In 1998
43% of the surveyed Belgian population was low skilled; in 2008 that share had decreased to 30%
(and in every subgroup by age/gender this decrease took place). Probably the low skilled of 2008 are
in this sense more ‘oppressed’ on the labour market than the low skilled of 1998. All over the EU this
evolution took place, with the difference that in 1998 the average share of the low skilled in the EU
was somewhat lower in the EU than in Belgium, while it was a bit higher in 2008: our country is
catching up on the skills gap.
It is useful to look at these data in detail. In any case, the following observations catch the eye.
When we look at the evolutions within Belgium, it is striking how strongly women’s employment rate
increased for all age cohorts between 35 and 64 years of age. For the age groups between 35 and 50
the increase of the employment rate for low skilled and middle skilled women is very pronounced
(more in Flanders than in Wallonia).31 There are two plausible explanations:
-
First, there is of course the ‘cohort effect’ (women who started working at a younger age
grow older and continue to work);
For low skilled women in Flanders, there is the impact of service vouchers; Figure 9 indicates
how the development of service vouchers in Flanders really caused a bend in women’s
employment rate curve; without the service cheque circuit this effect would not have been
there, and low skilled women’s employment rate in Flanders would not have been much
higher today than it was in 1998.
31
The CSP takes the issue of the ‘two-speed emancipation’ of women at heart in its research agenda. Cf. Joris Ghysels and
Wim Van Lancker, Emancipatie in twee snelheden opnieuw bekeken: laaggeschoolde vrouwen in België en Europa, CSPPolicy Report, June 2009.
23
Figure 9. Employment rate of low skilled women: the effect of service vouchers
Source: Eurostat
Progress between 1998 and 2008 for low skilled women above 35 years of age contrasts sharply with
a decrease in the employment rate of low skilled men (till 44 years of age) in Flanders, and certainly
in Wallonia. Even though the employment rate of low skilled women above 35 years of age has
improved, low skilled people in Belgium face significantly less chances to work than in the rest of
EU15: in Flanders this is not the case for all sub-groups of the low skilled (on the basis of age/gender);
in Wallonia this is the massive reality for all low skilled sub-groups (just as the employment rate of
the mid skilled group in Wallonia lags behind EU15). This reality has barely changed between 1998
and 2008.
In the age cohorts above 45 years of age the employment rate has generally increased significantly
between 1998 and 2008 (when we compare our current performance with our own past), but in
comparison with the EU15 average the employment rate lag is very big.
Table 6 presents the same data for Brussels. It confirms that the labour market in Brussels has
evolved very badly in all respects.
24
Table 6. Employment rate in Brussels: the difference with the EU15 (in percentage points) and
evolution 1998-2008
Legend
The difference between the EU15 average and Flanders mainly has an age profile. The difference
between the EU15 average and Wallonia mainly has a schooling profile. The difference with Brussels
is quasi ‘total’.
Is it useful to compare our employment rate with the EU15 average? Why would we be fixed on a
moving target, as is the EU labour market? Does it not suffice to look at the evolution of the figures
over time in Belgium and its regions, to determine where we made progress and where not? The
comparison with other EU countries is problematic, among others because the reality of being ‘low
skilled’, ‘mid skilled’ and ‘high skilled’ is not the same in different countries, in view of the differences
in the education systems and the differences in educational performance. Nevertheless the
comparison with the average evolutions in the EU is useful for several reasons. It gives an indication
of the ‘potential’ employment rate in comparable socio-economic systems, in other words what our
ambition could be. It illustrates differences in the social system that correspond with implicit and
explicit choices that have been made in the past.
We can conclude from all these figures that the Belgian labour market has not been a ‘frozen
landscape’ in the course of the past 10 years. There have been successes, namely the increase of
female employment, and we can associate those successes to policy choices. Service vouchers are an
example of a successful reform with a large scale impact on the labour market. One could speak of a
shift in the social model in the direction of services and employment of the low skilled. The originality
of this Belgian path is that it did not occur via the collective sector as is the case in the Scandinavian
25
example, but in a strongly subsidized private sector. Obviously this is an expensive operation for the
public budget.
Next to some positive evolutions, there are however two big ‘buts’.
To start with two big bottlenecks on our labour market remain: the low employment rate of the low
skilled in Wallonia and of the elderly in the three regions. As the difference between the Flemish
labour market and the EU-average mainly has an age profile, while the difference between the
Walloon labour market and the EU average mainly has an educational profile, and Brussels sinks
away entirely, it is not so simple to point to unambiguous causes. Factors that clearly arise are
regulatory in nature (namely the possibilities of early retirement that have not been fundamentally
changed in the Generation Pact) and shortcomings in the education system (unqualified and wrongly
qualified outflow); but the analysis of these bottlenecks should also be economic (does the cost of
labour for the low skilled in Wallonia and Brussels not remain too high in comparison with the
possible market yield when they are employed – despite the efforts undertaken concerning tax
reductions? What is the sector development of employment?). Activation policy that had been
flanking rather than financial towards job seekers and mostly ‘encouraging’ towards the elderly, did
not fundamentally change these hard facts.
The second ‘but’ concerns the budgetary cost of employment policy, which was often high. I am not
only referring to the tax reductions, but also to the service vouchers, and to a number of stimulating
measures that are probably a net cost rather than a yield. This high cost is often hard to avoid, but is
sometimes also the consequence of a lack of consistency. For example it is not very useful to come
up with important general tax reductions when there is no sustained form of wage moderation. I am
not saying that I agree with the employers that we mainly have a problem of labour cost in this
country (but that is also quite a complex issue and needs to be approached with nuance). But tax
reductions too often served to press forward social dialogue. In my opinion, now that service
vouchers have developed so extensively one could certainly charge the middle group and higher
earners more.
By way of preliminary, general conclusion we can argue the following. A hineininterpretierung is
always risky, but to the degree that policy in our country wished to make a shift to a ‘new welfare
state’, this process has not always been efficient and well-considered, and has been half hearted on
certain points. We are not good at making strategic choices and that affects the coherence of our
policy. This certainly shows from the first ‘litmus test’ that I use here, namely the evolution of
employment rates.
3.
Redistribution must remain high on the agenda
3.1. Why did inequality and poverty not decrease?
I now turn to the second litmus test to measure the success of our policy: poverty. My source of
inspiration for this part of my presentation is the CSP-policy paper by Bea Cantillon De paradox van
de investeringsstaat: waarom is de armoede niet gedaald?’ (The paradox of the investment state:
why did poverty not decrease?). Cantillon first points to the U-shaped course of income inequality in
the past 50 years. In the 1950s and 1960s there was an equalisation of income distribution, which
26
we can probably associate with the development of the welfare state; in the 1970s a stabilisation in
the equalisation trend seems to take place despite a further and strong increase in social spending;
as of the second half of the 1980s however, many welfare states seem to evolve in the direction of
greater inequality. The increase in inequality first arose in the United States and the United Kingdom;
but recently however, several sources point to an increase in inequality in the more egalitarian and
stronger welfare states in Scandinavia and the European continent.32
In my opinion, one can now read the long term trends in inequality and poverty through different
lenses; at least that is what literature seems to indicate. I give two examples. Huber and Stephens33
analyse the capacity of three ‘types’ of welfare states to tackle old and new risks, on the basis of
average results for poverty eradication in ‘old’ and ‘new’ risk groups. They compare two periods of
time: the years before 1987 and the years after 1987. They conclude that the Scandinavian welfare
states are superior in their capacity to tackle old poverty risks as well as new poverty risks. The
conclusion is that the continental (Bismarckian) welfare states must evolve in the direction of the
Scandinavian ones, that emphasise public services more, as well as employment for women,
activation, investing in human capital… Lane Kenworthy starts in his excellent book on ‘Jobs with
Equality’34 from the observation that inequality in most welfare states has increased in the course of
the 1980s and 1990s, despite the fact that governments, with just a few exceptions, have
progressively redistributed more; the most important factor behind the increase in inequality was
the increasing inequality of the primary income distribution as it developed in society, on the
(labour)market and by the way families are being composed. The ‘raw material’ with which
redistributing governments must work become as it were more recalcitrant, and governments must
develop new strategies to live up to their redistributive ambition successfully. Cantillon, referring to
the OECD analyses and Brandolini and Smeeding, emphasizes the fact that poverty and inequality are
increasing in all welfare states, and that this has more to do with the decreasing redistributive
capacity of governments than with a worsening of the primary income distribution. In other words,
these are policy choices that most recently have been on the rise in all welfare states to a lesser or
greater extent.
The difference between these approaches has among others to do with the raw data used, but in my
opinion also with a time perspective. Stated bluntly I summarize it as follows. Do we look at average
levels of poverty and inequality over the course of the different decennia? Then the conclusion can
indeed be: let us become Scandinavian. Do we look at the evolution in the course of the last
decennia? Then the conclusion is: it goes wrong everywhere. When we compare the beginning of
the 1970s with today, one could say: it is mainly the ‘raw material’ that has become more unequal.
When we look at the last decennium, one can argue that everywhere governments have stored away
their redistributive ambition. I summarize the argument in Figure 10. If all welfare states would
display this pattern, but the Scandinavians remain at a lower level, then each of the above
conclusions contains its own (part of the) truth.
32
Cantillon refers to the important OECD report ‘Growing unequal’, 2008 and to A. Brandolini and T. Smeeding, Inequality
Patterns in Western-Type Democracies: Cross-Country Differences and Time Changes.
33
E. Huber and J.D. Stephens, ‘Combating old and new social risks’, in Armingeon and Bonoli, Op. Cit. 143-168 namely the
summarizing table on p. 147. They do not use the same terminology for the types of welfare states, but that is what it is
about.
34
Lane Kenworthy, Jobs with Equality, Oxford, Oxford University Press, 2008, p. 3.
27
Figure 10. How to account for rising inequality?
Stylized on the basis of Cantillon, Brandolini & Smeeding (US, UK, Can, Swe, Fin)
One could come up with quite some explanations why inequality and poverty increase. One could
argue that this development is due to…
(i)
(ii)
(iii)
The fact that policy, while focusing on new objectives (the ‘new social risks’, activation, …)
took too much distance from the classical protecting and redistributive goals of the
welfare state;
The fact that policy, despite lip service to new objectives, took too little distance from
the classical protecting and redistributive objectives of the welfare state, that are not
adjusted anymore to the present challenges;
The fact that policy has added new objectives to the classical objectives of the welfare
state in an incoherent way;
28
(iv)
To underlying economic and socio demographic trends to which different types of
welfare states have reacted with varying degrees of success (or failure) in the 1980s and
1990s, but that have become ‘too powerful’ for all welfare states, whatever is the type.
Cantillon’s hypothesis on increasing inequality leans towards (i). She argues that the new policy
developments that are inspired by the idea of the ‘social investment state’ engender important
Matthew effects. Indeed high skilled women disproportionally enjoy formal child care services:
women’s emancipation has reached low skilled women much less than high skilled ones. The service
vouchers are a bountiful subsidy for the cost of household work of dual earners. Education policy
has so far been unable to create real equal opportunities whereby a ‘shift of social spending in the
direction of the education budget, even if it is geared towards equal opportunities policy, has a
negative effect on the redistributive capacity of social policy, at least as long as policy effects on
educational opportunities do not show up’ (p. 29). And not every inactive person can be activated…
Cantillon does point out though that this is not inevitable: ‘We only propose the hypothesis that this
policy inadvertently resulted in a reduced redistributive capacity of social spending. The reason is
simple: the investment state intrinsically first helps the socially stronger groups (the working,
emancipated women, students), hoping that others will follow. This effect is strengthened by the
fact that benefits for the weaker groups (the unemployed, single income families, the low skilled
peers of students) have not increased along with general prosperity. Is this inevitable? The example
of the Scandinavian countries teaches us that it must be possible to do better: they combine higher
protection for ‘old social risks’ with advanced emancipation also among low skilled women and
lower relative poverty. It is possible that what is described here will come to pass depending on the
success of the policy strategies directed to work, emancipation and equal chances (meaning the pace
at which ‘the others’ will follow).’ (p. 30)
I do not know if a shift in objectives and budgets to “new social policy’ can adequately explain why
our country has not been doing better in terms of poverty and inequality in the course of the past
decennium. We illustrated before with Figure 7 that Belgian social spending in the period 2000-2006
increased sharply in relation to GDP. This increase is related to the ‘old risks’ old age and sickness;
the relatively modest increase in Belgian spending on education was not a hurdle here. Low skilled
and middle skilled women also enjoyed the employment dynamics in Flanders which is among others
related to the development of service vouchers: on the Flemish labour market then, and concerning
women, the ‘others’ have already started catching up. We had to start this catch up by women on
the labour market. As pointed out before, women’s increasing employment rates are one of the
reasons why favourable evolutions take place in the field of retirement.
It is paradoxical that inequality and poverty do not decrease while employment rises and the
government used a period of economic boom to increase its classical protection budgets. To better
assess the impact of rising government budgets, one should also incorporate in the analysis the social
impact of the expenses for health insurance that took an important part of additional budgetary
space. This is often still lacking in our analyses. As said before, I also think our policy could be more
coherent on a couple of points. But whether that has been the decisive explanation why poverty and
inequality have not evolved better, I also dare not say. Maybe something more fundamental is going
on which we do not quite grasp yet. A form of ‘exhaustion’ of the welfare state’s arsenal that should
make us think about our entire arsenal of instruments.
29
Be that as it may, Cantillon is quite right when she points to the Matthew effects that are associated
with the consumption of child care, service cheques and education. In child care this is also related
to the incoherent accumulation of federal and community policy:35 tax deduction for child care costs
makes the Flemish contribution system regressive for the highest income groups. In view of the
serious budgetary problems that we are facing, the issue must be raised whether contributions paid
by people with higher incomes in a couple of sectors – such as the service vouchers, but maybe also
child care – should not be reconsidered (for example, in case we finally would not have enough
resources to develop high quality child care fully). To the degree that this would not happen or only
happen very modestly – it concerns politically sensitive issues – new benefit policies should be
directed to financially insecure families as a matter of priority. In view of the extremely small
margins of which policy can avail itself in the coming years, every new initiative should actually first
be subjected to a ‘Matthew test’. For every policy initiative one should ask the question: are we not
spending these euros on the wrong group?36 I come back to this when I list my ‘strategic choices’ for
social policy.
3.2 Why redistribution should remain high on the agenda
People occupied with social policy and research should ask the question whether the challenges that
lie before us – high social protection, as little inequality as possible – can offset new big challenges,
such as for example climate change. Suppose that combating climate change would require such a
big budgetary effort by the government, that we would have to give up a little of the quality of our
social protection, would we not accept that?
I think that we cannot naively deny that in the coming years policy challenges other than the strictly
social ones will be very high on the agenda, such as energy policy and industrial innovation.
Moreover, these challenges will compete with the social ones in terms of policy attention and in
terms of budgetary resources. Nevertheless, I argue that this logic must be reversed. In which type
of society is it a priori simpler to effectively combat climate change: in an egalitarian one or in an
inegalitarian one? There are subjective and objective reasons why it is easier to implement climate
policy in a more egalitarian society. Measures to address the climate problem will have to steer
behaviour; sometimes it will be necessary to make certain forms of consumption more expensive.
Think for example about ‘smart road pricing schemes’, that translate the environmental burden from
traffic into a price: this seems to me an extremely desirable scenario to curb traffic. Or take the price
of energy sources: if we want to curb CO2 emissions seriously, price hikes of energy sources are
inevitable. But in an inegalitarian society it is harder to find support for this. Indeed, rich people will
be limited less in their freedom to be mobile and to consume energy when these prices would go up
than people with middle incomes; their personal budget is so high that they can rearrange it
relatively easily to pay for more expensive mobility and energy. And certainly for poor people an
increase in the price of mobility and energy is socially detrimental. If one wants to find support for
road pricing schemes for example, one will have to explain that this is socially acceptable. That
supposes that income distribution is not all too skewed. When income distribution is very unequal
35
Joris Ghysels and Wim Van Lancker, Het Matteüseffect onder de loupe: over het ongelijke gebruik van kinderopvang in
Vlaanderen, CSB-bericht, oktober 2009.
36
See for a similar argument the editorial of Patrick Vander Weyden in Samenleving en Politiek, ‘Wie heeft krijgt meer, wie
niets heeft krijgt minder’, January 2010, p. 1-3.
30
then the principle of ‘the polluter pays’ is quickly translated into ‘the payer can pollute’. That is the
subjective argument. But there even is an objective argument. Economists in the past already
pointed out that price mechanisms are objectively more effective for steering behaviour in an
egalitarian society than in an inegalitarian one.37
This argument can be generalised. Whether we talk about education policy, health policy, justice
policy, environmental policy… inegalitarian societies make policy harder.38 Saying that redistribution
must remain high on the agenda, leaves a series of questions unanswered. What do we want to
distribute fairly? Only income? Or also health status? Autonomy? Do we reason rawlsian, i.e. is the
benchmark of justice the situation of the weakest group in society?39 Or do we deem too big an
income gap in any case a problem, even if it does not help the weaker groups that the top incomes
are reduced?
Space is lacking to elaborate on all these questions. But I still want to underline three considerations.
The first is mostly self-critical. In the past political authorities, such as myself, have declared now and
then that extravagantly high top incomes disturbed us, but still that confiscating and redistributing
these top incomes would generate only very little extra-income for the middle and lower incomes.
The law of large numbers would result in distributing crumbs. In other words, the ones who fussed
about top incomes were dealing with an issue of high symbolical but little practical importance. As a
consequence we neglected to pay attention to income formation in society’s top layer. That explains
among others why we have come to realise so late that the way in which bonuses for managers are
calculated is so wrong.40 More substantially, I think that in tomorrow’s society it will be absolutely
necessary to rehabilitate a fairness code,41 whereby high-end incomes also need to be assessed
critically and need to be taxed in order to redistribute more. That will be necessary for the creation
of social support for necessary reforms, i.e. when we will have to ask efforts from the middle groups
in society in the form of sacrifices in purchasing power, for example in the framework of the
ecological transition and budget austerity. In essence, Wouter Bos made the same point in his recent
Den Uyl-lecture. A Rawlsian focus on the bottom of society is inadequate if we want to create a
feeling of justice in society at large.42
The second consideration follows suit, but asks the question positively. On what do we wish a shared
feeling of justice in tomorrow’s society to be based? Previous debates on social security often
emphasised that intelligent self-interest, also that of higher earners, would make them attached to
social security, provided that they would see enough ‘yield’ from their contributions when they are
37
About cross connections between social policy and climate change, see Ian Gough et al, ‘JESP Symposium : Climate
change and Social Policy’, Journal of European Social Policy 2008, 18, 325; and there the reference to M.L. Weitzman, ‘Is the
Price System or Rationing more Effective in Getting a Commodity to Those Who Need it Most?’, The Bell Journal of
Economics, 8 (2): 517-24, 1977.
38
The argument is somewhat comparable to hypotheses formulated in Bea Cantillon, Ive Marx, Karel Van den Bosch, The
puzzle of egalitarianism. About the relationships between employment, wage inequality, social expenditures and poverty,
December 2002. In societies where the primary income distribution is unequal (e.g. due to great wage inequalities on the
labour market), governments are apparently less able to compensate for this inequality.
39
The way I formulate it here is a rather simple reading of Rawls that we should exclusively look at the weakest group.
Rawls does not ignore the position of groups that are less weak, and moreover one can also formalise a broader look than
‘maximin’.
40
See a pertinent analysis about this issue by Paul De Grauwe, in DS of 26 January 2010.
41
I borrow the expression ‘fairness code’ from Olaf Cramme, Patrick Diamond and Roger Liddle, The Politics of Evasion,
paper presented at the conference of the Wiardi Beckman Foundation, Policy Network et al, Amsterdam, 4-5 November
2009, but I do not know whether they would agree with the scope I give to the concept.
42
Wouter Bos, De Derde Weg Voorbij, Den Uyl-Lezing, 25 January 2010.
31
struck by a risk. People who used this argument in defence of the social security system hence
considered it important that benefits would have a strong enough bond with people’s living standard
when a risk arose. A sufficiently strong ‘insurance principle’ would guarantee the system’s legitimacy.
Too much (income)selectivity would be entirely inappropriate. A lot of homo economicus hides
behind this argument: it is basically about rational individual self interest. To the degree that you can
use this argument to find support for the welfare state, it is useful. The question is whether the
classical insurance principle can at all be rehabilitated in the near future. I doubt it. Does this mean
the end of the legitimacy of the welfare state? I do not think so. I am deeply convinced that we can
and must appeal to the homo reciprocans, the human who is capable of solidarity and redistribution,
provided that there is sufficient ‘reciprocity’ in society, but one can interpret this ‘reciprocity’ broadly.
The homo reciprocans is a little bit like the homo economicus: he loves some ‘return’ from ‘his money’
(or his effort), but he does not split hairs and he interprets ‘return’ also more broadly than the homo
economicus. He considers people’s personal responsibility important, but he is also capable of
compassion when other people are very vulnerable. He may also attribute this vulnerability to
people’s own choices made in the past.43 I think people are willing to be and to remain net-givers in
society provided that they see that with ‘their money’ social problems, such as poverty and
unemployment, are actually tackled (‘no bottomless pits are being filled’), and provided that those
who receive aid also make an effort where possible and relevant to make something of that aid. But
also on the basis of compassion towards great vulnerability. All this is a form of reciprocity. Another
aspect of reciprocity concerns the fact that we expect people who have been blessed by fate, are
very talented or have been born in a privileged environment, to use what they have been gifted with
for the good of society.44 Reciprocity, in my opinion, is a fundamental binder in society. Reciprocity
among others appeals to people’s own responsibility, but should be a richer concept than the rather
rigid ‘rights-and-duties’ discourse. And reciprocity should be an attitude that we do not only demand
from society’s weak, but also from the strong.
In this context, I want to express my special appreciation for the Centre for Social Policy’s website
initiative that allows people to determine where they are located in our income distribution. Many
will be surprised how high their income is in comparison to the weakest groups in society. It is a
remarkable eye-opener (http://www.centrumvoorsociaalbeleid.be/index.php?pg=63).
The third consideration is probably more a wish than an observation. The universal character of a
social security system – the fact that in principle everyone contributes and everyone can benefit – is
next to the strict insurance principle often regarded as another pillar of its legitimacy. Our system
has become more universal in recent years because more and more social groups have been included,
and that is a good thing. Universality and income selectivity are often regarded as polar opposites as
universality is often equated with ‘rights that are not tested on capacity’; however, I think that
intelligent selectivity does not have to impair the universal character of social protection (cf. what I
said before on the maximum bill in health care). The same goes for services. When the entire
population – rich and poor, native and minority – makes use of the same health care system (meets
43
Cf. what I wrote on responsibility sensitive egalitarianism and ‘compassion’ in the Den Uyl lecture of 1999 on
the active welfare state.
44
Why we must demand that people with strong social positions bear in mind the interests of the weakest
group (or more broadly, social solidarity), within the formal rules of the game of societal institutions, is a
central argument in Vandenbroucke, Social Justice and Individual Ethics in an Open Society: Equality,
Responsibility, and Incentives, Springer, Berlin & New York, 2001.
32
each other in the same waiting rooms of the same doctors), the same education, the same child
care… you forge a strong cement in society. Universal services for the entire population which are
venues for different social classes do not exclude that one contributes more for certain services than
another person: most often quality is decisive for people’s appreciation of a service. Today we are
removed from this ideal (think of the factual social segregation in our education system). People like
me who plead for a welfare state where not only benefits are paid but also investments in services
are made, must keep this in mind.
4. Strategic choices for social policy
The sizeable budget cuts that we are facing force us more than ever to make strategic choices in
social policy. It does not only involve the question where budget cuts should be made, it rather
involves the question what our society will look like after this period of economic crisis and after the
budget cuts.
With strategic choices I mean big orientations that will determine policy for a relatively long period of
time and that are also benchmarks for concrete daily policy decisions. We are talking about
orientations regarding the policy goals, priorities among the goals and the architecture of social
policy. Architecture refers to the question: which instruments do we deploy? And who deploys
which instruments? ‘Clear’ means here: clearer and more explicit than in the past. A choice does not
always have to follow a pattern ‘all-or-nothing’. It often involves finding the right balance, but then
also an explicit and well-considered deliberation must be made.
1) A first strategic choice has to do with social policy’s underlying objective of justice. I
definitely plead for an egalitarian approach, i.e. that we put redistribution high on the
agenda. I would reason in a Rawlsian way, i.e. the position of the weakest group in
society is the most important test for justice in our society. Hence, I would pay a lot of
attention in scientific research to poverty indicators. But both in scientific research and
in policy I would develop a focus on what happens in the upper layer of society as we can
remain indifferent to it much less than before.
This choice implies two further choices. First, that income and capital selectivity in
benefits (such as the Guaranteed Income for the Elderly, the Flemish school benefits for
families…) and income selectivity in the contributions for services (such as in the case of
child care, or in health care through the maximum bill) are justified. A useful research
theme is the question how the different forms of income and capital selectivity in our
system interconnect, and where there is room for improvement. Second, that when
budgetary choices are inevitable, a strong minimum income protection in social benefits
(decent minima) should in the end get priority over insuring the living standard of the
entire group, how important and useful this may be. Or better even, that we may not
trade minimum income protection for the insurance principle, that we may not allow it
to become weaker because we want to do something for the entire group. This also
means that it is not possible to extend radically the individualisation of rights in the
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current social security system. 45 And for every new initiative a Matthew test is
appropriate: if we want to strengthen the position of the weakest group can the money
not be used in a better way?
Justice also demands a vision on intergenerational justice. I will not elaborate on this
here, but like to refer to what Erik Schokkaert wrote about this some years ago.46
I would choose for the homo reciprocans, and not for the homo economicus.
2) Redistribution is related to income, but also to health and autonomy and to chances in
training and education. A second strategic choice has to do with the necessary balance
between three big functions of social policy: protecting incomes, quality and accessibility
of care and investing in human capital and resilience, from kindergarten till college or
university. It must be and-and-and, and this within very narrow, or even negative,
margins. I do not think that in Belgium we shifted too much towards investing in human
capital. On the contrary, in the long run we rather risk an underinvestment in education.
The difference between ‘old’ and ‘new’ social risks that has been dominating the debate
in recent years, is instructive. But today it is actually very difficult to argue in general
terms that we must invest ‘more’ or ‘less’ in ‘old’ or ‘new’ risks. Above all, we must
implement coherent policy whereby the overall results in terms of income, health and
emancipation are as strong as possible.
3) A third strategic choice has to do with ‘cash’ versus ‘services’. The historical tradition to
which the Belgian welfare state belongs, was aimed at ‘cash’. Now that it gradually
becomes clear which great budgetary and societal challenges we face, we must think
twice which new benefit systems we develop, when our social services would still be
inadequate. At the same time more attention is required on social segregation and
Matthew effects in education and services.
4) A fourth strategic choice has to do with public versus private. Legislation was passed to
allow employees access to a second pension pillar, but do we (and in this case, the social
partners) really want that? If so, then wage negotiations for many years will have to be
focused on this as a matter of priority. Supplemental pensions can be an instrument of
pension policy, if the social partners consistently make this choice and trade wage
increases for pension contributions. I doubt that supplemental insurance in health care
can be an instrument of health policy. But I admit that it never has been the subject of a
serious debate. Here also there is room for (urgent) research, because strategic choices
are urgently needed.
5) A fifth strategic choice has to do with the importance of work. We know that a high
employment rate is no guarantee for low poverty in society. I consider a high
45
For a more thorough discussion see B. Cantillon, J. Ghysels and M. De Wilde, De individualisering van de
sociale zekerheid, tussen utopia en dwaling, June 2009.
46
Erik Schokkaert, ‘The reform of the Belgian Pension System : making value judgments explicit’, in Les Finances
Publics: Défits à Moyen et Long Termes, pp. 172-202.
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employment rate for men and women to be an objective per se, not only because of the
economic sustainability of our system, but also because of the importance of
participation. This however, implies that we actually tackle big bottlenecks on our labour
market in a coherent way. Activation must be high on the agenda (cf. infra). But of
course, there is more than activation when we talk about the labour market. I did not
touch upon the broader problems of the labour market here. I like to refer to
Kenworthy’s book ‘Jobs with equality’, not because I agree with everything in it, but
because of the evidence based undogmatic approach of labour market policy as a whole:
on tricky subjects such as flexibility, a lot of nuance is necessary.
6) A sixth strategic choice concerns the balance between financial stimuli and flanking
policy concerning activation. If we wish unemployment benefits to be sufficiently high,
then we must keep on investing in activation strategies with a lot of counselling,
summoning, contractual obligations, administrative sanctions, …. Attenuating such
flanking activation policy is certainly not an option then.
7) A seventh strategic choice has to do with the role of budgetary policy in guaranteeing
future pensions. The political and social world must reflect on the degree to which
tackling population ageing can lean on a mere budgetary savings strategy, given our
current situation and the many other needs in society. To tackle the cost of ageing
parametric reforms will be needed in any case within the current pension system.
Working longer is one of the keys. People like myself who plead for this option must
realise at the same time how easy it is to say this from their own comfortable social
position, and realise the social difficulty of this issue, certainly in times of economic crisis.
It is therefore important to take measures that gradually, with a very long term view,
make early retirement impossible and effectively increase the actual pension age. These
measures will need to be regulatory: it makes no sense to encourage working longer
through policies that would cost as much as they yield. Innovation of labour organisation
must at the same time be put much higher on the agenda so that working longer
becomes a viable option for as many people as possible. And competence development
in the company must effectively become every employee’s right.
8) An eighth strategic choice is related to the responsibility of different levels of
government. The question is double. First, do we continue with parallel policy
developments (tax deductions for child care at the federal level, child care by the
communities; time credit on both levels; benefits for care dependent elderly on both
levels; city policy on both levels; energy policy on both levels…), or do we resolutely
choose for core tasks (hence specialisation) and accountability of every level?
Subsequently, to what extent can Regions and Communities take over financial
responsibilities (‘invoices’) of the federal level without impairing upon their essential
investment tasks? What will be the ‘priorities of the priorities’ then?
These are issues that I deem important for research and policy. I did not touch upon quite a few.
What must be the role of taxation in social redistribution? Do we think that structural changes in
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health care need to be discussed or not? How do we conceive the organization of education and
social policy in Brussels? …
In Flanders many social researchers are working on these issues. For my part, they play an important
role. If governments and social partners want to make strategic choices on the basis of wellconsidered scenarios, if they want to explain people what the concrete consequences are of their
scenarios for the future…., then a lot of research and development work presents itself.
Epilogue: deep and shallow compromises
Making choices in a democratic society goes hand in hand with finding agreements – compromises.
There are two kinds of compromises: compromises where negotiators dare not dig deep, and
compromises where they do dare to dig deep. One can make a compromise for which negotiators
cannot give in on even one single sensitive issue: these are ‘safe’ compromises, but they often bring
little progress. One can make a compromise whereby mutually sensitive points are given up: these
are the compromises that most often cause progress. That is what we badly need. But to convince
representatives of vulnerable people, such as the trade unions for example, to make compromises in
depth, there will have to be in our society a fairness code more than ever. Those who are strong and
powerful will have to prove, also in daily practice, that it is about the good of all and not about self
interest. This we did not recognise enough in recent times.
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