From Protection to Investment? New
Frontiers for the European Social
Model(s)
Maurizio Ferrera
University of Milan
Presentation prepared for the 6th EU-India Joint Seminar on Employment and Social Policy, Brussels,
24-25 June 2013
Outline
 The traditional “fordist” model of social protection
and its variants
 The new Social Investment (SI) model
 Where are we now: summary data
 The EU role
Maurizio Ferrera - Universiy of Milan
2
The way we were: social welfare models
(«Fordist»)
Common traits:
1. Emphasis on social protection (compensatory logic)
2. Ex post benefits for traditional risks/needs
3. Large role for «passive» transfers during non employment (pensions,
unemployment, disability, sickness, maternity, family dependants etc.)
4. Residual safety nets (poverty)
5. Target: households with various family members (female carers)
6. Education & training: outside social protection
Maurizio Ferrera - Universiy of Milan
3
Variations in the «fordist» theme
(regimes, models, families, clusters..)
Maurizio Ferrera - Universiy of Milan
4
1. Continental Europe



Bismarckian insurance schemes (BIS) insider/outsider divide
transfer heavy, lean on services
male breadwinner model (MBM)
Maurizio Ferrera - Universiy of Milan
5
2. Southern Europe




BIS + national health services (BIS very acute insider/outsider divide)
Transfer (pension) heavy, very lean on social services
MBM + high familialism ( low “exclusion”)
Weak/non existent safety nets ( very high poverty)
Maurizio Ferrera - Universiy of Milan
6
3 Anglo-Saxon Europe:



Beveridgean “encompassing” schemes, weak universalism
Occupational/fiscal welfare for the middle classes
Means-tested benefits for the poor (including working poor) poverty cum
exclusion
Maurizio Ferrera - Universiy of Milan
7
4 Nordic Europe




Strong universalism
Service rich (including Active Labour Market Pplicies ) already a Social
Investment element
Dual earner model (DEM), female employment, gender equality
Strong but limited safety nets, low poverty, high inclusion
Maurizio Ferrera - Universiy of Milan
8
5. Central/Eastern Europe


Transition from socialist collectivism (productivist welfare model) to mixed or
hybrid models (social insurance + residual safety nets, poor services, female
earner/carer model)
high poverty and exlusion
Maurizio Ferrera - Universiy of Milan
9
The way we ought to be?
The social investment model
 Was introduced in the debate by Esping Andersen et al. (Why We Need a
New Welfare State, 2002)
 Became popular in the context of the Lisbon Strategy (2000-2010) ….
 …With different meanings: orientation, paradigm, analytic
concept/framework, a rethorical platform
 Has been gradually endorsed by the EU, especially with the shift from the
Lisbon to the Europe 2020 agenda
 Has recently become the object of a fully fledged «package» of measures
proposed by the European Commission
Maurizio Ferrera - Universiy of Milan
10
The Social investment model
Core traits:








Emphasis on social promotion (enablement logic)
Ex ante (early) prevention of risks and needs (ECEC)
Large role for capacitating social services during the life cycle
Robust safety nets and activation (inclusion)
Individuals within households (dual earner/dual carer model)
Support for reconciling paid work and family life
Education (schooling, training, LLL) as integral part of welfare sphere
Encouragement of «social innovation»
Maurizio Ferrera - Universiy of Milan
11
Social Investment: what rationale?




More growth: human capital + labour market participation
Better growth: knowledge based, quality jobs
More cohesion: safety nets, inclusion policies, elderly care
More equal opportunities: early child education and care,
work-life balance, capacitating services
 More social justice: containment of inter-generational
transmission of advantage/disadvantage, greater mobility
chances
Maurizio Ferrera - Universiy of Milan
12
Rates of Return to Human Capital Investment:
the Heckman curve
Source: Heckman (2003)
Maurizio Ferrera - Universiy of Milan
Investment Oriented Social Expenditure as a % of total
(ALM, childcare, education, research, rehabilitation)
>20%:
EL,IT,LU
20%-25%:
• ES, PT
• UK,IE
• BE,DE,FR,NL,AT
• PL,RO,SL,SK,BG,CZ
25%-30%:
• FI,SW
• EE,EE,LV,LT
>30%:
DK
Maurizio Ferrera - Universiy of Milan
14
Social Investment and Employment
Maurizio Ferrera - Universiy of Milan
15
Social Investment and Poverty (AROP)
Maurizio Ferrera - Universiy of Milan
16
Childcare and mothers’ employment
Maurizio Ferrera - Universiy of Milan
17
ALMP spending and persistence in
unemployment
Maurizio Ferrera - Universiy of Milan
18
Lifelong Learning and employment
Transition rate to employment for unemployed and inactive persons,
depending on participation in LLL, 2011-2011 (EU13)
Maurizio Ferrera - Universiy of Milan
19
Social investment policies: a tentative map
Childhood/youth
Social protection
Social investment
Early Childhood
Education and Care
Working age
Old age
Unemployment,
sickness, disability
benefits
pensions
Active labour market
policies
Social care services
Active aging
Education
Long-life learning
Training and labour
market insertion
Work/life balance and
family services
Health
promotion/prevention
rehabilitation
General
Health care, safety
nets, social inclusion ….
Maurizio Ferrera - Universiy of Milan
20
Broad challenge
“the logic of social investment entails a tendency to
underestimate the workings of labour markets and the
strong gravitational pulls of social class, and to
consequently overestimate the potentiality of activation
….and depreciate the question of redistribution, of social
protection and of care for the most vulnerable”
(Bea Cantillon)
 How to generate a virtuous circle between social
protection and social investment?
Maurizio Ferrera - Universiy of Milan
21
Towards a virtuous nesting?
European
Union
D
National
governments
SOCIAL
PROTECTION
SOCIAL
INVESTMENT
A
B
C
Sub-national
governments
National level
Social Protection:
Continue «recalibration»: functional (across risks) and
distributive (across social groups); selective universalism
(«progressive universalism», especially in high private savings
countries)  liberate some financial resources
Social Investment:
Expansion/enhancement: innovative and experimental
approach; coordination, monitoring, evaluation
Maurizio Ferrera - Universiy of Milan
23
Sub-national level
 Crucial for social investment policies: cf. ALMP,
childcare and «capacitating» services, inclusion etc.
 broad partnership and territorial anchoring
(differentiated universalism);
 pubic/private mix in financing («second line» welfare
state)
Maurizio Ferrera - Universiy of Milan
24
The EU
 Promote and support social investment
 Find a new equilibrium between macroeconomic and fisca stability and growth
objectives
 Contrast «excessive social unbalances» across
the member states
Maurizio Ferrera - Universiy of Milan
25
EU: the social investment package
March 2013 communication on Towards Social Investment for Growth and Cohesion – including
implementing the ESF 2014-2020
Main points:
 Achieve adequate and sustainable budgets through a better reflection of social
investment in the allocation of resources.
 Fully implement without further delay, including through use of the ESF, the Active
Inclusion Recommendation of 2008, integrating its three pillars: adequate income
support, inclusive labour markets and enabling services.
 Implement the Recommendation on 'Investing in Children: breaking the cycle of
disadvantage' in an integrated way through a combination of cash and in kind benefits.
Make early childhood education and care (ECEC) more visible and available, in line with
the Barcelona targets on childcare and the EU targets on ECEC . Use the ESF and the
European Agricultural Fund for Rural Development (EAFRD) to promote access to health
and social services and to ECEC;
 Use the active ageing index, which monitors older people in employment, their social
participation, and independent living and the opportunities the European Innovation
Partnership on Active and Healthy Ageing offers in this regard.
 reshaping EU governance for social policies, monitoring and communicate to citizens
Maurizio Ferrera - Universiy of Milan
26
Will it happen?





Social impact of the crisis very high
Euroscepticism on the rise
Europe needs growth and cohesion, the EU needs legitimation
Time is short, June EC will be crucial
If no step forward, 2014 EP elections:
DEMOCRATIC DISASTER
( Enrico Letta to Angela Merkel)
Maurizio Ferrera - Universiy of Milan
27