Concepts of the European Social Model

Der Öffentliche Sektor - The Public Sector Concepts of the European Social Model Christoph Hermann 1. The comparative dimension fact that public ownership is diminishing rapidly in Europe - especially in the new member states where public ownership was the dominant form of owner- Analytically the term European social model (ESM) ship before the transformation. Another major diffe- only makes sense in contrast to other social models. rence is public pensions. Public pension benefits are In this regard the main point of reference has tradi- significantly less important for the income of retired tionally been the United States, although the lack of Americans than for pensioners in continental Europe comparisons with other developed countries such as - especially for those on the lower-end of the income Japan is simultaneously one of the major weaknesses scale (ibid. 33). Furthermore, inequality in the US is of the debate.1) Comparisons between the US and also fuelled by a much less progressive tax system, the European Union (EU) typically centre around with comparatively high tax rates for low-income four issues: wealth, poverty inequality and unem- earners (ibid. 37). Hence, Alesina and Glaeser con- ployment. While the US is much richer than Europe clude that: "European countries have adopted a wide measured in GDP per capita - GDP per capita in the range of policies that are meant to redistribute inco- US is about one third higher than in the EU - Europe me from the rich to the poor. In the United States, stands out as having a significantly smaller proporti- this effort is more limited. While certain categories on of poor citizens,2) and consequently a clearly hig- (say single mothers or the old) are not forgotten by her degree of equality (higher GDP per capita in the the American legislator, if one were to be born poor, US is also the result of longer working hours and one would choose to be born in Europe, especially if lower unemployment - at least according to official risk averse" (ibid. 48-9). statistics).3) In the US, 17 per cent of the population has to cope with less than half of the national median income, while in Europe this is true for less 2. The institutional dimension than nine per cent. In the Nordic and continental European countries it is even less than six per cent (Albers 2006; see also Alesina/Glaeser 2004:47). There is a body of literature that analyses welfare Also in terms of inequality, the US ranks much hig- institutions and their development over time. On her than Europe. One possibility to measure inequa- aggregate these institutions form what after the lity is the decile ratio. It shows how much more inco- Second World War became known as welfare state. me those at the 90th percentile have in comparison Since it is not only the state but various public and to those at the 10th percentile. The US has a ratio of private actors that provide welfare for citizens per- 5.5 while the EU average accounts for 3.6 (Albers haps the more accurate term is welfare regime. As ibid.). Another possibility to measure inequality is Christine André (2006) writes, "the traditional con- the Gini coefficient. Here, too, the coefficient is cept of the Welfare State is progressively replaced by much higher in the US than in Europe and it is par- that of the Welfare Regime or of the Social Model ticular higher than in the Nordic and continental which is associated with a larger field than social European countries (ibid.) The lower proportion of protection and which takes into account actors others poverty in Europe is mirrored by a higher percenta- than the State." However, common to all three con- ge of government expenditure including spending on cepts is the notion of social inclusion. Martin Kro- social benefits and transfers (Alesina/Glaeser nauer (2006) argues that from the perspective of 2004:17-19). social inclusion there is indeed a distinctive Western Alberto Alesina and Edward Glaeser also point to European tradition of welfare provision based on the much higher proportion of public ownership in social rights and social justice rather than charity. "In continental Europe which contributes to a redistribu- contrast to the social model of the USA (but also to tion of wealth (ibid. 49). The more troubling is the most Southern European countries), Western Euro- Heft 3-4/2006 47 The European Social Model pean welfare states are universalistic. They official- vian countries" (Kronauer 2006). However, the uni- ly recognize a responsibility not just for particular versalistic tradition is clearly "not compatible with groups in need but for all citizens with regard to their the exclusion of large parts of the population from basic well-being in the most important dimensions health insurance or a 'welfare reform' which threa- of everyday life" (italics in original). James Wick- tens unemployed poor people with the loss of any ham (2005:7) makes a similar argument when sta- income support after five years" (ibid. italics in ori- ting that "citizenship in Europe includes social citi- ginal). Furthermore, markets on which public ser- zenship, i.e. that cluster of rights to education, health vices are traded as commodities for money tend to and social security." As rights "they cannot be taken exclude those who have limited financial resources. away and they are therefore enforceable" (ibid; ita- A universal right to social inclusion calls for a mini- lics in original). It is important to note that these mum degree of collective responsibility and solidari- rights were not freely given by any enlightened aut- ty and for a minimum level of the redistribution of hority, but are based on a compromise between capi- wealth. As André (2006) points out, fiscal policies tal and labour after a series of partly violent strug- are therefore a crucial feature of every social model. gles. Due to the universal access to a minimum level of Social inclusion is not only guaranteed by the pro- subsistence, citizens become less dependent upon tection from social risks such as unemployment but market forces to reproduce themselves and their also by equal treatment (non-discrimination), family dependents. The result is what Gosta Esping-Ander- arrangements and the organisation of non-paid work, sen (1990) has called the decommodifying effect of as well as by an equal access to public services such welfare state provision. Georges Menahem (2006) as education, health and social services, utilities, has attempted to measure the level of decommodifi- communication and transport. Social inclusion is cation by the development of a "decommodified also guaranteed by the collective and inclusive orga- security ratio4)". The assessment of this ratio on 20 nisation of services. Data from the UK show that in EU countries demonstrates that the Nordic countries relative terms those at the bottom-end of the income or in Esping-Andersen's terms the social democratic scale profit more from the provision of free public welfare states show the highest level of decommodi- services such as health and education. "The poorest fication (together with the Netherlands), while the get more benefit from these services than the rich - new member states and Southern Europe bear the for the poorest, the value of public services is almost highest risks. The ratio of Spain, for example, as great as the value of their entire income including accounts only for half of the ratio of Sweden (ibid). benefits." (Hall 2007) From this perspective the More generally the need to restrict the free play of European welfare-state tradition becomes particular- market forces is also accounted for in the concept of ly evident in the extraordinary important role of social-market as opposed to free-market economies. public services. In countries such as France the ser- In the 1950s and 60s Germany promoted its social- vice public is an integral part of national identity and market economy as viable alternative to unregulated social citizenship. As the European Commission markets and planned economies and the European (2004:4) notes in its White Paper on Services of Commission (2005b:4) recently declared a "Europe- General Interest, "in spite of sometimes substantial an choice in favour of a social-market economy." On differences in the views and perspectives of the the other hand, Europe has a tradition of making up various participants in the debate [on the Commissi- for market shortcomings through massive state on's Green Paper], the consultation has shown a investments in private-sector companies in what is broad consensus on the need to ensure the provision generally perceived as mixed economies (Freeman of high-quality and affordable services of general 1989; Blaas 1992). This is different from the US way interest to all citizens and enterprises in the Europe- of spending public money on private contracts in the an Union." The public access to health services is a health sector and in the armaments industries. But point in case. There are different ways of organising Europe not only has a larger public sector, the role of access, among them the Beveridge tradition of the the state more generally is also seen more positively UK or the employment-centred corporatist traditions than in the US. "Unlike the liberal variant of the US in Germany, France and the Netherlands, which pro- social model, the state is not primarily seen as a con- duced different degrees of inclusion. There are also straining threat to the freedom of the individual but important differences with respect to the level of as a necessary agency of social balance. Since the provision that are thought to guarantee social inclu- destruction wrought in Europe by fascism and the sion.

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