Bea Cantillon

The paradox of the social investment state: growth, employment and poverty in the Lisbon era

After the European Year for Combating Poverty and Social Exclusion, on the eve of the elaboration of policies designed to help reach the Europe 2020 target of lifting 20 million people out of poverty, it is important to take stock of the outcomes of the Lisbon agenda for growth, employment and social inclusion. The question arises why, despite growth of average incomes and of employment, poverty rates have not gone down, but have either stagnated or even increased. In this paper we identify the following trends: rising employment has benefited workless households only partially; income protection for the working-age population out of work has become less adequate; social policies and, more generally, social redistribution have become less pro-poor. These observations are indicative of the ambivalence of the Lisbon Strategy and its underlying investment paradigm.

The Social Stratification of Social Risks: Class and Responsibility in the 'New' Welfare State

Welfare states are said to have evolved over the course of the past twenty years towards a ‘social investment’ model of welfare, characterised by a focus on equality of opportunity and upward social mobility combined with greater emphasis on individual responsibility. More or less concurrently, under the mantra of ‘individualisation’, scepticism has grown with regard to the relevance of traditional stratification schemes. This paper sets out to ascertain whether social class, i.e. intergenerational background, (still) affects the occurrence of ‘social risks’. Using SILC 2005 data, it considers the impact of social class (of origin) on a relevant selection of social risks: unemployment, ill-health, living in a jobless household, single parenthood, temporary employment, and low-paid employment. The results provide clear evidence of a continuing influence of social class. On this basis, we argue that a one-sided focus on individual responsibility could open the door to new forms of marginalisation. Key words: social risks, social stratification, social class, social investment state, individualisation thesis Word count: 9964 wordsOver the course of the past 20 years, welfare states are said to have evolved towards a ‘social investment’ model of welfare – characterized by a focus on equality of opportunity and upward social mobility along with a greater emphasis on individual responsibility. In view of these policy changes, it is necessary to assess whether traditional stratification cleavages (still) affect the occurrence of ‘social risks’. Using data from the 2005 EU-SILC intergenerational module, we consider the impact of social class (of origin) on a relevant selection of risks: unemployment, ill-health, living in a jobless household, single parenthood and low-paid employment. The results provide clear evidence of a substantial influence of social class. On this basis, we argue that social investment strategies need to take stock of the persistence of traditional stratification cleavages. Otherwise, a one-sided approach may create new forms of exclusion and give way to ‘Matthew effects’.

Three Shortcomings of the Social Investment Perspective

In this article we critically assess the social investment perspective that has become the dominant paradigm in European social policymaking. We identify and discuss some of its shortcomings that may hamper social progress for all. In doing so, we focus on three pillars central to the idea of social investment: social inclusion through work, individual responsibility and human capital investment. We find that the social investment perspective has some serious flaws when it comes to the social protection of vulnerable groups. This is strongly related to the continuing relevance of social class in explaining and remedying social inequalities. We conclude that investment cannot be the only rationale for welfare state intervention and that protecting people should remain equally high on the policy agenda.

Female employment differences, poverty and care provisions

In this article, we link an analysis of female employment in the OECD with a reflection on the role of the welfare state regarding the provision of care. First, we reveal a picture of multi-speed labour market participation, with highly skilled women approaching male employment rates irrespective of the type of welfare state and low-skilled women lagging considerably behind, especially in the conservative welfare states. We also show that the gaps between the sexes, educational groups and countries grow even wider among women with children. Consequently, dual earnership is far from generalized in the OECD and differences in poverty rates may be explained by (among other factors) the uneven participation in paid labour of women. To counteract this phenomenon, we therefore plea for a welfare state reform towards the inclusion of care. This will ease the entry to paid employment for mothers and low-skilled women, and thus act as a poverty reduction strategy. A combination of several policy measures is suggested.

The Puzzle of Egalitarianism: About the Relationships between Employment, Wage Inequality, Social Expenditures and Poverty

In social policy debates, there are fundamentally different views of links between such key variables as employment, low pay, social transfers and poverty. This paper reviews basic empirical evidence on the validity of these views and the policy prescriptions that follow from them, drawing mainly on cross-country comparative studies. These reveal that clear and striking cross-country correlations prevail, but not, as is often so readily suggested, between low pay (wage compression) and employment performance, or between employment performance and poverty. Instead, results indicate a strong but negative cross-country correlation between the level of social spending and the incidence of poverty, as well as a strong and positive cross-country correlation between the incidence of low pay and the incidence of relative poverty. While the former correlation has become part of the received wisdom in social policy research, the latter is more surprising, as the correlation is not due to a strong link between low pay and poverty at the individual level. In addition, the incidence of low wage employment and social expenditure are also strongly and (negatively) related. We examine these correlations in more depth, particularly the link between the level of social spending and poverty. Since there is such a clear and strong negative link between the level of social expenditure and the level of poverty, it is tempting to think that more social spending offers an easy means of reducing poverty. However, a simple simulation exercise using Luxemburg Income Study data from the mid 90s suggests that putting more money into social transfer systems as they currently exist in the EU would not have a positive outcome on poverty rates in all countries. In the final section of the paper, we briefly summarise the results, and put forward a recommendation for further research.

Solidarity and reciprocity in the social investment state: what can be learned from the case of Flemish school allowances and truancy?

In this contribution, we discuss some of the new tensions that are emerging between the foundations of the welfare state. Several developments have led to the advent of the social investment state, in which people are to be activated and empowered instead of passively protected. We argue that this social policy shift has been accompanied by a normative shift towards a more stringent interpretation of social protection in which individual responsibility and quid pro quo have become the primordial focus. Using the Belgian (Flemish) disciplinary policy on truancy and school allowances as case in point, we demonstrate that this social policy paradigm may have detrimental consequences for societies weakest: they will not always be able to meet the newly emerged standard of reciprocity. This implies an erosion of the ideal of social protection and encourages new forms of social exclusion. As these changes in the social policy framework are not confined to the Belgian case alone, our analysis bears relevance for all European welfare states.

The EU and minimum income protection: clarifying the policy conundrum

Should the EU be involved in the governance of minimum income protection, and if it should, in which role precisely? This question raises a complex policy conundrum. We focus on a proposal by the European Anti-Poverty Network (EAPN) for an EU Framework Directive on Minimum Income Protection, in order to examine three aspects of that policy conundrum: (1) the instrumental relevance of minimum income protection; (2) the unequal burden of the redistributive effort that would be required across the EU if the Union were to impose hic et nunc a minimum income guarantee of 60% or 40% of the median national income in all Member States; and (3) the impact on dependency traps, under the same hypothesis. We illustrate each of these observations empirically, using cross-nationally comparable data on income and living conditions (EU-SILC) and minimum income protection levels (CSB-MIPI). Since a harmonised minimum income scheme requires a significantly greater budgetary effort on behalf of some of the poorer Member States in Eastern and Southern Europe, it raises a complex question about the meaning of solidarity within the EU. Enhanced solidarity within Member States cannot be decoupled from enhanced solidarity among Member States – and vice versa. Simultaneously, the EU should put positive pressure on poorer and richer Member States to gradually improve the overall quality and efficiency of their welfare regimes. In this context, the prospect of gradually and flexibly introducing a more binding EU framework on minimum income protection may become realistic.

Social redistribution in federalised Belgium

The federalisation of Belgium has led to a fragmentation of competences in the field of social policy. Only social security has remained an exclusive federal responsibility. However, there have been calls for further federalisation in this policy area. The prominence of interregional financial transfers fuels such calls, while its opponents point out that, among other things, federalisation would result in greater poverty and inequality in Wallonia, a Region that is already disadvantaged in economic terms. In this contribution we first outline the territorial organisation of social policy in a federalised Belgium. We then analyse social transfers between Flanders and Wallonia, focusing on their size and determinants. We demonstrate that these transfers have a considerable equalising and anti-poverty effect. Next, we explore the theoretical arguments for and against federalising social policy, supplemented with examples from the Belgian case. We conclude with an overview of the discussion and indicate some future policy directions.

Long-Term Care Financing in Belgium

Long-term care (LTC) in Belgium consists of a wide range of benefits in cash and in kind, organized at the federal, regional and municipal levels, and is related to health and social service provision.1 The bulk of LTC services are provided as part of the federal public compulsory health insurance system, which is financed by social security contributions and general taxes. The main actors in the management of the system are the federal parliament (issuing the main laws governing the system), the Ministries of Health and Social Affairs, the National Institute for Health and Disability Insurance (NIHDI) and the sickness funds, which serve as intermediaries between the administration, the providers and the patients. Since public health insurance covers practically the whole population, LTC coverage is also nearly universal. However, since LTC services provided through the health insurance system cover only nursing care (as well as paramedical and rehabilitation care) and part of personal care to dependent persons, a whole range of services is organized and provided at the regional and local level. Indeed, while there is no specific LTC legislation at the federal level, the regional governments have issued decrees that regulate a wide range of issues related to LTC services: certification of facilities such as nursing homes and day care centres, integration and coordination of services at the local level, quality monitoring systems and so on.

Cracks in a policy paradigm – poverty reduction and social security: the case of Belgium

Poverty reduction rests on the mechanisms of horizontal and vertical solidarity and on prevention and repair of social risks. In this contribution, we argue that in contemporary welfare states the poverty-reducing capacity of existing social security systems has inherent limitations. Focusing on Belgium, we present and discuss empirical indications of a persistent (over a period of at least 30 years) decline in poverty reduction through social transfers, particularly among households who are highly dependent on such transfers. Firstly, we show that prevention and repair have failed to contribute to a reduction in the proportion of work-poor households who are highly dependent upon social security and face a high (rising even) poverty risk. Secondly, we find that given the fragmentation of social risks – in terms of both ex post poverty outcomes and ex ante social stratification – horizontal redistributive mechanisms through risk pooling have become less obvious, especially in respect of unemployment. Thirdly, it appears that the mechanisms of vertical solidarity also face inherent limitations. In a final section we summarise some important research questions for the future and potentially worthwhile policy avenues to resolve the question of how social policy-making might succeed in the future where it has failed in the past.