Scientific Council for Government Policy (WRR) Prof. Dr. A.C. Hemerijck director

1. Scientific Council for Government Policy (WRR)Prof. Dr.A.C. Hemerijckdirector

2. Role of the WRR • Policy making (Heclo) = puzzling + powering • WRR: puzzling • Mandate to advise government • Government obliged to respond

3. Characteristics of the WRR • Scientific/academic • Multidisciplinary • Policy oriented • Intersectoral • Long term perspective • Independent

4. Scientific/academic + mulitdisciplinary • Members of Council are professors • Member of Staff have PhDs • They also teach at university • Law, economics, socioligy, political science etc.

5. Policy oriented + Intersectoral • Council for government policy • Good contacts with policy makers • Complex societal problems • Not restricted to single sectors or policy silos

6. Long term perspective • 25 years ago: predicting the future • 25 years later: formulating future adequate policy directions

7. Independent • “We don’t have to listen to the prime minister……the prime minister has to listen to us.” • Special law on WRR • Own working program

8. WRR=council+staff

9. Council • Legal mandate 1976 • Chairman Wim van de Donk • Other members (8) • Nominated by the cabinet • Working council (3 days a week)

10. Staff • Academic staff (25-30) • Support staff (10) • Organisation under Ministry of General Affairs (Prime Minister’s Office) • Budget for external studies

11. Council AND staff • Project teams • Staff and Council meetings • The primacy of argument

12. Various projects • Dynamism in Islamitc activism • Climate strategy • Welfare state • Labour market, flexibility & security • National identity • Infrastructure • Security • Innovation • Religion • Europe

13. Recalibrating Work and Welfare in the Wider Europe Anton Hemerijck (WRR, Erasmus University Rotterdam, Antwerp University)

14. Outline • European orientations and welfare regimes • ‘Goodness of fit’ and the imperative of welfare recalibration • Welfare performance at a glance • Sequential (self-)transformation and the politics of recalibration • Why we need a new welfare state • Conclusions (role of EU)

15. Paul Pierson (2001) In an atmosphere of austerity a fundamental rethinking of social policy seems a remote possibility.

16. 1. European orientations and welfare regimes

17. European orientations • Normative: nobody left behind (significant redistribution) • Cognitive: social policy (potentially) as a productive factor • Institutional: democratically endorsed negotiated reformism (gradual transformative rather than punctuated change) • Mutiple equilibria effective, legitimate and coherent

18. Four (or five) welfare clusters • Scandinavian (generous/universal/tax) • Anglo-Saxon (targeted on need/tax) • Continental (encompassing breadwinner insurance – contributions) • Mediterranean (insider protection, no safety net, familialism) • New member states (mixed Beveridgean and Bismarckian catch-up – far less coherence)

19. 2. ‘Goodness of fit’ and the imperative of welfare recalibration

20. “Goodness of fit” • Welfare state institutions (policy legacies, administration, financing and spending levels) Compatible with: • Structure of (international) economy (technology) • Social (family and demographic) structure and value orientations • EU (and international) political economy

21. Postwar “goodness of fit” • Sovereign industrial economies based on exploiting existing (US) technologies • Nuclear male breadwinner family social structure, young population (PAYGO) • Limited international competition (foreign investment highly regulated) • EU limited goals – the expansion of heavy industry, the liberalization of trade, CAP, the deregulation of product markets (much later) • All four original regimes equally viable to the 1980s

22. “Goodness of fit” in question • Accelerating economic internationalization and techological change • Post-industrial differentiation (shift to services, feminization labour market, adverse demography, family destabilization) • Relative austerity (standing commitments/low growth) • EU not mandated to push through socially invasive and politically salient reforms (semi-sovereign welfare state)

23. Diverse systems no longer (equally) viable • Scandinavian (public finance/flexibility problem – largelyresolved) • Anglo-Saxon ([child] poverty/inequality problem – improved under New Labour) • Continental (inactivity/employment/pension problems – catching up dualization) • Mediterranean (segmentation/perverse familialism with declining fertility - divergence) • More intense social problems in NMS, but also high growth

24. The imperative of recalibration • Functional evolution of socio-economic risks • Distributive social groups and generations • Normative social justice considerations • Institutional roles and responsibilities (organization of social policy)

25. 3. Welfare performance at a glance

26. Total social expenditure in % of GDP, 1980-2003

27. Employment/population ratios, 1980 – 2006

28. Female employment and share of women’s part-time work, 2006

29. Employment rates of older workers (55-64), 2006 (1997)

30. Standardized unemployment rates (2007/1997)

31. Life course employment rate in Sweden 1995 and 2005

32. Life course employment rate in Spain 1995 and 2005

33. Fertility (1970-2003)

34. Correlation between total fertility rates and female employment rates in 2003

35. Correlation between total fertility and female unemployment in 2003

36. Childcare use and costs (2001)

37. Public social expenditure and education in per cent of GDP, 2004

38. Contingent convergence • Clear shift away from early exit (supply reduction) to raising participation (also women, young and elderly) • Convergence towards higher participation better educated younger cohorts • Fiscal cost-containment but no retrenchment • Equity and efficiency (Scandinavian success) • Social services and human capital lagging behind • Long incubation periods

39. 4. Sequential (self-)transformation and the politics of recalibration

40. Sequential transformative change From Keynesian synthesis to pragmatic monetarism Cost competitive wage bargaining (de-indexation) Broaden base taxation Activating social security Active labour market policy Minimum income protection innovation Pension restructuring (contribution/benefits in line with increased life expectancy) toward a cappuccino three-tiered model Dual-earner-family-friendly services Human capital impulse Financial hybridization provisions (family services and health care) Process: from corporatist class-based bargaining towards (soft) concertative multi-level problem-solving With temporal “joint-decision traps”

41. The politics of recalibration • Exposing drawbacks of welfare status quo (cognitive) • Legitimize new policies (effective) and principles (normative) • Framing reform resistance as problematic • Efforts at political consensus-building • Phasing in (two-tiered) reform • Rethinking roles and responsibilities • Dual importance of EMU/Single Market and Employment Strategy (closing and opening reform pathways)

42. 5. Why we need a new welfare state

43. Ageing societies • Social security is strongly redistributive over the life cycle: the ageing of societies puts tough fiscal pressures on public spending • The debate on ageing has been overly focussed on pension reforms and savings • Of vital concerns is how social policy interact with fertility, education and labour supply (the future tax base) Esping-Andersen, Gallie, Hemerijck, Myles

44. The gender dimension • Women an important resource/capability • Pool of underutilised labour supply • Provider of future labour supply • Complicated relation with social security system • Main providers of child and elderly care

45. Female labour force participation +/- - + + Family policy Fertility - - Child poverty Family policy, female economic activity, child poverty and fertility

46. Human capital and family policy • Knowledge intensive economies push up skills premiums: youth with poor cognitive skills or inadequate schooling today will become tomorrow’s precarious worker. • Sustaining the welfare of a large aged population necessitates high-productive labour force: strong social inheritance not affordable. • Cognitive inequalities are substantially lower in Scandinavia and the trend towards declining social inheritance coincides with expansion of universal day care. • Sharing the costs of raising children to avoid population decline (and meet child rearing preferences) and its consequences for growth and intergenerational equity

47. Ten priorities • Mobilizing active popupation • Child-centered investment strategy (fertility) • Raising and broadening human capital base • Flexicure labour markets • Dual earner family support coherence • Gender equality • Later and flexible retirement (quality work) • Migration and integration through employment participation • Strong anti-poverty strategies (minimum income protection) • Fiscal prudence (but no orthodoxy) in the face of ageing

48. Normative recalibration • Serving citizens to reach their full potential across life course • Connected to dynamic (international) economy and social change • Dynamic equality from freedom from want (protection/redistribution) to responsibility sensitive freedom to act (resources/capabilities) • Policy redirection to address family contingencies

49. 6. Conclusions • Welfare states as ‘evolutionary systems’ with temporary (dis-) equilibria and windows of opportunity for gradual transformative change • Focus on connection and interplay between challenges and welfare regimes (goodness of fit) • More coherence through a life course perspective • Seek positive feedback fertility, (flexible) labour market participation, human capital formation, less poverty • More tailored combinations of income policy and social services and governance structures for managing transition to the post-industrial economy • Hard to imagine welfare recalibration without EU (EMU/EES)