Building the European Welfare Policy

2. Development of a social policy after enlargement

by Maciej Duszczyk
Deputy head, department of economics, ministry of european affairs, Warsaw

The present EU enlargement brings many challenges but also many opportunities for the increasingly uniting Europe. Opinions presented before 1 May 2004 focused on the one hand on issues pertaining to widening of development gaps within the European Union, which might endanger cohesion, and on opportunities relating to acceleration of economic growth and enhancement of competitiveness of the enlarged European Union on the other. The first approach resulted, amongst other things, in transitional periods in the area of free movement of workers. The latter one resulted in joining single market operations by new member states — which intensified competitiveness within the Union.
It is true that the states that acceded to the European Union on 1 May 2004 are relatively less affluent and developed than those comprising the Union so far. This, however, is not a new situation. Similar ones took place twice before. Firstly in the case of Greece. And secondly in the case of Spain and Portugal. One has to assume that subsequent enlargements will be also of similar character. There is a single reason for that. Practically all well developed European states already are Single Market members. Only Switzerland remains outside, but it increasingly unites economically with the European Union. The examples of Norway or Iceland show that despite non-participation in political integration, states can participate in economic integration.
The largest enlargement of the European Union took place in a very special moment in history. The European Union has faced an enormous challenge to effect changes that will help it respond to globalization-related challenges. The reform package adopted in 2000 and called Lisbon Strategy failed to take into account two fundamental issues: European Union enlargement and increased competition from such states as China or India. That is why the Lisbon Strategy requires adjustments to the events that have taken place after 2000. One of the key aspects of the Lisbon Strategy is the upgrading of the European social model. This is to be the main challenge for social policy performed both at member states level and co-ordinated at the Union level.
Recently at least four very important documents have been published, which contain opinions and recommendations concerning the future of social policy. They are:
1. Report of the Employment Task Force: “Jobs, Jobs, Jobs — Creating more employment in Europe”, November 2003.
2. Report of the High Level Group on the future of social policy in an enlarged European Union, May 2004.
3. Report “The social situation in the European Union”, October 2004.
4. Report “Facing the Challenge — The Lisbon strategy for growth and employment”, November 2004.
Authors of all four reports are unanimous. The necessity to reform the European social model ensues from changes relating to the demographic factor and intensification of global competitiveness and to the European Union enlargement. What is more, members of the High Level Group directly prove that accession of new member states with lower level of social security can be an opportunity to effect the necessary changes.
Analysis of the situation in the European Union suggests that it faces three key challenges:
1. How can we counteract adverse effects of the ageing of European societies?
2. How can we increase employment level and minimize adverse effects of unemployment?
3. How can we win social approval for reforms of social security systems, which will inevitably decrease security level of excluded persons?
Let us try analyzing those three issues and formulating foundations for some recommendations.

Challenge 1

Contrary to common opinions, accession of new member states to the European Union did not change the pan-European trends in the scope of demographic changes. It is true that new member states — particularly Poland — are relatively young societies. However as a result of the drop in the number of births, which has been observed in those countries since late ’80s of the previous century, in mid-term ageing of societies will be a problem afflicting all EU member states. This situation will not be changed by the accession of Bulgaria, Romania or Croatia. A change might be brought by the accession of Turkey to the European Union — but presently this is a controversial issue. Ageing of societies brings many adverse economic effects. The major ones include: inefficiency of social insurance systems and the necessity to bear higher expenditure in health care field. On the other hand, the lengthening of lifespan is a key element of a welfare state. Let us think how we can counteract adverse effects of the ageing of societies. Three methods are usually given in the reports:
• Lengthening of employment time by delaying retirement age,
• Increasing migration level,
• Conducting active pro-family policy.
It seems that the development of a social policy in the nearest future will rather tend towards the third method, which seems least controversial. Delaying of retirement age is very controversial from the social point of view. Limitation of the period when the pension earned by a citizen is paid out can only be voluntary. Given the present level of pensions in EU Member States, it is difficult to imagine a situation where persons over 65 on a mass scale consent to remaining occupationally active longer with a view to receiving higher pensions. Even if such situation takes place, the period of lengthening the employment time will be rather short and thus will fail to bring about the expected savings. In this context it seems that a positive outcome can be brought through elimination of fraud in the system of disability pension granting and limitation of the grey zone area. States that amended their ‘pay-as-you-go’ systems and introduced individual insurance are in a better situation here.
Equally controversial is the issue of increasing the migration level. It needs to be stressed that hitherto external migration from CEECs has become internal migration as a result of the enlargement. Moreover migration from such states as Poland was the most agreeable one for citizens of ‘old’ member states. As a result of lack of social approval for migration from Asian countries, India or Africa and difficulty in integration of those immigrants with the European society, the scale of migration will remain on low level from the point of view of the ageing of the society. An important observation in this context is also certain migration gaps in ‘new’ member states. Recently from typical emigrant countries, they have become emigrant-immigrant countries. In the years to come most of them can be expected to become typical immigrant countries. Therefore one can expect that they will accept a larger number of emigrants than before.
Given the two issues above, the best method to counteract the ageing of societies seems to be an active pro-family policy. Its elements can be found for example in the Lisbon Strategy, which encourages member states to increase the number of places in kindergartens. Of particular importance here are also new forms of employment, which help reconcile professional career with home duties. Other elements exceeding the boundaries of social policy are, for example, pro-family taxation systems.

Pages: 1 2 3

Tags: , , ,