Download A More Dynamic Welfare State for a More Dynamic Europe

Progressive Agenda
A more dynamic
welfare state for
a more dynamic
Europe
“
The welfare state is
one of the greatest
achievements of the
past century.
”
José Luis Rodríguez Zapatero
vol 4.3 } progressive politics { 3
Progressive Agenda – José Luis Rodríguez Zapatero
A more dynamic
welfare state for a
more dynamic Europe
José Luis Rodríguez Zapatero
“
Europe made a
different choice
than the US in
terms of leisure
versus hours
worked, and
therefore decided
to work less but in
a more productive
manner.
”
During the last days of October, the
British Presidency invited all Member
States to discuss the challenges that
globalization poses to the European
Social Model. This was an open and
no doubt fruitful dialogue: a necessary
exchange of views about concepts
and final goals, before the discussion
about the means to achieve these goals
could proceed.
Crucial issues on the table were related
to the modern concept of social justice,
and the policies that Europe needs in
order to combine competitiveness,
growth and social cohesion. These are
all crucial questions for the 21st century
that our citizens want us to answer,
and this is why I personally welcome
the initiative launched by Tony Blair.
The welfare state is one of the greatest
achievements of the past century.
It emerged as a response to the risks of
the industrial era and in the framework
of the nation state. Today these risks
have evolved and globalization is
limiting the room for manoeuvre of
individual countries. Together with
globalization, ageing and technological
change, the viability of the traditional
welfare state as it was developed in
postwar Europe is also being challenged.
While I admit that these are new
developments that impose new
constraints to our models, I would like
4 } progressive politics { vol 4.3
to challenge the argument that the
European welfare state is an impediment
to economic competitiveness. There
are no theoretical or empirical reasons
to maintain that those countries with
more developed welfare states are
necessarily less competitive.
First, the impressive performances of
Nordic countries in all competitiveness
indexes demonstrate that this argument
is far from true. In fact, there are aspects
related to the provision of health
insurance, education, unemployment
protection and pensions where the
public provision of welfare is clearly
more efficient than its private
counterpart.
Second, if we look at the evolution of
per capita GDP in the last 30 years, we
can see that the inability of Europe to
reach US per capita income levels is not
the result of a poor performance in terms
of productivity per hour (which was in
fact higher in Europe than in the US),
but rather a question of hours worked.
Europe made a different choice than
the US in terms of leisure versus hours
worked, and therefore decided to work
less but in a more productive manner.
Third, if we measure competitiveness
in terms of imports and exports, we see
that Europe has performed better than
is often supposed. For example, in the
last decade, Europe has systematically
had a trade surplus while the US has had
a continuous deficit. This can either be
the result of different choices in terms
of consumption and savings (the US
consuming and importing and Europe
saving and exporting), or the result of
more competitive European products.
In fact there seems to be evidence of
both effects, with European market
shares in world trade well above those
of the US during the whole decade.
And finally, it is important to note that
competitiveness in world markets and
per capita income are not the only valid
measures to account for the level of
well-being that citizens enjoy in Europe
with respect to other citizens in other
parts of the world. There are alternative
measures that have to do with the quality
of life, where Europe always scores above
its competitors. For example, Europeans
enjoy a higher life expectancy, a more
equal distribution of income, and a
more protected environment, than
in other parts of the world.
This does not mean that Europe is not
in need of reforms. Clearly, European
economies have to be more productive
and more flexible. We have to reinforce
our comparative advantages in high
value-added products, and we need
to multiply our investment in
infrastructure, research, innovation and
education. The road map depicted by the
renewed Lisbon strategy is the one to
follow. But if we want our citizens to
come with us on this journey, we should
avoid negative messages and threats
of dramatic scenarios unless we do
something in response to globalization.
On the contrary, messages must be
positive. When we blame globalization
for welfare reforms that were needed
anyway, we must be aware of the
negative attitudes that these arguments
generate against globalization. Therefore,
those of us who are convinced that a
better welfare system for our citizens
is perfectly compatible with further
European integration and more
globalization, should start sending the
following positive messages.
European citizens need to hear more
often Europe is in good economic shape
in many areas, and that it is fully
committed to undertake reforms and
implement new policies in those other
areas where it is lagging behind. It needs
to be explained that globalization is only
accelerating those changes which would
have taken place anyway. Globalization
must then be interpreted as a window
of new opportunities; a new process that
is creating new risks but which will also
demand a renewed impulse to a new
form of welfare provision, more efficient,
more dynamic and to the benefit of
more citizens.
In this context, we progressive Europeans
must put in place a policy agenda for
globalization and the modernisation
of our socioeconomic models that
combines three crucial elements:
Flexicurity in the market; Dynamism
in the State; and Cooperation within
globalization.
‘Flexicurity’ in the Market
“
Globalization must
be interpreted as a
window of new
opportunities.
”
If Europe wants to continue acting
as a major economic player in world
markets, it has to reinforce its internal
market and European economic policy
cooperation between Member States. As
further integration of European markets
takes place, their efficient functioning
will require higher flexibility, and we
must be keen to provide it. At the same
time, as integration progresses, flexibility
increases and globalization accelerates,
Member States will be required to
guarantee new forms of welfare
provision to their citizens, a question
which should also be at the top of
our agenda.
vol 4.3 } progressive politics { 5
Progressive Agenda – José Luis Rodríguez Zapatero
“
We need a new
welfare state
more dynamic
in its internal
functioning, and
which acts as an
external dynamiser
for economic and
social actors.
”
The only way to combine these parallel
demands for higher flexibility and
growing welfare is by means of a
creative combination between ex
ante deregulation and ex post social
protection. ‘Flexicurity’ is the term
applied to this type of combination that
has worked so well in Nordic labour
markets in the last decades. It is based
on two elements: few regulatory
constraints to hire workers, and
generous unemployment and education
programmes to activate labour rotation
and replacement. The first element of
this virtuous policy combination
has worked considerably well to offer
strong incentives to employers and
international investors, and the second
element has guaranteed social inclusion
and participation.
This optimal combination proves that
growth and equality, efficiency and
equity, or flexibility and security, can
go together. We must be creative enough
to expand this type of policy from
labour market policies to as many areas
as possible.
A More Dynamic State
In order to do so, we need to transform
our main policy tools. A new role for the
public sector and the welfare state will be
also crucial in this respect.
We need a more active and dynamic
welfare state, both in the way it spends
and in the way it regulates. We need a
new welfare state more dynamic in its
internal functioning, and which acts as
an external dynamiser for economic and
social actors.
This Dynamic State should place at
the forefront of its theoretical discourse
the value of dynamic equality. As a
consequence, the primary objective of
the welfare state of the twenty-first
century should be that of combating
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the social inheritance of disadvantage.1
This is why this Dynamic State should
concentrate its efforts on policies for the
training and growth of human capital.
It should also put more emphasis on
preventive policies than on reactive ones,
choosing investment over subsidies, and
activation over protection.
As a result of this normative
recalibration,2 this Dynamic State would
be better equipped to cover the new risks
that our citizens face in the new century.
These are not only the ‘old risks’ that the
traditional welfare state used to protect
(such as unemployment or old age), but
those ‘new risks’ associated with atypical
unemployment, social exclusion, the
obsolescence of professional skills,
and above all, the non-availability
of adequate training opportunities
throughout life.
This Dynamic State should empower
its citizens to adapt themselves to a
world in constant change because this
is the way to guarantee that equality of
opportunities and freedom of choice are
durable principles.
We must be conscious that a
reorientation of our spending policies
towards investment in education
and research, investment in children,
mothers and young people is the correct
set of policies to tackle at once the longterm challenges posed by globalization
and ageing.
Together with spending, we need to
recalibrate our legislation as well.
The Dynamic State should then reduce
its administrative burdens on businesses
and must transform itself into a
facilitator for citizens’ initiatives.
It has to be aware of the complications
that it can create for private initiative in
some areas (in order to avoid them), but
it also has to exploit its great power to
act as a catalyst in many other areas.
Cooperation within
Globalization
‘Flexicurity’ in the markets and
dynamism in the state are two
crucial ingredients for a recipe to take
advantage of the opportunities created
by globalization. Nevertheless, their
application at the national level will
only have limited success if the purpose
is to make the European Social Model a
viable model in the era of globalization.
This is why together with national
reforms, decisive action at the European
level is also needed.
At the European level, we must agree on
the new Financial Perspective and on the
Internal Market for Services. We must
also move towards policies that help
close the existing technological gap
between different Member States, and to
integrate fully the European Education
System. Only by means of a fully
integrated market, will Europe be
competitive in the global economy.
Together with these actions, Member
States need to strengthen economic
policy coordination in those areas which
are of national competence. And decisive
steps must be taken to apply the national
reforms necessary to comply with the
renewed Lisbon Strategy.
economic risks and prospects among
the citizens of the world. This is what
motivates migration flows, and Europe
must respond to them as well.
A first step in this direction would
be to create a new common European
immigration policy based on four lines
of action3. In addition to this new
common policy, we should celebrate
a new EU-Africa Conference for the
multilateral dialogue on immigration.
If all these joint actions succeed,
we will all succeed. Cooperation within
globalization is the key to turn the
current pessimism into realistic
optimism. This will renew the consensus
about the merits of the European
formula of reconciling economic
performance and social cohesion, and
this will give us the chance to speak to
the world with much greater legitimacy.
Once we reactivate our economy,
Europe should then position itself as a
reference leader in the governance of
globalization, to ensure sustainable
development and build a decent and
more equal world for the generations
to come.
These simultaneous actions at the
European and the national level are
crucial to reactivate the European
economy and to demonstrate that our
mixed models of market and welfare are
as competitive as any other in the world.
European common values will then be
again considered as an asset (not an
obstacle) in the globalized world.
Globalization is about free and fast
trade of goods, services, and capital.
And the world should find Europe at
the forefront of these processes in
the coming WTO negotiations. But
globalization is also about sharing
José Luis Rodríguez Zapatero is
Prime Minister of Spain.
“
Only by means of
a fully integrated
market, will Europe
be competitive
in the global
economy.
”
1 See Esping-Andersen ‘Against Social Inheritance’,
2003; and, Esping-Andersen, Gallie, Hemerick and
Myles ‘Why we need a New Welfare State’, 2002.
2 For the concepts of functional, distributive and
normative recalibration, see the work by Mauricio
Ferrera, ‘Modernizing the Social Model: Stepping-up
Reforms, Improving Coordination’, 2003.
3 These four lines of action are:
1) a technical improvement in external frontiers;
2) a new impulse to the repatriation agreements
with neighbour and third countries;
3) the inclusion of immigration issues in the
external policy of the Union; and,
4) the search for additional financial assistance to
the countries that channel migration routes.
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