OECD-ECLAC-PSE EU-LAC Forum

1. The
European
Welfare
State:
Performance
and
Challenges
Pierre
Pes:eau
CORE,
Université
de
Louvain
and
CREPP,
Université
de
Liège.

2. Assessing
the
European
Welfare
State
brings
contrasted
reac:ons
depending
on
whether
you
are
a
pessimist
or
an
op:mist:
– Half
full
glass:
All
the
missions
have
been
fulfilled.
Recent
study
on
the
performance
of
the
Welfare
State
in
the
28
EU
countries:
improvement
and
convergence.
– Half
empty
glass:
They
are
more
numerous.
Concerned
by
the
challenges
that
threaten
the
viability
of
the
Welfare
State
more
than
by
its
current
performance.

3. Among
the
most
cited
challenges,
there
are
– demographic
aging,
– globaliza:on
,
– financial,
budgetary
crisis.
As
a
reac:on
to
these
challenges,
we
have
already
observed
over
the
last
decade
changes
in
the
architecture
of
our
Welfare
State.
From
contributory,
it
becomes
more
and
more
Beveridgean.

4. On
the
revenue
side,
an
increasing
frac:on
of
resources
comes
from
general
revenue
and
not
from
contribu:ons.
1990 2000 2010
Belgium 23.8 25.5 35.8
France 17.0 30.3 34.0
Germany 19.1 31.9 36.7
Italy 27.2 40.6 45.6
Spain 26.2 29.5 43.5
Table
1.
General
government
contribu:ons
as
%
of
total
receipts

5. On
the
benefit
side,
there
is
less
and
less
link
between
the
contribu:ons
and
the
compensa:ons:
survival
benefits,
minimums
and
maximums,
derived
rights.
• Problem:
by
moving
away
from
the
Bismarckian
contributory
principle,
we
increase
tax
distor:ons
and
lose
poli:cal
support.

6. Two
remarks
in
order
when
assessing
the
performance
of
the
welfare
state.
– Different
countries
can
have
different
priori:es:
employment,
equality,
poverty
allevia:on,
health,
educa:on,
old
age,
…
– Those
priori:es
are
not
always
reflected
in
the
amount
of
social
spending.
There
exists
other
non
financial
means
to
achieve
certain
objec:ves:
relying
on
the
private
sector
through
mandatory
insurance,
laws
and
regula:on,
environment,
…

7. Now
I
provide
some
evalua:on
of
the
performance
of
the
European
welfare
states.
For
the
most
recent
years,
it
comprises
the
28
EU
member
states.
For
the
dynamic
part,
it
is
restricted
to
EU15.
• The
performance
is
measured
as
the
capacity
to
fulfill
5
basic
missions
of
the
Welfare
State:
– Poverty
allevia:on
– Inequality
reduc:on
– Health
– Employment
– Educa:on

8. • Two
techniques
of
aggrega:on
are
used:
– simple
unweighted
sum
of
normalized
indicators
(SPI)
(ex:
HDI)
– Data
Envelopment
Analysis
(DEA)
that
weights
the
par:al
indicators
according
to
the
importance
they
are
given
in
each
country.

9. 1,000
0,900
0,800
0,700
0,600
0,500
0,400
0,300
0,200
0,100
0,000
POV
INE
EXP
UNE
EDU
France
Germany
Spain
United
Kingdom
Figure
1
:
Primary
indicators
in
4
countries

10. DEA rank SPI rank
Austria AT 1.000 1 0.821 6
Belgium BE 0.911 17 0.736 11
Denmark DK 0.947 14 0.773 8
Finland FI 0.997 10 0.835 5
France FR 1.000 1 0.749 9
Germany DE 0.916 16 0.738 10
Greece EL 0.846 23 0.319 26
Ireland IE 0.882 21 0.648 15
Italy IT 1.000 1 0.543 19
Luxembourg LU 0.984 11 0.813 7
Netherlands NL 1.000 1 0.896 1
Portugal PT 0.799 25 0.446 23
Spain ES 1.000 1 0.263 28
Sweden SE 1.000 1 0.863 2
Table
2
:
DEA
and
SPI
performance
indicators
–
EU
28,
2012
(1)

11. DEA
rank
SPI
rank
UK
UK
0.904
18
0.646
16
Bulgaria
BG
0.650
28
0.327
25
CroaLa
HR
1.000
1
0.471
21
Cyprus
CY
0.902
19
0.716
12
Czech
R.
CZ
1.000
1
0.849
3
Estonia
EE
0.758
26
0.513
20
Hungary
HU
0.859
22
0.604
18
Latvia
LV
0.697
27
0.332
24
Lituania
LT
0.896
20
0.462
22
Malta
MT
0.925
15
0.648
14
Poland
PL
0.962
13
0.617
17
Romania
RO
0.842
24
0.305
27
Slovakia
SK
0.965
12
0.648
13
Slovenia
SI
1.000
1
0.840
4
Mean
0.916
0.622
Table
2
:
DEA
and
SPI
performance
indicators
–
EU
28,
2012
(2)

12. POV INE UNE EXP EDU
DEA
0.027 0.160 0.264 0.294 0.255
Table
3
:
Implicit
weights-­‐
EU
28,
2012

13. Figure
2
:
Convergence
of
SPI
1
0,9
0,8
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
AT
BE
DE
DK
EL
ES
FI
FR
IE
IT
LU
NL
PT
SE
UK
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

14. Figure
3
:
Average
DEA
growth

15. Overall
assessment
• Quasi
universal
coverage
rela:ve
to
less
than
50%
in
La:n
America.
• S:ll
many
holes
in
the
safety
net:
poverty
rates,
working
poor,
unalended
dependent
elderly.