Social Welfare Policy: A Safety Net or a Crutch?

Theodoulou

Social Welfare Policy• Provision of appropriate levels of well-

being—Safety Nets against poverty• Social Welfare Policy: programs

destined – To assist the poor and the working class– To redress the gaps in society

• Levels of expenditure vary according to whether a society believes the Gvt. Should be responsible (and responsive) to the needs of its citizens

Question: How should the State react before the

dynamics of the market?Understandings of Welfare:

1. Relief ancillary to economic arrangements, because of the instability of capitalist economies

2. Welfare policy regulates labor, integrating people within the system and acting as a social pacifier

3. Welfare policy should encourage individuals to be independent

Types of Welfare Policy Solutions

• Rights: services to which individuals are entitled as a part of their citizenship

• Rules: specify conditions under which individuals are eligible for certain policies

• Inducements: positive or negative, encourage or discourage individuals to become subjects of specific welfare policies

Tools

1. Policies that benefit the poora. General Assistance Programs (food,

money, clothing)

b. Work Assistance

c. Categorical Assistance

2. Policies that benefit the general publica. Social Insurance (against unemployment)

b. Social Regulation Programs

Approaches Used by Gvts.

• Preventive (that individuals do not become poor)

• Alleviate (Assistance to reduce poverty)• Punitive (Assumption: poverty is the

poor’s fault/minimal assistance)• Curative: attempts to “cure” causes of

poverty• Incomes: encourages individuals to

work for Gvt. Assistance

Critics of Welfare Policies

• Claim: Welfare encourages individuals to become dependent on government support and remain unemployed

Brazil: Imitation of the “Real Thing”

• Restricted Welfare System• Military Rule prevented the country from

developing a real public welfare system – Focus on rapid economic growth and not on

social policies– Increasing Gaps

• Late 1970s, rise of a state-centered movement claiming for welfare programs (middle and working class)

• Social rights consecrated in the 1988 Constitution—Insufficient implementation

Policy Structure• About 50% of workers make no contributions to

the system– Fiscal Gaps

• Series of Programs and services based upon the Organic Social Security law promulgated in the 1930s and changed in the 70s and 90s.

• November 1998, Social Security Reform (deters retirees from going back to work in the public sector, reduces or eliminates certain public pensions while fostering people’s transferring to the private system)

• In countries as unequal as Brazil, an “equal for equals” policy is impossible to apply (in Brazil, universality means exclusion). Targeted policies

Recessive Cycle• Economic Recession• Huge Public Debt

– Cuts in public expenditure—lack of resources to spend in education, health, etc.

• Brazil’s industry hit by globalization (unemployment)– Policies to attract foreign investments through

privileges

• Many social reformers argue for a strong paternalistic state (Danger of authoritarianism)

• Voluntary Associations

• Economically, Brazil’s national debt, de-industrialization, and dependency have increased

• Socially, the gap (one of the biggest in the world) is widening

• Politically, loss of legitimacy of the system and pessimism

• Lula has brought new hopes, with his goal of allowing all Brazilians to have three meals a day—Will he be able to achieve even this minimal goal?

Germany: Status Maintenance with Minor Cutbacks

• Before Reunification– West Germany: Pluralism, Corporatism,

Decentralization. High welfare provision hierarchically organized and distributed

– East Germany: Centralized and Universalistic, wide-scale coverage, deficiencies of quality

• After Reunification: organizational uniformity, with differences– Western social insurance was extended to

the Eastern States with benefits calculated on the basis of their (Eastern) income

Germany, place of Birth of the Welfare State

• First Statutory Social Insurance System• 1970, the Poor Law (basic assistance)• Bismarck, 1883, compulsory sickness

insurance• 1889, Provisions concerning old age and

invalidity insurance• 1923, the Empowering Act (local

responsibility/ employer/employee financing of the system)

• Under Hitler, welfare policies became restrictive• Restrictions continued under the Allies occupation till 1947• 1945-1949-Reconstruction of the social welfare system while

integrating war veterans, victims, and refugees.• 1949 Basic Law settles conditions for social welfare policy:

Social State, inspired in Bismarck’s welfare state– Key elements applied throughout the nation with local

differences in implementation• 1950-69 Ec. Growth and expansion of the welfare state• 1970s Welfare Reform (expansion)• Late 1970s-1980s Economic problems and reduction of

programs (not as severe as elsewhere)• 1990s Problems of reunification

The German System

• Social Market Economy

• Welfare policy objectives are – Defined and articulated by the federal gvt.

– Implemented at the local level/increasing role of the federal gvt. Since the 1980s (and with reunification)

• Funded by both the state and the private sector (employers/employees)

The German System• Social Insurance

– General Assistance program covering income losses caused by sickness, unemployment, old age, or disability. Semi-autonomous organization (employers/unions) locally administered and sponsored by the federal gvt.

• Social Assistance (benefits for those who cannot apply for social insurance, calculated according to needs)—State institutions, benefits for refugees, social housing

• Personal Social Services provided by the states (Lander)

Criticisms and Problems

• The welfare system reproduces the inequalities of the labor market

• Reunification brought about a crisis of the welfare system (huge unemployment, more individuals in need, lack of resources, inequality between the West and the East)

• No roll back of the state

Great Britain: 1996, “The End of the Welfare State”?

• Antecedent: British Poor Laws (1601)• The British Welfare State developed out of the

belief that “every individual has the right to support in times of need and emergency.”– 1942 Beveridge Report: social welfare seen as a right

of citizenship. Expanded notion of liberty. Attack against the “five giants of modern society”—want, disease, ignorance, squalor, idleness.

– Three decades of expansion of the Welfare State– 1979: Thatcher’s Structural Cutbacks (limits: health

care & benefits for the elder)– 1997: New Labour’s “Welfare-to-Work” approach.

Main Social Welfare Instruments• From WWII to 1979/80:

– Single weekly contribution for “cradle-to-grave” benefits (“all-in” insurance)

– Five areas of benefits: cash benefits, health care, education, housing, personal & social services (about 70% British received at least one cash benefits, and health and education were available to everyone)

• Since 1979, Thatcher’s drastic erosion of the Welfare State—Privatization (of pensions, health, education), weakening of the idea of universal access—Replaced with the notion of incentives and disincentives

New Labour Conservatives•Jobseeker’s Allowance (JSA) “Welfare-to-Work” (individuals must demonstrate their will to get any available job to continue perceiving the benefits•Agencies attempt to match unemployed with jobs•Since 2000 Proliferation of Controls (beepers, checks, etc)•Blair’s GreenGreen paper (3 types of welfare: as a channel for pursuing social well being as self-interest, as the exercise of authority compelling people to pursue the common good, and as a mechanism for moral regeneration)•Policies are designed nationally and implemented locally

Shift in the Debate• From

– How much to expect, and how should the State provide for its citizens’ needs

• To– How to make the choices concerning welfare

services

• Problem: lack of resources to fund a comprehensive welfare state (the British welfare state looks obsolete in comparison with the Swedish or the German)

Japan: Different and Unique

• 1938 National Health Insurance• 1944 Employees’ Pension Insurance• Occupation—Western-style welfare

reforms (1946 Daily Life Protection)

Symbolic

1960s: Prosperity & Social Welfare• National pension scheme• Late 60s: movement pro-Welfare State• 1973, the “First Year of Welfare”

– Dramatic increase in social expenditure during the 1970s

– 1980s Japan looked like Germany

• Mid 1980s (economic crisis, cutbacks) Development of the idea of a Japanese Welfare State— “Reconsider Welfare”– Complex System: Family, Community, Corporation,

and... The State (the State only supports people who are also supported by their relatives)

Mixture of welfare-state principles, insurance, and individual responsibilityFour Main Areas • Public Assistance• Social Insurance• Basic Welfare• Public Health

Main Actor: the Central government bureaucracy

Main Problem: the aging population

Sweden: the Social Democratic Model?Gradualism• Early commitment with solidarity and universalism

since the 18th century (because of the political power of the agrarian industry, the increasing power of the working class, and the existence of a centralized monarchy)

• The Poor Law (1882)• The Pension Act (1913)• The National Unemployment Commission (1914)• 1932-1976 Social Democratic gvts—Welfare State

based upon a Keynesian policy• 1980s Growing deficit & Inflation• 1990s Austerity measures (did not undermine the

structure of the Welfare State, at least not yet)

Structure• Social Insurance: universal (sickness,

unemployment, disability, old age, long-term care). No means-tested

• Social Assistance Benefits: Means-tested (Housing and child benefits)

• Social Services: Parental benefits package (12 months leave at 80% of gross earning, further 180 days of leave until the child enters primary school, up to 60 days per year to face emergencies); Daycare

United States• Reluctance towards social policy• Social welfare policies developed after the 1930s

by the federal gvt. – Roosevelt’s New Deal Limited (and always

problematic)

• Reason: American political culture and values, with an emphasis on self-reliance and individualism

• Poverty is seen as the individual’s fault• Early 20th century punitive approach• After 1929: acceptance of the notion that crises

may produce poverty that are not the poor’s fault– 1935 Social Security Act Preventive and alleviative

Phases

• 1935 Social Security Act: social security and unemployment compensation

• (AFDC) Aid to Families with Dependent Children• Post WWII, prosperity & suspension of social

welfare• 1960-8 Kennedy-Johnson the Great Society & the

War on Poverty (Medicare, Medicaid, housing subsidies, school feeding programs, programs for pregnant women, Equal Opportunity Act/curative)

• 1968 Nixon (Milton Friedman) inexpensive programs based on dis/incentives Workfare

• 1980/90s Reagan & Bush: hostility to welfare. Poverty seen as the individuals’ fault punitive approach. Welfare seen as the root of all problems

• 1996-Clinton, the Personal Responsibility and Work Opportunity Reconciliation Act End of Welfare?

Organization• Since 1996, recipients of welfare are required to

work • AFDC was eliminated and replaced by TANF,

limited temporary assistance to families– States administer funds and programs (no national

unified programs anymore)

• Elimination of benefits for immigrants• Punitive & Incomes approach• Different Programs

– Direct Cash Assistance (Should I include tax discounts here?)– In-Kind Assistance Programs– Services (health care, childcare, help dealing with

alcohol or drugs)