LTRAV2720 2017 Vanderborght Syllabus

Comparative social protection systems
LTRAV2720
Academic Year 2016-2017
Syllabus
for the classes given by
Yannick VANDERBORGHT
Comparative social protection systems
UCL- LTRAV2720
Academic Year 2016-2017
Syllabus for the classes given by Yannick Vanderborght
<yannick.vanderborght@uclouvain.be>
Important notice: these are short summaries of the lessons.
1. Social protection: setting the scene
1.1. What is “social protection”? Key concepts and data
“Social protection” or “social policy” is a subset of public policies mainly

aimed at covering several social risks such as illness, old age, unemployment, work
accidents, or parental responsibilities. These policies are at the core of what is often
called the “welfare state” in English, or Sozialstaat in German, Etat social and Etat
providence in French, and verzorgingstaat or welvaartstaat in Dutch. In Europe, one
often refers to the notion of social protection or social security.
A “social protection system”, or welfare state, can be briefly and minimally
defined as follows: a series of institutions that ensure a condition of relative economic
security for each citizen (or resident) through a package of redistributive mechanisms.
This brief definition relies on two key elements: 1

- aim: ensuring economic security
- method: redistribution
Let us consider each of these elements in turn.
Considering the aim of social policy consists in looking at its main

justifications, a key issue in political debates in developed welfare states. The aim of
ensuring a relative economic security is mainly justified by considerations of fairness
and efficiency. These two aspects sometimes conflict (economists speak of a “trade-
off”).
- One way to justify specific social policies consists in looking at their impact on
efficiency. Under certain conditions, expenditures in social protection can help
1
See BARR, Nicholas (2012), Economics of the Welfare State, Oxford: OUP.
Yannick Vanderborght – UCL – LTRAV2720 – 2016-2017 2

to sustain an efficient economy. Examples can be found several fields, such as
health care, and even social assistance.
- But the most important way consists in looking at their consequences on

fairness. This is a difficult issue, to be raised again when looking at concrete
policies such as unemployment insurance and social assistance (see, esp., the
distinction between deserving and undeserving poor). Two main sets of
justifications can be discussed here: justification in terms of equality, and in
terms of freedom.
Equality: focus on equality of opportunity and equality of outcome;
Freedom: providing the means of real freedom, rather than mere formal
freedom.
As to the method, it allows us to distinguish between two components :

financing and benefits (or delivery).
- Financing
Two main sources of funding:
- dedicated revenues : social contributions ;
- general government revenues: direct taxes (ex : income tax) and indirect taxes
(ex : VAT);
[+ « user’s fees » (example of copayments in the case of health care)].
In class, some important differences between social contributions and direct

taxes are discussed.
The graph below shows the social protection receipts within the European
Union (EU28) in 2012.

Source: EUROSTAT 2016 (Data for 2012)
- Benefits (delivery)
The second component of redistribution has to do with “expenditures” which
take the concrete form of “benefits” (such as, for instance, “unemployment benefits”)
that are mainly delivered by public authorities (the welfare state).
Here three distinctions need to be made as far as the modes of delivery are
concerned:
1) Contributory versus non-contributory benefits

1a) Benefits which are financed by social contributions are said to be
contributory, or earnings related. They are a matter of what is often called social
insurance. Sometimes, one refers in this respect to « horizontal redistribution », in a
twofold way: redistribution throughout the whole lifecycle of any given individual
(for instance in the case of pensions); or redistribution between risk categories
(contributions of the active fund the pensions of the inactive).
Note that in practice, in a somewhat confusing way, “contributory” benefits
may be paid to beneficiaries who did not previously pay any social contributions.

1b) Some benefits are “non-contributory” (and flat rate):
• universal benefits: irrespective of income, occupation or social position.
• means-tested benefits (or “targeted” benefits): social assistance.
2) Cash versus in-kind benefits

Preferences for benefits in cash or in kind are affected by considerations
regarding the alleged trade-off between fairness and efficiency (see above). All
welfare states combine both types of benefits in some way.
3) Public versus private benefits

Increasingly, developed welfare states rely on private benefits, privately
funded and delivered, but often publicly subsidized. In this case, state intervention is
indirect:
• The welfare state can subsidize goods and services that are produced
and/or delivered by the private sector (as is already the case for
medicines);
• The welfare state can give cash incentives to households in order to
foster the consumption of goods and services that are produced and/or
delivered by the private sector. This is especially the case when tax
expenditures (sometimes called “fiscal” benefits, or even “implicit”
benefits, as they are somehow hidden to the general public). The most
illustrative case is perhaps the U.S. health care system, in which a
significant proportion of individuals buy a health insurance scheme on
the private market, and benefit from tax deductions. Figures for 2015
are below (Source: US Census Bureau 2016).
- Employer-based health insurance: 55.7%
- Government plans (Medicaid, Medicare, Military coverage): 37.1 %
- Direct-purchase (or individually purchased): 16.3%
- Uninsured: 9.1% (from 10.4% in 2014, a decrease due to “Obamacare”)

Public social protection expenditures, % of GDP, 2013-2016
Source
Branch
Type of Expenditure
Type of Programme
Measure
Year 2013 2014 2015 2016
Country
Australia 18,1 18,7 18,8 19,1
Austria 27,6 27,9 28,0 27,8
Belgium 29,3 29,2 29,2 29,0
Canada 16,9 16,8 17,2 ..
Czech Republic 20,3 19,9 19,5 19,4
Denmark 29,0 29,0 28,8 28,7
Finland 29,5 30,2 30,6 30,8
France 31,5 31,9 31,7 31,5
Germany 24,8 24,9 25,0 25,3
Greece 26,0 26,1 26,4 27,0
Ireland 20,2 19,2 17,0 16,1
Italy 28,6 29,0 28,9 28,9
Japan 23,1 .. .. ..
Netherlands 22,9 22,7 22,3 22,0
New Zealand 19,3 19,4 19,7 ..
Norway 21,8 22,4 23,9 25,1
Poland 19,6 19,5 19,4 20,2
Portugal 25,5 24,5 24,1 24,1
Spain 26,3 26,1 25,4 24,6
Sweden 27,4 27,1 26,7 27,1
United Kingdom 21,9 21,6 21,5 21,5
United States 18,8 18,8 19,0 19,3
OECD - Total 21,1 21,1 21,0 21,0
Source : OECD February 2017

Private social protection expenditures, % of GDP, 2011-2013
Source Voluntary private
Branch Total
Type of Expenditure Total
Type of Programme Total
Measure In percentage of Gross Domestic Product
Year 2011 2012 2013
Country
Australia 0,7 0,8 0,8
Austria 1,1 1,1 1,2
Belgium 2,0 2,0 1,8
Canada 4,6 4,5 4,5
Czech Republic 0,2 0,2 0,2
Denmark 2,4 2,3 2,2
Finland 1,1 1,1 1,1
France 3,1 3,2 3,2
Germany 1,9 1,9 1,9
Greece 1,9 1,9 ..
Ireland 1,8 1,9 2,0
Italy 0,7 0,7 0,7
Japan 3,0 3,1 2,9
Netherlands 6,4 6,6 7,1
New Zealand 0,4 0,5 0,5
Norway 0,9 0,9 1,0
Poland 0,0 0,0 ..
Portugal 1,6 1,6 1,7
Spain 0,4 0,5 0,4
Sweden 2,9 3,1 3,1
United Kingdom 5,0 5,1 5,0
United States 10,6 10,9 11,1
OECD - Total 1,9 1,8 1,8
Source : OECD February 2017
In the European Union (EU28), the key social expenditures are as follows:

Source: EUROSTAT 2016 (Data 2012)
1.2. A brief note on the role of the European Union
During the lectures, we shall mainly focus on national social policies throughout
Europe, North America, and in Japan. As to date the competences of the European
Union (EU) itself are still quite limited in this area, but the fact that they remain
limited does not mean that they are non-existent. Large and even small member-
states (like, for instance, Denmark) have generally opposed new transfers of
competences to the EU in the field of social policy.
Today, EU social policy takes at least three main forms:2
- Regulation (= hard law)
- Mutual learning (= soft law)
- Redistribution through financial instruments
These three forms have a clear impact on member states, even though on the basis of
the subsidiarity principle member states are keen to preserve their own social policy
“model”. This principle “ensures that decisions are taken as closely as possible to the
citizen and that constant checks are made to verify that action at Union level is
justified in light of the possibilities available at national, regional or local level.
Specifically, it is the principle whereby the Union does not take action (except in the
2
The best source for reliable and up-to-date information on EU social policy is the European Social
Observatory: see www.ose.be

areas that fall within its exclusive competence), unless it is more effective than action
taken at national, regional or local level”.3
Some examples of the (limited) impact of the EU on national policies can be found
in the field of anti-poverty policies (see section 3 below). The EU has had some
impact via the three above-mentioned ways.
First, EU regulation regarding the free movement of persons implies that all
European citizens who live in another member state are potentially entitled to the
minimum income scheme in their country of residence.
Second, the EU has developed a new instrument called the “Open Method of
Coordination” (OMC) that has been used in several social policy fields, including
social assistance. The general idea of the OMC is simple to grasp, even if its
implementation is very complex: European authorities promote the coordination of
social policy through the creation of broad common objectives. Member states remain
fully free as to how they will (try to) reach the objectives, but are nevertheless
required to take part in a process of mutual learning. During this process, national
social policies may be reformed and adapted, following the best practices of other
countries.
In the case of poverty, currently the OMC is called the “European platform
against poverty and social exclusion”. Launched in 2010 within the framework of
EU’s “Europe 2020 Strategy”, its ambitious objective has been stated as follows:
“lifting 20 million people out of poverty and social exclusion” by 2020.4 In order to
reach this goal, the EU promotes new initiatives in the fields of employment,
education, access to services, etc.5
Third, through its financial instruments the EU also supports initiatives in the
field of anti-poverty strategies. The European Social Fund (ESF), especially, is now
co-financing projects aimed at promoting social inclusion, for instance through the
active labor market inclusion of the young unemployed, a group with a high risk of
poverty. According to the European Commission, the ESF program for 2014-2020
(€80 billion) will allocate “at least 20% of the Fund to social inclusion”, which means
that “people in difficulties and those from disadvantaged groups will get more
support to have the same opportunities as others to integrate into society”.6
3
Source: European Union 2014.
4
Source: European Commission 2014.
5
See: COM/2010/0758 final
6
Source: European Commission 2014.

2. Comparative welfare state research
2.1. The “Worlds of Welfare Capitalism”
Capitalism in one sentence: see discussion during the class.

The birth of capitalism: see discussion during the class
+ At the time of merchant capitalism, one could say that there were capitalists,
but no capitalism as such. In capitalism, the whole economy becomes dependent on the
investment of capital. This only occurs if production, not only trade, is financed
through the investment of capital. Whereas in merchant capitalism economic output
was dependent on specialized craftsmen, capitalism in the modern sense has to rely
on wage labour. Organized capital and organized labour have conflicting views on
the welfare state.
a) Transformations of capitalism throughout History

First stage (19th Century): capitalism was unregulated. The activities of
capitalist entrepreneurs were unchecked either by the State or by organized labour –
labour was still very much unorganized.
Second stage (1900-1970) reached its peak in the 1970s. One of the main
developments during this period was class organization, through the construction of
trade unions and employer's organizations. The State responded to pressures from
labour and shifted from the repression of the working class to its management. This
took the form of extending the right to vote (universal suffrage), and of a gradual
inclusion through the mechanisms of "corporatism" (or "social partnership"). The
Welfare State developed in all industrialized countries without any exception, even in
the United States (think of F.D.Roosevelt's “New Deal” in the 1930s), and Japan after
WWII.
Third stage (1980 onwards), some argue that capitalism has entered a new
phase, the stage of "re-marketized capitalism", with the election of Margaret
Thatcher in the UK (1979), and Ronald Reagan in the US (1981). It would be difficult
to deny that capitalist economies have reached a turning point, partly because of
"globalization". Some general features of stage 3: more conflicts between employers
and unions, protests of taxpayers against high tax rates, decreasing power of trade
unions, partial retrenchment of the welfare state, and rise of "neo-liberalism". This

third stage is still very much in progress. For instance most States are not spending
less money on welfare programmes, but average tax rates are indeed much lower
than 30 years ago. Stage 2, the stage of welfare capitalism, is not over yet!
b) Welfare Capitalism and de-commodification

This sub-section is mainly based on an analysis of Gøsta Esping-Andersen's
The Three Worlds of Welfare Capitalism.7 Esping-Andersen's main argument consists in
saying that contemporary capitalism has nothing to do with unregulated capitalism
or laissez-faire market economy.
The Marxist critique of commodification.

Karl Marx (1818-1883) has formulated the first comprehensive critique of
modern capitalism in the 19th Century. According to Marx, in capitalism labour is a
commodity: the worker must sell his labour in order to live, and the market
determines the price of labour.
De-commodification according to Esping-Andersen.

One of Esping-Andersen's main statements is partly inspired by the Marxist
critique of the commodification of labour. Esping-Andersen’s view is that welfare
institutions are aimed at de-commodifying labour = allow individuals to maintain a
standard of living outside of the labour market.
Decommodification according to Esping-Andersen

« Inspired by the contributions of Karl Polanyi, we choose to view social rights in terms of
their capacity for ‘de-commodification’. The outstanding criterion for social rights must be
the degree to which they permit people to make their living standards independent of pure
market forces. It is in this sense that social rights diminish citizens’ status as ‘commodities. »
(Esping-Andersen 1990: 3)
« (…) the introduction of modern social rights implies a loosening of the pure commodity
status. De-commodification occurs when a service is rendered as a matter of right, and when
a person can maintain a livelihood without reliance on the market. » (Esping-Andersen 1990:
21-22)
« De-commodifying welfare states are, in practice, of very recent date. A minimal definition
must entail that citizens can freely, and without potential loss of job, income, or general
welfare, opt out of work when they themselves consider it necessary. » (Esping-Andersen
1990: 23)
7
ESPING-ANDERSEN, Gosta (1990), The Three Worlds of Welfare Capitalism, Princeton: Princeton
University Press.

Before Esping-Andersen, most experts in social policy were using the level of
expenditures to compare welfare states: a welfare state was “performing” better, in
terms of generosity, if it was spending more money on welfare programmes (see
tables in Section 1 on social expenditures in the OECD).
Esping-Andersen merged several empirical indicators into an entirely new
index: the combined "de-commodification" score. Several broad dimensions were
used to assess the degree of de-commodification in social programmes, such as the
rules that govern peoples’ access to benefits, and the level of income replacement.
Combined de-commodification score

Australia 13.0
USA 13.8
New-Zealand 17.1
Canada 22.0
Ireland 23.3
United Kingdom 23.4
Italy 24.1
Japan 27.1
France 27.5
Germany 27.7
Finland 29.2
Switzerland 29.8
Austria 31.1
Belgium 32.4
Netherlands 32.4
Denmark 38.1
Norway 38.3
Sweden 39.1
Mean 27.2
Source: Esping-Andersen 1990: 52
Three ideal-types.
Esping-Andersen's book has been very influential. On the basis of his new de-
commodification score, he created a typology to distinguish between three worlds of
welfare capitalism (ideal-types à la Weber): the liberal regime, the conservative-
corporatist regime, and the social-democratic regime.
In the liberal regime: (sometimes called “Anglo-Saxon”) means-tested assistance
and very modest universal transfers or social insurance plans predominate. Low
level of transfer targeted at the very poor (selectivity). The liberal regime is closest to
the "unregulated" form of capitalism.

In the social-democratic regime: (sometimes called “Nordic”) massive
redistribution through universal transfers, universal health insurance, generous
unemployment benefits, high-quality services, ...
In the conservative-corporatist regime: (sometimes called “Bismarckian”)
generous transfers, but almost no universal basis. Benefits are a proportion of wages
(contributory), the welfare system tends to perpetuate income and status differentials.
18 countries, three worlds of welfare capitalism

Liberal Social-democratic Conservative-corporatist
Australia Denmark Germany
Canada Finland Austria
USA Norway Belgium
Ireland Sweden France
New-Zealand Italy
United Kingdom Netherlands
Spain
Switzerland
Esping-Andersen’s typology can of course be criticized (see sub-section 2.5 below). If

we look at non-European countries, counting Canada as a “liberal” country, for
instance, is questionable. The case of Japan could also be discussed, as it does not fit
easily in one of these three categories. Furthermore, in recent years scholars have
been discussing the situation of former communist countries (Eastern Europe).
Whereas some of them clearly follow a liberal path, other might be closer to the
“conservative-corporatist” model. See 2.4 below for a discussion.
2.2. “Three Worlds”: Illustrative cases
One could discuss each specific country in some detail. The categories above are to
be seen as “ideal-types”. Some existing countries will be closer to the ideal-type than
others. Let us now turn to a short discussion of three illustrative cases: Belgium,
Denmark, and the United States.
Belgium
Belgium, a founding member of the EU, is a small country (population: 11,3
million in 2016) with generous welfare programs. In 2016: 29% of GDP for public
social expenditures. Belgium is quite close to the ideal-type of the “conservative-
corporatist” welfare state, or “Bismarckian” model. Why? Among other reasons:

- Importance of social contributions vs. government contributions;
- Low employment rate for women, and low level of de-familiarization;
- Key role played by social partners in social security.
Denmark
Like Belgium, Denmark is a “small” country (population: 5,7 million in 2016).
It is also a generous spender in social protection: 28,7% of GDP for public social
expenditures in 2016. Unlike Belgium, however, Denmark is not part of the
“conservative-corporatist” welfare family. It is often considered to be a paradigmatic
example of the “social-democratic” (or Nordic, or Scandinavian) welfare state. Why?
Among other reasons:
- Importance of taxation vs. social contributions;
- Universalism (example of basic pension);
- High employment rate for women, high level of de-familiarization;
- Social democracy.
United States
The United States are obviously a much larger country (population: almost
323 million in 2016), and are often considered to be a “welfare laggard”. Compared
to Belgium and Denmark, the U.S. are a small spender in social protection, with only
19,3% of GDP for public social expenditures in 2016. It is a paradigmatic example of
the “liberal” model of the welfare state.
- Means-tested benefits (including in health care);
- Importance of private social expenditures;
- Low levels of transfers;
- Large income inequalities (see 2.3 below).
Importantly, in all three cases we find programs that are typical of other models:
Belgium has universal child benefits, and the U.S. has a universal health care system
for the elderly (called Medicare). In Denmark, the unemployment insurance is clearly
contributory.

2.3. Inequalities within welfare states
Historically, one of the most striking features of welfare states has been the degree to
which they tend to reduce the income inequalities that arise from the interplay of
market forces. Through a combination of progressive taxation and welfare transfers,
some countries manage to achieve a relatively high degree of redistribution.
Typically, social-democratic countries tend to have lower levels of inequalities,
whereas liberal countries tend to have (much) higher levels, and most conservative-
corporatist countries fall somewhere in between these two extremes.
a) Income inequalities
Economists use several techniques to measure and compare degrees of income
inequality.
One often-used technique consists in measuring the income gap, typically by
looking at the interdecile range, i.e. the ratio of the income share of the richest 10% to
that of the poorest 10%. For instance: a ratio of 5 means that to be in the highest 10%,
on average you need to have a disposable income 5 times higher than the disposable
income of people in the lowest 10%. The interdecile range can also be calculated for
market income, rather than disposable income. Note that one can perfectly use
similar statistics about the income gap between the 20% richest and the 20% poorest
(the "interquintile" range or ratio), or 25%-25% ("interquartile" range).
The Gini coefficient (named after an Italian scientist, Corrado Gini) is the
most widely used measure of inequality. The coefficient – a measure of statistical
dispersion – for a given country will always vary from 0 to 1. A Gini coefficient of "0"
= no inequalities, a Gini coefficient of "1" = extreme inequality.8
8
For detailed information on how inequalities can be measured, see COWELL, Frank A. (2008), Measuring
Inequality, Oxford: OUP.

GINI AND S90/S10, OECD 2016
Source : OECD (2016), Society at a glance 2016. OECD Social Indicators, Paris: OECD, p.103.
Increase in income inequality (2007-2013) in OECD Countries
Source: OECD (2016), Income inequality remains high in the face of weak recovery’, Income inequality
update, November 2016, p.3.
b) Income inequalities and the “index of health and social problems”

Inequalities have a strong impact on welfare achievements. In recent years, a
book by two British researchers, Richard Wilkinson & Kate Pickett, has been widely
discussed in Europe. Entitled The Spirit Level (2009; it inspired the documentary The
Divide released in 2015), it tries to assess the impact of inequalities through an Index
and Health and Social Problems, using the following variables:
* Life expectancy (reverse coded)
* Teenage births
* Obesity
* Mental illness

* Homicides
* Imprisonment rates
* Mistrust
* Social Mobility (reverse coded)
* Education (reverse coded)
* Infant mortality rate
Wilkinson and Pickett have been collecting internationally comparable data on
these "health and other social problems", in order to check whether there was some
correlation with the level of inequality in the different countries.9 Note that they use
the interquintile range as a measure of income inequality, not the GINI coefficient.
Source: Wilkinson & Pickett, 2009: 20.
These problems are clearly more common in unequal societies (whereas

national income per person does not make any difference, as is shown in the figure
below). And, importantly, "within countries we know that all the components of
[the] Index of Health and Social Problems are strongly related to social status: the
further down the social ladder the more common they become."10
9
See the book for further methodological insights: WILKINSON, Richard & PICKETT, Kate (2009), The Spirit
Level. Why Equality is Better for Everyone, London: Penguin.
10
This quote (our emphasis) by Wilkinson & Pickett is from the website devoted to their book:
http://www.equalitytrust.org.uk/
See in particular the following page: http://www.equalitytrust.org.uk/why/evidence/frequently-asked-questions

Source: Wilkinson & Pickett, 2009: 21.
In sum, social policies have an impact on income inequalities, and inequalities

themselves have an impact on welfare achievements, for instance in the field of
health care.11
2.4. Critiques and alternative typologies
Esping-Andersen’s typology is still widely used in the academic literature on

social policy. In 2015, the Journal of European Social Policy devoted a special issue to
the 25th anniversary of The Three Worlds of Welfare Capitalism. In their introductory
paper, the editors write: “In fact, Three Worlds had an immediate impact on
comparative welfare state research, and its status has only grown since. This is
evidenced by a large and increasing number of references to the book, not only in
scientific discussions but in public fora as well”. And, they conclude, “It has
advanced the methods in comparative welfare state research, synthesized earlier
work, turned into a ‘standard reference’ and has certainly inspired debates beyond
the confines of its own discipline.”12
11
See DORLING, Danny & al. (2007), ‘The global impact of income inequality on health by age: an
observational study’, British Medical Journal, 2007, 335, from p. 873.
12
Quotes from Emmenegger, Partick & al. (2015), ‘The Three Worlds of Welfare Capitalism: the Making of a
Classic’, Journal of European Social Policy, 25 (1), 3-13.

Esping-Andersen’s work has also been adapted, refined, and criticized. The
feminist critique, among others, has been very influential. Some feminists argue that
Esping-Andersen did not pay enough attention to gender issues in elaborating his
typology. His point of reference is the situation of male breadwinners, working full-
time in the private sector. The issue of social rights of those, essentially women, who
might be economically dependent but perform a significant proportion of unpaid
labour, is not taken into account. From the feminist point of view, the idea of
“decommodification” is in itself ambiguous.
Some welfare states tend to remain androcentric, especially – but not
exclusively – within the “conservative-corporatist” family of welfare.13 One good
example is the case of Japan, where a “gendered dual system” has been developed
since World War II. “Male regular workers in large firms benefited from strong
employment protection, but in exchange they relinquished control over their jobs,
consequently suffering the imposition of long working hours and frequent
relocations. On the contrary, women assumed the role of primary caregiver while
providing cheap and flexible labor as part-time workers, thereby playing a critical
role in sustaining strong employment protection for the male regular workers”.14
13
Among the numerous publications on gender and welfare states, see DEL BOCA, Daniela & WETZELS,
Cécile (2007), Social policies, labour markets and motherhood: a comparative analysis of European countries,
Cambridge: Cambridge University Press; FRASER, Nancy (1997), ‘After the Family Wage. A Postindustrial
Thought Experiment’, in N. Fraser, Justice Interruptus. Critical Reflections on the “Postsocialist” Condition.
New York: Routlegde, pp.41-66; LEWIS, Jane (1992), ‘Gender and the development of Welfare regimes’,
Journal of European Social Policy, 2 (3), pp.159-173; LEWIS, Jane (1997), ‘Gender and Welfare Regimes :
Further Thoughts’, Social Politics, 4 (2), pp.160-177; LEWIS, Jane (2001), ‘The decline of the male
breadwinner model: Implications for work and care’, Social Politics, 8, pp.152-69; ORLOFF, Ann S. (1993),
‘Gender and the Social Rights of Citizenship: The Comparative Analysis of State Policies and Gender Relations’,
American Sociological Review, 58: 303-28; ORLOFF, Ann S. (2009), Farewell to Maternalism? State Policies,
Feminist Politics and Mothers’ Employment in the US and Europe. New York: Russell Sage; SAINSBURY,
Diane (1999), Gender and welfare state regimes, Oxford: Oxford University Press.
14
MIURA, Mari (2012), Welfare through Work. Conservative Ideas, Partisan Dynamics, and Social Protection
in Japan, Ithaca: Cornell University Press, p.12.

Labour force participation, women, 2015
Sex Women
Frequency Annual
Age 15 to 64
Unit Percentage
Time 2015
Country
Australia 71,2
Austria 70,9
Belgium 63,0
Canada 74,2
Czech Republic 66,5
Denmark 75,3
Finland 74,4
France 67,6
Germany 73,1
Greece 59,9
Hungary 62,2
Ireland 62,8
Italy 54,9
Japan 66,7
Netherlands 74,7
New Zealand 74,1
Norway 76,2
Poland 61,4
Portugal 70,3
Spain 70,0
Sweden 79,9
United Kingdom 72,5
United States 66,9
OECD countries 63,0
European Union 28 67,1
Source: OECD 2017
Alternative typologies include, for instance, the idea that there is a

“Mediterranean” world of welfare,15 or that “Post-communist” countries must be
included in a new ideal-type.16 Recently, there has been a growing interest in Latin
American social policies, especially due to the implementation of cash transfer
programmes in several countries (esp. Brazil) [this will be discussed in detail by Laura
Merla, see class on “Latin-American Welfare Regimes”].
15
See for instance FERRERA, Maurizio (1998), ‘The Four “Social Europes”: Between Universalism and
Selectivity’, in RHODES, Martin, MÉNY, Yves (Ed.) (1998), The Future of European Welfare : A New Social
Contract ?, London : MacMillan, 81-96.
16
AIDUKAITE, Jolanta (2009), 'Old welfare state theories and new welfare regimes in Eastern Europe:
Challenges and Implications', Communist and Post-Communist Studies, 42, p.36.

3. The challenge of poverty
3.1. Brief history
Thomas More (1478-1535) published its famous Utopia in Louvain in 1516, in

which he argued about the necessity of “providing everyone with some means of
livelihood.” A few years later, his friend and Louvain Professor Johannes Ludovicus
Vives (1492-1540), published a book entitled De Subventione Pauperum, which is often
considered to be the first developed plea for a scheme of social assistance. Vives
argued for a direct involvement of the public authorities in poor relief. His scheme
however clearly required willingness to work: “No poor person who can work,
according to his age and his health, should remain idle”. Vives also gave preference
to in-kind over cash benefits.
Even if the social assistance scheme delineated and advocated by Vives was
not entirely new, his book inspired several European cities, where schemes of public
relief were gradually implemented in the following decades. The most famous of
these schemes are perhaps the English Poor Laws (1601). Poor relief took two main
forms: outdoor relief and indoor relief. The latter implies the creation of true workhouses,
which were notably defended by philosopher Jeremy Bentham (1748-1832). Outdoor
relief, especially when it took the form of cash supplements to wages, was very
controversial. Thomas Malthus (1766-1834), for instance, was strongly against it. In
1834, the New Poor Laws reaffirmed the importance of indoor relief against outdoor relief.
In the United States, the Social Security Act of 1935 included a non-contributory
public assistance program called Aid to Dependent Children (ADC), renamed Aid to
Families with Dependent Children (AFDC) in 1962 and transformed into Temporary
Assistance to Needy Families (TANF) in 1996. The United Kingdom passed a more
comprehensive National Assistance Act in 1948, itself based on the wartime Beveridge
report on Social Insurance and Allied Services (1942). It provided for “assistance grants”
payable in cash to all poor households. This scheme, still essentially in place today,
explicitly marked the definitive abolition of the poor law system. During the second
half of the 20th century, schemes broadly similar were introduced elsewhere in
Europe (in Belgium in 1974). Japan enacted its own social assistance law in 1950,
called the Livelihood Protection Law.

3.2. Measuring poverty
Methodological discussions about the measure of poverty have been intense in

all welfare states.17 There is widespread agreement about the fact that poverty is
relative. Objectively, the very notion of "basic goods" is relative to the place where one
lives. Subjectively, poverty has to do with self-esteem, which is for a great deal a
relative notion.
Absolute poverty
“Absolute or extreme poverty is when people lack the basic necessities for survival. For
instance they may be starving, lack clean water, proper housing, sufficient clothing or
medicines and be struggling to stay alive.” This definition of poverty is often presented
as “objective”.
Relative poverty
“Relative poverty is where some people’s way of life and income is so much worse than
the general standard of living in the country or region in which they live that they struggle to
live a normal life and to participate in ordinary economic, social and cultural activities. What
this means will vary from country to country, depending on the standard of living enjoyed by
the majority.” This is a more « subjective » conception of poverty.18
Example 1: United States

In the 1960s, the U.S. department of agriculture had calculated the value of a
so-called subsistence food budget. Assuming that households spend roughly one-third
of their income on food, authorities established the poverty threshold at three times
the value of this subsistence food budget.19 Several thresholds were defined, taking
into account family composition. The U.S. official poverty rate was 13,5% in 2015
(14,8% in 2014), – i.e. 43,1 millions people in poverty.20
17
See the discussion in Marx, Ive & al. (2014), ‘The welfare state and anti-poverty policy in rich countries’,
CSB Working Paper 14/03, pp.4-10.
18
Both definitions are standard definitions of absolute and relative poverty. The ones used here are those used by
the European Anti-Poverty Network (EAPN), see http://www.eapn.eu
19
See DUMONT, Daniel (2013), ‘A European view on the American welfare state’, European Journal of Social
Law, 1, March 2013.
20
Source: U.S. Census Bureau 2016.

Poverty in the U.S. 1959-2015
Source: U.S. Census Bureau, September 2016
Statistics Canada uses a similar measure of absolute poverty called the “low
income measure” which is, however, not an “official” poverty measure. According to
this measure, the poverty rate in Canada was at 8.8% (in 2011 – latest available
data).21
Example 2: The “material deprivation rate” within the EU

At the level of the European Union, “material deprivation” also refers to
“basic necessities”, however in a broader definition than in the U.S. Figures on the
“material deprivation rate” and the “severe material deprivation rate” are made
available on a regular basis.
Here are the definitions used by Eurostat:
“The material deprivation rate is an indicator (…) that expresses the inability
to afford some items considered by most people to be desirable or even necessary to
lead an adequate life. The indicator distinguishes between individuals who cannot
afford a certain good or service, and those who do not have this good or service for
another reason, e.g. because they do not want or do not need it.
The indicator [of material deprivation] adopted by the Social protection
committee measures the percentage of the population that cannot afford at least
three of the following nine items:
1. to pay their rent, mortgage or utility bills;

2. to keep their home adequately warm;
3. to face unexpected expenses;
21
Source: Statistics Canada 2017.

4. to eat meat or proteins regularly;
5. to go on holiday;
6. a television set;
7. a washing machine;
8. a car;
9. a telephone.
Severe material deprivation rate is defined as the enforced inability to pay for at
least four of the above-mentioned items.”22
Severe material deprivation rates in the European Union
Source: Eurostat 2016
Example 3: The “at-risk-of-poverty rate” within the EU

The most widely used measure of relative income poverty is a measure that
compares the disposable income of households to the median disposable income of
22
Source: Eurostat 2016, see http://ec.europa.eu/eurostat/statistics-explained/

their country of residence. At the level of the European Union, the “at-risk-of-poverty”
threshold is officially established at 60% of the national median disposable income.
For example, the threshold in Belgium was €1.085 per month in 2014 (€13.023/12, see
table below). The at-risk-of-poverty rate is the share of people with a disposable
income below the at-risk-of-poverty threshold.
At-risk-of poverty rates in the European Union, 2013-2014
Source : Eurostat 2016
Data on relative poverty are also available at the OECD. Differences between the two
tables as far as EU-countries are concerned are due to differences in methodology.

Poverty rates in the OECD (selected countries, 50% of median disposable income)
Source : OECD (2016), Society at a glance 2016. OECD Social Indicators, Paris: OECD, p.105.
For your information:

“The equivalised disposable income is the total income of a household, after tax and
other deductions, that is available for spending or saving, divided by the number of
household members converted into equalised adults; household members are equalised or
made equivalent by weighting each according to their age, using the so-called modified
OECD equivalence scale. The equivalised disposable income is calculated in three steps:
• all monetary incomes received from any source by each member of a household are
added up; these include income from work, investment and social benefits, plus any
other household income; taxes and social contributions that have been paid, are
deducted from this sum;
• in order to reflect differences in a household's size and composition, the total (net)
household income is divided by the number of 'equivalent adults’, using a standard
(equivalence) scale: the modified OECD scale; this scale gives a weight to all
members of the household (and then adds these up to arrive at the equivalised
household size):
• 1.0 to the first adult;

• 0.5 to the second and each subsequent person aged 14 and over;
• 0.3 to each child aged under 14.
• finally, the resulting figure is called the equivalised disposable income and is
attributed equally to each member of the household.”23
Example 4: The “at-risk-of poverty or social exclusion rate” within the UE

The “At risk of poverty or social exclusion rate”, abbreviated as AROPE, is
“the share of the total population which is at risk of poverty or social exclusion”. The
AROPE is used as a key indicator within the so-called EU2020 Strategy.24 It officially
refers to the situation of people who are affected by at least one of the following
23
Source: Eurostat 2014, http://ec.europa.eu/eurostat/statistics-explained/
24
On the EU2020 strategy and its impact on poverty, see publications and reports of the European Social
Observatory (www.ose.be)

conditions: either at risk of poverty (see above), or severely materially deprived (see
above), or living in a household with a very low work intensity.
The latter indicator refers to what follows:
“Work intensity is the ratio between the number of months that household members
of working age (person aged 18-59 years, with the exclusion of dependent children in
the age group between 18 and 24 years) worked during the income reference year
and the total number of months that could theoretically have been worked by the
same household members. For persons who declared that they worked part-time, the
number of months worked in full time equivalent roles is estimated on the basis of
the number of hours usually worked at the time of the interview.
People living in households with very low work intensity are defined as
people of all ages (from 0-59 years) living in households where the members of
working age worked less than 20.0 % of their total potential during the previous 12
months.”25 [In Belgium this concerned 14% of the population aged 0–59 in 2013].
AROPE rates in EU-28 countries, 2013-2014
Source : Eurostat 2016
25
Eurostat 2014.

3.3. Child poverty26
* Fairness: equality of opportunity.

* Efficiency: negative externalities.
“The costs to the United States associated with childhood poverty total about $500 billion per
year, or the equivalent of nearly 4 percent of GDP. More specifically, we estimate that
childhood poverty each year: Reduces productivity and economic output by about 1.3 percent of
GDP; Raises the costs of crime by 1.3 percent of GDP; and Raises health expenditures and
reduces the value of health by 1.2 percent of GDP.”27
At-risk-of-poverty rates, children (<16 years), 2015
Source: Eurostat 2017, children aged 0-16

(Threshold at 60% of median disposable income)
According to the latest figures from the Luxembourg Income Study (LIS), child poverty
rates (threshold at 60% of median disposable income) are 29% in the U.S. (2013),
23.6% in Canada (2010), and 19.4% in Japan (2008).28
26
See CORAK, Miles (2005), 'Principles and Practicalities for Measuring Child Poverty in Rich Countries',
Luxembourg Income Study Working Paper Series, Working Paper No. 406.
27
HOLZER, Harry (2007), 'The Economic Costs of Child Poverty. Testimony Before the U.S. House Committee
on Ways and Means', Washington D.C.: Urban Institute, January 2007.
28
Source: LIS 2015, cf. http://www.lisdatacenter.org/

3.4. At the heart of social assistance: minimum income schemes
In social assistance, the aim of ensuring a relative economic security is (more or less)
achieved through a variety of non-contributory and means-tested benefits, in cash
and in kind. Among them, the most important one is called « minimum income ».
a) The respective roles of central and local authorities

In most European welfare states, local and/or regional authorities implement a
national legislation on minimum income schemes.29 The key argument in favour of
decentralization relates to information asymmetry. However, depending on the
degree of decentralization problems of financing and implementation can arise.
Among the examples cited in class are:
• France: “Revenu de solidarité active” (since 2009), national legislation,
but implementation and part of the funding by the “departments”;
• Belgium: “Revenu d’intégration sociale” (since 2002), Federal
legislation but implementation and part of the funding by local
authorities via the ”Centres publics d’action sociale” (CPAS-OCMW);
• Germany: “Sozialhilfe”, Federal legislation but implementation and
funding by regional (Länder) and local authorities.
Despite a great degree of decentralization, these three countries offer good
examples of comprehensive minimum income schemes (as is the case in DK, SE, FI,
but also NL, PT).
Some EU countries have a more complex network of schemes (like in the case
of ES and IE), while others simply have no minimum income schemes (including EL and
IT).
In North America, all Canadian provinces implement their own minimum
income schemes, but federal legislation imposes some general guidelines, as 50% of
the financing comes from federal authorities through the Canada Social Transfer (CST).
In the United States, there is no federal legislation imposing the implementation of
minimum income schemes. Some states and counties have their own General
Assistance or General Relief, and a federal programme called Temporary Assistance to
Needy Families (TANF) gives block grants to states, which have considerable leeway
in the delivery of benefits.
29
Cf. Katja Hölsch & Margit Kraus (2004), ‘Poverty Alleviation and the Degree of Centralization in European
Schemes of Social Assistance’, Journal of European Social Policy, 14 (2), 143-164.

b) Minimum income schemes are always conditional
Condition 1: Minimum income schemes are targeted at the “needy”, i.e. they
are paid ex-post, after a means-test (or an income-test). This also means that they are
“degressive”: the amount received will decrease if income increases. Beneficiaries
only get the maximal amount if they have an income equal to zero.
The maximal amount is often assumed to be high enough as to cover basic
needs (adequacy), … but this is rarely the case.
Condition 2: Minimum income schemes depend on family composition.

People living alone (singles) receive higher benefits than people who live together.
For instance, in Belgium the amounts of the “revenu d’intégration sociale” are
currently (2016) as follows: €578,27 for people who are cohabiting, and €867,40 for
singles.
Condition 3: Minimum income schemes are associated with work

requirements. Recipients are supposed to be actively searching for work, and can be
sanctioned if they do not comply with this obligation.
On top of these three key conditionalities, one should not forget that such
schemes also rely on residency requirements, and are only paid to adults, sometimes
even provided they are older than 25, such as in France.
3.5. Is means-testing really better for the poor?
Means-tested minimum income schemes help to reduce the scope and depth of
poverty. As such, means-testing itself looks attractive: social policies can channel
resources towards the very poor. As was already mentioned, this process is called
targeting. And yet, empirical data also show that countries that rely on universal
programs, such as social-democratic countries, perform better in the struggle against
poverty. There are different ways to account for this apparent “paradox of
redistribution”.30
30
KORPI, Walter & PALME, Joakim (1998), ‘The Paradox of Redistribution and Strategies of Equality :
Welfare State Institutions, Inequality, and Poverty in the Western Countries’, American Sociological Review,
vol.63, October 1998, 661-687.

“Supply” side:
• Identifying the poor (administrative complexities)
• Controlling the poor (arbitrariness)
“Demand” side:
• Ignorance
• Complexity
• Stigmatization (example of mizu giwa sakusen in Japan)
These issues explain why take-up rates of means-tested schemes are always
inferior to 100%, leaving a significant proportion of the least well-off without any
access to publicly organized income support.

4. The challenge of unemployment
4.1. Unemployment in today’s Europe
According to the widely accepted definition of unemployment by the International

Labour Organization (ILO), a person is considered unemployed if during a given
reference period (usually one week), she is:
- Strictly without work, i.e. not in paid employment or self employment;
- Currently available for work, i.e. immediately available for paid employment or
self-employment;
- Actively seeking work, i.e. took specific steps to seek paid employment or self-
employment.
In several EU countries, unemployment rates are very high, especially since the
outbreak of the financial crisis in 2008 (see esp. Greece and Spain).
Unemployment in Europe (in %), December 2016
Source: EUROSTAT 2017
By comparison, the unemployment rate in Japan and the United States remains low,
in spite of the enduring economic downturn.

Unemployment in Europe (EA19, EU28), Japan, and the United States, January 2000-December 2016
Source: EUROSTAT 2017. Note: EA19 = Euro Area
Tracking the causes of such unemployment rates is of course a difficult task,

and not part of the purpose of these lessons. Importantly, in Japan and the US greater
labour market flexibility seems to have a positive impact on unemployment rates.
The dark side of such flexible regulation is the rise in the numbers of working poor.
Note that it can be useful to look at sub-national unemployment rates, as
regional variations can be quite important. Look, for instance, at the case of Belgium.
Unemployment by region, Belgium, 2015

Unemployment rate
Belgium 8.5%
Brussels 17.3%
Flanders 5.2%
Wallonia 11.9%
In two Belgian regions, Brussels and Wallonia, the youth unemployment rate
is especially high (see table below).

Youth unemployment (15-24) by region, Belgium, 2015
Youth unemployment rate
Belgium 22.1%
Brussels 36.2%
Flanders 15.2%
Wallonia 32.2%
In all EU countries, unemployment insurance is contributory, even if state

subsidies now fund a large part of the program in several countries (esp.
Scandinavia). In all countries, unemployment benefits are conditional upon strong
work requirements.
When comparing unemployment insurance programmes, one should pay
attention to the following aspects: funding, conditionality, replacement rates, benefit
duration, and maximum amount of benefits.31
Social-democratic countries tend to have high replacement rates, but often for
a short period of time.
Sweden = 80% of reference earnings during 200 days, thereafter 70% during
100 days, but with a maximum benefit of €96 per day;
Denmark = 90% of previous earnings, with a high ceiling at maximum €112 per
day. Maximal duration of benefit: 2 years.
Bismarckian countries generally tend to have lower replacement rates, but
sometimes for a much longer period of time.
Belgium is a typical example. Replacement rates are as follows: cohabitants
with dependants receive 60% of the last salary earned; single persons receive 55% of
the last salary earned; cohabitants without dependants receive only 40% of the last
salary earned. The maximum amount for a single person is €63.68 per day during the
first three months of unemployment, decreasing afterwards. Interestingly, in
Belgium there is no formal limitation in the benefit duration: after 48 months of
unemployment, an unemployed person can keep receiving a flat-rate benefit of
€38.14 per day for a single person.
Germany: Beneficiaries with children receive 67% of net earnings, and
beneficiaries without children receive 60% of net earnings.
France: between 40.4% and 75% of reference daily wages, depending on the
family situation.
31
Source for the following data: MISSOC 2017.

Liberal countries have even lower “replacement rates”, as their benefits are
often flat rate. Benefits are also paid for a very short period of time.
United Kingdom: 18-24 years recipients get a weekly benefit of €70; older
recipients (25 or over) get a weekly benefit of €89. Benefits are limited to a maximum
of 182 days.
Ireland: the flat rate benefit is at €188 per week (higher than in the UK, but still
much lower than in other EU countries). Payment is limited to a maximum of 234
days.
United States: there is no unemployment insurance scheme at federal level.
Each of the 50 states has its own programme, but each state also has to follow some
federal guidelines. In most cases states provide up to a maximum of 26 weeks of
benefits. For various reasons, most unemployed individuals in the U.S. are not
eligible for unemployment benefits – the recipiency rate is around 35%.32
4.2. The key role played by trade-unions
Trade union density in selected OECD countries, 2013 (OECD 2017)

Unit Percentage
Time 2013
Country
Australia 17,0
Austria 27,8
Belgium 55,1
Canada 27,1
Czech Republic 12,7
Denmark 66,8
Finland 69,0
France 7,7
Germany 18,1
Greece 21,5
Hungary 10,5
Ireland 29,6
Italy 37,3
Japan 17,8
Netherlands 17,8
New Zealand 19,8
Norway 52,1
Spain 16,9
Sweden 67,7
United Kingdom 25,8
United States 10,8
OECD countries 17,0
32
See WOODBURY, Stephen A. (2014) ‘Unemployment insurance’, in Daniel Béland et al. (eds.), The Oxford
Handbook of U.S. Social Policy, New York: Oxford University Press, pp.471-490.

In Europe, trade unions have played a key role in the creation and
development of unemployment insurance programs. In several countries, they are
still central to the daily management of insurance funds.
A quick look at the history of social policy can help to understand the current
situation, including in terms of union density. In the end of the 19th Century,
European trade unions have set up unemployment funds in many cities. In 1900, in
the city of Ghent (Belgium), the public authorities have started to support financially
the unions’ unemployment funds. This was the first step in the establishment of the
so-called Ghent System, which has gradually been adopted in other Belgian cities,
and then abroad. During the 20th Century, several European countries will
implement a Ghent System at national level.
Currently, three EU member-states (Denmark, Finland, and Sweden) still have
pure Ghent systems, whereas one country (Belgium) has a hybrid Ghent system (to be
discussed in class).33
4.3. The “active welfare state”, and its shortcomings
In Europe, one of the most important developments in the past 20 years has
been the promotion of new social policies under the label of the “active welfare state”.
In some cases, especially on the left, the alternative label of “social investment state”
was used: it referred to a renewed focus on “active” investment in human capital,
through employment and training, rather than “passive” social protection itself. In its
most extreme form, it consisted in arguing that social investment had to become a
substitute for social protection. As has been shown by Bea Cantillon, the active
welfare state has been mainly causing two important and complementary new
trends.34
First, there is a trend towards new resource allocation, or resource re-allocation.
Second, there is a trend towards some form of re-commodification of labour.
a) The active welfare state: new social policies but less redistribution
33
For further information, see for instance VAN RIE, Tim, MARX, Ive & HOREMANS, Jeroen (2011), ‘Ghent
revisited: Unemployment insurance and union membership in Belgium and the Nordic countries’, European
Journal of Industrial Relations, 17 (2), pp.125-139; and KJELLBERG, Anders (2009), 'The Swedish Ghent
system and trade unions under pressure', Transfer: European Review of Labour and Research, 15 (3-4), 481-
504.
34
Source: CANTILLON, Bea (2011), ‘The Paradox of the social investment state : growth, employment and
poverty in the Lisbon era’, Journal of European Social Policy, 21 (5), 432-449.

The re-allocation of resources and the re-commodification of labour are
obviously connected, be it only because within the active welfare state re-
commodification necessarily implies some form of re-allocation.
The main consequence of the re-allocation of resources towards “new policies”
is the fact that social policy became less aimed at direct transfers (or “passive
benefits”), and increasingly aimed at providing services and active benefits. In this
respect, the basic trend throughout Europe, within individual countries or at EU-
level through the European Employment Strategy (EES), has been a new focus on
“employment-related social spending”. The most obvious example are services
aimed at facilitating the combination of work and family life by providing better
childcare facilities especially, but also with new forms of longer and better paid
parental leave.
Own care through non-work differentiated according to the educational level of the mother.35
Source: Cantillon 2011
From this graph, which only shows some of most egalitarian welfare states in Europe,
one can easily see that a re-allocation of resources aimed at facilitating the
combination of work and family life through childcare will obviously tend to “flow
to higher income groups”. These higher income groups will make an intensive use of
the new services, certainly in comparison with single households. Belgian expert Bea
35
Source: CANTILLON, Bea (2011), Idem.

Cantillon concludes that in the active welfare state “the redistributive aspect of social
spending has been relegated to the background.”36
Whereas in terms of re-allocation of resources most reforms are aimed at
implementing positive incentives, re-commodification is rather focused on negative
incentives through retrenchment in passive benefits. The main goal then consists in
incentivizing behaviour through cuts in benefits, shorter duration of payment,
tightened eligibility rules, and increased emphasis on close administrative control
and monitoring of recipients. Negative incentives, even when they have some
concrete impact on the willingness to work, contribute to increase financial poverty.
Rather than a virtuous circle, in Europe this type of welfare state reform has
tended to set a vicious circle in motion, in a worst-case scenario which researchers
Vandenbroucke and Vleminckx describe in the following terms:
“(1) average income of the work-rich households increases, (2) the relative proportion
of the number of work-poor households does not change, (3) the poverty threshold
increases because median household income increases, and (4) social programmes
become less redistributive as the new risk-programmes mainly benefit work-rich
households and unemployment benefits are cut.”37
b) Illustration: the active welfare state in Belgium

Belgium – one of Europe oldest and most generous welfare states – is quite
illustrative of the trends that were briefly described above.
Re-allocation of resources: childcare services

Traditionally, the employment rate of women has always been low in Belgium
(63% in 2015, according to Eurostat). Even if it improved significantly in the past
decade, the growth in female employment in Belgium has mainly benefited to
employment-rich households. One of the policies that have been designed to achieve
this growth is the gradual expansion of childcare facilities, massively subsidized by
public authorities. The case of Flanders (one of Belgium’s three regional authorities)
is illustrative.38
36
Source: CANTILLON, Bea (2011), Idem.
37
VANDENBROUCKE, Frank & VLEMINCKX, Koen (2011), ‘Disappointing poverty trends: is the social
investment state to blame?’, Journal of European Social Policy, 21 (5), 450-471.
38
GHYSELS, Joris and VAN LANCKER Wim (2011), ‘The unequal benefits of activation: an analysis of the
social distribution of family policy among families with young children’, Journal of European Social Policy, 21,
5: 472 – 485.

In 2005, over €200 millions were spent on direct or indirect (fiscal)
expenditures for childcare (pre-school daycare under the age of 3) facilities by local,
regional, and federal authorities. This public spending massively benefited to the
middle-class and even to high-income groups. In fact, on average, the top 20% got
“more than twice as much from the public support for childcare” than families in the
bottom 20% of the income distribution.39
Soft re-commodification: social assistance

Belgium has implemented a minimum income scheme since the mid-1970s.
Even if its current amount is below the poverty threshold, it is still quite high in
comparison with many other EU-countries, currently at €867,40 per month for a
single individual. The whole system was transformed in 2002. Political actors at the
time have stressed the fact that what was needed was a change from social assistance
to social action.
Hence, since 2002 there is a new focus on employment: beneficiaries are
required to sign some sort of ‘integration contract’, and show how they are going to
get out of exclusion. The focus here is on social integration, but the main goal
remains employment itself. In practice, however, the whole reform remains quite soft
in comparison to the Hartz IV reforms in Germany, for instance.
Strong re-commodification: Unemployment insurance

In Belgium, at least in principle, the payment of unemployment benefits is not
limited in time. But in the past decade the duties of the unemployed have been
emphasized like never before. Since 2004, close monitoring of the recipients means
that the unemployed need to prove that they are actively searching for a job.
In theory, this trend can obviously be considered as a welcome form of
administrative support. However, contrary to the case of social assistance (see above),
sanctions are implemented at a large scale in all three regions of the country (Brussels,
Flanders, and Wallonia). Daniel Dumont, who has been researching this issue with
great details, summarizes this as follows: in the first place, those who have to face the
sanctions are “the illiterate, the ill-informed, the naïve, the clumsy, the marginal – in
short, those who are sometimes said to be ‘unemployable’”.40
39
GHYSELS, Joris & al. (2011), Idem.
40
DUMONT, Daniel (2012), La responsabilisation des personnes sans emploi en question. Une étude critique
de la contractualisation des prestations sociales en droit belge de l’assurance chômage et de l’aide sociale,
Brussels: La Charte.

Since November 2012 another re-commodifying measure has been
implemented: it consists in reducing the benefit in time at a much higher tempo.
In sum, the form taken by the “active welfare state” in Europe, via a
combination of re-allocation and re-commodification, had some counter-productive
effects if one pays specific attention to the situation of the worst-off.

5. Basic income:
tackling poverty without worsening unemployment?
7
A basic income is an income unconditionally granted to all on an individual basis,
without means test or work requirement.41 In Europe, during the 20th century, this
idea was advocated by members of UK’s Labour Party, Dutch socialists, French
liberals, Catalan nationalists, Belgian ecologists, and many others. In 1986 a few
European researchers and activists founded the Basic Income European Network
(BIEN), headquartered in Louvain-la-Neuve, a European network set up to conceive
and promote the basic income concept. Since 2004 this, now global, network has gone
by a new name, the Basic Income Earth Network. Recently, basic income has
attracted huge media attention in Europe and North America (see examples shown in
class). In February 2016, the Brazilian activist and political actor Eduardo Suplicy, a
long-standing advocate of basic income, has been made Doctor Honoris Causa of the
Université catholique de Louvain.
5.1. More ambitious than a minimum income
The standard definition of basic income has already been referred to above: an income
unconditionally granted to all on an individual basis, without means test or work
requirement. This definition makes it possible to identify from the outset three key
differences between a basic income and the minimum income schemes already
established in most OECD countries (see section 3 above).
269
1. A basic income is strictly individual;
2. It is paid on a universal basis, i.e. without means-test;
3. It is paid with no requirement of availability for work.
Hence when implemented such a measure would most probably entail a substantial
shift in social policies. It must nonetheless be said that these three non-conditions do
not really constitute a revolution. A number of European countries already have
universal systems of family benefits, basic pensions and health insurance, which are
41
For a detailed discussion of basic income, see VAN PARIJS, Philippe & VANDERBORGHT, Yannick
(2017), Basic Income. A radical proposal for a free society and a sane economy. Cambridge (Mass.): HUP.

often very popular. Proponents of the basic income therefore perceive it as a more
ambitious measure than payment of a minimum income.
5.2. The right to work or the right to an income?
One of the main bones of contention with regard to the basic income concept is in
fact its impact on the labour market, as employment is a key priority in all social
protection systems. As many developed welfare states have adopted “active”
inclusion policies (see section 4 above), is there not a risk that such a blatantly
unconditional basic income would undermine the progress made in this direction?
Does it not amount to seeking to do away with exclusion by encouraging dangerous
inactivity? Would it not be better to guarantee a genuine “right to work”, for
example in the form of mass subsidizing of low-skilled jobs or through the creation
of public sector jobs?
Basic income supporters consider that the only way of achieving a right to
work is, in point of fact and paradoxically, to guarantee the right to an income. This
would not be a second-best alternative to full employment, but a strategy for
achieving it. This is because traditional social assistance schemes, like all targeted
programs, do indeed tend to dig a genuine inactivity trap by penalizing those who
succeed in finding low-paid work. Basic income makes it possible to encourage
people to seek work, even low-paid, low-productivity or part-time work, because
that lastingly improves their net income as compared with what they receive when
they are inactive.
Some remain sceptical about the effect of a basic income on labour supply.
This issue was at the core of large-scale social experiments in Canada and the United
States in the 1960s and 1970s. Households were randomly assigned to a group
enjoying the benefit of a basic income for a number of years and to a control group
that continued living under existing arrangements. The main goal of the experiments
was to establish the effects of the guaranteed income scheme on labour supply.
5.3. The impact on poverty and inequalities
Despite the worrying increase in the number of working poor, it is clear that access to
employment remains a key means of escaping poverty. In the light of the above, it
therefore follows that the basic income can be conceived as a component of an anti-

exclusion policy. However, if the aim is to tackle the pressing problem of poverty
head on, would it not be clearly more intelligent to target expenditure at those who
are really in need of it? It would indeed make no sense to award a basic income to all,
if that entailed an increase in disposable income for everyone. However, the aim of a
basic income is not to bring about a net improvement in the situation of the richest
members of society, and that would not be its end result. One way or another, the
allowance has to be funded, like any other redistribution scheme. Most versions of
the basic income concept involve a restructuring of current social transfer and
personal taxation systems. In concrete terms, this would mean eliminating or
reducing certain transfers to the poorest members of society – but never in an
amount greater than the basic income – and, secondly, ending tax exemptions (or
reduced rates) benefiting the rich rather than the poor. Such a universal policy would
benefit the poor, not the rich.
5.4. A liberal-egalitarian reform
Beyond the pragmatic arguments advanced to show how the basic income can be an
efficient means of combating unemployment and poverty, it is important not to lose
sight of the fairness justifications for it. As already mentioned, the payment of this
kind of basic income, combined with funding through progressive (or proportional)
taxation, should help to decrease inequalities, as has been observed with other
universal schemes.
In addition, a number of the key features of the basic income confer on it a
unique potential for emancipating individuals. As Philippe Van Parijs showed in one
of his most commented works on the subject, it maximizes “real freedom” for those
who have the least of it.42
Our economies produce wealth of which we are the collective owners, but
which remains very unequally distributed. A convenient way of organizing the
necessary redistribution is to grant everyone access to basic resources leaving them
free to lead what they regard as a good life. This is naturally where the profoundly
“liberal” nature of the basic income lies.
5.5. The participation income
42
VAN PARIJS, Philippe (1995), Real Freedom for All, Oxford: OUP.

While the basic income constitutes a subsidy for low-paid employment, it can also be
considered as a subsidy for other forms of activity to which the market attaches no
monetary value. In principle, there is therefore nothing to prevent individuals from
deciding to make the most of their resulting financial independence and free time by
spending their days surfing on the Malibu beaches. To avoid this type of “parasitic”
behaviour and encourage everyone to contribute to the common good by fulfilling
their obligation to reciprocate, it would be possible – some say desirable – to arrive at
a compromise regarding the radically unconditional nature of the basic income, but
without relapsing into the shortcomings of the “active welfare state” (see section 4.4
above).
It is with this aim in mind, that advocates of this solution frequently defend
the concept of a “participation income”, as proposed by the British economist
Anthony Atkinson.43 However, a number of key objections can be raised with regard
to this apparently attractive proposition.
5.6. Migration and the Euro-dividend
An unconditional basic income has many advantages that help make this proposal a
serious alternative to traditional social policies. Nonetheless, it should not be inferred
from this that its acceptance would not pose difficulties. In particular, the moral
objection that it is unacceptable to tear asunder the link between a right (to income)
and the corresponding duty (to contribute) continues to stir up debate. In addition,
the proposal’s advocates have to contend with a number of practical challenges. One
of the most pressing of these challenges has to do with migration.
Would such a basic income be viable in a Europe whose frontiers are
increasingly easy to cross? Within the European Union, as we have seen in the case of
anti-poverty and unemployment policies (section 3 and 4 above), it is no longer
possible to restrict access to social rights to a country’s citizens alone. If a single
member state introduced a basic income and a residence requirement continued to
apply, that would probably not suffice to discourage migration by those wishing to
benefit from such a basic income, especially if it represented a quite significant
amount.
This challenge highlights an inevitable stress point to be found in all
43
The latest formulation of the participation income appears in ATKINSON, Anthony B. (2015). Inequality.
What can be done?, Cambridge (MA): Harvard University Press.

redistributive schemes in a globalized economy. A benefit that is as radically
unconditional as the basic income can be seen to be particularly exposed to this risk.
A simple, satisfactory response to this challenge is therefore not necessarily
feasible. Would it be enough to show that the integration of persons of foreign origin
into the employment market would, in point of fact, be facilitated by the subsidy for
low-skilled work that the basic income constitutes? Would it be possible to win over
the sceptics by showing that the positive effects on the jobs supply would easily
suffice to cover the cost of the scheme?
Whatever the answers to the above questions, the migration challenge
requires basic income supporters to envisage the possibility of creating a basic
income at a supranational level, for instance at the level of the European Union. One
means of transition that should be explored in this context is the establishment of a
genuine “Euro-dividend”, which could initially take the form of universal family
benefits financed at EU level. The amount of these benefits could vary according to
the cost of living in each member state. While both supporting and being a partial
substitute for the Union’s cohesion policies, according to its supporters44 such a Euro-
dividend would simultaneously constitute a first step towards a fully renovated
“European social model”.
44
See esp. VAN PARIJS, Philippe (2014), ‘An unconditional basic income in Europe will help end the crisis’,
Interview, April 2014, available at: http://www.euractiv.com

LTRAV2720 2017 Vanderborght Syllabus

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Comparative social protection systems

Academic Year 2016-2017

Important notice: these are short summaries of the lessons.

1. Social protection: setting the scene

1.1. What is “social protection”? Key concepts and data

“Social protection” or “social policy” is a subset of public policies mainly

This brief definition relies on two key elements: 1

Let us consider each of these elements in turn.

Considering the aim of social policy consists in looking at its main

Yannick Vanderborght – UCL – LTRAV2720 – 2016-2017 2

- But the most important way consists in looking at their consequences on

As to the method, it allows us to distinguish between two components :

In class, some important differences between social contributions and direct

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1) Contributory versus non-contributory benefits

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2) Cash versus in-kind benefits

3) Public versus private benefits

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1.2. A brief note on the role of the European Union

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2.1. The “Worlds of Welfare Capitalism”

Capitalism in one sentence: see discussion during the class.

a) Transformations of capitalism throughout History

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b) Welfare Capitalism and de-commodification

The Marxist critique of commodification.

De-commodification according to Esping-Andersen.

Decommodification according to Esping-Andersen

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Combined de-commodification score

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18 countries, three worlds of welfare capitalism

Esping-Andersen’s typology can of course be criticized (see sub-section 2.5 below). If

2.2. “Three Worlds”: Illustrative cases

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Increase in income inequality (2007-2013) in OECD Countries

b) Income inequalities and the “index of health and social problems”

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Source: Wilkinson & Pickett, 2009: 20.

These problems are clearly more common in unequal societies (whereas

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In sum, social policies have an impact on income inequalities, and inequalities

2.4. Critiques and alternative typologies

Esping-Andersen’s typology is still widely used in the academic literature on

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Alternative typologies include, for instance, the idea that there is a

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3.1. Brief history

Thomas More (1478-1535) published its famous Utopia in Louvain in 1516, in

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Methodological discussions about the measure of poverty have been intense in

Example 1: United States

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Source: U.S. Census Bureau, September 2016

Example 2: The “material deprivation rate” within the EU