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SOCIAL PROTECTION: under demographic and financial pressure, challenging new risks

SOCIAL PROTECTION: under demographic and financial pressure, challenging new risks. Mark Pearson Head of Social Policy Division OECD www.oecd.org/els/social ICSW: TOURS 2008. Does globalisation doom social protection?.

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SOCIAL PROTECTION: under demographic and financial pressure, challenging new risks

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  1. SOCIAL PROTECTION: under demographic and financial pressure, challenging new risks Mark PearsonHead of Social Policy DivisionOECD www.oecd.org/els/social ICSW: TOURS 2008

  2. Does globalisation doom social protection? Common fear: Globalisation will destroy the European Social Protection model by giving rise to a “race to the bottom”

  3. Fear of ‘race to bottom’ is based on bad economics • If people need social protection, they will pay for it • Cutting needed public social provision will lead workers to demand more pay • No evidence yet that social spending falling Cutting needed social protection will not reduce labour costs significantly

  4. Social policy nevertheless needs to change focus Skill-biased technological change Widening market incomes

  5. Widening market income Gini coefficients, mid80s = 1

  6. Social policy nevertheless needs to change focus Skill-biased technological change Widening market incomes Ageing Increased social expenditure

  7. 40 40 35 35 30 Sweden 30 France Germany 25 25 Italy OECD - 27 Netherlands 20 20 United Kingdom Australia United States 15 15 Ireland 10 10 1985 1995 2003 1980 1990 2000 Public social spending has been rising again since 2000(public social spending in % of GDP)

  8. Social spending reduces poverty

  9. Summary of story so far: • Social protection is not being destroyed by globalisation directly • But changes in the labour market are putting it under great strain • traditional income redistribution is not good enough and not sustainable Social justice must be pursued through other means

  10. Social policy needs to change focus Skill-biased technological change Widening market incomes Ageing Increased social expenditure Reorient spending towards “active social policy”

  11. Active Social Policy: • aim to address root causes of widening market income by engaging in social engineering • reorient towards investment in children, youth • put heavy emphasis on employment Can only afford to do this if we control spending on ageing.

  12. Child poverty rates edging up

  13. Work is the key to reducing povertyPoverty rate among lone parents by employment status

  14. To sum up • Don’t blame globalisation for destroying the welfare state • But market income distribution is widening, making traditional redistribution unsustainable • Social justice must therefore aim to reduce inequality through investing in children, work

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