Pension reforms around the world20104514745

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Pension reforms around the world20104514745 Powered By Docstoc
					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?



Common fear: Globalisation will destroy the
 European Social Protection model by giving
 rise to a “race to the bottom”
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
      Social policy nevertheless
       needs to change focus

              Skill-biased technological change
Widening market incomes
Widening market income
        Gini coefficients, mid80s = 1
                      OECD-15
 1.20




 1.10




 1.00


                        Market income
                        Disposable income
 0.90
        1975   1985   1990    1995      2000   2005
      Social policy nevertheless
       needs to change focus

              Skill-biased technological change

Widening market incomes
                              Ageing
    Increased social expenditure
  Public social spending has been
      rising again since 2000
        (public social spending in % of GDP)
40                                           40



 35                                          35



                                                  Sweden
30                                           30
                                                  France
                                                  Germany
 25                                          25   Italy

                                                  OECD -27
                                                  Netherlands

20                                           20
                                                  United Kingdom
                                                  Australia

 15                                          15   United States
                                                  Ireland



10       1985           1995          2003
                                             10



 1980           1990           2000
Social spending reduces poverty
                16%
                             MEX
                                        USA                   POL
                14%                       TUR
                           JPN
                12%              KOR          CAN
                                                IRL
                                                       ESP
                                                      PRT         NZL
                                                       DEU
                10%                           ITA                  AUS
 Poverty rate




                                        GRC            OECD
                                                                 NLD
                8%                                 SVK        BEL LUX NOR
                                                  HUN
                                                 GBR ISL
                                                  FRA           FIN
                6%                                     CHE AUT
                                                 CZE           SWE
                4%                                                       DNK


                2%


                0%
                      0%    1%     2%    3%     4%    5%     6%     7%   8%    9%
                             Social transfers to working age, % GDP
      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
    Social policy needs to change
                 focus

               Skill-biased technological change

Widening market incomes
                               Ageing
    Increased social expenditure

Reorient spending towards “active social policy”
          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.
      Child poverty rates edging up
200
                      Mid-1980s
                      Mid-1990s
175
                      Mid-2000s

150


125


100


75


50
      below 18   18 to 25     26-40   41-50   51 to 65   66-75   above 75
Work is the key to reducing
          poverty
  Poverty rate among lone parents by employment status
           To sum up
1.Don’t blame globalisation for
  destroying the welfare state
2.But market income distribution is
  widening, making traditional
  redistribution unsustainable
3.Social justice must therefore aim
  to reduce inequality through
  investing in children, work

				
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