Wo Frau Kanzlerin Angela Merkel irrt: Der Sozialschutz in der Welt, der Anteil Europas und die Beurteilung seiner Effizienz

Tausch, Arno (2015): Wo Frau Kanzlerin Angela Merkel irrt: Der Sozialschutz in der Welt, der Anteil Europas und die Beurteilung seiner Effizienz.

Abstract

The “welfare hammock” - who didn’t hear already such arguments? Although the ILO in its recent "ILO World Social Protection Report 2014/2015" has clearly pointed out that social protection plays an important role in the realization of the human right to social security for all, for the reduction of poverty and inequality and that it supports inclusive growth, there is a never-ending debate about supposedly too generous social protection expenditures, especially in Europe.

The German chancellor, Angela Merkel, has recently taken up these arguments, by claiming that the European Union accounts for only seven percent of the world population, but at the same time it consumes more than 40 percent of global social spending.

Such perspectives overlook the analysis of the success story of the small, world-market oriented welfare states, combining social partnership, fairly encompassing trade unions and wage restraint with a fairly tight social net after 1945. 16 of the 20 global leading countries according to the World Bank Regulatory Quality Index correspond to this model. Based on the published literature on the efficiency and effectiveness of social spending, we develop a clear empirical method based on the analysis of data from ILO, Eurostat and the OECD data, calculating the residuals from poverty before and after social transfers as the measure of the efficiency of poverty reduction, and calculating then the residuals from social protection expenditures and this newly derived measure of the efficiency of poverty reduction as the new final measure of the efficiency of social protection expenditures in poverty reduction.

The empirical results of our efforts then can be summarized in the following six main theses:

1) Our re-analysis of the Angela Merkel hypothesis based on 169 countries for which we have recent ILO Social Protection data and World Bank GNI PPP data reveals that the 27 EU countries with complete data spend only 33% of global world social protection expenditures, while the 13 non-EU-OECD members, among them the major other Western democracies, spend 40% of global social protection expenditures, the BRICS 18% and the Rest of the World 9% of global social protection expenditures. A theme for reflection on the agenda of Chancellor Merkel thus could be the current relatively successful social Keynesianism of the Anglo-Saxon overseas democracies, which are in stark contrast to the savings agenda in the framework of the European “fiscal pact”.

2) In this article we will also find some empirical confirmation for the ILO's thesis according to which social security plays an important role in the realization of the human right to social security for all, for reducing poverty and inequality and for the support of inclusive growth. It indeed improves human capital and productivity, supports domestic demand and facilitates structural change in economies.

3) Our results show that the following members of the EU currently (2012) had the most efficient use of social protection expenditures in poverty reduction: Czech Republic; Ireland; Hungary; Netherlands; Slovakia; Slovenia; Luxembourg; Finland; Denmark; and Malta. This replicates the ranking described in earlier studies by the present author, and in particular emphasizes again that the Czech Republic has a very efficient social model. The "sick man on the Bosporus" of social policy in Europe by contrast was Greece; Italy; Spain; Bulgaria; Portugal; Croatia; Germany; Latvia; Poland; and France, also partially replicating results from earlier studies.

4) Sufficient data are now available in the time series in order to present reliable results on which countries improved their efficiency and which countries did not during the time period from 2005 to 2013. The superstars of improving efficiency of social protection in poverty reduction over time were Austria; Lithuania; and the Netherlands.

5) Our macro-quantitative comparisons show that an efficient social protection is indeed an important guarantee for a satisfactory overall development in the areas of gender, education, EU-2020 Performance, democracy, societal tolerance, life satisfaction, Happy Life Years, stability of democracy, and reducing the difference between the poorest and the richest strata.

6) Our results show a large concordance between findings, based on data from Eurostat and from the OECD.

• Item Type: MPRA Paper
• English Title: Where Chancellor Angela Merkel got it wrong: social protection in the world, Europe's share in it and the assessment of its efficiency
• Language: German
• Keywords: social spending, European Commission, index numbers and aggregation, cross-sectional models, spatial models, economic integration, regional economic activity, international factor movements, international political economy
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; C - Mathematical and Quantitative Methods > C4 - Econometric and Statistical Methods: Special Topics > C43 - Index Numbers and Aggregation; F - International Economics > F1 - Trade > F15 - Economic Integration; F - International Economics > F2 - International Factor Movements and International Business; F - International Economics > F5 - International Relations, National Security, and International Political Economy; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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