by Geir E Jansen
Sun Oct 23rd, 2005 at 08:51:57 AM EST
promoted by Jerome. Some of the text put below the fold.
Next week’s summit in Britain of the heads of states and heads of governments in the member-states of the EU, will be dominated by a topic that politically are directly linked to core-values within all European nations, and touches issues that are fundamental in domestic economic policy.
How to organize the society, and what to emphasize and give priority in the economic policy, are controversial and hot political issues, in any given state, and that is certainly the case too, with the discussions that already have taken place, prior to the upcoming high-level summit in the EU.
The discussions have already materialized themselves, though only vaguely so, along the lines of the pros and contras of two different models of organizing the society and ways of executing economic policy, the “Anglo-Saxon”-model and the “Continental” or “Social Welfare-State”-model.
The political challenges ahead for the EU and directly affecting the social and economic policies in the member-states, is how to be competitive and cost-efficient in an ever internationalized economy, without loosing the grip on the fundament of a modern civil society, a social structure and an economy that benefits all citizens.
Financial Times writes:
This fundamental dispute will be at the heart of next week's summit of the European Union at Hampton Court, heated by fears in France, Germany and other EU countries that their generous jobless and pensions systems, whose benefits are often pegged to wages, could be slashed if replaced by far less beneficial pay-outs in the US and the UK.
The core of the critic against the so-called Anglo-Saxon-model, giving priority to economic growth and flexibility within the economy at the expense of a mutual beneficiary social structure, and an economic policy that to a greater extend emphasizes the importance of publicly financed social-security-programs, is that such a society does not use it’s resources efficiently, as the model at any given time excludes from the economy, a sizeable part of it’s potential work-force, unemployed, home-less etc.
Financial Times writes further:
To critics' eyes, the UK model is seen to have produced high levels of poverty and inequality, along with draconian welfare-to-work policies. Recent private pension scandals in the UK also have been grist for their mill.
On the other hand an economy and a social policy that is too rigid can represent a major obstacle for necessary flexibility within an efficient and competitive economy, thus resulting in high rates of unemployment, as is the case in many of the major continental European states.
Financial Times writes:
UK politicians look at high rates of unemployment in the rest of Europe, and at pension systems that still need reform and much higher public spending, and wince.
The political and economic challenges for the economies in the member-states, is to find the sufficient balance between flexibility and efficient use of the national work-force at hand.
Finding an economic model that both gives the necessary flexibility, and at the same time do not exclude parts of the work-force from the economy, but rather prepares and gives the work-force the needed skills for an ever changing working-environment.
The solution could lie in the nuances in the discussion of these models, and instead of discussing comprehensive models; one rather should fragment the models and adopt the desired parts, and add an aggressive labour-policy to make the work-force better prepared for the ever internationalized economic environment, in which they are to operate in the future.
Financial Times goes on writing:
But painting a stark contrast between the so-called "Anglo-Saxon" model and the European "social model" is to miss the point, according to Richard Layard, an employment economist at the London School of Economics.
"The real distinction is between those countries that have had effective active labour policies, and those that have not."
Thus, he argues many of the Nordic countries have high levels of public expenditure and social protection but also high levels of employment thanks to policies that ensure those out of work are actively seeking to return to it.
This article is also available at Bitsofnews.com.