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Reconsidering social protection

Why it would make sense to have internatonal safety nets

von Hans Dembowski

Blog

Otto von Bismarck’s social-protection systems are arguably his most important legacy.

Otto von Bismarck’s social-protection systems are arguably his most important legacy.

Social protection is typically an issue of nation-state policy-making. There are good reasons to consider supranational approaches however.

European countries have historically been the pioneers of welfare-state policies. As Praveen Jha of Jawaharlal Nehru University recently argued on our platform, however, years of austerity have led to the erosion of what was once called the “Europeans social model”. That need not stay that way however.

It is inspiring that the new European Commission, which took office in late 2019 and is led by Ursula von der Leyen, wants to introduce a minimum wage. It will apply throughout the EU. Earlier, a joint system of unemployment benefits was discussed. Pan-European safety nets would indeed foster something like a pan-European identity  (as Dirk Messner pointed out when discussing for our recent Europe briefing what challenges the EU must rise to).

Quite obviously, the euro crisis of the past decade would have been less divisive had the EU had such an unemployment insurance. The EU enforced austerity, but it did little to soften the impacts. A joint unemployment insurance would have made a difference, indicating solidarity among member nations.

Joint social protection would also help to fight the onslaught of right-wing populists, who tend to be particularly strong where wages are low and unemployment is high. Pan-European safety nets might  thwart their agitation. That is one reason why leaders like Wolfgang Schäuble, Germany's former finance minister who is now the president of federal parliament, are willing to countenance such ideas.

A problem for German policy makers, of course, is that such systems would certainly result in Germany, the EU strongest economy, contributing more funding than German beneficiaries would collect. On the upside, such systems would strengthen the EU, and the German economy has always benefitted massively from the EU’s common market.

Social-safety nets of international reach could be helpful in other ways too. Consider migration. Western governments are keen on reducing the number of people who want to flee to their countries. It would make sense for them to ensure that potential migrants feel safe and protected at home. Guaranteed minimum incomes would help, and so would pension schemes, child benefits of health-insurance coverage. Such schemes, moreover, could be considered at the level of regional organisations such as the ECOWAS (Economic Community of West African States) or the EAC (East African Community). Boosting their sense of cohesion cannot hurt. African governments, of course, would have to assume responsibility for social protection too.

The lines between national and supra-national policymaking are blurring in other respects too. The most striking example is the climate crisis. Poor countries are increasingly suffering because of emissions they did not cause. The rich nations are most to blame. Global social-protection measures might be part of the compensation. Moreover, targeted cross-border action may well contribute to eradicating extreme poverty, which is among the UN’s most important Sustainable Development Goals.

Opposition to cross-border solutions for social protection is strong. Such schemes would contribute to solving pressing problems, but policymakers would first have to break the mould of social protection being a nation-state issue. History tells us that innovations typically look impossible until they suddenly happen – and that was not different when Otto von Bismarck established the first, ground breaking, nation-wide protection schemes in the late 19th century (see an old blogpost of mine).

P.S.: I planned to write this blogpost much earlier, and had even promised to do so in the blogpost linked in the final paragraph of this one. I was busy with other things and this topic slipped off my screen. I apologise for not posting earlier.

 

 

 

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