Social Policy and Welfare Regimes - Essay Example

‘Globalization Exacerbates Human Insecurity in Both Rich and Poor Countries.’ Discuss the Implications of this ment for Social Policy and Welfare Regimes Introduction A very popular view among economists is that ‘globalization exacerbates human insecurity in both rich and poor countries.’ This has had both negative and positive implications for social policy in different welfare regimes and will continue to do so if things are not brought into check. Globalisation has been defined in many ways Bordo et al (2003, qtd. in WTO 2008) indicates that it refers to international integration in commodity, capital and labour markets. This implies that commodities, capital and labour can flow freely between countries. With this last episode of globalisation the world has become a global village with the shrinking of borders and the fusion of cultures. Human insecurity relates to various problems which people face in both rich and poor countries. These problems arise from the inability of people to exercise their choices safely and freely, thus leading to diminished confidence in the ability of the society to provide them with any hope for the future. They include hunger, crime, little or no access to health care, poor living conditions, famines, ethnic conflicts, social disintegration, terrorism, pollution, human trafficking and drug trafficking. These insecurities fall into several categories: economic insecurity, food insecurity, health insecurity, personal insecurity, environmental insecurity, community and cultural insecurity, and political insecurity. Views on Globalisation Globalisation is nothing new. It has been around from the 1800s. According to WTO (2008) it started in the middle of the 19th century and ended before the First World War. Since then, there has been two episodes which have been characterised by varying levels of international integration in trade, capital flows and movement of labour. According to Yeates (2002) globalization became an established term in social science and most recently in social policy. Liberal theory presents globalization as a welcome easing of political constraints upon economic production and exchange and as a force leading to greater political and economic integration worldwide. In fact some people see globalization as flows of capital, people and information and this makes them excited about the opportunities that come with it. Meanwhile, Hay and Watson (1999) and Teeple (1995) cast doubts on its true purpose and see it as the unfolding of oppression of different peoples by a dictatorial form of global economic regime. Those views form part of the critical theory which emphasises the belief that economic globalisation as a polarising force with many undesirable social, economic and political consequences globally. Hout (1996, p. 168) indicates that globalisation involves an increasingly sharp division between core states who share in the values and benefits of a world economy and developing states which are increasingly marginalised and therefore described as failed states. According to Herod (1997) successful challenges have been made against trans-national corporations (TNCs) as it relates to issues of health and safety, women and child workers. Globalization and Human Insecurity Gunter and Hoeven (2004) indicates that, it is a widely held view by researchers in the area that globalisation has increased economic, social and political insecurity. Gunter and Hoeven (2004) further emphasised that this is so even for persons who have gained some benefits as a result of this phenomenon. It has been suggested that globalization with its heightened volatility of international trade, capital flows and production is only one of the factors that have contributed to increased insecurity. Additional factors suggested by Nayyar (2002); and Ocampo and Martin (2003) is the non-responsiveness of governments to counter the challenges of increased risk and uncertainty which has contributed just as much, if not more to this scourge of human insecurity. Some of the researchers who have levelled the insecurity argument include Torres (2001) who has written extensively on matters related to job insecurity and changes in the patterns of employment. Scheve and Slaughter (2002) has also carried out research of an empirical nature on economic insecurity. Meanwhile, David, Thomas and Amponsah (2001) have covered the area of the effects of globalisation on food security, a very important issue if famine and hunger are to be dealt with effectively. World Bank (2008) study also provides useful information on the link between globalization and terrorism. UNDP (1994) emphasised the point that: ‘the world can never be at peace unless people have security in their daily lives’ as conflicts that arise in the future may be within nations rather than between them as was previously the case. UNDP (1994) further emphasised that the origins of such conflicts lie at the root of socio-economic disparities and that security in that context ‘lies in development and not in arms’. While UNDP (1994) reports of ‘unprecedented human progress’ they also report ‘unspeakable human misery’ which is essentially taking a few steps forward and a few steps backwards with some bearing the pain and a few reaping the gains; usually the multinational corporations. UNDP (1994) painted a grim picture of what existed then and still exists now, all over the world but especially in poor countries: ‘breathtaking globalisation of prosperity side by side with a depressing globalisation of poverty.’ This episode continues as UNDP (1999) indicates that, three decades before the publishing of their Human Development Report for 1999 the income gap which existed between the richest 5th and the poorest fifth has more than doubled to 74 to 1. This gap has led to crime and violence in many countries, migration from poor to rich countries; pressure on the environment leading to the depletion of the earth’s ozone layer, increasing conflict; instability; drug trafficking; human trafficking; and the numerous other problems that lie at the root of poverty and inequality in rich and poor countries. Thus, Yeates (2002) states: At its crudest, the strong globalization thesis presents the global economy as dominated by uncontrollable global forces in which the principal actors are transnational corporations (TNCs). They choose the most conducive or profitable terms and conditions for their investment and production operations. Since they owe no allegiance to any country they go wherever market advantage appears to exist, all in the name of globalisation. Welfare Regimes A welfare state is a social system in which the state assumes primary responsibility for health care, education, employment and social security of its citizens. The effects of globalization on developing countries can be disaggregated into separate welfare regimes based on their levels of social protection expenditures. Esping-Andersen (1990) has provided a typology that has been used by many researchers as the standard for disaggregating welfare regimes. This typology relates to the indices of decommodification and stratification in 18 OECD countries. They include: social-democratic regimes, conservative regimes and liberal regimes. Decommodification ‘occur when a service is rendered as a matter of right, and when a person can maintain a livelihood without reliance on the market’ (Esping-Anderson, 1990, p. 21-22). The concept was first expressed by Polanyi (1980) who argued that under capitalism labour had to be treated as a commodity like any other produced for exchange. According to Klien, et al (2010), the social-democratic regimes includes Sweden, Finland, Denmark and Norway while the conservative regime include Germany, France, Austria, Belgium, Italy, Japan, Switzerland and the Netherlands. Finally, the liberal regime include: the UK, USA, Ireland, Canada and Australia. This regime has been criticised and so it has been extended to include a fourth welfare regime for the Southern European countries of Italy, Spain, Greece, Portugal, Cyprus and Malta as suggested by Ferraro (1996) and Bonoli (1997). Navarro et al (2004) also used a four regime model in their work. Rudra speak (2007) reports on developing countries and indicates that they too have their special grouping – protective welfare regimes and productive welfare regimes. Implications for social policy in welfare regimes The implications for welfare regimes are retrenchment in welfare expenditure and further cuts in spending as seen in increases in tertiary education fees in the UK. The importance of the search for new income streams goes without saying. Further, the need to get the able-bodied who are dependent on unemployment benefits to support themselves is critical. In recent times the governments of established welfare regimes have been forced to take measures as a result if the effects of globalisation. These pressures have not been limited to the social democratic regime as Klein et al (2010) analysis would suggest. The effects have also been found in the US, UK and Canada. Grayson (2010) reports that globalisation has resulted in increased insecurity in Canada and that this has been accompanied by reductions in social expenditure even in the face of surplus in the budget. According to Daly (1997) welfare states are under extreme pressure. Daly (1997) research covers the period 1985 to 1995 and focused on the reformation of welfare systems in 15 states of the European Union as well as Norway. Daly (1997) research sought to answer two main questions relating to what happened to cash benefits over the period and the main changes in these benefits. Daly (1997) states that there has been both cut backs and expansions with both Belgium and Ireland carrying out major cutbacks in absolute terms while France, Greece, Luxemburg and the Netherlands held their expenditures fairly constant. Denmark, Finland, Spain and Sweden, as well as Italy, Portugal and the United Kingdom have all had considerable increases based on the European Commission (1995, p. 61; qtd in Daly, 1997). According to Daly the Southern European countries are the only countries that increased their expenditure on cash benefits, and in so doing, expanding their social safety systems. The expenditure grew because of an increasing number of claimants, which suggests, either an aging population or high unemployment levels which arises from the movement of capital to more favourable locations where the factors of production inclusive of land and labour are relatively cheaper and the standards are lower. These measures, Daly (1997) explains are described in various ways – ‘cost containment’; ‘targeting’, ‘flexibility’, selectivity’, ‘incentives/disincentives’. In their efforts to contain costs they restricted access to the benefits by carrying out means testing and in so doing have attached conditions as they tighten the regulations. They have linked the size of benefits to income and have made benefits taxable. In an effort to contain cost through increased privatisation, they have effected the policy in two ways: contracting out service to the public sector and increasing the responsibility of individuals to provide their own protection. They have also increased their efforts to get persons to work in order to cur down on the number of beneficiaries so that they can start supporting themselves. Additionally, efforts are being made to reduce the cost to employers and to seek alternative forms of funding such as through taxation in a few countries. The financing problem has therefore being resolved by cutting benefits rather that creatively finding another source of revenue. These reforms have not been uniform and some benefits have been improved (maternity benefits) while others such as cash benefits have been cut; an effective strategy to get people to actively seek jobs if they want cash in their hands. These countries have also set out new policies and guidelines relating to the various groups of welfare benefit: old age pensions, unemployment benefits, and the provisions relating to the care of young children, the sick and the handicapped. Further implications for the elderly Already there have been increases in the age of retirement in order to increase both pension contributions and reduce the number of years in which payments would be received. There has also been upward adjustment in the number of years to obtain both full pension benefits and minimum pension benefits. Thus Daly (1997) speaks of a general trend in this area. The official retirement age was increased in Austria, Germany, Greece, Italy, Portugal, and the UK. In Finland, this only applies to workers in the public sector. The real plan is to standardise the system 20 years from then which means by 2015. In the UK they have privatized pensions and women now have individual rights. Pensions are now to be closely related to contributions made. In terms of unemployment benefit policies also need to be put in place not only by implementing the means test in order to stop handing out cash but force people to look jobs in both the public and private sector and placing them in those jobs. The state will not be able to continue funding these expenses. This group will have to be trained for specific jobs that are currently available so that they can start contributing to the government revenue. While Denmark has been making their system more favourable UK and Finland has reduced the amount of time in which the means tested portion of unemployment benefits can be received. This is six months in the UK and 180 days in Finland Daley (1997). The current situation in the UK and Finland – that of increasing use of means testing as a way to limit the amount of cash distributed and regulating employment agencies are steps in the right direction as they will help to ensure that too many persons do not become overly dependent on the state for unemployment benefits when they can actually get a job. According to Daly, while the welfare system have long been established in some European countries like Greece and Portugal in the new classification suggested by Bonoli (1997) and Ferrara (1996) have just started providing welfare for their citizens. With the problems now been experienced with Greece not yet out of the recession which started in 2008-2009 their welfare programme is expected to be impacted negatively. Greece now has debt repayment problems for which they may need forgiveness. The fact that what happens in one country has implications for the other suggests even more convergence for the European countries. With the countries which use the same currency – being the most likely ones to experience this the earliest. There is no doubt that convergence is occurring with the developing countries now introducing their own welfare systems, albeit slowly. There is increasing evidence of the dominance of efficiency effects of globalisation in work carried out by Kaufman and Seguro-Urbiergo (2001) where there is a squeeze in the share of social expenditure. Klein et al (2010) reports that globalisation has exerted efficiency effects on countries in the social democratic welfare regimes. Klein et al (2010) also reported some convergence between social democratic regimes and conservative regimes but based on what Grayson (2010) and Daly (1997) has reported there has been retrenchment in liberal regimes. According to Mackenzie (2004, p. 4; qtd in Grayson 2010) despite the perception globally of Canada as a social democratic society (not how they have been categorises above using Esping-Andersen, 1990 model); with strong income redistribution policies they have reduced programme spending from CDN$120 billion in 1993-1994 fiscal year to CDN$108 billion by 1996-1997. Mackenzie (2004, p. 4; qtd in Grayson 2010) reports that this is the lowest level of federal spending since 1950. This signifies significant retrenchment as unemployment levels continue to rise. As Grayson (2010) reports, even in the face of huge budget surpluses in 2004 the liberal government of the day did not inject any new funds into the programme. There are indeed tougher days ahead with the opening up of more free trade areas in Asia and the new CEECs. We are likely to see even more retrenchment leading to worldwide convergence of welfare regimes. So while some countries are introducing social welfare other well established welfare states will experience retrenchment. It is not something that can be prevented. With no clear long term innovative plans in place this situation is inevitable. The choice is either increasing taxes or cutting social expenditure. Increasing taxes is a disincentive to firms which will move somewhere else. Other creative redistribution policies will have to be seriously considered in order to reduce current levels of insecurity where they exist. Conclusion and recommendation Gunter and Hoever (2004) suggest some national policy responses which will be applicable to all countries. They include: investment in education and training; adoption of core labour standards; the provision and improvement of social protection; the tacking of rising national inequality; and (e) facilities to discuss globalization. Investment in education is seen as of major importance in all countries especially developing. It is also important to train the unemployed for specific jobs (targeted training). The adoption of new labour standards will help to ensure that child labour is stopped. This will also lead to encouragement towards non-discriminatory activities. This could be enforced by regular factory inspections. Provision and improvement of social protection is important for those countries that are not established welfare states. A comprehensive protection system needs to be put in place for children, the elderly, the unemployed, inclusive of health care and food supply where necessary. The problem is financing. It therefore means that the budget would have to be reassessed to facilitate its inclusion. In addressing the growth of national inequality, a proper tax system needs to be put in place; one that would ensure that those who have large incomes are progressively taxed. This would help to provide funds for supplementing salaries with benefits in order to facilitate equality. Dialogue is always a positive option. It has the advantage of being able to get the best suggestions from unexpected sources. It’s inclusive and decisions that result from it are most likely to be accepted. It therefore creates an environment for the support of policy options. Both rich and poor countries have to find creative ways to make their citizens better so that they will have some modicum of self esteem and respect for life. Those involved in drugs and crime needs to be taken from that precipice on which they find themselves, timely awaiting their end. If these and other relevant and important matters are not dealt with then it will lead to greater problems which are harder to fix. Increased vigilance if non-compliance with emission is a prime area in which revenue generation is possible. New standards based on size and revenue generating capacity of firm’s could be considered. Penalties applied could be used to set up a fund to supplement social programmes. The days ahead are going to be tough. Increasing insecurity for employed persons who face even more reduced pensions and an extended work life. It is expected that as life expectancy contuse to increase the age of retirement will be extended even further. References Bonoli, G (1997) Classifying welfare states: a two-dimension approach. Journal of Social Policy 26. p. 351-372 Daly, M. (1997) Welfare States Under Pressure: Cash Benefits In European Welfare States Over The Last Ten Years. Journal of European Social Policy 1997 7(2): 129 Davis, C.G., Thomas, C.Y., Amponsah, W.A. 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