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Introduction
Social policy in European countries experienced huge change in process of economic
and socio-demographic development. Particularly, after the World War II European countries
faced with economic growth and increase in employment. In this period labor market required
mass unskilled labor force for manufacturing. However, as countries transited to post-industrial
societies characterized by non-hand employment, social issues became urgent. Particularly, fast
development of technologies demanded more highly-qualified labor force. Therefore, workers
with low skills became vulnerable to risk of poverty. New social risks emergence occurred.
Specifically, new social risks were related to intergenerational transmission of poverty. Parents
possessing lack of financial resources cannot equip their children with relevant education.
Thus, transmission of poverty occurs which adds considerable additional difficulties.
European countries experienced substantial demographic transformations, characterized
by falling fertility rate, rising longevity and ageing of population in aftermath. There were also
observed alterations of values, reflected in desire to have fewer children. In the framework of
falling fertility rate, European authorities’ major concern lied in problem of reconciling work
and family life. As a result, generous maternity leave arrangements were introduced. However,
such measure introduced burdens on ability of women to return to their work places due to
losing of qualifications. Currently, the most important problem of European countries is ageing
of population. This phenomenon heavily shaped the social policy making. Particularly, old age
benefits item constituted for about 40% of all government expenditures in EU-27 in 2006.
Problem of ageing imposed additional burdens due to transformation of traditional extended
families which existed in the first half of XX century (Wray 2006). In current time older
parents tend to live separately from their children, so that government’s expenditures on old
age benefits are ceteris paribus higher than, for instance, in Asian societies. Ageing of
population led to growth in old-age dependency ratio. Accordingly, pension burden rose
considerably. In view of population ageing European countries plan to increase retirement age
(COM 2005). Several European countries went further by linking pension entitlement to future
changes in life expectancy, by eliminating the need for frequent reforms to pension systems
(Carone & Costello 2006).
In the fist section, author discusses the historical background including economic and
social development of European countries after ending of the World War II. The work
addresses transformation of economies, especially labor markets. Then, paper analyzes past
policy actions of European countries. Particularly, the effect of such measures on socio-
demographic situation is considered.
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Historical background
Social policy in Europe was connected with economic development. The standards of
living of most European countries were vastly devastated during World War II. However, as
economies started to restore, social issues in western societies became less urgent. During the
postwar period, mainly 1950s, 1960s and 1970s, “the development of welfare states in
European countries took under highly favorable circumstances” (Taylor-Gooby 2004). The
period from 1945 to 1975s in France was named as “trente glorieuses” (“The Glorious
Thirty”) by the French demographer Jean Fourastié (Fourastié 1979). This period in France and
other European countries was characterized by strong economic growth and substantial
increasing in standards of living.
Development of the welfare state during this period was promoted by “…relatively
continuous growth in economies characterized by large stable manufacturing sectors which
provided high levels of family-wage employment for the mass population; stable nuclear
family structures which supplied care for young children, frail older people and other
dependent groups; governments able to manage their national economies through broadly neo-
Keynesian policies which achieved continuing low unemployment and secure wages; and
political systems in which coalitions of working and middle class groups were able to press
effectively for the provision of benefits and services to meet their needs and in which the tax
consequences of such provision could be legitimated” (Taylor-Gooby 2004).
Social problems at the time of trente glorieuses were mainly concerned with loss of
income due to unemployment. Other social issues were the responsibilities of the market, thus
the role of state was limited to “promoting full employment and organized social provision for
needs which market and family did not meet” (Ibid 2004). This system of provision
organization was named the Beveridge or Bismarck welfare state. The difference between
these two systems was identified in the source of financing. The Bismarck welfare state was
based primarily on social insurance contributions whereas the Beveridge system received its
resources from taxes2
. The Beveridgean system was considered as “highly redistributive and
achieves complete equalization of benefits”, however under Bismarckian system “no
redistribution occurs” (Cremer & Pestieau 2003). As it was stated both systems were
developed and utilized to cope with old social risks. Eventually, economies of Europe transited
to postindustrial societies. Fast technological development extended the growth of economies,
but increased instability, therefore making job places more flexible. These changes influenced
2
CESifo DICE Report 4/2008, Center for Economic Studies, the Ifo Institute for Economic Research
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social issues in these countries. The shift to postindustrial employment led to career profiles
that were “very different from that of the standard male workers of the trente glorieuses,
characterized by full-time continuous employment from an early age, with a steadily rising
salary” (Bonoli 2004). Indeed, stable increase in manufacturing during the postwar period did
not require highly skilled labor and the system was more of the male-breadwinner type society.
However, the transformation of economies demanded high skilled labor, thus implying that
those with low skill were most at risk of poverty. New social risks emerged as a result. There
were identified several important issues concerned with those hit by new social risks: hard
reconciliation of work and family life for middle class parents and concentration of new social
risks among young, women and low skilled (Ibid 2004). These problems have thus led to social
transformation that was illustrated by changing role of women in society. The male
breadwinner model was replaced by couple earner model.
Table 1: Labor Force Participation Rate for Women aged 15-64 years in 1983-2007 in
selected countries (Percentages)3
1983 1990 2000 2001 2002 2003 2004 2005 2006 2007
Australia 51,9 61,5 65,4 65,8 66,1 67,1 66,9 68,4 68,9 69,4
Austria 49,7 55,4 62,5 62,3 64,0 64,3 64,2 65,6 67,0 67,8
Belgium 44,5 46,1 56,6 54,5 55,4 55,8 57,7 59,5 58,9 60,2
Canada 61,3 68,3 70,4 70,8 71,9 73,2 73,4 73,1 73,5 74,3
Denmark 72,8 77,6 75,9 75,0 75,9 74,8 76,1 75,1 76,7 76,4
Finland 72,9 73,4 72,1 72,5 72,7 72,1 72,0 72,9 73,2 73,9
France 4
55,6 58,0 62,5 61,8 61,7 63,7 64,0 64,9 65,0 65,5
Germany 4
52,5 55,5 63,3 63,8 64,4 64,5 65,8 66,9 68,5 69,3
Greece 40,8 42,6 49,7 48,8 50,2 52,1 54,1 54,6 55,0 55,1
Ireland 37,8 42,6 55,7 56,0 57,3 57,4 57,8 60,2 61,3 63,0
Italy 40,1 44,0 46,3 47,3 47,9 48,3 50,6 50,4 50,8 50,7
Japan 57,2 57,1 59,6 60,1 59,7 59,9 60,2 60,8 61,3 61,9
Luxembourg 41,1 42,4 51,7 52,0 53,5 53,5 55,8 57,0 58,2 55,4
Netherlands 40,2 52,4 65,7 66,9 67,1 67,3 67,8 68,6 69,4 71,1
Norway 5
73,5 70,7 76,5 76,4 76,7 75,8 75,7 75,4 74,8 75,9
Portugal 59,8 59,6 63,8 64,6 65,0 65,6 67,0 67,9 68,4 68,8
Spain 5
34,7 42,2 52,9 51,6 53,7 55,7 57,7 59,1 61,1 62,3
Sweden 5
78,3 82,5 76,4 77,1 77,1 76,8 76,6 77,7 77,7 78,2
Switzerland 5
68,2 71,6 73,0 73,9 74,1 73,9 74,3 74,7 75,0
United Kingdom 5
62,5 67,3 68,9 67,6 69,3 69,2 69,6 69,6 70,3 69,8
United States 4
63,5 67,8 70,7 70,5 70,1 69,7 69,2 69,2 69,3 69,1
Source: OECD, Employment Outlook 1997, p. 165; 2002, p. 306; 2003, p. 302; 2004, p. 296 and 2008, p. 338.
3
Ratios refer to women who are in the labor force divided by the working age population of women
4
Data for 2007 are Secretariat estimates obtained by applying changes between 2006 and 2007 estimates from the
European Labour Force Survey to national estimates for 2006
5
Refers to persons aged 16 to 64 (For Norway up to 2005)
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European countries experienced large fluctuations in female labor force participation
rate (Table 1). However, the general trend toward rising of this rate was observed. Most
European Union Member countries (accompanied by USA and Japan) experienced growth of
this rate. Most ambitious growth in period of 1983-2007 was demonstrated by Spain (79.5%),
Netherlands (76.9%) and Ireland (66.6%). Austria, Belgium, Germany, Luxembourg and Italy
reflected more moderate growth. Correspondingly, the female labor force participation rate
increased by 36.4%, 35.3%, 35%, 34.8% and 26.4% in listed countries. Sweden was the only
country among industrialized countries to achieve reduction in female labor force participation.
Numerically the rate fell by 0.12% in this country. Massive entrance of women into labor
market increased the long-term employment and earning prospects of working parents. Even
though increased female labor force participation had reduced the risk of poverty for family, it
initiated other more comprehensive problems. The most relevant of that is decrease in fertility
rate and resulted increase in proportion of older population.
New social risks and social capital
The term social risk is concerned with “poverty due to retirement, unemployment or
illness” (Armingeon 2004). This type of risk was outdated because it emerged after the end of
the World War II and was mainly attributable to Western countries. These risks were
traditionally covered by insurance schemes, which promoted establishment of different funds
for people who incur the same type of risk. For instance, special funds were introduced for
miners facing black lung disease or for single-mother household struggling with income
poverty (Esping-Andersen 2000). The literature on new social risks, essentially, was concerned
with Western European countries. However, the main factors precluding the emergence of new
social risks came to reality in other countries as well. The important factors are
deindustrialization, tertiarization of employment, women’s entry in the labor market,
increasing instability in the labor market, increasing instability of the family structure, and
processes linked to the privatization of the welfare state (Esping-Andersen 1999; Esping-
Andersen et al. 2002; Taylor-Gooby 2004; Armingeon & Bonoli 2006). These factors were
recently identified in countries outside of Western Europe; therefore it would serve as a
foundation for fertility of research in this area of study. Particularly, new social risks were
defined as “risks that people face in the course of their lives as a result of the economic and
social changes associated with the transition to post-industrial societies” (Taylor-Gooby 2004).
According to Esping-Andersen (2000), there were identified four types of social risks:
universal risks (faced by all people, death can serve as a typical example of this risk);
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group/class risks (faced by specific groups who bear the same feature or peculiarity);
life course (faced by people at certain stage of life course);
intergenerational risks (risks transmitted from parents to children: lack of given
education and absence of good societal skills)
An alternative classification (Kitschelt & Rehm 2006) divides new social risks into four
types:
general existential risks (faced by people unable to work due to illness and old age);
group specific risks I (faced by people with insufficient level of skills due to structural
changes);
group specific risks II (faced by people with uncertain return on higher education);
group specific risks III (faced by people who might lose earnings due to demographic
reproduction).
The view of social welfare in risk terms has come out from insurance principles
(Esping-Andersen 2000), therefore it was agreed that the probability of occurring of a
particular risk can be evaluated and insured in the aftermath. However, most of the new social
risks were idiosyncratic and unstable. Thus they hardly could be prevented by traditional
methods and required new solutions. New social risks tended to co-vary, affected each other
and, as a result became complex and hard to deal with. Social risk was also linked to
personality development in terms of background education, cognitive abilities, being able to
interact with people. Pierre Bourdieu grouped these outcomes into “social capital” (Portes
1998). He defined social capital as “the aggregate of the actual or potential resources which are
linked to possession of a durable network of more or less institutionalized relationships of
mutual acquaintance or recognition”. Coleman (1988) defined social capital by its function as
“a variety of entities with two elements in common: they all consist of some aspect of social
structures, and they facilitate certain actions of actors – whether persons or corporate actors –
within the structure”. Baker (1990) identified social capital as “a resource that actors derive
from specific social structures and then use to pursue their interests; it is created by changes in
the relationship among actors”. However, Schiff (1992) viewed social capital as “the set of
elements of the social structure that affects relations among people and are inputs or arguments
of the production and/or utility function”. An alternative view of social capital by Burt (1992)
is basic and defined as “friends, colleagues, and more general contacts through which you
receive opportunities to use your financial and human capital” Social capital may seem to be
obscured and to some extent, abstract, but it has a significant and important role in the human
welfare concept.
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Social expenditures in European countries
Social protection systems were designed to protect people against the risks associated
with unemployment, parental responsibilities, health and invalidity, the loss of a spouse or
parent, old age, housing and social exclusion (EC 2008b). Article 136 of European Treaty
declared that the community of member states “shall have as their objectives the promotion of
employment, improved living and working conditions, so as to make possible their
harmonization while the improvement is being maintained, proper social protection, dialogue
between management and labor, the development of human resources with a view to lasting
high employment and the combating exclusion” (EC 2006). With a view of achieving the
stated goals, the Community treaty declared the need for maintaining the competitiveness of
the European economies. Thus, social policy in European Union was considered as part of
more comprehensive economic policies, because provision of generous social protection
required significant financing from government. The sustainable economic growth with high
living and working conditions was referred as the European social model.
The term “European social model” does not assume the entire commonality of
European social policies but rather the sense that European states do share some the common
characteristics. Bughea (2007) stated that the European social model is based today on a
common core values that are beyond the diversity of Member States’ social systems. Lindbeck
(2002) instead argued that “talking about the common European social model is somewhat
misleading due to considerable difference among European states. These differences lied in the
relative role of the state, the family, the market for the provision of income protection and
social services and generosity of benefits and welfare services (Ibid 2002).
Table 2: Total social expenditures in European countries in 1995-2006, in % of GDP
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Austria 28 28,1 27,9 27,6 28,2 27,6 28 28,3 28,8 28,5 27,9 27,6
Belgium 25,9 26,5 25,7 25,6 25,6 25 25,6 26,7 27,8 28 28,3 28,7
Czech Republic 16,9 17 18 17,9 18,6 18,9 18,8 19,6 19,5 18,7 18,5 18,1
Denmark 31 30,4 29,3 29,2 29 28,1 28,4 28,8 30 29,8 29,3 28,3
Finland 30,6 30,4 28,3 26,1 25,6 24,3 24,1 24,8 25,7 25,8 25,9 25,4
France 28,7 29,1 28,9 28,5 28,4 27,7 27,8 28,5 29 29,4 29,5 29,2
Germany 27,2 28,3 27,9 27,9 28,2 28,3 28,4 29 29,3 28,7 28,5 27,6
Greece 19,2 19,7 20,1 20,9 22 22,7 23,6 23,4 22,9 22,8 23,6 23,6
Iceland 18,5 18,3 18,1 17,9 18,5 18,9 19,1 20,9 22,6 22,3 21,3 20,9
Ireland 18 16,9 15,7 14,5 13,9 13,3 14,2 16,3 16,7 16,9 16,9 16,9
Italy 23,2 23,4 24,1 23,7 23,9 23,8 24 24,4 24,9 25,1 25,4 25,7
Luxembourg 20 20,4 20,7 20,4 19,8 18,8 20,5 21,2 21,7 21,8 21,3 20
Netherlands 28,9 28 27 26,1 25,4 24,7 24,8 25,8 26,5 26,4 26 27,5
Norway 25,9 25,2 24,5 26,3 26,4 23,9 24,9 25,5 26,7 25,5 23,4 22,1
Spain 20,9 20,9 20,3 19,7 19,3 19,8 19,5 19,9 20,1 20,2 20,6 20,4
Sweden 33,2 32,6 31,8 30,9 30,5 29,6 30 30,8 31,9 31,3 30,9 30
Switzerland 23,4 24,2 25,1 24,9 25 24,5 25,1 25,9 26,9 27,3 27,1 26,2
United Kingdom 26,4 26,2 25,8 25,2 24,7 25,5 25,8 24,9 25,3 25,4 25,8 25,9
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EU-25 25,4 25,6 25,9 26,3 26,2 26,2 26
EU-27 26,1 25,8
Source: Eurostat
There are considerable differences between Member States in percentage of GDP
devoted to social protection (Table 2). Social expenditures as a percentage of GDP vary in
most of the countries in European Union. For instance, Germany, France, Sweden, UK, Italy
and Netherlands devoted more than 25% of their GDPs to social protection in 2006. However,
in other countries, including Czech Republic and Luxembourg the foregone indicator barely
exceeded the edge of 20%, being even less in some of the listed countries. In terms of social
expenditures evolution, considerable disparity also existed. The general performance in 2004
concerned with larger GDP growth than in previous years, particularly affected the share of
social protection in those countries where the GDP growth was strong. Accordingly, Czech
Republic demonstrated a reduction between 2003 and 2004 in proportion of GDP attained for
social expenditures (EC 2007). Also, for the most of the European Union countries (Belgium,
Denmark, Ireland, Spain, France, Luxembourg, Netherlands, Finland, Sweden, and UK) the
period 2000-2001 was the point when the gradual decline in expenditures in proportion to GDP
stopped to decline (Ibid 2007).
Table 3: Total social expenditures in European countries in 1997-2006, per head in Euro
(Purchasing Power Standard) (at constant 2000 year prices)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Austria 5944,8 6172,8 6584 6897,2 6916 7320,6 7555,7 7813,6 8024,9 8272,5
Belgium 5944,8 5345,8 5598,7 5987,7 6258,7 6819,1 7078,1 7302,8 7681,3 8127,4
Czech Republic 2126,2 2145,3 2303,7 2462,3 2611,1 2818,6 2972,2 3030,4 3169,8 3323,2
Denmark 6337,8 6537,8 6754,5 7028,3 7175 7580,2 7716,8 8112,7 8323,5 8369,7
Finland 5080,8 5076,1 5238,9 5424,8 5526 5853,2 6011,5 6491,9 6669,2 6985,2
France 5371,9 5568,9 5799,2 6082,3 6356,2 6765,6 6726,4 7001,4 7432,8 7700,1
Germany 5633 5789,3 6133,1 6375,1 6544 6833,1 7084,6 7223,8 7358,6 7409,3
Greece 2752,3 2959,6 3246,5 3640,9 4040,7 4315,8 4362,1 4642,4 5063,1 5380,3
Iceland 4045,2 4267,2 4583,5 4738,7 4998 5558,5 5883,4 6342,9 6427,2 6442,9
Ireland 2910,3 2988,3 3123 3301,4 3716,7 4593,7 4854,9 5182,6 5439,3 5865,7
Italy 4646,7 4823,1 5008 5294,8 5581,4 5585 5707,7 5794,1 5984,2 6242,6
Luxembourg 7249,6 7565,6 8417,4 8792,7 9473,4 10404 11150 11981 12698 13172
Netherlands 5553,2 5691,7 5929,1 6319,7 6550,6 7051,7 7102,4 7394,5 7700,2 8523
Norway 5868,5 6189,3 6800,4 7505,7 7938,3 8086 8658,2 9062,1 9419,3 9708,8
Spain 3070,7 3183,3 3302,6 3672,9 3789,7 4087,5 4214,8 4414,9 4742,2 5039,3
Sweden 6366,3 6425,3 6811,1 7136,5 7200,2 7628,4 8106,7 8461,3 8558,9 8802,1
Switzerland 6129,9 6320,1 6507,5 6764,2 6986,7 7442,9 7621,7 8000,1 8208,7 8397,8
United Kingdom 4939,8 5039,3 5180,5 5775,4 6121,8 6152,5 6377,9 6793,4 6997,1 7269,6
EU-25 5084,5 5301,3 5541,3 5693,9 5909,9 6137,1 6375,2
EU-27 5870,3 6105,9
Source: Eurostat
Having compared social expenditures in European Union in the framework of Purchasing
Power parity drew substantially different picture with respect to previous analysis (Table 3). In
this view, Luxembourg gained an absolute leadership in terms of social expenditures with
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13172 Euro PPP per head in 2006. It clearly cut off all other countries with high ranks,
including Sweden (8802.1), Norway (9708.8), Denmark (8369.7), Switzerland (8397.8),
Austria (8272.5) and Belgium (8127.4). The disparities among countries are partly due to
differing levels of wealth, but they also reflect differences in social protection systems,
demographic trends, unemployment rates and other social, institutional and economic factors6
.
Composition of social expenditures objectives varies from country to country. Specifically,
benefits were classified according to eight social protection functions (set of risks or needs) in
European Union Member countries:
sickness/healthcare benefits - including paid sick leave, medical care and provision of
pharmaceutical products;
disability benefits - including disability pensions and the provision of goods and
services (other than medical care) to the disabled;
old age benefits - including old age pensions and the provision of goods and services
(other than medical care) to the elderly;
survivors’ benefits - including income maintenance and support in connection with the
death of a family member, such as survivors’ pensions;
family/children benefits - including support (except healthcare) in connection with the
costs of pregnancy, childbirth, childbearing and caring for other family members;
unemployment benefits - including vocational training financed by public agencies;
housing benefits - including interventions by public authorities to help households meet
the cost of housing;
social exclusion benefits - including income support, rehabilitation of alcohol and drug
abusers and other miscellaneous benefits (except healthcare) (EC 2008b).
6
Alexandra Petrašová, “Social Protection in the European Union”, Population and social conditions, Statistics in
focus, Eurostat, 46/2008, http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-08-046/EN/KS-SF-08-046-
EN.PDF
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Figure 1: Structure of social protection expenditure in EU-27 in 2006 (percentages)
29,21
7,49
7,99
2,26
40,00
6,16
5,59 1,30
sickness/health care disability family/children housing
old age survivors unemployment social exclusion n.e.c.
Source: Eurostat – European system of integrated Social Protection Statistics (ESSPROS)
Substantial proportion (46.16%) of total social expenditures in 2006 was devoted to old
age and survivors benefits (Figure 1). Particularly, the magnitude of proportion attained for old
age depended on the extent to which certain country had experienced ageing of population.
European countries reflected growth in proportion of older population; therefore challenges
emerged for their social policy systems. Another benefit which constituted for significant
proportion was health care (29.21%). The rest was spent to varying degrees, on disability,
(7.49%), family and children (7.99%), unemployment (5.59%), housing (2.26%) and social
exclusion (1.30%).
Employment and Family policies in demographic framework
Luxembourg summit of European Commission held in 1997 gave birth to an
employment strategy of the European countries (Aust et al. 2001). The labor-market policy in
European countries was mainly concerned with principles of “activation” and “inclusion”.
These principles were based upon providing education to those who had lack of skills. The
main goal of European social policy was to socially include every citizen into society.
Governments tried to provide people with material, social and cultural capital, so as to make
sure that there were not any socially deprived parts of population. These issues gave evidence
that European social policy shouldn’t be gauged only from the point of generosity of
expenditures but rather from a sight that stated policy is aimed to ensure multifaceted human
development. The concept of “active inclusion” was based on three main pillars: a link to the
labor market through job opportunities or vocational training; income support at a level that is
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sufficient for people to live in a dignity; and better access to services supporting their re-
entering into employment (EC 2008). This goal was achieved by supporting unemployed
persons through initiatives such as benefit reform, income support, training, and through
innovative policies targeting the most disadvantaged (the disabled, immigrants and women).
The main problem in European countries concerning employment is the problem of
reconciling working and family lives. Bonoli (2004) defined this problem as “possible inability
to simultaneously fulfill legitimate labor market and fertility aspirations”. Several risks were
identified in the framework of reconciliation of work and family lives. In situation when
woman takes care of her child or frail relative on unpaid basis, she becomes subject to several
risks, such as a lost opportunity of a paid job, deprivation of skills and experience, and inability
to find a job thereafter. These problems become even more profound if the woman is single or
her husband is unemployed. Therefore, “inability to reconcile work and family life, can,
especially for low income parents, be associated with a poverty risk” (Esping-Andersen 2002
as cited in Bonoli 2004).
This problem is very complex since it deals with choice of people about giving
children. Certain actions can to significant extent alter the decision of people concerning child
birth. From one side, generous paid leave arrangements can promote the rise in child births.
From other point of view, however, women being out of work for long time might have a risk
of losing qualifications and being unable to return to work. Particularly, in the long run it can
substantially worsen the wealth status of family. Throughout the development of western
welfare states policymakers strived to implement the couple-earner model instead of the male-
breadwinner model. It was conducted by active inducement of female entry into labor market.
The European Commission enacted a series of recommendations and directives in order to
promote and impose female participation in the labour market (Aust et al 2001). This path was
chosen for dealing with new social risks, because the families with both spouses working and
getting income were less vulnerable to such a common risk as loss of income. However, the
attainment of the couple-earner model induced other more comprehensive problem: fall in birth
and fertility rates and ageing of population. Indeed, as women reached some stable and rising
income, the opportunity cost of having children increased substantially and women became
reluctant to extend their families. Most European countries experienced significant increase in
fertility gap during transition to post-industrial societies7
(Bonoli 2004). The growth of fertility
gap could be explained by various reasons, including increased opportunity cost of having
7
The difference between the number of children women aged 15-45 would like to have and the number they are
actually likely to have
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children, and changed values or “cultural shift”. Cultural shift has involved situation when
people wanted to have fewer children than their parents’ generation did” (Fahey & Speder
2004). This aspiration had its implications on fertility rate in Europe. Moreover, Western
European countries also revealed growth in permanent infertility8
. At least one in five of the
women born at the end of the 1960s will remain childless in Austria, Finland, England, Ireland
and the Netherlands (Sardon 2006).
Table 4: Total Fertility Rate in selected countries (average of the period)
1950-
1955
1955-
1960
1960-
1965
1965-
1970
1970-
1975
1975-
1980
1980-
1985
1985-
1990
1990-
1995
1995-
2000
2000-
2005
Austria 2,1 2,5 2,8 2,5 2,0 1,6 1,6 1,5 1,5 1,4 1,4
Belgium 2,3 2,5 2,6 2,4 2,0 1,7 1,6 1,6 1,6 1,6 1,6
Czech Republic 2,7 2,4 2,2 1,9 2,2 2,3 2,0 1,9 1,7 1,2 1,2
Denmark 2,6 2,6 2,6 2,3 2,0 1,7 1,4 1,5 1,8 1,8 1,8
Finland 3,0 2,8 2,7 2,2 1,6 1,7 1,7 1,7 1,8 1,7 1,8
France 2,7 2,7 2,9 2,6 2,3 1,9 1,9 1,8 1,7 1,8 1,9
Germany 2,2 2,3 2,5 2,3 1,6 1,5 1,5 1,4 1,3 1,3 1,4
Greece 2,3 2,3 2,2 2,4 2,3 2,3 2,0 1,5 1,4 1,3 1,3
Italy 2,3 2,4 2,5 2,5 2,3 1,9 1,5 1,4 1,3 1,2 1,3
Japan 2,8 2,1 2,0 2,0 2,1 1,8 1,8 1,7 1,5 1,4 1,3
Luxembourg 2,0 2,2 2,4 2,2 1,7 1,5 1,5 1,5 1,7 1,7 1,7
Netherlands 3,1 3,1 3,2 2,8 2,1 1,6 1,5 1,6 1,6 1,6 1,7
Norway 2,6 2,8 2,9 2,7 2,3 1,8 1,7 1,8 1,9 1,9 1,8
Spain 2,6 2,8 2,9 2,9 2,9 2,6 1,9 1,5 1,3 1,2 1,3
Sweden 2,2 2,2 2,3 2,2 1,9 1,7 1,7 1,9 2,0 1,6 1,7
Switzerland 2,3 2,3 2,5 2,3 1,8 1,5 1,5 1,5 1,5 1,5 1,4
United Kingdom 2,2 2,5 2,8 2,5 2,0 1,7 1,8 1,8 1,8 1,7 1,7
United States 3,5 3,7 3,3 2,6 2,0 1,8 1,8 1,9 2,0 2,0 2,0
Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat,
World Population Prospects: The 2006 Revision and World Urbanization Prospects: The 2005 Revision
Throughout 1950-2005, total fertility rate dropped dramatically in all European
countries (Table 4). The most profound decrease in total fertility rate during 1950-2005 was
observed in Czech Republic (by 56.1%), Spain (49.8%), Italy (44.4%), Greece (44.1%),
Norway (43.5%), Netherlands (43.5%), and Finland (42.2%). Lesser drop was indicated in
Switzerland (37.7%), Germany (37.5%), France (31.1%), Denmark (30.9%), Austria (33.9%)
and Belgium (29.9%). Non-European countries, United States and Japan experienced reduction
in total fertility rate as well. Correspondingly, they showed 40.9% and 53.1% decline in period
of 1950-2005.
8
Permanent infertility refers to the proportion of women who have never had a live-born child in the course of
their reproductive life
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Table 5: Crude Birth rates (per 1000 population) in selected countries
1975 1980 1985 1990 2005 2006 2007
Austria 12,5 12 11,6 11,6 8,8 8,7 8,7
Belgium 12,2 12,7 11,5 12,6 10,5 10,4 10,3
Czech Republic9
19,6 16,4 14,5 13,4 9,1 9 9
France 14,1 14,8 13,9 13,5 12,2 12 11,9
Germany10
9,7 10 9,6 11,4 8,3 8,3 8,2
Greece 15,7 15,4 11,7 10,2 9,7 9,7 9,6
Ireland 21,5 21,9 17,6 15,1 14,5 14,5 14,4
Italy 14,8 11,2 10,1 9,8 8,9 8,7 8,5
Japan 17,2 13,7 11,9 9,9 9,5 9,4 9,2
Netherlands 13 12,8 12,3 13,3 11,1 10,9 10,7
Norway 14,1 12,5 12,3 14,3 11,7 11,5 11,3
Poland 18,9 19,5 18,2 14,3 9,7 9,9 9,9
Switzerland 12,3 11,3 11,6 12,5 9,8 9,7 9,7
United Kingdom 12,5 13,5 13,3 13,9 10,8 10,7 10,7
United States 14 16,2 15,7 16,7 14,1 14,1 14,2
Source: United Nations, Monthly Bulletin of Statistics, June 1997, Data for 2004, 2005, and 2006 from the US,
Census Bureau, International Database
Crude birth rates declined in most of the European countries as well. The most
significant reduction in birth rates in period of 1975-2007 was observed in Czech Republic,
Poland, Italy, Greece, Ireland and Austria (Table 5). Correspondingly, the stated rate
descended by 54%, 47.6%, 42.6%, 38.8%, 33% and 30.4%. In non-European country, Japan,
birth rate also declined by 46.5%. Less profound reduction was observed in Netherlands,
France, Belgium, Germany and United Kingdom. Respectively, this rate went down by 17.7%,
15.6%, 15.56%, 15.4% and 14.4%. Conversely, USA experienced a subtle increase by 1.43%.
In the face of falling birth rates, member countries of European Union presented some
assistance for parents who gave childbirth. Mothers in European countries receive
considerable provision (Table 6). Moreover, a woman being out of work due to child birth
receives 100% of their wages in most Member countries of EU. Also, women attain significant
rest time (ranging from 9 weeks in Norway to 52 weeks in UK), to be able to provide care for
children. Conversely, United States has unpaid maternity leave. Women have a right to be out
of work for period of 12 weeks only. This policy is shaped by the fact that US didn’t
experience such significant reduction in birth rates as European countries did. The US enters a
group of only five countries in the world (others are Australia. Lesotho, Papua New Guinea
and Swaziland) which lack paid protection for women in case of childbirth (Heymann et al
9
Data prior to 1994 pertain to the former Czechoslovakia
10
All data pertaining to Germany prior to 1990 are for West Germany
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2004). There were attempts to introduce paid parental leave during Bush administration;
however they were met by strong opposition from business groups.11
Table 6: Employment-Protected Statutory Maternity Leave Arrangements 2005-200612
Country
Maximum duration
(weeks)
Eligibility criteria for
payments
Paid Payment Financing
Austria
16 (can be 20 for
medical reasons)
No qualifying
conditions.
Yes 100% State / Social insurance
Belgium 15 (17 multiple births) All insured women. Yes
30 days: 82%
after: 75%.
Social insurance
Czech
Republic
28 (37 multiple births) All women residents. Yes
69% (up to EUR
25 daily).
Denmark 18 6 weeks of residence. Yes
100% up to
(DKK 3,115 per
week).
Employer
Finland
105 days = around
17.5 weeks
All parents are eligible. Yes
100-60% (four)
decreases with
earnings; daily
minimum EUR
11.45.
Social insurance
France
1st/2nd child: 16; 3rd:
26 (+3 multiple
births)
10 months insurance
contributions.
Yes
100% up to
maximum of
EUR 2,432 per
month.
Social insurance
Germany 14 (18 multiple births) All insured women. Yes 100% Social insurance + employer
Hungary 24 All insured women. Yes
Pre-natal
(minimum 4
weeks): 70%.
Social insurance
Ireland 26
39 insurance
contributions paid in the
12 months pre-leave.
Yes,
18
weeks
70% with
minimum and
maximum.
State
Italy 21 (5 months) All women residents. Yes 80% Social insurance
Luxembourg
16 (20 if multiple
birth)
All insured women. Yes
100% (with
minimum and
maximum
payments).
Social insurance
Netherlands 16 All insured women. Yes
100% up to
maximum.
Social insurance
Poland
1st child: 16; 2nd
child or more: 18;
multiple births: 24
No qualifying
conditions.
Yes 100% Social insurance/employer
Spain
16 (18 if three or
more)
180 days insurance
contributions paid in last
5 years.
Yes 100% State
Sweden
7 weeks pregnancy
leave + 60 days
allocation of parental
leave
All parents are eligible. Yes
80% (minimum
EUR 19 per
day).
State
United
Kingdom
52 Employment for a
continuous period of 26
weeks ending 15 weeks
before the expected
Yes,
26
weeks
First 6 weeks:
90%, then final
20 weeks: EUR
154 per week or
Employer (refunded for at
least 92%)
11
“U.S. stands apart from other nations on maternity leave”, USA Today,
http://www.usatoday.com/news/health/2005-07-26-maternity-leave_x.htm [Retrieved 5 November 2009]
12
Private sector employees; in many countries, civil servants have access to more generous entitlements. Self-
employed often have less favorable statutory schemes.
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week of childbirth. 90% average
weekly earnings
if lower + 26
weeks unpaid.
Norway 9 weeks
6 out of preceding 10
months in work (either
parent).
Yes
Varies if period
is 42 weeks: pay
is 100%; for 52
weeks pay is
80%, maximum
EUR 590.
State
Switzerland 16
Currently in covered
employment.
Yes 100% Employer
USA 12 weeks
No qualifying
conditions.
No - -
Source: For European countries adapted from OECD, Babies and Bosses: Reconciling Work and Family Life,
Paris 2007, p.122 and p.126.
For USA – Heymann et al (2004)
Ageing of population
The good economic conditions in European countries gave way to increase in life
expectancy of people. Reduction in fertility rate, fall in mortality and the approach of baby-
boomers to the retirement age led to ageing of population in all welfare states of European
countries, whereby the population’s median age increased from 29.7 in 1950 to 38.913
in 2005.
Between 1960 and 2005 in EU-27 the proportion of older population (aged 65 and over) rose
from 10 to 17%. It is expected that further this proportion will increase to 30% by 2050. The
proportion of very old people (aged 80 and over) was anticipated to increase to 11% by 2050
from 4% in 2005 (EC 2007).
Table 7: Proportion of population aged 65 and over in selected countries (% of total
population)
1997 2000 2004 2008
Austria 15,3 15,4 15,5 17,1
Belgium 16,3 16,8 17,1 17,1
Czech Republic 13,5 13,8 13,9 14,6
Denmark 15 14,8 14,9 15,6
Finland 14,5 14,8 15,6 16,5
France 15,3 15,8 16,1 16,3
Germany 15,7 16,2 18 19,9
Italy 17,2 18,1 19,2 20
Luxembourg 14,2 14,3 14 14
Netherlands 13,4 13,6 13,8 14,7
Norway 15,8 15,3 14,7 14,6
Spain 15,8 16,7 16,9 16,6
Sweden 17,4 17,3 17,2 17,5
Switzerland 14,9 15,3 15,7 16,4
13
Source: Population Division of the Department of Economic and Social Affairs of the United Nations
Secretariat (2007). World Population Prospects: The 2006 Revision. Highlights. New York: United Nations
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United Kingdom 15,9 15,8 16 16,1
EU-27 15,1 15,6 16,4 17
EU-25 15,2 15,7 16,4 17,1
Source: Eurostat
From 1950 to 1990 the proportion of older population (aged 65 and over) grew by
almost two times (from 34 to 67 mln. people), whereas proportion of population aged 15-64
increased by 35% and population (children) aged 0-14 fell by 2.2% (COM 2006). Growth in
proportion of older population continued into the end of 1990s and beginning of 2000s. In
period of 1997-2008 the foregoing rate rose by 26.7% in Germany, by 16.3% in Italy, by
13.8% in Finland, by 11.8% in Austria, by 10.1% in Switzerland and by 9.7% in Netherlands
(Table 7). Lesser growth was observed in Czech Republic (8.1%), France (6.5%), Spain
(5.1%), Belgium (4.9%), Denmark (4%) and United Kingdom (1.2%). Conversely, Norway
and Luxembourg experienced reduction in this rate by 7.6% and 1.4% respectively.
The ageing of population shaped the social policy in European countries, where
substantial proportion of social expenditures is directed toward old age benefits. In the face of
demographic problems, the European Commission identified three goals to be pursued:
returning to demographic growth; ensuring balance between the generations (distribution
benefits from growth, funding needs from pension and health-related expenditures); and
finding new bridges between the stages of life (ensuring employment for young people) (EC
2007). However, promoting higher birth rates is very comprehensive issue and provision of
financial support or services such as subsidized childcare may not provide the needed result.
One of the reasons is that people, who have fewer children, already have a high level of
resources, so that additional support from government would have a negligible effect (Fahey &
Speder 2004). Thus, the changing structures of the population in European countries created
impressive challenges for policymakers. Additional problems of growth in proportion of older
population lie in propensity of elderly people to live alone. It may increase the burden on
workers to the extent that this requires more resources than needed to support elderly in a more
traditional, extended family arrangement (Wray 2006).
Growth in proportion of older population forced European authorities to take certain
actions. Particularly, Member States of European Union increased incentives to retire later and
reformed their Social Protection systems in order to promote longer working lives. It was
considered as important driver of demographic pressure on pensions systems in European
countries. It was viewed even more influencing factor when compared with current low
fertility rates in stated countries (EC 2008). The projected increase in spending on pensions (as
percent of GDP) between 2004 and 2050 was estimated at more than 5 percentage points in
17. RAKURS Center for Economic Analysis
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Belgium, Cyprus, Czech Republic, Hungary, Ireland, Luxembourg, Portugal, Slovenia and
Spain (Carone & Costello 2006).
Table 8: Old-age dependency ratio14
in selected countries
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010*
Austria 16 17 18 21 23 24 24 21 22 22 23 24 26
Belgium 16 17 19 20 21 22 22 21 22 24 26 26 27
Canada 12 13 13 13 13 13 14 15 17 18 18 19 20
Czech
Republic 12 13 14 16 18 20 21 18 19 19 20 20 22
Denmark 14 15 16 17 19 21 22 23 23 23 22 23 26
Finland 11 11 12 12 14 16 18 18 20 21 22 24 26
France 17 18 19 19 21 22 22 20 21 24 25 25 25
Germany 14 16 17 19 22 23 24 21 22 23 24 28 31
Greece 11 11 13 13 17 19 21 20 20 22 25 27 28
Italy 13 13 14 15 17 19 20 19 22 24 27 30 31
Japan 8 9 9 9 10 12 13 15 17 21 25 30 35
Luxembourg 14 15 16 18 19 19 20 19 19 21 21 21 21
Netherlands 12 14 15 15 16 17 17 18 19 19 20 21 23
Norway 15 16 18 19 21 22 23 24 25 25 23 22 23
Spain 11 12 13 13 16 17 18 19 20 22 24 24 26
Sweden 15 17 18 19 21 24 25 28 28 27 27 26 28
Switzerland 14 15 15 16 17 19 21 21 21 20 22 23 25
United
Kingdom
16 17 18 19 21 22 23 23 24 24 24 24 25
United
States
13 14 15 16 16 16 17 18 19 19 19 18 19
Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat,
World Population Prospects: The 2006 Revision and World Urbanization Prospects: The 2005 Revision
Ageing was considered as a serious problem because of the burden placed on workers
of supporting those old aged who do not work. The old-age dependency ratio which reveals the
extent of this burden, demonstrated substantial growth during 1950-2005 (Table 8). The most
profound growth was observed in Greece (by 2.54 times), Italy (by 2.38 times), Finland (2.36
times), Spain (2.36 times) and Germany (by 2.21 times). Lesser extension, but still very
impressive, was demonstrated by Netherlands (by 75%), Sweden (73.3%), Switzerland (by
64.3%), Denmark (64.3%), Belgium (62.5%) and Austria (50%). United States also
experienced growth in old-age dependency ratio though it was not as tremendous as in
European countries. The foregoing ratio rose by 38.5% in United States. Conversely, Japan,
surpassed all European countries in stated ratio by having shown growth by 4.3 times or 275%.
Carone & Costello (2006) and COM (2006) contented that the ageing of European
population was occurring from a combination of four factors: firstly, fertility rates in all
Member countries of European Union are below the natural population replacement rate;
14
The “old-age dependency ratio”, calculated as the ratio of the total number of people aged 65 and older to those
aged 15-64
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secondly, the decline in fertility rates followed the postwar baby boom, and the impending
retirement of this cohorts will again led to a transitory increase in old-age dependency ratio;
third, substantial increase in life expectancy at birth; and fourth is large net migration inflows
which will not offset the low fertility and growing life expectancy after year 2050.
Additionally, such solid demographic transformation could be resulted from the fact that the
problem of population growth was recognized among Europe’s policymakers only recently
(Sardon 2006).
In the view of risen pressures on pensions, most European countries have reviewed
their policies concerning pension provision to increase retirement age. Particularly, Austria
passed legislation cutting benefits by 10% and gradually raising the retirement age to 65 from
60. Similar legislation is planned to be approved by France and Germany15
. France, Germany,
Italy and Sweden linked pension entitlement to future changes in life expectancy, thus
eliminating the need for frequent reforms to pension systems (Carone & Costello 2006). In the
framework of employment promotion for older people, researchers suggested several
measures, for instance, cutting back seniority privileges in the remuneration of employees,
subsidizing wages for older workers, and increasing participation of older workers in continued
education16
. Representatives of NGOs also believe that older people should be encouraged to
study and work beyond retirement, whether through part-time or on voluntary basis17
.
Protecting the rights of workers and other social groups
One of the factors that have a crucial role in dealing with new social risks is the ability
of people to protect their rights by grouping together. Indeed, by mobilizing and uniting people
can create specific groups (unions, communities, associations), so as to exert some political
influence. However, the social groups who are most likely to experience problems are not
politically influential. Generally, those groups are constituted by women, younger persons and
individual with low skills (Bonoli 2004). In the case of new social risks unlike old social risks,
the risk bearers do not play a major role in political process; therefore policies implemented
tend to reflect interests of more powerful actors.18
It is also worth noting that these socially
vulnerable groups have little or have not at all sufficient financial sources by which they can
15
Richard Bernstein “Aging Europe Finds Its Pension Is Running Out”, New York Times, June 29, 2003
http://www.nytimes.com/2003/06/29/international/europe/29AGIN.html?ex=1372219200&en=48abc5aeb06b894
c&ei=5007&partner=USERLAND [Retrieved 20 November 2009]
16
CESifo DICE Report 1/2003, Center for Economic Studies, the Ifo Institute for Economic Research
17
Sarah Toyne, “Ageing: Europe’s growing problem”, BBC news,
http://news.bbc.co.uk/2/hi/business/2248531.stm [Retrieved 20 November 2009]
18
“Modernizing Policy Paradigms and the Emergence of New Social Risks, Key Findings from the Welfare
Reform and the Management of Societal Change Project”, WRAMSOC Project
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group. Thus from this point of view it is expected that those parts of society with considerable
political power will be able to persistently improve their well beings. On the other hand, people
who cannot exert their needs will be hit by new social risks. This vicious circle can become
even more frustrating if development framework of intergenerational problems is applied.
Most vulnerable groups constituted by women, young and individual with low skills will “hand
down” these problems to their children, because those parents would be unable to equip
children with adequate education to socially include into society.
As it is widely known, the modern welfare states of European countries were formed
with help of numerous political forces as labor unions, associations grouped by the same type
of risk (i.e. single mothers and disabled people). Therefore, the positive experience of
European countries in this field should be particularly applied in less developed countries
which strive to create their welfare states. In the framework of this goal government should
promote or enable people to express their needs. In European countries it was conducted by
promoting the creation of NGOs, labor unions and numerous associations. Potential members
in Denmark, Finland, and Sweden (and partly in Belgium) perceived strong incentive to join
and stay in a union, even though legal obligation didn’t exist (Ebbinghaus 2003). Particularly,
membership in the union was considered as an ultimate eligibility criterion for social
assistantship. All these arrangements are needed in order to get knowledge for government
about groups of population which experience the highest problems. However, persistent
response actions to labor unions requests can create a problem of moral hazard. People will
react to incentives by continuously asking for higher salary despite the high existing level.
Another problem lies in pure economic scope. Rising wages of workers induces higher costs
which transforms into higher price of product produced. Thus, it can harm to some extent the
competitiveness of economy. In the long run, government with weak economy will not be able
to function properly and to maintain its social programs. Thus, the balance should be
maintained within this problem.
Intergeneration transmission of risks
In the framework of emerging of new social risks (NSR), in relation to labor market
changes, two problems were identified: lacking the skills necessary to gain access to an
adequate paid and secure job; and having skills and training that become obsolete and being
unable to upgrade them through life-long earning (Taylor-Gooby 2004). In the face of
emerging new social risks, European policymakers started to pay considerable attention to
intergenerational transmission of risks. In their strategic report for 2006-2008, Member States
20. RAKURS Center for Economic Analysis
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responded with commitments to break the intergenerational transmission of poverty and
exclusion (EC 2008). By definition, this type of risks referred to social problems transferred to
children from their parents. This risk was viewed within development framework. For instance,
family having been in poverty was unable to provide child with adequate education. As a result
child when achieving maturity will possess low skills and knowledge. In that turn, this grown
up person will be in poverty as his/her parents were. The poverty can become even more
chronic and wrecking. From the standpoint of low social capital attained, this person may face
other complicated problems. The low social capital in this term is associated with
inaccessibility to employment, low mobility through occupational ladders and inability to gain
entrepreneurial success (Porters 1998). Therefore, risks transmitting through generations may
deepen and increase social deprivation of those people.
In the framework of dealing with Intergenerational Transmission of Risks (ITR),
European countries tried to prevent and tackle child poverty and ensuring sufficient resources
for families with children. On the way of achieving these goals, countries adopted an integrated
approach to poverty that combined income support for families and policies enhancing labor
market integration of parents (EC 2008). Also parents are supported by training, re-
qualification schemes. Important element of assisting to entering the labor market is vocational
education. Providing employment is crucial for eliminating poverty. Within development
framework, person being unemployed is entitled to have low or obsolete pension at retirement
(Taylor-Gooby 2004). Thus, European policymakers aimed to break the poverty at every stage
of human life starting out from the birth. The good example of that can be found in United
Kingdom. In that country a child care facility and vocational education center are located in
one place entitled as Whaddon Sure Start Children’s Center (EC 2008). This is especially
useful for parents who may find it difficult to leave house to learn new skills. The wish of
parents to spend more time with their children and work more at another time in their life may
therefore lead to a new, more adaptable and flexible organization of working time (COM
2005).
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Conclusion
European countries experienced huge socio-demographic transformation during the
second half of XX century. The most notable changes were fall in fertility and birth rates, rise
in life span, and the resulted increase in proportion of older population. Problems associated
with ageing included reduction in work force and rising burden on pension provision.
Pessimistic view of population ageing contended about probable falling of aggregate demand,
collapsing asset values, shrinking corporate profits, deterioration household and financial
institution balance sheets, weakening currencies and soaring budget pressures (Hewitt 2002).
However, the major issue was concerned with providing retired people with sufficient pension.
On the way to achieve this goal, European countries already increased retirement age or plan to
conduct related arrangement. In the present time European government authorities motivate
longer employment for older people and for women as well (COM 2005). However, inducing
active female labor force participation opposes to the goal of fertility rate rising. Women in
Europe receive generous leave arrangements in terms of financial provision and period of leave
comparing with other countries. Yet this generous measure cannot be treated as the best
arrangement against falling fertility and birth rates. Long-period out of employment may
impose barriers to return of women to their workplaces. The major problem concerned with
losing qualification required for work. Therefore, this type of policies should be considered
with great caution. Specifically, all social policy arrangements should be analyzed and
designed within development framework. Particularly, social policy actions should take into
consideration human life at every stage of his/her maturity. Policy arrangements should not
allow person to live in chronic poverty and to “transit” poverty to his/her children. From this
point of view, it is obvious that substantial care should be addressed to children from the point
of their births. It should be done by providing young parents with training and necessary skills.
These parents should be able to gain employment and to equip their children with relevant
material, social and cultural capital in the aftermath. Parents assisted by government should
strive to actively “include” children into society, so that young person was able to establish
relations with others and be able to find employment and make a career. It is also worth noting
about “enabling” principle widely utilized by European governments. Vulnerable people can
hardly express their requests for government due to low financial and education resources
possessed. From this view, Government can actively motivate creation of various unions and
associations, so that to get a knowledge about the most vulnerable groups.
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