Social investment evidence

I began this book by rhetorically asking the question whether European welfare states were fit for twenty-first century global capitalism. The answer is largely affirmative, but this conclusion does not apply to all European welfare regimes. While there is no one-size-fits-all social investment policy package on offer, policy coherence between policy areas is of critical importance. Over the 1990s it became evident that the more active, universal, and service-oriented welfare states were in a stronger position than the more passive, selective, and transfer-oriented systems. In the new millennium, some of the most generous welfare states, with large public sectors devoted to human capital formation, active labour market policy, early childhood education and care, and work-family reconciliation arrangements, clearly outperform the more passive and liberal welfare states. The Nordic countries particulary have produced the strongest evidence base for Pareto-optimal solutions to the challenges of structural social and economic change, by matching, in the words of Andre Sapir, 'high efficiency' in the real economy with 'high equity' in the distribution of life chances, in line with fiscal consolidation (Sapir, 2006). In their wake, other welfare regimes have also moved to more active and service-oriented welfare provision. This holds true for the Netherlands, Germany, France, the United Kingdom, Ireland, and Spain (Morel, Palier, and Palme, 2012). All in all, we are able to discern a relative shift from the social protection function of the welfare state towards a greater emphasis on the social promotion function of social and economic policy as an essential ingredient of resilient knowledge-based economies. Among the new Member States, including Poland, Slovenia, and the Czech Republic, family servicing features high on the political agenda today because of low fertility. In terms of aggregate welfare performance, I have been able to establish in Chapter 7 that the social investment impetus corresponds with high levels of male and female employment participation over the life cycle, high productivity, and low inflation and budget surpluses, without massive hikes in inequality. A large public sector is not necessarily an inhibition to competitiveness; there is a positive relationship between fertility and higher levels of female employment; and high numeracy and literacy rates can be achieved with educational policies that abide by the principles of equal opportunities and high-quality public provision (see also Esping-Andersen et al., 2002; Kenworthy, 2004, 2008, 2011; Lindert, 2004; Pontusson, 2005; Bernard and

Boucher, 2007; Begg, Draxler, and Mortensen, 2008; Esping-Andersen, 2009; Hemerijck and Eichhorst, 2010; Eichhorst and Hemerijck, 2011; Eichhorst, Hemerijck, and Drabing, 2012). Ex negative, the crisis also exposed deep flaws in particular welfare regimes. Many southern European countries, excepting Spain, stand out as having declined to pursue explicit social investment and institutional capability-building policy strategies, with continued underinvestments in services together with overspending in passive benefits. This in part also explains their continuing high levels of inequality, low levels of employment for women and older men, high long-term and youth unemployment, and more troubled public finances, together with lower fertility, especially in Italy and Greece.

Aggregate welfare performance speaks to important accomplishments of the social investment turn, before the onslaught of the global financial crisis. This brings us to the important question of whether the fall-out of the economic crisis since 2008 will reinforce or undermine the promise of social investment in terms of its triad of high life-course employment participation and productivity, distributive justice, and sustainable economic growth. In Chapter 9 I have been able to exemplify how, initially, measures of Keynesian crisis management, in combination with short-term work or temporary lay-off schemes with strong human capital initiatives, were largely consistent with social investment priorities. Without much exaggeration, we can therefore infer from the empirical evidence of long-run social policy change that the translation of the social investment paradigm into new welfare provisions has been quite successful. Of course, the achievement of social investment varied across countries.