Social investment synergies

The fundamental societal trends that necessitated a social investment perspective are as relevant and important today as they were ten years ago, perhaps even more so, because of adverse demography and skill-biased economic change. With fewer active persons supporting ever more dependants, low labour market participation is simply no longer affordable. There is no denying that a social investment strategy generates tensions and trade-offs between various social policy preferences in the short term, but it is important to emphasize that social investment is a long-term strategy par excellence with potentially very high rates of economic returns and social rewards, in an era where human capital is swiftly becoming a scarce resource. There is great potential for employment and productivity growth, if people are skilled for the new jobs and families are supported by good quality childcare and work- family reconciliation arrangements. High lifetime labourforce participation at high levels of productivity is the single most important macroeconomic prerequisite for maintaining living standards while sustaining inclusive welfare states, and thereby citizen wellbeing. The task of employment and social policy systems should first and foremost support the development of each person, with measures tailored to people's capabilities and needs, thereby enabling them to reach their full potential. The key challenge is to devise policy portfolios that not only address 'new' and 'old' social risks adequately, but equally important is to connect such an endeavour fully with the dynamic knowledge-based economy. On the other hand, social investment should not be mistaken as a celebration of economic dynamism as an end in itself, but in terms of a framework for citizens to pursue fuller and more satisfying lives. At the heart of the social investment edifice lies the idea that each welfare system consists of three overlapping spheres of public policy: income supports, capacitating regulation, and social services to address new needs. In concrete policy practice, social investment bears on reforming these three elements by linking them more closely to one another, in ways suited to welfare contexts. Delivering on social investment requires policy action across a large array of policy areas, in effective combinations that maximize employment and productivity in a manner consistent with deeply anchored values of social fairness, which are difficult to achieve through the market alone.

Central to the social investment edifice is that social services, in childcare, education, elder and health care, and employment services, are of critical importance to improving social protection today. Social services have a triple function in supporting people in employment, redressing the marginal position of social disadvantaged groups, and according autonomy and respect to people in need of institutional care. In addition, a life-cycle approach provides the most adequate framework for advancing a social investment strategy. This allows us to distinguish between different life-cycle cohorts—children, young adults, people of working age, pensioners, and persons reliant on care, while asking what combination of social services, income support, and enabling regulation is necessary to achieve better social protection and promotion, and through what governance methods. In order to guide the social investment policy measures in a broader perspective on competitiveness, I suggest a series of highly relevant priorities.