Page 58 - The Economist Asia January 2018

The Economist January 27th 2018
42 Europe
2 land, it is the populist right that has seized policies often saw their unemployment
the mantle ofthe party ofwelfare. rates go up faster than those which strong-
And not just in Poland. In Hungary the ly protected existingjobs. Yet the crisis also
nationalist Fidesz party of Viktor Orban, drove countries like Spain and Portugal,
the prime minister, has launched New which got bail-outs, to make their labour
Deal-style public-works programmes. In laws more flexible. Their jobless rates are
France Marine Le Pen’s National Front de- nowfallingfasterthan those ofItaly, where
fends the protections enjoyed by perma- Matteo Renzi, the prime ministerfrom 2014
nent employees against the “neoliberal- to 2016, managed only modest labour re-
ism” of President Emmanuel Macron. In forms before beingejected.
the Netherlands Geert Wilders’s Freedom That has left the focus on France. Mr
Party lambasts the government over cuts Macron’s great mission is to revive the
to health care. The right-wing Alternative French economybyshiftingitslabour mar-
for Germany exploits anger over unequal ket to a more Nordic model. His first re-
pensions in the country’s east and west. forms have already been approved by the
Meanwhile centre-left parties that felt ob- National Assembly, butmanyin France are
liged to cut welfare during the euro crisis— sceptical. “Our system continues to be fo-
the Dutch Labour Party, the French Social- cused on getting a permanent job, so you
ists, Germany’s Social Democrats—have can access pensions and unemployment
been hammered in recent elections. insurance,” says Bruno Palier of Sci-
Since the 1990s the received wisdom in ences-Po, a French political science school.
Europe has been that the post-war welfare Macron turns Nordic “Flexicurityisveryfarfrom French views.”
state was past its peak. But voters often Flexicurity’s critics have some strong
want it to be more generous, not less. In ing permanent staff. The response was a arguments. Some economists challenge
polls in 2014 and 2016, citizens in three- wave of cutbacks, from Margaret Thatch- how much active labour-market policies
quarters of the EU’s members named “so- er’s deregulation in Britain to Sweden, have contributed to Germany’s recovery.
cial equality and solidarity” as their priori- where social spending fell from a peak of The Hartz reforms accounted for only
ties for society. Western Europeans un- 34% in 1993 to 27% bythe end ofthe decade. about 1.5 percentage points of the four-
nerved by the global financial crisis want But by the late 1990s a new approach point drop in Germany’s unemployment
protection against an uncertain future. developed, spearheaded by Denmark and rate from 2005 to 2009, one study found; a
Eastern Europeanswith skimpypublicser- the Netherlands. Their “flexicurity” model bigger factor was rising global demand for
vices want the kind of security that their sought to combine social protection, pro- German products, especially in China.
western neighbours seem to have. Where vided by the state, with more freedom for Another threat to welfare-state reforms
centristpartieshave stopped championing employersto hire, fire and adjustcontracts. is immigration. In Germany, France, Swe-
the welfare state, populist parties are pick- The state also expanded “active labour- den, Britain and the Netherlands the share
ing up the slack—and the votes. A poll in market policies”, such as training and job of foreign-born residents now ranges be-
January put PiS’s support at 44%. Its closest matching, subsidised daycare to help tween 11% and 17%, comparable to those in
rivals, Civic Platform and the Modern women work full-time, and required the traditional immigrant countries like Amer-
party, were at15% and 6%. unemployed to seekwork. ica. Countries with greater ethnic diversity
Scandinavian countries, which were are usually believed to have stingier wel-
No farewell to welfare used to providing social benefits directly fare states. Since the migration crisis of
Backin the 1980s, when unemployment in through the government, moved quickly 2015, ethnic resentment against Muslims
some European countries rose to double- to implement flexicurity. However, Ger- has become a leitmotif in debates about
digit levels, lavish welfare states were seen many and France, which relied more on welfare-state policies. In Sweden, the
as one of the culprits. Generous unem- protectingworkers’ jobs, found itharder. In Netherlands and Germany populist par-
ployment benefits and sick leave discour- Germany unemployment stayed high un- ties engage in “welfare chauvinism”, rail-
aged people from working, while public til Gerhard Schröder’s Social Democratic ing against refugees for collecting benefits
spending crowded out private investment. government pushed through the Hartz re- at higherrates than natives.
Laws inhibiting employers from laying off forms, beginning in 2003. These cut early Yet such resentments do not seem to
workers also discouraged them from hir- pensions and unemployment benefits, have affected European support for the
created lower-paid job categories (“mini- welfare state. Indeed, France’s National
jobs”), and required the unemployed to Front, Germany’s AfD, Poland’s PiS and
Boosting babies 2 take part in job-search programmes. But in the like are all staunch supporters of social
Monthly child benefit, January 2018, $ at PPP* France fitful stabs at liberalisation that be- benefits. They use welfare-chauvinist ar-
1 child 2 children 3 children gan in the mid-1990s were defeated or wa- guments to attack immigration, not the
tered down by the left. The country kept a welfare state. In a recent study of 85,000
0 150 300 450 600 750
dual labourmarket, in which insiders have people in regions around Europe, Bo Roth-
Germany
permanent contracts and full benefits and stein and Nicholas Charron, political sci-
are hard to sack, and outsiders on tempo- entists at Gothenburg University, found
Britain
rary contracts have nothing. Southern that ethnic diversity did not undermine
European countries like Spain, Portugal, It- support for benefits; poor governance did.
Sweden
aly and Greece have suffered from similar- In countries where citizens trusted their
nil
Poland † ly rigid labourmarkets. government, the presence of immigrants
In December 2007 the European Com- made no difference—perhaps because citi-
nil
France mission adopted flexicurity as a guiding zens had faith that the system would block
principle of its economic recommenda- them from free-riding.
*Purchasing-power parity at 2016 rate
Sources: † Payments start with first child tions. The nextyearthe global financial cri- Since the start of his presidential cam-
National governments; if family is indigent/ sis struck, followed in 2010 by the euro cri- paign in 2016, Mr Macron has insisted that
OECD; The Economist a child is disabled
sis. Countries that had adopted flexicurity he will balance his drive for economic effi- 1