Social security policy
Social security policy is a major, convoluted issue in all societies. Millions of people are heavily reliant on social security as a means of support to achieve a basic standard of living. There is thought to be three main welfare regimes, in western society.
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These regimes are corporate-conservative, socio-economic and liberal. This essay aims to give a brief description of these regimes in action, in relation to the USA, France and Sweden, respectively. Then, go on to compare the regimes, in relation to social security. It will take in to account unemployment, pensions and family policy.
Social security is basically the procedure of benefits and transfers in the form of financial assistance as income maintenance which is funded by taxation and/or insurance contributions. (Baldock et al, 1999) There have been three principle types of welfare regime. These are corporatist-conservative, socio-democratic and liberal. The corporate-conservative regime is usually based on individual’s contributions, therefore very work-orientated. The socio-democratic regime is usually based on universal values. The liberal regime is usually residualist.
This means that the welfare is seen more as a bag-up, only to provide for those who would not manage at all without it. (Esping-Anderson, 1990) France is an example of the corporatist-conservative regime in action. Social security is hinged on solidarity. In this context, it means mutual responsibility, shared risks and common action. It was first brought in to place by the introduction of a regime general for social and health security. This was then expanded. In the 1970’s additional measures were introduced to include all ‘excluded’ people.
The most significant measure was introduced in 1988. This was called the Revenu Minimum d’Insertion. It amalgamated a rudimentary benefit with a personal contract for social inclusion. The French regime is somewhat expensive. The control of expenditure has become the focus of social policy. Pensions play a very prominent part as they are very costly. (www2. rgu. ac. uk/public policy/introduction/wstate. htm) The French regime basically advocates the rights are in accordance status and class. Support comes mostly through private insurance, which is supported by the state.
It aims to fortify civil society while limiting the market. (Esping-Anderson, 1990) Sweden is an example of the socio-democratic regime in action. This Swedish model is often judged as the exemplary form of welfare state. One of the integral components is the sense of organised co-operation. (www2. rgu. ac. uk/public policy/introduction/wstate. htm) The socio-democratic regime advocates equality and universalism of high standards. This is through the state. The state is the main way of support; there are high levels of benefits.
It aims to amalgamate welfare and work and promote full employment. (Esping-Anderson, 1990) The United States of America is an example of the liberal regime in action. The liberal regime advocates residualism, laissez-faire, individualism and a severe stand on poverty. These are all dominant subjects in USA debates on welfare, yet the USA does not have a unified welfare system. The predominant measures of federal provision came in the 1930’s from the Roosevelt administration. (www2. rgu. ac. uk/public policy/introduction/wstate. htm) it was called ‘the new deal’.
It was instigated to be a safe-guard against market failures, which was desperately needed after the mass unemployment of the depression years. The main principle behind it was that the state should provide more than just support; it should actually protect the individual. (Miller, 2003) The liberal regime basically has a strong work ethic. Support comes through means-tested assistance. It aims to strengthen the market. (Esping-Anderson, 1990) Unemployment is a very contentious issue. The three countries all have differing ways of dealing with it. France has a twofold system of providing unemployment benefits.
One of them is an unemployment insurance scheme. This scheme is when individuals are part of a national collective agreement, which is mediated by the state. This system is financed by contributions. The unemployed are allowed to receive benefits if they are a member of this scheme and it was not their own fault that they lost their job. The provision and duration of these benefits also depends on how long the individual has been part of the scheme. Its payment has two forms. These are either the basic benefits or post-entitlement benefit. (www. eurofound. ie/under. tm) The other system of unemployment benefit is a guarantee supplementary scheme. It is funded by the state and was set up in 1984. its aim is to provide unemployment benefits for widowed or divorced women, young people and other disadvantaged groups, who have not been in the job-market long enough to make substantial contribution. It also helps those who have had been in unemployment for a very long time and are no longer eligible for the insurance scheme.
Its payment comes in two forms, either a work programme allowance or a guaranteed supplementary benefit. (www. urofound. ie/under. htm) This rigid system is in stark comparison to Sweden. Their unemployment insurance benefit (UIB) has been thought to be one of the most generous in the world. It is controlled by the trade unions, finance by the state and administered by 40 voluntary societies. The level of contribution varies as it depends on the likelihood of unemployment. UIB encompasses about 3/4 of unemployed people, the rest rely on social assistance. In the 1990’s UIB came under intense pressure because of an increase in unemployment and concern to limit social expenditure.
This resulted in that by the late 1990’s there was a decreased eligibility and the proportion of previous income received was slashed from 90% to 80%. There is now a far greater pressure on unemployed individuals to join in AMS schemes (Government training schemes) to indicate their availability to work. Involvement in AMS schemes permits the re-establishment of eligibility to UIB. This can be seen as a huge incentive! There is a three year benefit duration limit. Despite this limit, it is still safe to say that it is more generous and less disciplined than that of France. (Cochrane et al, 2001)
In comparison to France and Sweden, welfare for unemployment is very complicated. The administration of social assistance is controlled by state or local government agencies, on a decentralised basis, even though funding does come from federal Government. However, USA welfare on employment is mainly through unemployment insurance (UI). Unemployment insurance varies significantly depending on state and local government. However, there are some principles which are relevant to most states. (www. tiss. zdu. uni) Unemployment insurance is not aimed at being long term support for the unemployed.
It is designed to be a bridge till they obtain a new job. Unemployment insurance operates under very strict condition for limited periods of time. The number of covered people is relatively low. This is due to the fact that a lot of people are not eligible foe unemployment insurance. (www. law. cornell. edu/topics) Unemployment insurance is not available to the self-employed, domestic servants, farm workers, Government employees and those who have only been briefly employed. (www. buzzle. com) To actually receive unemployment benefits from the state is incredibly complex.
The actual law on benefits and who is eligible to welfare schemes is very convoluted. In extreme cases, where vulnerable individuals do not even meet the criteria for schemes of federal support or assistance, may be entitled to state and local or purely state relief. This is called general assistance. (www. law. cornell. edu/topics) It has been found that the population age profile of western societies is changing. We are now living in an increasingly ageing population. The age structure of the population comes from past birth rates, increasing mortality rates, increased longevity and migration trends.
This inevitably means an increase in the amount of people who will be eligible for a pension. (Baldock et al, 1999) Therefore, welfare regimes have to account for it. France has a pay-as-you-go system. (www. news. bbc. co. uk) The pay-as-you-go system is basically that the pensions that are being paid out today are being funded by taxing the employed of today. This is in stark contrast to private pension scheme (those favoured in the USA) as these are based on paying pensions out of the contributions an individual made during their entire working life. (Baldock et al, 1999) It is believed that this is going to be unsustainable.
This is due to the increasing longevity and the declining birth rates. This means that in the future there will be far fewer workers to pay for the multiplying amount of pensioners. (www. news. bbc. co. uk) This is now worrying the French Government. They are now beginning to take steps to remedy the situation. One example of this can be seen by looking at a bill approved by the French Government, in May of last year. They approved a bill that meant that the amount of time that all Government employees must work in order to get a full pension increases from 37 years and 6 months to 41 years and 9 months. www. telegraph. co. uk) In comparison to Sweden, the French system leaves a lot to be desired. In Sweden, there are two mandatory statutory pension schemes. These are a basic flat-rate payment and a contributory earnings-related scheme (ATP). Both schemes are funded on a pay-as-you-go system. They are paid out of contributions from the current workforce. Every citizen and long-term resident are entitles to the basic flat-rate pension. To get the ATP pension, they have to have a thirty year history of contribution.
However, there is a supplement that can be obtained with the basic pension if an individual has no ATP or a very low level of ATP. For most of the people in Sweden, the two statutory pension schemes, replace or provide around 65% of pre-retirement gross salary. However, these pensions are liable for taxation. Also, 90% of employees in Sweden top-up the statutory schemes by covering themselves with extra occupational pension schemes. These cover various groups of employees and provide up to an extra 10% on replacement income.
The extra occupational pension schemes encompass four main schemes and they work on a collective agreement. They cover people employed by local and central government as well as blue-collar workers and white-collar workers. In Sweden, in 1992, only 6. 3% of elderly households were defined as being poor after taxes, this is in stark comparison to the USA as in 1996; just over 20% of elderly households were poor. These are phenomenally different statistics. (Cochrane et al, 2001) There are two public pension schemes in the USA. They are the public flat-rate pension and the public earning related pension.
The public pension scheme encompasses both the means-tested, basic-rate pension (Supplementary security income, or SSI) and the earnings related pension (Old-age, survivor and disability insurance, or OASDI). The flat-rate basic pension is financed by general federal Government revenues. However, some states give an additional small state-government supplement. All SSI pensions are subject to income and asset testing. The earnings related pensions (OASDI) are financed through contributions. It is broken down as follows: employee provides 6. 2% of earnings and the employers provide 6. 2% of payroll whereas the self-employed provide 24. % of earnings.
The minimum eligibility requirement for OASDI pensions is ten years of contributions. This is also a pay-as-you-go system. However, occupational, private pension schemes are highly recommended. (www. reformmonitor. org) Family policy plays a very significant part in social security. In France, family allowance is assigned to all families with at least two children, under the age of 18, regardless of income. However, there are numerous supplementary means-tested benefits available. There is the family supplement, which is for families with three children, over the age of three.
There is also the single parent allowance, adoption allowance, the parental education allowance, the special education allowance for children with disabilities and also the annual school allowance for children between the ages of 6 and 18. There is also the housing allowance; this is calculated by the expense of rent and the families’ situation. Additionally, there are also birth payments, maternity benefits and parental leave benefits. These include a means-tested young child allowance; it is available from the fourth month of gestation until the child is three years old.
Also, included is a maternity benefit that increases by the amount of children plus if the mother is insured there are even more benefits. There are also paternity leave benefits, where the mother or the father can be on leave up until the child’s 3rd birthday. Since 1998, there have been means-tested allowances to decrease the cost of childcare for children under 3 years old. The childcare can be in the home (child minder) or at a registered facility. There are also allowances in childcare for 3 to 6 year olds. (www. reformmonitor. org)
Like France, Sweden has a universal child allowance. This is for children under the age of 16 years. This goes up to 20 years, if they are in full-time education. Families, with more that 3 children are entitled to a large family supplement. There is also a family allowance for handicapped children who attend a public school. They also, like France, have a housing benefit. This benefit is also dependant on the expense of rent and the size of family. There are also birth payments, maternity benefits and parental leave benefits but the do not seem as good as France is.
There is a paid parental leave for 450 days, which is divided up between the parents. Also, the mother gets special allowances because of reduced work ability. In Sweden, they can also claim a sick child benefit. This is available for a maximum of 60 days, per year, per sick child under the age of 12 years. There is a positive infrastructure of support services to help working parents meet their childcare obligations. It also includes the support of single parents. Since July 2001, childcare expenses were lowered for families with children in subsidised childcare facilities.
With this reform came a guaranteed 3 hours a day for childcare for unemployed people. This was so that they could actively seek employment. (www. reformmonitor. org) The USA is completely different from France and Sweden. In the USA, under the temporary assistance for needy families programme (TANF), benefit payments differ widely across states. The TANF programme is to support poor families with low incomes and dependant children. It is often reduced or even stopped after a family has received benefits regularly for 6 to 24 months. This is supposed to help reduce dependence on the state.
The main family assistance, which is practically available in most states, is provided through federal income tax. Families with 1 or more children are provided with an ample amount off of income tax and people who earn a very low wage plus have children are given refundable income tax benefits. Unlike both France and Sweden, there are very few employees, who are given paid parental leave, when a child is born or is sick. However, since 1995, unpaid leave for both child birth and child illness has been mandatory. There are 5 states, which do provide income replacements, subject to certain conditions, for up to 52 weeks.
Federal employees do benefit from 24 hours of paid leave a year, for child related activities. Some employers, in the USA, do offer subsidised childcare facilities for their staff. However, the majority of employers do not. Federal childcare funding was provided so that states could be flexible in designing inclusive, integrated childcare facilitates, to make it easier for unemployed or single parents to get back to work. (www. reformmonitor. org) To conclude, there are some major differences between each of the welfare regimes. The biggest differences come from looking at unemployment differences and family policy.
The USA is probably the most diverse plus the have all had very different consequences. However, there are similarities between some of the aspects. This comes from pensions. All regimes are based on the pay-as-you-go regime, to a certain extent. However, they all have differing success. All in all, it would be hard to say for definite that any one of them would be superior but Sweden would be a definite contender. However, it is safe to say that welfare regimes in the future could benefit from utilising the most successful parts for the present regimes and learning for the unsuccessful parts.