Time to change

Towards an active social policy agenda

Much social progress has been made in recent decades. But there are several serious problems that stubbornly remain on the agenda.

Too many children still risk being poor and too many people are excluded from work. Older people are better off in most countries than they were in the past, but many still spend their later years in isolation and dependency. Traditional social policies cannot solve these problems. Action is needed urgently before population ageing complicates reforms further.

For generations, social policy consisted of protecting people against a few, welldefined risks, such as short-term unemployment, disability during working years, and poverty in old age. It was based on simple assumptions about life experiences. The various stages in an individual’s life were clearly mapped out, such as work and study, or maternity and retirement. Families were closely knit, and gender and career roles were well defined. This simple scenario no longer holds. The life-course is more varied and people of all ages switch between jobs or combine different activities. The male breadwinner model is becoming obsolete. Careers may be interrupted not just by spells of unemployment, but by education, caring for the elderly or child rearing, and too often are ended prematurely by disability or involuntary early retirement. People separate and form new households with other partners, while children may spend more time with different parents or in childcare when very young.

Social policies need to fit these new realities. Helping people in distress is not enough. Good social policies must aim to attack the causes, by changing the economic and social conditions in which people live and work. This is what is meant when we talk of active social policies, which countries need in order to open up opportunities for a fulfilling life, rather than restricting themselves to policies which try to make poverty slightly less awful than it otherwise would be. Societies have to spend now to support those in need, but they also have to invest now, to reduce social breakdown in the future. Pursuing both objectives is not a tall order, given the vast resources already committed to meeting other economic and social challenges, such as education, healthcare and pensions. There are four areas of policy effort which form the core of today’s active social policy agenda.

The first concerns children: governments must do everything possible to ensure they get the best possible start in life. Children are not only vulnerable in their own right, but many lifelong social problems have their root causes in childhood. Hungry kids do not perform well at school, and a poor education can become a burden for life. Yet, childhood poverty is all too common in the OECD. Over 12% of children live in households with less than 50% of median household income, and this percentage has been increasing. Ending childhood poverty is clearly one priority, but that is only part of the story. High levels of child benefits can reduce child poverty but they can be counterproductive if they discourage parents from working. It is not a secret: child poverty tends to be lowest in those countries where female employment activity is high and family support systems are most developed. But for this to happen, women have to be able to work. This in turn requires adequate and affordable childcare.

The second front is to devise policies to help individuals overcome barriers to work. Mothers out of the workforce face barriers to getting a job, but they are not alone in this. All those out of work need to have access to jobs if economic and social progress is to be reconciled. Research shows that few jobless people are unwilling to work. Rather, they may be ill, or have to care for children or elderly relatives. Some may wish to work but feel discouraged by low take-home wages. They may have once held down good jobs, but after redundancy, now lack confidence, or the necessary skills to get back to work. Others may simply not know how to go about looking for work. Isolation, alienation and exclusion: all become barriers which they need help to overcome. As the OECD Jobs Strategy showed, a wide range of policies, in education, labour, tax and employment, can play a role in this.

Social policies, too, must aim to increase employment if they are to serve the best interests of the most vulnerable in society. We know much more now than we did just a few years ago about what works in getting people back into employment. Public bureaucracies need reforming and to be given incentives, so that they understand that their objective is to help people, not administer programmes. Job-readiness and training schemes are needed, and tax and benefit systems must be reformed so that work pays. If government and society gets their act together in offering effective help, it is reasonable to require those needing support to take advantage of the opportunities newly opened to them. Where countries have followed this active approach to tackling exclusion from the labour market, results have been good–sometimes spectacularly so.

Third, social policies must help reconcile work and family life. Birth rates are low in many OECD countries, with women having on average just 1.3 children. Over the course of four generations, 100 years, such a low level of fertility would reduce the population to one quarter of its current size. Even the more common fertility rates of 1.7 or 1.8 children per woman could lead to enormous social and economic costs on society.

There are two issues here. On the one hand, any parent has to feel that childcare is adequate and affordable before deciding to go out to work. On the other hand, women in many countries say that they would have more children if there were fewer obstacles in their way. In short, policies that minimise any conflict between career and family pay a double dividend in terms of higher employment and perhaps higher birth rates, which would help relieve the impending burdens of growing dependency rates.

The final dimension in the active social agenda is to reorient policies away from an excessive emphasis on pensions. That people are living longer is a fantastic achievement of modern society, but we have to make sure that the benefits are shared fairly across the generations. Financial transfers for pensions and other age-related benefits are rising with ageing societies, but they are now so high that social investments in the needs of younger generations risk being crowded out. Simply reducing the level of public pensions is difficult: people approaching retirement are owed an income, and breaking the pension promise would undermine trust in government and the implicit social contract which helps bond our societies together. And draconian cuts could result in a resurgence of old-age poverty.

Still, the pressure has to be relieved, especially as health and long-term care expenditures are projected to increase substantially over the coming decades. What can be done? Ensuring that some of the increase in lifespan is spent in work rather than retirement would boost contributions to pension systems and reduce expenditures. But raising the retirement age from the very low rates found in some countries (it is under 60 for men in six OECD countries) is not a simple reform to implement. It can be costly and slow going, as some countries have found out.

Perhaps the most telling way of illustrating the need for this active social policy agenda is to play the “what if” game. If we continue the old policies and do not adopt the active social policy agenda, then we know what will happen–a continuation of the trends from the mid-1970s onwards. Earnings will become more unequally distributed; labour market and social isolation will increase; and fertility rates will remain low, leading to declines in the working-age population, excessive payments to finance an ageing population and economic stagnation. This is not an attractive scenario.

There is no reason for it to come to pass. The evidence is there to show that active social policies can make a real difference to people’s lives. And we must not forget that in doing so, active social policies not only help the poorest and most disadvantaged in society. More, and more-productive workers mean healthier economies, and everyone gains from that. Active social policies can benefit us all.

References

Martin, John (2003), “Down to work and better jobs”, in OECD Observer No 240/241, December.

OECD (2005), Society at a Glance.

©OECD Observer No 248, March 2005




Economic data

GDP growth: +0.6% Q2 2018 year-on-year
Consumer price inflation: 2.9% Sept 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.2% Sept 2018
Last update: 13 Nov 2018

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