Academic journal article Review of Social Economy

The Italian Welfare System in the European Context

Academic journal article Review of Social Economy

The Italian Welfare System in the European Context

Article excerpt

Abstract The deep changes that have taken place over the past twenty years in the labor market, demographics, and social disparities have led European countries to reorganize their welfare systems in order to respond more effectively to these challenges. Although several of the European Union's core documents affirm social protection as a fundamental component of European society since it ensures political stability, social cohesion and economic progress, there is significant evidence that today's European countries will follow a United States approach of "minimal social protection" especially in the current climate of liberal ideologies and global market pressures. The erosion of historical commitments to social protection is aided by the fact that a significant number of European voters appear to favor tax reductions and don't seem to make the connection between low taxes and low social services and infrastructure spending.

After a brief description of the Italian welfare system, this paper discusses Italy's reforms of the 1990s and reaches the conclusion that actual and planned reforms are paving the way for a residual model of welfare and social protection. It is further argued that a constant re-examination and restructuring of the welfare system is necessary in order to improve its effectiveness in reaching defined goals while at the same time responding to changing economic conditions. However, restructuring efforts should focus on improvements in internal efficiency, rather than on a general reductions of social expenditures. In fact, it is argued that the reduction of social expenditure in itself is neither a necessary consequence of globalization and European unification nor a necessary strategy to remain competitive. It is instead a reflection of cultural leanings and political choices.

Keywords: welfare, government expenditures, social cohesion, social support, globalization

INTRODUCTION

The radical changes that have taken place over the past twenty years in the labor market, in overall demographics, and in the social conditions and disparities within and between countries have led European countries to reorganize their welfare systems in order to respond more effectively to old and new challenges. This process of reorganization was excellerated by the European Union's transition to monetary union, when compliance with the criteria of convergence spelled out in the Treaty of Maastricht (1992) subjected governments to stringent budget guidelines and constraints in public spending. So what sort of social model is emerging from this most recent move toward closer European integration?

For a long time the European Community adopted a rather hands-off stance toward social policies within EU member countries since "the European states have always shown a certain reluctance to give up their powers in the sector of social policies, even though one of the objectives of the Treaty of Rome (1957) was precisely the harmonisation of social regulations" (CEPR 1998). It was not until the 1990s that new documents and studies leading to the Treaty of Amsterdam (1997) (1) laid the foundation for a new focus on common European strategies for social policies and goals summarized as the task "to promote throughout the Community ... a high level of social protection" (cf. art. 2, Treaty of Amsterdam).

So what principles emerge from these documents and their recommendations to individual EU member countries? Firstly, social protection is regarded as a fundamental component of European societies' self-understanding and commitment. According to this self-understanding social protection assures political stability, social cohesion and economic progress (Recommendation 92/442/EEC European Commission 1995, 1997, 1999). In fact, strong social support services not only reduce poverty (European Commission 1997) (2) but constitute an investment in human resources in that they improve the quality of the workforce and thus boost its competitiveness in an increasingly demanding global market. …

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