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Social Models in the Enlarged European Union: Policy Dimensions and Country Classification

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Abstract

This paper aims to contribute to the literature on social models by exploring characteristics of social policies and their classification in the enlarged European Union. The analysis is based on a set of social policy indicators with a focus on labour markets. By means of Principal Components Analysis we identify four major dimensions of social policies to reflect the main tasks including a productivity-enhancing role. The dimensions are used as a basis for clustering countries into five different groups, that is, social models, which significantly differ from the commonly proposed regional classification of social models across Europe prior to enlargement.

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Notes

  1. The productive role of social policy is described by the EU-Commission as follows: Social policies perform economic and social functions with employment and incomes as the essential links between the two. Hence, many social policies are in the form of social investments – notably education and health – that directly impact on and input into the economic system and employment. At the same time social transfers are important, not only in reducing the incidence and costs of social exclusion, but also in facilitating adaptability and responsiveness to change, that is, in allowing an effective combination of flexibility and security at the workplace and the labour market generally. Modernising the way in which the social model delivers investments and passive support can therefore impact positively on the quality of work. (Commission of the European Communities, 2001, p. 6).

  2. The term (a portmanteau of flexibility and security), refers to the combination of labour market flexibility and security of employees.

  3. See for an elaborate overview on Flexicurity in the new EU member states Cazes and Nesporova (2007). Auer proposes the term ‘labour market security’ in order to make clear the difference to job-security and intra-firm employment security (Auer, 2007a, 2007b).

  4. In addition to the similarities in industrial relations, social protection systems and a typically European way of conceptualising and promoting social protection, a comparison of the levels of social public expenditure in relation to GDP in European and non-European countries is striking. It shows an ESM supplement for EU member states, which in relation to GDP per capita exhibit higher social expenditures (Knogler and Lankes, 2008).

  5. See footnote 4.

  6. Table A1 in Appendix A lists all our indicators with definitions and sources. We neither include Malta and Cyprus because of missing data nor Luxemburg, which plays a special role as an European finance centre.

  7. There is evidence for a stronger decline in employment ratios in countries with weaker coordination of wage bargaining (OECD, 2003, Chapter 3). Recent OECD research by Bassanini and Duval (2006) shows that highly coordinated and/or centralised wage-bargaining systems are considered to reduce unemployment.

  8. For assessing the adequacy of our original 11 indicators for subsequent PCA, two criteria were used: an inspection of the off-diagonal elements of the anti-image covariance matrix and the Kaiser-Meyer-Olkin measure of sampling adequacy (Dziuban and Shirkey, 1974). Both criteria indicate that the chosen indicators are suitable for PCA. Because of differences in the scaling of indicators we use standardised values.

  9. Only components with eigenvalues greater than one are included.

  10. See Table A2 for the results of factor extraction.

  11. For the interpretation only loadings exceeding 0.5 in absolute values have been considered.

  12. See Table A3 for mean values of indicators by cluster.

  13. Strictly speaking, social inequality is low in this group. For convenience we rather refer to high social equality.

  14. See Alber (2008) and Whelan and Maître (2008) for employment and poverty patterns in the enlarged EU.

  15. The correlation coefficients between employment and emphasis on labour market security and institutional impact respectively are 0.44 and 0.53. Calculations based on employment rate data for 2007 from Eurostat.

  16. The correlation coefficients between poverty rate and institutional impact and social inequality, respectively are −0.37 and 0.82.

  17. The correlation coefficient between expenditures on human resources and employment rates in the EU is 0.59. Calculations based on employment rate data for 2007 from Eurostat.

  18. The correlation coefficient between poverty rate and reduction of poverty rate via transfers is −0.89 in the EU. Calculations based on poverty rate data for 2007 from Eurostat.

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Acknowledgements

The authors thank Richard Frensch, Steve Wood and the anonymous referee for helpful suggestions and comments. We thank Paul Wachtel for helpful comments and excellent editing guidance. This paper was presented in April 2011 during the XII April International Academic Conference on Economic and Social Development in the National Research University – Higher School of Economics in Moscow.

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Authors and Affiliations

  1. Institute for East and Southeast European Studies Regensburg, Landshuterstr 4, Regensburg, 93047, Germany

    Michael Knogler

  2. University of Applied Sciences – Munich, Am Stadtpark 20, München, 81243, Germany

    Fidelis Lankes

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Appendix A

Appendix A

Tables A1, A2, A3

Table A1 Social policy indicators, 2007: Description and sources
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Table A2 Total variance explained
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Table A3 Mean values of social policy indicators by cluster
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Figure A1

Figure A1
figure 4

Factor scores grouped by cluster

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Knogler, M., Lankes, F. Social Models in the Enlarged European Union: Policy Dimensions and Country Classification. Comp Econ Stud 54, 149–172 (2012). https://doi.org/10.1057/ces.2012.4

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