Boeri, Τ. (2015) “Why We Need A Welfare Union In Europe“, Social Europe Journal, 23 February.
Are Europe’s welfare states fit to meet the demands brought on by the financial crisis? In an interview with EUROPP’s Managing Editor Stuart Brown, Tito Boeri discusses the need for a ‘stress test’ of the European welfare state, why citizens in southern European countries have been much more susceptible to poverty during the crisis, and the role that EU cooperation should play in providing a more effective safety net for European citizens.
You have argued that alongside bank ‘stress tests’, which aim to determine whether banks have the capacity to deal with adverse economic developments, Europe should also carry out something approximating a stress test of European welfare states. Has the importance of welfare states been overlooked in Europe’s response to the crisis?
Well in the last few years we have had several stress tests of the banking system in Europe. These tests have had the intention of assessing the vulnerability of financial institutions to negative economic developments, such as serious drops in GDP or changes in interest rates. But a similar analysis has not been carried out with reference to a key pillar of the European Union: the welfare state.
The welfare state is supposed to act as a safeguard, particularly during difficult times like those which have occurred in Europe since the crisis. It essentially has three key functions. The first function, which is perhaps its overriding purpose, is to provide relief from poverty or to prevent a rise in poverty rates. The second function is one of protecting against privately uninsurable labour market risks, such as providing unemployment benefits in case people lose their jobs. The third function is to promote labour force participation. In a period of economic crisis the first of these functions is clearly the most important.
Relevant posts:
- Rodrik, D. (2015) “From Welfare State To Innovation State, Social Europe Journal, 15 January.
- Amartya Sen (2014) “Social Choice and Social Welfare“, Project Syndicate Organisation, 26 November.
- Dollar, D., Kleineberg, T. & Kraay, A. (2014) “Growth, inequality, and social welfare: Cross-country evidence“, VoxEU Organisation, 19 November.