Four - Towards social investment? Patterns of public policy in the OECD world

Summary

Introduction

The debate on social investment and activation policies implies a new perspective on the relationship between different social policy areas. From this perspective, economic and social change together with the fiscal constraints they produce necessitate the redrawing of boundaries between ‘active’ and ‘passive’ social policies. It is assumed that the ‘passive’ welfare state is being steadily restructured into an ‘activating’ welfare state guided by a social investment perspective (see Chapters Two and Three). The social investment approach has been formulated in terms of redeploying public spending from passive social transfers to investments in education and training, labour market activation measures, promotion of lifelong learning and other measures to reconcile work and family (Giddens, 1998; Esping-Andersen et al., 2002; Palier, 2006).

The questions addressed in this chapter are to what extent the social investment ‘turn’ actually finds expression in the social expenditure profile of welfare states? Which countries are social-investment oriented today and which are not? Furthermore, do we see some convergence towards a social investment approach? To answer our questions we start by discussing how we can identify social investment policies and their relative importance in various countries. We then trace the development of public social expenditure in 21 of the 34 OECD member states from 1980 to 2007. We focus on disaggregated programme expenditures and compare public expenditures for investment measures and compensation expenditures on the basis of the OECD Social Expenditure Database and the Education Spending Database as a way to compare the diversity in spending priorities among countries. We also ask to what extent we can observe a convergence of welfare policy when comparing the situation of the 1980s with the situation in 2007. The focus is more on outcomes and less on the processes and causes underlying the results. The analysis takes into account expenditures for families, active labour market policies, education systems, old age and passive labour market policies. The reason for starting with the 1980s is not only influenced by data availability, but also by the fact that the 1980s is the period immediately preceding the rise of the social investment perspective in the 1990s (see Chapter Two).