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New Managerial Challenges in European Social Security THE EVOLUTION OF SOCIAL PROTECTION With the evolution of social protection in Europe from assistance to insurance and beyond assistance towards promoting individual development, new managerial challenges have emerged
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New Managerial Challenges in European Social Security
MANAGING SOCIAL SECURITY IN
EUROPEAN COUNTRIES SOME CONTEMPORARY CHALLENGES
by:Jean-Victor Gruat
Senior ExpertEUCSS Reform Project
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New Managerial Challenges in European Social Security
New types of challenges
- Scope of coverage (risk definition, categories of insured persons)
- Computation of Benefits(qualifying conditions, absolute and relative levels)
- Organizational structure(private vs public sector, mobility and vesting)
- Financing(fraud and adverse selection, central vs local government)
New Managerial Challenges in European Social Security
THE EVOLUTION OF SOCIAL PROTECTION
With the evolution of social protection in Europe from assistance to insurance and beyond assistance towards promoting individual development, new managerial challenges have emerged
New Managerial Challenges in European Social Security
BLURRED FRONTIER AMONG RISKS The distinction among risks is no more as clear cut as it used
to be. In fact, incapacity to make his/her own living starts becoming the overarching global risk which requires rules to ensure continuity in protection – and avoid abuse of the system.
Examples of uncertain frontiers are: the distinction between unemployment/retirement/disability; medical/maternity; occupational/non occupational accident
New Managerial Challenges in European Social Security
EXTENSION OF PERSONAL COVERAGE
Social security protection is applicable or not to all citizens (what part is social responsibility, and what is linked to employment status is as much a political as a technical decision, and may vary historically)
With extension of coverage, protection applies to higher percentages of the population, closer than ever to 100 %. There is a risk if protection awarded through a variety of schemes that individuals may enter into a number of schemes for over-coverage.
% of population with not full coverage in health care by age group, France (selected years)
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New Managerial Challenges in European Social Security
BENEFIT FORMULAESelected European countries – Main pension credit provisions
Benefits are not necessarily related to previous contribution records
(citizenship periods, equivalent periods, credit periods; matching employer’s contributions)
New Managerial Challenges in European Social Security
REDISTRIBUTIONSimilar benefits may be obtained despite very different levels
of previous contributions (result of corrective factors such as lump sum component, minimum benefit, ceiling for benefits, investment of personal assets)
A number of provisions have been introduced to alter the proportionality between contributions and cash benefits – this in order to ensure that social security actually acts as a redistributive tool (“three principles”: affordability, equity and efficiency)
Social security short term benefits, UK - replacement rate, according to decile
New Managerial Challenges in European Social Security
MULTI-LEVEL VS COMPREHENSIVE PROTECTION
Delivery may happen through different structures with different types of ownership (insurance companies) (employment agencies) (self liability)
* It is important to ensure that protection provided under different types of insurance carriers are comparable and provide the required level of protection
* Also, that if protection is to be achieved under different layers (different pillars) ascertain that those pillars affordable to all do provide overall satisfactory level of protection
% of insured persons not enjoying full coverage for health care, breakdown by income level, selected years, France
New Managerial Challenges in European Social Security
PUBLIC VS PRIVATE
For many risks, in a growing number of European countries,
there is a kind of social protection competition between public and private insurance carriers – this may apply for pensions,
health care, accident injury, unemployment, even social care.
Pensions, replacement through public, mandatory private and voluntary private, average contributor (source: OECD )
New Managerial Challenges in European Social Security
MOBILITY AND VESTING
Workers mobility has never been so high in Europe, increases with the number of member countries and discrepancies in economic and demographic patterns among members.
European social security systems agree to facilitate vesting, but avoid adverse selection (common identification methods, adopt rules about conflicting eligibilities)
New Managerial Challenges in European Social Security
TEMPTATION FOR CHEATING Under-declaration, non declaration, clandestine work, non compliance with
training requirements, accumulating disability pension and income from work are most common fraud patterns found across European countries social security schemes.
A European Code of conduct was adopted already in 1999 for improved cooperation between authorities of the Member States concerning the “combating of transnational social security benefit and contribution fraud” and “undeclared work”, and concerning “the transnational hiring-out of workers”.
It includes: - direct communication between competent bodies; - designation of national liaison offices in the Member States with a view to
facilitating cooperation, and their notification to the other Member States and to the Commission;
- forwarding of any request for cooperation to the competent body of a Member State;
- reciprocal provision of administrative assistance between the competent bodies (supply of information, transmission of documents).
New Managerial Challenges in European Social Security
FINANCIAL CONSIDERATIONS
It is common knowledge that, in social security financing, the higher the social need, the lower the resources (social need increases with economic slowdown or restructuring, population ageing, poor living conditions, etc. all elements provoking simultaneous decreases in contributory bases)
Globalisation and ageing have increased the demand on social security protection in European countries. Other financial means than contributions assessed on salaries had to be identified – notably concerning guarantee of minimum living standards, directly targeting persons with very limited contributory resources.
G eneral non contributory social security guaranteed m in im um incom e Financial arrangem ents in selected European countries (w hen provision s exist and are not fu lly covered by c entral revenue )
New Managerial Challenges in European Social Security
RELEVANCE FOR CHINA
With an active population with increased mobility – across geographical boundaries, across social categories – China’s social security is confronted with challenges comparable to those identified in Europe over the past couple of decades.
A number of these challenges have been recently recognized in the China Social Insurance Law. It is hoped that the relevant European experience here summarily described will in some aspects help in the proper implementation of the Law.
New Managerial Challenges in European Social Security
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