In Europe

Europe is the region from which formal social security systems initially emerged, as a consequence of the industrial revolution in the 19th century, and spread throughout the world. Today, EU15 (EU25) on average spends around 25 per cent of its GDP on social protection (2003).

From a social security perspective European developments are most interesting under different aspects: First, Europe's social security legislation and institutions cover a maximum range of social functions, ranging from health over pensions to unemployment and social assistance. At the same time far from any uniform solutions, Europe has developed a wide variety of concrete approaches towards social protection financing as well as benefit and services delivery. While maintaining core social values the European social model has been permanently, revolvingly and carefully, adjusting to changing economic and demographic conditions. As a consequence of population ageing a number of European countries recently introduced new systems designed to cover the social needs of frail persons, especially of very old persons needing intense or permanent care.

At the same time, since about the mid-1990s Europe has been undertaking a major overhaul of its social protection systems. On the one hand, the systems have to be prepared for the foreseeable fiscal and financial effects of Europe's demographic changes. On the other, increased international competition and recurrent technological changes force Europe to adapt its economic fabric to new circumstances. Within this process social protection is more and more understood as a productive factor: in order to assume this role, health sectors are being made more effective and efficient, pension systems increasingly introduce elements of funding and individual provisions, retirement ages are being increased and unemployment and social assistance systems are being directed towards activating people.

Thus, the Europe of today and of the future, in some important respects may reflect the future of the more dynamic regions of the world, which have been since numerous years in a process of fast economic advance, but which are also ageing quickly. Learning from Europe's experience in order to be able to adapt the future Social Protection Systems in other regions of the world is one of the aspects defining the Social Security Department's sustained interest in the region.

At the same time, Europe manages the complicated process of integrating, countries which in 2004 joined the European Union, into a common set of rules and practices, and into trade and labour market relations. Here, the main problem is the (still) wide income differentials between the ten states which have accessed the EU and the earlier EU of fifteen, which will take around the time span of one generation to overcome. During this transition period income differentials will generate permanent East-West-migration within the EU. While Western Europe will take advantage from these movements, Eastern Europe's economies and, consequently, the financing of its social security systems will be under strain. Demographic ageing, in these countries, will be topped by a relative drying out of their labour markets.

Due to overall ageing, (geographical) Europe, in total, is about to lose between about 70 and 90 million persons of its labour force during the next four to five decades – under the assumption of unchanged ("reluctant") immigration policies. As this loss cannot be counterbalanced by increased labour market participation Europe will inevitably have to develop an explicit immigration policy. Accordingly, the social protection systems of Europe will have to be adapted in order to support immigration.