Social Rights in the Welfare State

Origins and Transformations

Toomas Kotkas, Kenneth Veitch, Toomas Kotkas, Kenneth Veitch

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315524313
• Edition: 1
• Topic: Diritto
• Subtopic: Teoria e pratica del diritto

At a time when the future of the welfare state is the object of heated debate in many European countries, this edited collection explores the relationship between this institution and social rights. Structured around the themes of the politics of social rights, questions of equality and social exclusion/inclusion, and the increasing impact of market imperatives on social policy, the book explores the effect of transformations in the welfare state upon social rights and their underlying rationalities and logics. Written by a group of international scholars, many of the essays discuss a number of urgent and topical issues within social policy, including: the social rights of asylum seekers; the increasing marketization and consumerization of public welfare services; the care of the elderly; and the obligation to work as a condition of access to welfare benefits. International in its scope, and interdisciplinary in its approach, this collection of essays will appeal to scholars and students working in the fields of law and socio-legal studies, sociology, social policy, and politics. It will also be of interest to policy makers and all those engaged in the debate over the future of the welfare state and social rights.

Part I

The politics of social rights

Chapter 1

The short and insignificant history of social rights discourse in the Nordic welfare states

Toomas Kotkas

Introduction

The history of Western welfare states goes hand in hand with the history of social rights. Aspirations and policies to secure the social welfare of the people were not, of course, unknown to the liberal states of the early 20th century or even to the absolutist states of previous centuries but it was the legal institutionalization of social rights as distributive rights that gave birth to the modern welfare state (Preuss 1986). Welfare states emerged as a result of recognizing citizens’ rights to social security and health in national legislation. This took place in Europe after World War II– although at a different pace in different countries. According to T. H. Marshall’s (1964, pp71–83) renowned analysis, the recognition of social rights also gave birth to a whole new dimension of citizenship– that is, social citizenship.

Gøsta Esping-Andersen took Marshall’s observation as one of the starting points of his seminal work, The Three Worlds of Welfare Capitalism. Social citizenship was indeed a result of the recognition of people’s social rights. However, Esping-Andersen elaborated Marshall’s analysis further. According to Esping-Andersen (1990, pp21–9) the scope and level of social rights, and thus also the nature and extent of social citizenship, varied in different welfare regimes. Citizens were least dependent on the market in the Nordic social democratic welfare regime where social entitlements were universal and their level high. The de-commodifying effect has traditionally been strongest in the Nordic welfare states.

The construction of welfare states with universal social security schemes was “completed” in the Nordic countries by the 1980s. Entitlements to a variety of rather generous income security benefits as well as to social care and healthcare services– that is, extensive social rights– became recognized in social security legislation in Sweden, Denmark, Finland and Norway. One would assume, especially with reference to Marshall’s and Esping-Andersen’s renowned narratives about the recognition of social rights and the emergence of welfare states in post-war Europe, that these reforms and hence the creation of Nordic welfare states would have been legitimized by an explicit social rights discourse. But was this really the case? This question has not been posed before.

The aim of this chapter is, indeed, to explore the history of social rights discourse in the Nordic welfare states, chiefly Finland and Sweden. By the notion of “social rights discourse” I simply refer to the occurrence and usage of the term “social right” (Finnish: sosiaalinen oikeus, Swedish: social rättighet) in official law drafting documents. Two questions will be asked. First, when did explicit discourse on social rights emerge in Finland and Sweden? Second, what, if any, have been the practical consequences of the emergence of an explicit social rights discourse connected to the strengthening of human and constitutional rights discourse in general? The second question relates to the longstanding discussion on the relationship between welfare state regulation and juridification (see e.g. Teubner 1987). The term “juridification” is, of course, equivocal. It has been used to depict a number of interrelated phenomena such as the increased importance of constitutional rights, growing judicial power, more autonomous judicial institutions, more detailed legal regulation, the expansion of legal regulation in new social spheres, and so on (Sinding Aasen et al 2014, p2). I am particularly interested in the question of the relationship between constitutionalization and the emergence of social rights discourse in Sweden and Finland.

The central claim made in this chapter is that the creation of modern social security schemes and social welfare and healthcare services systems, i.e., the emergence of modern welfare states, took place almost without any explicit discourse on social rights in the Nordic countries. Instead of individual social rights, the creation of modern social security schemes was legitimized by the need to secure the material well-being of all segments of the population equally. This task was entrusted to the state (i.e. to society, in Nordic parlance). The claim is based on analysis of the travaux préparatoires of key social security legislation in Sweden and Finland from the 1940s to the 1980s (section 2). Then, the emergence of explicit social rights discourse will be dated (section 3). Next to be scrutinized will be the consequences of the emergence of an explicit social rights discourse, the relationship between social rights discourse and possible constitutionalisation in particular (section 4). It will further be claimed that the emergence of social rights discourse has thus far had practically no impact on adjudication. Lastly, conclusions will be drawn.

The creation of modern social security schemes in Sweden and Finland: the absence of social rights discourse

The construction of modern Nordic welfare states took place in the period between the 1940s and the 1980s, when various social security schemes based on universalism were created. This happened at a slightly different pace in different Nordic countries. For instance, a flat-rate tax-financed national old-age pension scheme with universal coverage was established in Sweden as long ago as 1946. Denmark, Finland and Norway followed the Swedish example in the mid-1950s. A mandatory earnings-related old-age pension scheme was set up in Sweden in 1959, Finland in 1961 and Norway in 1966. In regard to sickness insurance schemes, a mandatory scheme with universal coverage was introduced in Sweden in 1955. The same happened in Norway the following year and in Finland in 1963. However, Denmark was a pioneer in having made membership in a sickness fund obligatory as early as 1933; the public authorities took over the activities of the funds in 1971. In regard to unemployment insurance schemes, Sweden, Denmark and Finland still have the so-called “Ghent system”– that is, the system is based on voluntary membership in trade union-run insurance funds that are state subsidized. Norway operates a state-run unemployment scheme (Kangas and Palme 2005). Finland, Sweden and Denmark also operate a state-funded minimum unemployment benefit system for those who are not members in unemployment funds. For instance, in Finland this was created in 1960.

One characteristic that has distinguished Nordic welfare states from the many Continental welfare states has been the significance of social welfare and healthcare services made available to citizens free of charge or for a small user charge. For instance, in Finland a municipal healthcare system with health centres was established in the 1970s. The first modern social welfare act that granted universal social services was passed in 1982. With the act, the old poor law tradition was finally abolished. In Sweden, modernization of the social services system was carried through a few years earlier with the enactment of the 1980 Social Services Act.

In this section, the travaux préparatoires for some of the key Swedish and Finnish post-war social security legislation will be analysed in order to show that they almost entirely lack explicit discourse on abstract individual social rights. Instead, three interrelated themes emerge from these documents. These are:

1 collective social justice;

2 responsibility of the state/society; and

3 rights in a technical meaning.

Each theme will be addressed separately below.

Collective social justice, not individual social rights

The first old-age pension scheme to cover the whole population was created in Sweden in 1913. The scheme consisted of a fully funded contributory pension with means-tested supplements. In 1946, this contribution-based system was abolished and a new tax-financed pay-as-you-go scheme with flat-rate pensions was introduced with the passing of the new National Pension Act (1946: 431) (Kangas and Palme 2005 pp22–4). In turn, an earnings-related old-age pension scheme was introduced in Sweden from 1960 with the General Supplementary Pension Act (1959: 291). The scheme largely followed the design of the Social Democratic Party as a statutory pension that covered all wage earners and entrepreneurs, with pension funds placed under state control. The full pension target was set at 60 per cent of the pensioner’s work income. The foundation for a “Scandinavian model” in earnings-related old-age pensions was thus laid (Kangas and Palme 1996).

The aim of the Swedish pension reform of 1946 was to make the old-age pension scheme as comprehensive, equal and sufficient as possible. The idea was to make the level of pension benefits so high that their receivers would not have to resort to various forms of social assistance. With reference to the mandate of the Social Welfare Committee, its report of 1945 stated that:

In regard to other state measures in the field of social policy, on the one hand it should be investigated if the level of benefits and the prerequisites for their claim are just and fair, and on the other, how this sort of means could best be extended to cover groups that are now excluded [emphasis added].

(Sweden, Socialvårdskommitténs betänkande XI 1945, p8)

The creation of a national pension scheme in Sweden was soon followed by the establishment of the first modern sickness insurance scheme in 1947. This was realized by passing the General Sickness Insurance Act (1947:1). The sickness insurance scheme was made universal and mandatory. In contemplating various alternatives to this scheme– for instance, whether to make the system and premiums compulsory to all segments of the society or not– the Social Welfare Committee stated that:

But to differentiate different groups of society in such a way, i.e., in regard to [their] social responsibilities and rights, would hardly be desirable according to the Committee. […] It would not satisfy the demands of social justice [emphasis added].

(Sweden, Socialvårdskommitténs betänkande VII 1944, p134)

The history of old-age pension schemes in Finland corresponds to a large extent to the development of old-age pension schemes in Sweden. The first old-age pension scheme in Finland was established in the late 1930s. The 1937 National Pension Act (248/1937) created a social insurance scheme that covered the whole population, at least in principle. This scheme was still a savings-related insurance scheme and, as a consequence, it was also more vulnerable to changes in the economic situation. In fact, inflation caused by the war eroded the financial basis of the 1937 scheme. In 1956, the national pension scheme was reformed with a new National Pension Act (347/1956). The reform abolished the savings-relatedness of the national pension, which was transformed into a pay-as-you-go scheme with a flat pension. The reform has been considered a sign of the strong political status of the Agrarian Party. After all, Finnish society remained comparatively agrarian well into the 1960s.

However, the establishment of a national pension system as a universal basic pension soon led to the creation of an earnings-related old-age pension system because labour market organizations saw that the national pension did not provide sufficient pension security for workers. A mandatory earnings-related employee pension system was, indeed, established five years later, in 1961. This was a result of a political union between the social democrats and the conservatives. In contrast to the Agrarian Party, which still favoured flat-rate benefits, both supported an earnings-related pension system that would be financed by employers and run by private insurance companies where both employers’ and employees’ organizations would be represented (Kangas and Palme 2005, pp22–5).

As in Sweden, so, too, in Finland the biggest concern in the preliminary work for the pension acts seems to have been the just distribution of both pension premiums as well as pension benefits between different segments of the population. For instance, the Government Bill for the 1956 National Pension Act in Finland stated that:

Because the supplementary allowances of the pensions form a considerable and ever-growing strain on the public economy, there is a reason to carefully consider their just distribution between different groups of pensioners [emphasis added].

(Finland, Hallituksen esitys, 1955, p6)

The Pension Committee of 1960, whose task was to evaluate the need for an earnings-related old-age pension system in Finland, used the same kind of rhetoric and argumentation in its report. The committee stated that:

Although the Committee in accordance with its assignment focuses on the question of pension security of those who are privately employed, the Committee nevertheless wishes to state as its principled stand that all segments of the population have, of course, an equal right to old-age security and other social security benefits [emphasis added].

(Finland, Eläkekomitean mietintö, 1960, p7)

What characterizes these references is talk about the right of different groups of the population to social security benefits. In the documents, justice is a question of social solidarity between different groups and not a question of an individual’s right to social security and social welfare. Vahlne Westerhäll (2005, pp375–6) has argued that in comparison to social assistance schemes of previous decades, the social insurance-based schemes were not meant for the lower classes only. Instead, they were to cover the whole population and to level the socio-economic differences between different groups of citizens. This was seen to increase solidarity between groups.

The documents attest, in fact, to a claim by François Ewald in his classic study on the welfare state, L’État providence. Ewald (1986, p451) argues that the law in the modern welfare state concerns individuals not so much as isolated actors but rather as members of a group, class or profession. The law of the welfare state is social by nature (i.e., droit social). The collective nature of social security law is explained by Ewald through the fact that social security in the post-war welfare states was provided and produced through a specific technology (i.e., social insurance). In regard to social insurance and the risks (such as work-related accidents) that it is designed to deal with, it is not so much individuals and their blameworthiness that is relevant. What matters, instead, are socio-professional groups. The idea of individualized social rights is simply not relevant for social insurance as a technology. However, the Nordic welfare states took a step further and extended social insurance schemes to cover the whole population.

Social security as society’s responsibility, not an individual’s right

The modern social insurance system in Finland was completed in 1963 by establishing a statutory sickness insurance system. Instead of private sickness funds, the administration of sickness allowances was assigned to the Finnish Social Insurance Institution. The first Sickness Insurance Act (364/1963) introduced two main forms of sickness benefit:

1 reimbursement of the cost of medical treatment (examination and treatment from the private sector, prescription medicines and travel costs); and

2 sickness allowance intended to compensate for loss of earnings during a period of incapacity for work, pregnancy or birth of a child.

The scheme covered the entire population and was thus based on the principle of universality. A universal scheme had been on the political agenda of the Agrarian Party ever since the beginning of independence (Mattila 2011, pp69–84).

The need for a sickness insurance scheme was justified in the Government Bill in the following way:

In a modern society it is in the responsibility of the public authorities to ensure that each citizen’s subsistence is adequately secured. […] The social security system in Finland is in some respect satisfactory whereas some aspects, first and foremost security against sickness, is seriously lagging behind [emphasis added].

(Finland, Hallituksen esitys 1962, p1)

The Finnish unemployment insurance scheme was reformed in the 1960s, with the labour market organizations playing an important role in the creation of a new system. In 1960, a minority government run by the Agrarian Party proposed the esta...