Characteristics of the Modern Mediterranean Welfare States - Essay Example

Section/# Characteristics of the Modern Mediterranean Welfare s: An Analysis and Review The welfare has traditionally been defined as a system or concept of governance in which the state or government plays a central role in the development and/or promotion of the social well-being and economic life of its shareholders. Accordingly, such a model seeks to maximize what many scholars have termed an equality of opportunity. Oftentimes detractors of such a model will term this same opportunity of equality as a form of forced wealth redistribution by the central government. However, regardless of how the definition is framed, such forms of governance seek to play a central and abiding role in both economic and social organization of the economy. Such a model of governance has been applied in varying degrees and forms throughout the world; however, the largest concentration of these has been noted within the continent of Europe. As a function of the horrors of the Second World War and a long history of social activism, many nations within the European model is the most developed form of the welfare state in existence in the world today. Although it may be simple and concise to simply lump all of these welfare states in together as a means of better understanding their core components and the ways in which they interact within the lives of their citizens, such an approach would necessarily miss many of the nuances that different cultures that and economic realities have with respect to the way the welfare state itself is exhibited. As a function of this, the following brief analysis will seek to consider the ways in which the so-called “Mediterranean Welfare states” differ from those that are in place throughout much of the rest of Europe and indeed throughout the rest of the world. In this way, it is the hope of this author that such a level of analysis will help the reader to come to a better understanding of the social and economic externalities that define the way that these respective governments interact with their shareholders (Bover, 2011). Moreover, as a function of this level of critique and review, the author will also seek to provide a level of critique with regards to the challenges that such systems face as a function of the policies and actions that define them. Accordingly, such a report will include a high degree of economic analysis and consideration as a means of trying to understand the ways in which the central governments of these nations seek to divide and redistribute wealth while at the same time balancing job creation, FDI, and labour demands that define the very essence of the welfare state. Like all models of the welfare state, the Mediterranean model places a degree of focus upon the reduction in poverty of the general populace. However, unlike the other models that are extant within the world, the Mediterranean model does this via a different means. Whereas the Nordic and Anglo models seek to engage the populace with a high degree of programs aimed at reducing poverty directly, the Mediterranean model chooses instead to rely upon a strictly regulated and stratified labour codification to ensure that jobs are both readily available and the rights of the employee are secured (Schmidt & Hersh, 2006). This is done so that rather than focusing a three pronged approach to social welfare (reduction of poverty, protection of labour markets, and rewards for labour participation), the Mediterranean model can instead choose to focus the scant resources available to it upon the second and third approach; i.e. protection against labour market risks and rewards for participation within the labour markets. In this way, the Mediterranean systems of the welfare states chose to focus their available resources on job security, generous pension plans, and otherwise rewarding the labour process as a means of allowing jobs to provide the impetus towards a better social system of governance. This of course does not mean that the Mediterranean model of the welfare state does not place any level of emphasis on the reduction in poverty; rather it is merely much more The aim and focus of the Mediterranean model on protecting the labour market risks falls victim, like any government intervention into economics, to the swings of the market. Moreover, as a function of the fact that the prolonged economic malaise of the global system has made each and every nation competitive for foreign direct investment, the level and extent to which the Mediterranean models can continue to provide such a protection for its workers while the same time generating new revenues to feed the system comes into question (Arts & Gelissen, 2001). This brings the analysis to the fundamental issue that these economic systems of governance must engage with; i.e. how to remain competitive in a world where the cheapest labor costs, lowest levels of governmental restrictions, and highest level of opportunity within the given system are necessarily the winners. One can therefore conclude that with respect to seeking to achieve a higher degree of foreign direct investment (FDI), into these economies, the governments of the Mediterranean welfare state have their work ahead of them (Gal, 2010). Such a model encourages a high level of participation by trade unions as a way to ensure that the needs of the workers are fulfilled in each and every situation; all the while seeking to add an additional layer of protection into the governmental structure. However, as any business analyst will be quick to point out, the existence of a strong and active central government within the economics and labour relations discourages would-be FDI from choosing to make a given economic system its base of operations or home to new and expanding projects. Moreover, the existence of a strong and loosely regulated organization of trade unions is yet another discouragement for FDI (Hoekstra, 2005). What this means is that many of the economies of the welfare states of the Mediterranean have figuratively bound themselves to a level of economic non-competition by virtue of their desire to protect their economies and workers from the oftentimes predatory nature of the global system. Although worthy of praise for the care that they have shown with relation to their citizens and the means whereby they seek to develop their own lives, such an approach reduces the level to which these economic and governmental systems can continue to stay relevant and compete within the current structure. Another factor that few analysts have chosen to discuss is the way in which demographics severely affects the ways in which such a system is able to further itself. The standard model of demographic maintenance demands that each and every woman must have 2.1 children in order to maintain population sustainment. However, as with most other European nations, the demographic decline of the nations of Mediterranean Europe are suffering from a slow but steady decline in birth rates and population growth. This may seem as an ancillary issue; however the fact of the matter is that such a decline in population growth and demographic sustainment necessarily strikes at the very core of the ability of the governments to maintain the level of social involvement. Moreover, this affects the ability of the workforce to sustain itself let alone grow to meet the needs and development that the global economy offers (Calzada et al, 2013). Without a healthy growth in the demographics of these nations, it is hard to imagine that they will be able to sustain the desired growth and development of the populations they hold. The secondary approach that the welfare states of the Mediterranean seek to employ is rewarding labour participation. As has been stated within the previous segment, the level to which the governmental, and by extension, economic sector seeks to develop itself based upon rewarding the labour participation is also greatly weakened by the economic malaise that has affected almost all of Europe and the world. The reward for participation in the labour markets are various and can include, but are not limited to, liberal amounts of vacation time stipulated by law, a high minimum wage structure, guarantee and assurance of work for those that attend university and other forms of higher education, and an early retirement age and liberal pension structure. Each and every one of these mechanisms is useful towards integrating the entire society into the work force; however, it is not without a very high economic cost of both monetary value and loss of efficiency that it necessarily requires. Due to the fact that the pension structure is designed and engineered to allow individuals to retire in late middle age, it places a sudden and direct burden upon the remainder of the economy in that it requires something of a pyramid of working individuals to continue to pay for these pensions in the form of tax revenues. Such is only sustainable when and if the nation’s population is not in decline and necessarily growing; thereby providing more and more workers each and every year to support the pensioners that are drawing their benefits from prior work. Another issue associated with the implementation of all of these forms of the welfare state is the complete inability of the governing institution to seek to change these determinants without a backlash of public censure and possibly widespread civil unrest. As was noted in the Greek riots of the past several years, attempts at austerity have been met by violent clashes within the streets. Although it is not the express purpose of this paper to consider whether or not the claimants to these social privileges were in the right or the wrong, it is worth noting that once such privileges have been espoused by the central governments, it is nearly impossible to change them without engaging the ire and unrest of the masses (Guano, 2010). Once instituted, these social welfare states have bound themselves into something of a self-perpetuating and immutable provision of the privileges which they initially promised; regardless of the existence of the economic wherewithal of the system and/or shareholders to perpetuate it. Similarly, the structure of the wage system, defined by the respective governments as necessarily higher than market forces would otherwise dictate causes this particular incentive for labour integration to be somewhat lessened due to the fact that it makes the wages prohibitively high for many would-be foreign investors. As a function of this, many forms of FDI pass by the Mediterranean welfare states; choosing instead to invest in economies that have less stringent controls upon the minimum wage structures and costs that the firm/entity/or organization must engage upon. This in conjunction with the declining demographics which have already been discussed places an undue burden upon the ability of these governments to continue to support such a system (Gelissen, 2000). As has been noted within this brief analysis, the Mediterranean system of the welfare state differs in many ways from the way in which the welfare state is traditionally understood in other regions throughout Europe and indeed the rest of the world. However, even though it differs, it nonetheless has a great many positive and negative effects that have herein been discussed and briefly analyzed. Rather than concluding by stating that the system which has been described has a certain amount of time prior to its complete collapse or by estimating that the all but guaranteed improvement in the global economic situation will provide the needed shot of encouragement to perpetuate this form of governance well into the future, this author instead will note that the greatest benefit that this system of governance offers is its ability to seek to lessen, abate, and ameliorate the harsh economic realities that have been exhibited elsewhere throughout the world; both recently and in otherwise good economic times. However, all of this is done at the expense of economic competitiveness. Accordingly, this lack of competitiveness makes it extraordinarily hard for such a system to perpetuate itself; especially at a time in which a demographic shift is threatening to rob the very life blood of the system. 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