• The Attack on the Welfare State in the Name of the Welfare State

  • José Casimiro | 25 May 09
  • Discussion of the welfare state and the European social model has intensified in the last years. This is of vital importance, not only for European workers and citizens, but also in terms of the role Europe is to play in the world.

    After World War II, a social contract was established in Europe, founded on four basic values:

    • the right to work in life-long jobs based on full employment,

    • the eradication of poverty by granting a minimum income and public assistance to prevent social exclusion;

    • protection against social risks;

    • promotion of equality of opportunity supported by public investments in health care, education, transportation, culture, leisure, etc.

    The destruction of this heritage presents new difficulties for all who fight for effective improvements in civil rights or social conditions. Any struggle to defend and to improve the social security systems in Europe is therefore a real contribution to building a new world social and economic order, with more dignity, justice and humanity.

    The public welfare system, universal and solidary, is under strong attack due to intense capitalist globalisation, transformations in labour conditions and in the international division of labour, global competition and the general social and labour deregulation. The pressure for the “Minimum State” and “Minimum Rights” is defining the future of the welfare model.

    In Portugal, features of the most advanced capitalist opulence exist alongside the main characteristics of social and economic underdevelopment. Portugal can derive great social benefit from participation in a European Union that resists both the brutality of neoliberal politics and an economy that depends on international speculative financial transactions. This benefit can only exist if Europe compromises and builds into its future the best of its historic civil conquests.

    It is generally understood that the Portuguese welfare system is still incipient compared to those of other European countries. There are several indicators of this: the ratio between social protection expenditures and the GDP is much lower in Portugal than the European average; similarly, pensions and other social payments, as a proportion of GDP, are lower than in most European countries.

    The welfare system in Portugal is of very recent origin (unemployment compensation only began in 1975) - it was built in the last 30 years (only after the Revolution of 1974). The low degree of this country’s industrialisation led to few and only localised processes of urbanisation and proletarianisation before 1960.

    Before 1974, labour organisations were subjected to extreme repression and political parties were outlawed; on the other side, capitalists were organised in corporate structures, in a way resembling dictatorial government, allowing a few families to take control of the Portuguese economy. In the two years after the Revolution, left-wing majorities gave union structures their social and political legitimacy, ensuring the representative rights of workers and launching the basis for a welfare state.

    The Portuguese constitution recognised these labour and social achievements, and strategic sectors of the economy were nationalised (the privatisation of these - and other - companies was to start in the 1980s and is still continuing; this includes the health and education sectors, to the benefit of the old families who had controlled the economy before 1974).

    The popular conquests achieved after the April Revolution were to be halted by a new balance between the political forces that emerged from the 1976 elections, benefitting two parties (the Socialist and the Social Democratic Parties), which would retain hegemony until today (despite their names, both parties have neoliberal orientations).

    In the early 1980s, the Communist Party (PCP), with 41 deputies, and the Popular Democratic Union (UDP), with 1 deputy, were the anti-capitalist forces represented in the Parliament (with 250 deputies). At present, the PCP has retained 14 deputies and the UDP has joined the Left Bloc (BE, Bloco de Esquerda), which has 8 deputies. Together, these two anti-capitalist forces comprise 10% of the Parliament, not enough to contain the large-scale liberal wave that is being promoted by the two major political parties in Portugal.

    The current system reproduces a deeply inequitable social structure (social inequalities in Portugal are the most acute of any country in the EU) and imposes miserable conditions on the people: of the 2.7 million persons depending on social security benefits, 2 million live under the poverty limit (less than Ä 366 per month). Recent developments in the Portuguese social-security system, promoted by the Socialist Party in government, do not face this problem. On the contrary, some measures were introduced (like a new “sustainability factor” or the lowering of the “substitution tax”) to decrease pensions and to increase the retirement age: people have to work more, for more years, to receive less.

    Despite the measures enacted by the government, the social security budget shows that the sustainability of the system is not at stake, at least in the short-run, considering the positive results consistently achieved in the last years: Ä 784 M in 2005, Ä 706 M in 2006 and Ä 1148 M in 2007.

    The non-contributive and unemployment benefits cannot ensure any sort of emancipation from the labour market: there is no “de-commodification” of labour when these benefits only reach 50% of the population in question, with revenues under the poverty limit.

    Portuguese industrialisation, based on low labour costs, created new problems within global competition: relocation of foreign companies, higher unemployment, job precariety and growing informalisation of labour and economic relations. The new European orientation established by the “Lisbon Strategy” legitimises the acceleration of privatisation processes in the EU, stimulating the destruction of Portugal’s weak welfare system.

    This degradation of social protection has occurred simultaneously with the tendency to growing precariety of labour relations (2.1 millions, in a total of 5.5 million active workers, have precarious work conditions) and a lack of collective labour contract negotiations, which worsens the social conditions of the Portuguese working class.

    In Portugal, where it is easy “to hire and fire” (despite the government rhetoric), with weak social protection and institutional labour representation, union influence has been reduced with the ending of collective negotiations. The imposition of principles of “flexicurity” in the labour market will have dramatic consequences over the living and working conditions of Portuguese workers.

    In the social concertation processes, the revision of labour legislation and social security reforms have been agreed between the government, the employers and one of the union structures (General Workers Union (UGT) close to the Socialist Party, the Social Democratic Party and the Popular Party) in general against the positions taken by the General Confederation of Workers (CGTP-IN) linked to anti-capitalist forces and greatly influenced by the Communist Party.

    Eighteen to 20% of Portuguese workers are members of trade unions, concentrated mainly in the two major organisations CGTP-IN and UGT. New social movements are emerging now, which are struggling against unemployment, labour precariety or restrictive and security-oriented immigration policies. Ensuring and reinforcing the sustainability of the social security budget is a basic question. Portuguese society suffered several structural transformations in the last decades, with demographic changes, young people taking more time to enter the labour market, and the early exit of many people from their jobs, as a result of runaway shops, the collapse of traditional industrial sectors or the restructuring of the Portuguese economy.

    Portuguese society is changing and we are seeking a new approach to ensure social rights and the sustainability of the welfare system. To face the current challenges, the welfare system should focus on citizenship rights and seek new financial sources. The current method of calculating contributions to the social system arose in a context of labour intensive industrial organisation. Now, with rapid technological evolution and growing globalisation of activities, the labour intensive industries are losing their importance due to the emergence of work processes based on capital and information. The latter sectors do not contribute as they should to finance the social security system.

    In Parliament, Bloco de Esquerda has presented proposals to confront these changes in Portuguese society, with proposals for a concept of social protection based on citizenship and financed by funds from work and capital contributions. Some examples of these measures are:

    • adaptation to the technological changes at the enterprise level, calculating the contributions to the system not according to salaries (which penalises the labour-intensive companies), but according to the value added by each company;

    • the creation of a Solidarity Fund, with contributions from the large fortunes and capital transactions in the stock market.

    These proposals are intended to ensure sustainable coverage for social risks and achieve decent levels of pension, while mobilising Portuguese society and respecting the essential rights of citizenship. The Portuguese welfare system is farther away from this goal than any other welfare system in Europe, and its reform implies not only popular mobilisation in defence of achieved social rights, but also the struggle to conquer new citizenship rights.