Welfare State and welfare society Román Escolano: “Having reached the top public spending, there are political decisions to be made”

02/07/2019

The former minister of Economy Román Escolano has participated today in the second conference of the 2019 FAES Summer Course, where he has highlighted that “the big current challenges of the Welfare State are sufficiency, sustainability, and debt increase”, and he has assured that “Western societies have reached their top public spending, and it is necessary to decide where to direct it, how much spending we can afford and how to finance it”.

WELFARE STATE SIZE
“Western societies have toped their public spending in the last 15 years; from this moment onwards, it is necessary to make political decisions about where to direct it, how much spending we can afford and how to finance it”

“The public spending in the ‘welfare administration’ is by far the biggest budget allocation in Europe: approximately it is 45% of the European GDP”

“In general, regardless of the economic situation, European States tend to deficit”

PENSIONS
“Retirement pensions are the biggest and most inertial public spending, and their sustainability is a particularly important challenge”

“Today, 40% of the public spending in Spain are pensions; much more than 10 years ago and much less than in 10 years. The basic functions of the State -defence, justice, police, penitentiary institutions, foreign affairs- are only 5%”

“Advanced societies are ‘financing’ the public spending by the reduction of the investment effort. This is a non-viable process that will require making decisions in the future”

SPENDING EVOLUTION
“We need to make decisions and allocate resources, and for that we need to assess which is an unresolved issue in Spain”

MIDDLE-CLASS
“The narrowing of the middle class from the financial and bank crisis is one of the most important factors in the Welfare State assessment”

“From the financial crisis, middle classes have suffered a feeling of marginalisation, that their income is decreasing and that they are at a clear risk of falling to the lower extremes”

“The tax burden in Spain is focused in the labour factor and its impact to other taxable deeds is key for middle classes to trust again the Welfare State”

CONCLUSIONS
“The big challenges of the current Welfare system are sufficiency, sustainability and debt increase”

“We have to rethink the future of the employing and family policies”

“We need to find new tax bases and to bring in new industries from the new economies, such as the digital economy”

#Economy #pensiones #CursoFAES2019 #WelfareState #GastoPúblico #RománEscolano