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Are Education and Training the European Union’s Welfare State?

European Social Morality and National Expenditures, 1980-2000*

Stephanie L. Mudge

Department of Sociology
University of California, Berkeley
410 Barrows Hall #1980
Berkeley, California 94720-1980
slmudge@uclink4.berkeley.edu

January 15, 2003

* Paper submitted for participation in the session on European Integration: Politics and
Economics, organized by Professor Neil Fligstein, for the August 2003 Annual Meetings of the
American Sociological Association in Atlanta, Georgia. Keywords: European Union, social
policy, education and training, welfare states, social investment.
Are Education and Training the European Union’s Welfare State?
European Social Morality and National Expenditures, 1980-2000*

Stephanie L. Mudge
University of California, Berkeley

Abstract

Europe is well known as home to some of the most historically generous and
universalistic welfare states (Esping-Andersen 1990, 1996)—the source of and sustenance for a
social morality in which welfare protections come by virtue of citizenship. Yet the European
Union’s initial forays into the world of social policy emphasize education, training, and labor
market ‘activation’ rather than the protection of European citizens through citizenship-based
benefits and transfers. The problematic considered here, then, is the European Union’s turn to a
social policy paradigm featuring the rhetorical (if not substantively identical) trappings of an
American-style social investment welfare state, and the consequences of this turn, if any, for
national policy and public expenditures. More specifically, the question this paper seeks to
address is: Did the European Union’s emergence as a stakeholder in education policy in the late
1980s and early 1990s alter the course of ongoing ‘social investment’-oriented welfare state
reforms in its member states? It offers a preliminary analysis of expenditure patterns to evaluate
the hypothesis that though the EU’s policy stance on social investment mirrors pre-existing
national responses to the welfare state ‘crisis’ of the 1980s, it is exerting its own pressure to
direct member state policies toward a ‘social investment’ welfare state model. The analysis
draws on European Union policy statements as well as nation-level data for education
expenditures drawn chiefly from the United Nations Educational, Scientific, and Cultural
Organisation (UNESCO). It sets up a framework for a follow-up analysis offering more detailed
data on categorical social expenditures, which will draw from the Organisation for Economic
Co-operation and Development’s (OECD) Education at a Glance and Social Expenditure
databases.
Stephanie L, Mudge
Paper prepared for ASA 2003
January 15, 2003
I. Introduction

Social theorists have long emphasized that social cohesion depends on the ability of the

state to mediate the polarizing forces of economic life. The welfare state, however, is in flux;

policymakers in many countries appear to be turning toward variations of a ‘social investment’

model of welfare state reform to address the symptoms and fears of welfare state crisis rooted in

political and economic shifts from the 1980s. A broad consensus exists that policymakers in

many countries are moving away from protection and toward education, training, and labor

market ‘activation’ (Esping-Andersen 1996; Esping-Andersen and Regini, 2000; Gilbert 2002).

In the midst of this transition, the EU emerged in the late 1980s as a new player in the

world of redistributive social policy. With the 1986 Single Market Project and the 1992 Treaty

of Maastricht, the EU gained an important foothold in expanding its jurisdiction into the core

policy areas of member states to stimulate change in jealously guarded realms of social welfare

and education policy. The EU's new expansionary justification rests on a logic rooted in human

capital theory that ties the interests of the market to a properly European jurisdiction. As others

have noted, this definition of EU jurisdiction is ambiguous and has potentially far-reaching

consequences that are as yet undefined due to the diversity of interests and motives behind

member states’ participation in the EU (Mayes et al 1992; Fligstein and Mara-Drita 1996). The

question of whether the EU’s expanding jurisdiction has played (or will play) an influential role

in national social policy, especially in the context of a larger process of crisis-induced policy

change, has no complete answer in existing research. As a preliminary effort to work toward

such an answer, this paper seeks to addresses the following question: Did the European Union’s

emergence as a stakeholder in education policy in the late 1980s and early 1990s alter the

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course of ongoing ‘social investment’-oriented welfare state reforms in its member states? It

outlines a preliminary analysis of education expenditure patterns to evaluate the hypothesis that

though the EU’s policy stance on social investment mirrors pre-existing national responses to the

welfare state ‘crisis’ of the 1980s, it is exerting its own pressure to direct member state policies

toward a ‘social investment’ welfare state model.

II. Defining the welfare state

My definition of welfare states draws heavily on Weber’s (1922) concept of the state, as

well as T.H. Marshall’s (1975) definition of social policy as the use of "political power to

supersede, supplement or modify operations of the economic system in order to achieve results

which the economic system would not achieve on its own."1 The fundamental defining element

of welfare states is their basis in socioculturally informed ideas (which I refer to hereafter as

social moralities) of states’ responsibilities to mitigate the polarizing tendencies of a given

economic system by altering the life chances of individuals and groups via redistributive policy.2

Welfare states are composed of formal rules (social policies) and informal rules (norms and

assumptions that guide the enactment of social policies) that, taken together, direct the allocation

of services, benefits, and assets within a society based on some set of membership and selection

criteria. These rules are legitimated by the authority of the state—itself rooted in a monopoly of

legitimate violence, both real and ‘symbolic’ (Bourdieu 1994), over a territory—and draw on the

resources of that state’s individual and organizational economic participants. Welfare states are

multidimensional social facts, meaning that they incorporate and express the many elements that

comprise a society: social, political, and economic.

1
Marshall 1975, cited in Pierson and Liebfried, 1995: 3.
2
By this definition, it is worth noting that there are no states, recognized as such, that are not also welfare states.

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III. Welfare state crisis and the European Union: the social investment shift

Welfare states have been undergoing notable transitions since the 1970s, which many

analysts trace back to globalization-related economic shocks (OECD 1981; Huber and Stephens

2001; Esping-Andersen 1996). By this account, national governments unable to shelter domestic

economies from an increasingly integrated international market face increasing fiscal pressures

to scale back their welfare states (Finer 1999). By the close of the 20th Century, for instance,

Western European policymakers were confronted with a host of policy problems: a postindustrial

economy increasingly centered on services and information, a dwindling labor pool, doggedly

persistent high unemployment rates, and politically contested social welfare regimes (Esping
-

Andersen 1996, 2000; Pierson 1996).3 In addition, some argue that the structures of many

European education systems focused on imparting job-specific vocational skills are ill-suited to

respond to the variable demands of a postindustrial world (Müller and Shavit 1998).4 Gilbert

(2002) argues that, as governments respond to these developments, welfare state reforms across

Europe and in other nations of the world are increasingly leaning toward market-orientations and

privatization, targeted benefits and restricted eligibility, active labor force participation, and the

promotion of opportunities for education and training.

This trend toward the ‘third way,’ or what Gøsta Esping-Andersen refers to as a ‘social

investment’ type of welfare state, has extended up to become a powerful theme within the

emerging government of the European Union (European Commission 1993; Esping-Andersen

3
See also OECD 1981; Esping-Andersen 1996; Finer 1999;
4
See also: Confederation of the EU Rector’s Conferences and the Association of European Universities (CRE). The Bologna
Declaration on the European space for higher education: an explanation. Year unspecified.
http://europa.eu.int/comm/education/socrates/erasmus/bologna.pdf.

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1996).5 In theory, the social investment model replaces universal social security benefits and

income guarantees with opportunities for human capital investment—that is, it seeks to replace

transfers that equalize distributional outcomes with education and training opportunities and

labor market policies that facilitate entry (or re-entry) into the active workforce.6

Some literature on welfare state change and social investment emphasizes the American

welfare reforms of 1996 as the strongest case of dramatic shifts in social policy (Finer 1999)7. I

contend, however, that the social investment emphasis in social policy is more noteworthyin the

case of the European Union. The United States has always endorsed a social morality that

emphasizes work and means-testing; in a sense, then, the 1996 reforms are not surprising.

Europe, on the other hand, is well known as home to historically generous and universalistic

welfare states (Esping-Andersen 1990, 1996); the social investment turn in this context implies a

more fundamental change in the social morality of the European welfare state. 8

IV. The EU role in social policy

The EU is a relatively recently formed governmental entity with limited policy space for

intervening in the longstanding social welfare policies of its member states—policies that were

historically key components of political nation-building projects, developed long before the EU

5
Ibid. See also: European Commission. (May 2000) "European Report on the Quality of School Education: Sixteen Quality
Indicators." Report based on the work of the Working Committee on Quality Indicators. Directorate-General for Education and
Culture. Italy: European Communities.
6
Esping-Andersen (1996) is careful to maintain that while these shifts appear to be occurring internationally, however,
historically and politically defined institutional differences will remain.
7
This backlash culminated in the 1996 Personal Responsibility and Opportunity to Work Act (PROWA) under President Clinton,
which legally and practically brought an end to welfare-based entitlements—a development with special consequences for poor
mothers (Orloff 1999). Instead, the new program (TANF, or Targeted Assistance for Needy Families) is based on a “work first”
idea: the optimal way to promote employment is through immediate job placement—in any job—and to gain experience and
participate in education and training while working (Strawn, Greenberg, and Savner 2001).
8
Pierson (1996) and others have also pointed out that Europe’s stronger welfare state programs fostered more entrenched
interests that tend to preserve existing social policies.

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developed its current stake in social policy (Liebfried and Pierson 1995). Nonetheless, as I

explain below, the EU is building its case for legitimate involvement in social policy; one of the

main entryways for this involvement rests on connections between education and training

(especially human capital investment) and the changing demands of the labor market.

The EU and education and training policy, 1980 to 2000

The year 1986 marked a new era for the EU largely due to the Single Europe Act (SEA).

As several analysts have noted, the basic idea behind the SEA was around since the 1970s: to

reduce costs of trade. This idea was an important source of agreement across nations with

differing national interests and stances vis-à-vis the EU (Mayes et al 1992; Fligstein & Mara-

Drita 1996). As a consequence, the SEA passed with “little debate” (Mayes et al 1992).

Nonetheless, no substantive consensus lay behind this basic idea—as Mayes et al point out,

nations and policymakers can have a common objective and very different motives

simultaneously (Mayes et al 1992). Despite skepticism over the possibility that the SEA would

change the EU in many important ways, the unifying logic of the SEA could rally broad support

because it was both appealing enough and vague enough to create opportunities for social

conservatives and social progressives to move forward with their policy agendas (Mayes et al

1992). This opportunity set left EU policymakers in a surprising situation: a stronger, more

centralized EU created by working toward a ‘free and open’ market.

At this point it is unclear how this newly strengthened governmental entity will affect

social welfare in its member states, but the powerful potential of the unifying logic behind SEA

is clear—once it passed, newly empowered policymakers could carve their own paths within the

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confines of single market logic, and shape the direction of EU and, by extension, national social

policy. But what should the focus be? The commonsense logic of human capital theory

provided an answer: education and training (see Figure 1 below).

Figure 1:
Connections of Single Market to Education and Training via the Logic of Human Capital
Theory*

1986 SEA – to encourage open COMPETITION

SEA may promote oligopoly SEA may reduce incentive for


formation. employers to invest in training.

Need for high ‘value-added’ --


focus on human capital.

VOCATIONAL TRAINING GENERAL EDUCATION.

* Note: Based on argument in Mayes et al 1992: 15-16.

Hence, beginning with the SEA, educational systems-- especially the kinds and quality of

skills they impart—came to be understood as key to the development of a skilled workforce and

an integrated European Community from the EU perspective. As the European debate over

federalism in Europe wages on, the EU is still highly constrained in its abilities to directly

intervene in any member nation's domestic affairs--with the initiation of the Single Market

Project, however, the EU developed a powerful unifying logic derived from the commonsense

assumptions of human capital theory.

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Building the EU’s role in education and training systems

One of the most important aspects of the SEA for social policy in Europe is that is paved

the way for the 1992 Treaty of Maastricht. This treaty specified education as a specific EU

policy area for the first time (Article 149). Article 149, Chapter 3 of the European Community

Treaty states that "the Community shall contribute to the development of quality education by

encouraging cooperation between Member States and, if necessary, by supporting and

supplementing their actions while fully respecting the responsibility of the Member States for the

content of teaching and the organisation of educational systems and their cultural and linguistic

diversity."9 There are five major goals the Treaty specifies for Community action: (1)

developing the European dimension in education; (2) encouraging mobility of students and

teachers; (3) promoting cooperation between educational establishments; (4) promoting

exchange of information & experience; and (5) encouraging development of distance

education.10 These goals both reflect and reinforce education-oriented programs that had been in

place in Europe at least since the late 1980s (see Table 1, below), and especially since the 1988

‘Bologna Declaration’ (Bologna Magna Charta Universitatum of 1988), a voluntary agreement

among 29 European countries (including all of the EU member countries) to “reform the

structures of their higher education systems in a convergent way.”11

9
European Commission. (May 2000). "European Report on the Quality of School Education: Sixteen Quality Indicators." Report
based on the work of the Working Committee on Quality Indicators. Directorate-General for Education and Culture. Italy:
European Communities.
10
Hingel, Anders. March 2001. "Education Policies and European Governance: Contribution to the Interservice Groups on
European Governance." European Commission, Directorate-General for Education and Culture. DG EAC/A/1: 1.
11
Confederation of the EU Rector’s Conferences and the Association of European Universities (CRE). The Bologna Declaration
on the European space for higher education: an explanation. Year unspecified.
http://europa.eu.int/comm/education/socrates/erasmus/bologna.pdf. The signatory countries are: Austria, Belgium (French and
Flemish communities), Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland,
Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovak Republic,
Slovenia, Spain, Sweden, Swiss Confederation, and United Kingdom.

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Table 1: European Commission-Initiated Education Projects, Budgets, and Purposes, 1986-1995.
Period of Budget (ECU) Purpose
Program approval (millions)
COMETT 1986-1995 206.6 University enterprise cooperation in
technology training
ERASMUS 1987-1994 307.5 Mobility of university students and staff
and joint curriculum projects
EUROTECNET 1983-1994 7 Promote innovation in training in respect of
the new technologies
FORCE 1991-1994 31.3 Promote continuing vocational training

LINGUA 1990-1994 68.6 Promote foreign language learning within


teacher ed, secondary and higher ed, and
voc training
PETRA 1988-1994 79.7 Promote vocational training of young
people and preparation for adult life
TEMPUS 1990-1994 194 Mobility scheme for university studies
between EU and central/eastern Europe
YES 1988-1994 32.2 'Youth for Europe' - exchanges of young
people and centers
IRIS 1988-1995 .75 Networking between vocational training
projects for women.
Source: Field 1998.

In the whirlwind of research on the EU, the implications of European integration for

educational change are not mainstream topics. Pierson and Liebfried (1995) point out that: "The

central components of national welfare states -- provision of education, health care, and

retirement security -- are likely to remain largely under national control."12 Yet, this immediate

control of member states does not rule out the possibility of the EU setting constraints and

creating incentive for states to decide to change their policies. Given the specific efforts of

European nations to create a more convergent “European” higher education system under the

Bologna agreement, as well as other EU initiatives that reach into all levels of education and

training across its member states, there is good reason to believe that the EU exerts just this kind

of indirect influence on education policy specifically.

12
Pierson and Liebfried (1995). "Multitiered Institutions and The Making of Social Policy." Brookings, p33.

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By the year 2000, key EU policymakers clearly asserted a properly European prerogative

to shape and influence educational policies of member states, yet (as Field 1998 notes) these

same policymakers’ concrete efforts have focused more on quality and ‘benchmarking’ than on

actual intervention in the educational systems of member states. One European Commission

report states that in spite of the limited nature of implemented Community educational programs,

there is nonetheless a "manifest will and political demand to go beyond" from Member States

and the organizations of the EU. This report claims that:

What is presently happening in co-operation in the field of education tells us, that
not only is a European Space of Education in its making, common principles of
education are being agreed upon between Member States, leading logically to a
European Model of Education. Furthermore, this momentum of deepening co-
operation in education is followed by a strong movement toward enlargement.
Thirty European countries participate presently in the action programme Socrates
and 35 European countries are actively participating in co-operation concerning
the development of quality education and training. At a yearly meeting of
Ministers of education of 35+ European countries the foundations of a European
House of education are being laid.13

V. Data and analysis

The question this paper seeks to address is: Didthe European Union’s emergence as a

stakeholder in education policy in the late 1980s and early 1990s alter the course of ongoing

‘social investment’-oriented welfare state reforms in its member states? It offers a preliminary

analysis of expenditure patterns to evaluate the hypothesis that though the EU’s policy stance on

social investment mirrors pre-existing national responses to the welfare state ‘crisis’ of the

1980s, it is exerting its own pressure to direct member state policies toward a ‘social investment’

welfare state model. The analysis draws on European Union policy statements as well as nation-

13
Hingel, 2001: 2.

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level data for education expenditures drawn chiefly from the United Nations Educational,

Scientific, and Cultural Organisation (UNESCO).14

> Preliminary findings

Is there evidence of expenditure change in education systems among the member states of the

European Union in the 1980s and 1990s? UNESCO data indicates that, in fact, some change did

occur in the direction of convergence across EU countries. Measured by standard deviation,

there is a small decline in variation in education expenditures as a percent of public expenditures

across EU nations (see Figure 2). Overall, the standard deviation declined from 3.4 in 1986 to

2.4 by 1996, much of which occurred between the years 1988 and 1994.

Figure2: EducationExpenditureasPercent of PublicExpenditureinEUNations:


1986, 1988, 1994, &1995 (UNESCO)
30 Austria
28 Belgium
26 Denmark
24 Finland
22 France
20 Germany
18 Greece
16
%

Ireland
14 Italy
12 Luxembourg
10 Netherlands
8 Portugal
6 Spain
4 Sweden
2 UK
0 Std Dev
1986 1988 1994 1995
year
Source: UNESCO 2002.
1986 figures for Portugal and Francearetaken from1983 data; 1986 figurefor theUK taken from1984 data.

14
This first-brush inquiry is intended to provide a framework for a follow-up analysis offering more detailed data on categorical
social expenditures, which will draw from the Organisation for Economic Co-operation and Development’s (OECD) Education at
a Glance and Social Expenditure databases.

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Table 2: Education Expenditure as Percent of Public Expenditure and With some surprising
Net Differences, 1986 to 1995 (UNESCO)
1986* 1988 1994 1995 net diff exceptions, poorer
Belgium 14.3 … 10.4 5.8 -8.5
France 18.0 … 10.8 11.1 -6.9
countries increased the
Netherlands 15.6 15.7 9.4 8.7 -6.9
percentage of public
Spain 13.3 9.6 10.5 10.6 -2.7
US 16.0 12.4 14.4 14.1 -1.9 expenditures devoted to
Sweden 12.6 12.3 11.0 11.6 -1.0
Luxembourg 15.7 17.7 11.5 15.1 -0.6 education--including
UK 11.3 … 11.4 11.6 0.3
Denmark 12.7 13.1 12.5 13.1 0.4 Ireland, Portugal, Greece,
Finland 11.6 11.8 11.9 12.2 0.6
and Italy—and education
Italy 8.3 … 8.7 8.9 0.6
Greece 6.8 5.6 7.0 8.2 1.4
expenditures in wealthier
Austria 8.0 7.6 … 10.6 2.6
Portugal 8.7 … 12.1 11.7 3.0 countries (with the
Ireland 9.3 8.4 13.3 13.5 4.2
Germany … … 9.4 8.4 (-1.0) exception of Spain)
* France and Portugal - 1983 figure; UK - 1984 figure.
declined (see Table 2).

Since these figures do not account for population differences (by using per pupil education

expenditures and per capita general expenditures), however, it is unclear if this is real

convergence.

Indicators that do account for population differences suggest that trends in educational

investment are both different across European countries and across educational levels. For

primary and secondary education, expenditures from 1990 to 1996 increased for most countries,

with the striking exception of the UK. (see Figure 4 – the US is included for purposes of

comparison). There is some indication of convergence by these measures as well: the standard

deviation decreased from 8.6 to 7.8 over the six-year time period in European countries.

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Figure 4: Current Expenditure per Pupil as a Percentage of GNP per Capita: Primaryand
SecondaryEducation (UNESCO)
100
90
80
70
60 1990
%

50
1996
40
30
20
10
0
United States

United Kingdom
Austria

Belgium

Luxembourg
Denmark

Italy

Netherlands

Portugal
France

Greece
Finland

Ireland

Spain
countries

For tertiary education, trends are different: not only did expenditures decline in about half of

EU countries, but variation in expenditures per pupil as a percentage of GNP per capita actually

increased from a standard deviation of 11.1 in 1990 to 13.9 by 1996 (see Figure 5).

Figure 5: Current Expenditure per Pupil as a Percentage of GNPper Capita: TertiaryEducation


(UNESCO)
100
90
80
70
60 1990
%

50 1996
40
30
20
10
0
United States

United Kingdom
Austria

Belgium

Luxembourg
Denmark

Italy

Netherlands

Portugal
France

Greece
Finland

Ireland

Spain

countries

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Table 4: Current expenditure per pupil as a In sum, figures that account for population
percentage of GNP per capita, net differences 1990
to 1996 (UNESCO) differences and distinguish between levels of
ascending primary ascending tertiary
order: and order:
secondary
education show that while there may indeed

UK -5 Netherlands -9 be EU-wide convergence in expenditure


Netherlands -1 Portugal -7
Ireland 1 Ireland -6 patterns in primary and secondary education-
Italy 1 Luxembourg -5
-occurring especially in the early 1990s. In
Belgium 2 Italy -2
United States 2 UK -2 the case of tertiary education expenditures,
Luxembourg 3 Austria -1
Austria 4 Spain -1 the trend appears to be more in the direction
Denmark 6 Belgium 3
of divergence.
Finland 7 Finland 4
Portugal 8 United States 4 With reference to the specific question of
Greece 9 France 5
France 10 Greece 6 an EU role in changing expenditure patterns
Spain 13 Denmark 8
among its member states, this analysis offers

evidence that a convergence in expenditures on primary and secondary education occurred

around the same time as the EU’s first forays into the realm of education policy, marked by

the 1988 Bologna Declaration and the 1992 Treaty of Maastricht. This is obviously,

however, far from conclusive evidence that EU policy statements were directly connected to

this set of changes. These trends require investigation in further research.

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