On December 9, 2013 the Foundation for European Progressive Studies (FEPS) with the support of Freedom and Solidarity Foundation (FSF) held the NEXT LEFT roundtable debate “Constructing welfare society”. The discussion was attended by participants from Latvia, Lithuania, Poland and Italy. The event was divided into two panels – the first examined social policy and welfare, while the second part – the importance of the education policy of welfare society.

The first panel of discussion was titled „Aiming at a New Social Deal: Progressives in a search for a credible welfare agenda”. The panel focused therefore on the three main questions. First, it discussed if it was politically plausible to still talk in terms of “welfare society” – knowing that these are the times called “after the crash” or “after the era of plenty”. Secondly, it examined in what ways “welfare society” could be a future-associated project that could be at the heart of social democratic mission and would serve as an explanation of its mission at the service of the contemporary society. Thirdly, it looked closer at the experiences of Baltic States trying to find paths out of “REBBL” and towards “Social Europe”.

Discussion was moderated by Dr. Ania SKRZYPEK, Senior Research Fellow at FEPS in charge of the “Next Left” Research Programme, Poland.

Discussion was opened by Ronny MAZZOCCHI, Assistant professor at the University of Trento and Member of the FEPS Next Left Focus Group, Italy. He pointed out that the preservation of the welfare state in Europe is ideologically critical issue. If we looked back to the beginning of the economic crisis, then we’d remembered that the crisis was not caused by the national government and the public sector. The crisis was caused by private financial sector. However, it was the society that had to deal with the consequences of the crisis, using taxpayer money. As a result, today many EU countries have large public debt. And this fact has become a threat to the welfare state existence. We shouldn’t forget that before the crisis the public debt of many hard-hit countries (including Latvia, Ireland and Spain) was very low.

Ronny MAZZOCCHI pointed out that state budget spending reductions should in no way affect or threaten the welfare state as a whole. It is an essential idea in the context of further EU political integration. On EU level, the debate about the welfare state should be passed more to the hands of EU-level institutions. Bringing up and an important debate about making choices – how national states would be willing to give up the power over issues of taxes and welfare to EU-level institutions.

Discussion was continued by Veiko SPOLITIS, Doctor of Political Science at Riga P. Stradins University, Latvia. He explained that the modern society was changing very fast, transforming the definition of “well-being” along. It should also be noted that the younger generation does not necessarily see itself as part of society in its traditional sense due to growing individualization of people, as well as emergence of new roles and identities within increasingly important social networks. So, new generation’s understanding of “welfare state” would be hardly the same what older generations saw in the Soviet era – free education, health care and so on. This aspect is important to take into account during any discussions on wealth.

Veiko SPOLITIS also noted that there were significant differences between the Baltic countries. There are historical reasons for that. After the collapse of the Soviet Union, it was easier for Estonia’s economy and society, compared to Latvia. It was less sensitive to shocks because of fewer large companies. In addition, investment flowed into Estonia from neighboring Sweden and Finland, which brought in the business culture. There was also a great roles of the Estonian community in these countries. The investment was not only from the large companies, but also a number fo small Scandinavian companies entered Estonia. Thus, already in the nineties Scandinavian business model was established in Estonia. While in Latvia there was no such Nordic impact. As a result, the economic crisis has hit Latvia a lot harder, but the Estonians were able to manage with much smaller state budget cuts. The extent of corruption (having influence on important economic decisions) in Estonia was also significantly lower than that in Latvia.

Although, according to Veiko SPOLITIS, the free-market ideology had been supported by all of the Estonian government coalitions, they also had strong alternative visions that limited pure laissez-faire approach to economy policies. Even though Estonia originally introduced proportional tax system, at this moment discussions are taking place about the transition to progressive tax system. Likewise, during the recent years Estonia developed a good social support system for families with children.

The first panel of discussion was concluded by Gints TURLAIS, Lecturer in Economics at the Riga Technical University, Latvia, who focused on current Latvia issues. The level of social inequality in different EU countries is constantly changing. Unfortunately, for a long time Latvia has been the one with the highest level of inequality among EU Member States. This was largely due to the disproportionately high taxes on labor – particularly small and medium-sized salaries. Although government of Latvia never stops speaking about labor tax cuts, the result is almost always quite the opposite – they taxes have been raised. Division of taxes between workers and speculators is disproportionate. For example, if a person trades in real estate, he has 15% of the tax burden, but if you work as a nurse, then it is almost 50%.

A further consideration is that Latvian wages are so low that it is often more profitable not to work. Even tiny state allowances are greater than the offered salary. Similarly, the labor market lacks flexibility, therefore people have limited ability to change professions. For example, if a person loses a job in Denmark – he’s going to learn, learn a new profession. Because, in contrast to Latvia, there is a free higher education or life-long education system, and strong labor associations.

Gints TURLAIS also noted that it was extremely rare when Latvian people are fighting for their rights. This is often due to fear and ethnic divisions in Latvian politics. In Latvia the political system is not constituted by classic right-left wing political parties.

Also the first part of the discussion touched the subject of trade union problem – young people are less and less being involved in the movement of trade unions. Given that today a person during his lifetime can change the profession several times, it would be necessary to think about cross-sector unions. Similarly, participants indicated that many problems of social democrats appeared when the left began liberalization, thus partly accepting the status-quo of existing system. Therefore it is important to search for solutions how to adopt social democratic ideals within existing contemporary situation and the political agenda.

The title of the second discussion panel was „Finding the balance between pre-distribution and re-distribution: social democracy restoring confidence in educational systems”. This panel focused on three main questions. First of all, it looked at the relation of education as a policy and modern concept of welfare society as ideological underpinning. It tried to re-frame the argument that would be able to bounce back some of the criticism outlined earlier. Second, it looked at education as a method of pre-distribution. Herewith it reviewed policies that could re-emerge education as a promise again, especially for the younger generations. In that context, education would also be examined as a way of bringing individuals and divided societies (herewith also with growing number of migrants) together. Third, it focused on the Baltic States experience. Looking at the first decade of the EU membership, it would try to answer the question how improved educational policies could serve to avoid further brain drain on one hand, and on the other – ensure chances for more sustainable societal development in Latvia, Lithuania and Estonia.

Discussion was moderated by Ervins LABANOVSKIS, Chairperson of Freedom and Solidarity Foundation, Latvia.

The second part of the discussion was opened by Lorenza ANTONUCCI , Lecturer in Social Policy at the University of the West of Scotland and a member of the FEPS Young Academics Network, Italy. She pointed out that many social risks of the present day that threaten labor market affect also people who are just learning. Therefore, the social system should be oriented not only to support the labor market, but also the students. For example, today it is more and more difficult for young people to enter the labor market, because employers require that both students and new graduates have necessary experience. We need both scholarships and grants to provide initial experience to those who enter the labor market.

If in the past it was enough for a person to enter the labor market in order to solve many of the problems and join the mighty middle class, it’s no longer sufficient. Therefore the concept of the welfare state needs to be revisited. Social investment should be shifted as well to the people who are not yet in the labor market. It is essential that before entering the labor market a person is not losing his social status and is not exposed to social risks.

Discussion was continued by Algirdas DAVIDAVIČIUS of Demos Institute, Lithuania. He explained that Lithuania, as well as the rest of Eastern Europe, was in unique situation. In Lithuania there is neither new nor old social democratic concept. Currently, there are no prerequisites for any to be created. After the Cold War liberalism has been dominating the political agenda, thus investment flowed in business, public administration, but not in the social system. As a result, society is divided, fragmented. The protest tradition is not present. To prevent the emergence of widespread organized labor movement, trade unions were being weakened. And there is also a mythological fear of protests and confrontations in society, based on historical experiences of previous century. And stakeholders are using this situation to (capture) seize democracy.

Thus, the situation is too serious to be resolved only by investments in education. It may be that the public outcry and changes can be motivated by a broader confrontation against the existing system. This alone, however, would not force them to invest in education or to change the existing tax policy.

Mārtiņš KAPRĀNS, Research Fellow Institute of Government and Politics, University of Tartu, Board Member of the Latvian Young Scientist Council, spoke about the Latvian education system, with particular emphasis on new scientific challenges. According to him Latvia invests in science only 0.6% of GDP, which is one of the lowest figures in the EU. Earlier Latvia faced the critically low number of PhD graduates, but in recent years the situation has greatly improved. This was a positive development. However, the new issue emerged – a large proportion of young scientists are not employed in local industry, because the vacancies are very limited. As a result, these people are lost to science, so to speak.

Financial problems are not just the problem for young scientists, but science as a whole. However, many scientists over many years supplemented their income by working in educational and scientific institution administrations. A small community of “old professors” who are managing resources and administration, are not giving proper development opportunities for the new. Administrative job gives the opportunity to earn, because earning only by doing research in Latvia is not possible. Thus, a large proportion of young scientists are forced either to simulate scientific activities and expect the situation to improve, or combine work and scientific or non-scientific work, or to emigrate to other universities in other countries.

Discussion participants recognized that in overall the EU education system is good and it would not require significant changes. Participants agreed that certain innovations are necessary in the field of EU-level scholarships. Similarly, discussion participants stressed the importance of the role of non-formal education, with particular emphasis on the role of non-governmental organizations and trade unions in this process. Non-formal education, as well as funding for social guarantees for youth should be increased, thereby reducing the social risks in societies.

NEXT LEFT national roundtable debate was concluded by Peteris KRIGERS, President of the Free Trade Union Confederation of Latvia. He welcomed the fact that this event took place in Riga and acknowledged that for trade unions such discussions are very valuable. This was particularly important because the social support system in Latvia was critically flawed.