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The contributory principle – route to social cohesion or social divide?

May 27, 2013

Suddenly the commentariat is talking about restoring the “contributory principle” in the benefits system. At a rhetorical level, it sounds great: social support as collective insurance rather than as a one-way handout. The realities are very different, for the simple reason that we are no longer living in the 1950s world of near-full employment centred around male breadwinners.

Quite simply, basing benefits mainly on contributions excludes far more people than it did then – and not just the indigent (“scroungers”) or the itinerant (“immigrant scroungers”) who politicians seem to be hearing about on the doorstep. It excludes the lone parent whose partner has just walked out on her. It excludes the twenty-something who has not yet been able to get stable employment in the recession. It excludes the mentally ill person who struggles to hold down a stable job in a labour market which, whatever the laws on discrimination, is less forgiving of workers’ flaws than it was in the less competitive environment of half a century ago. What the present debate is missing is that the spread of means-testing derives not from some softening of politicians’ moral fibre, but mainly from a changed world in which many more people fall outside the contributory system as Beveridge designed it.

Would we feel okay today about giving the groups mentioned above an inferior form of protection (and if so, at what level of semi-subsistence?). As Ian Mulheirn points out, in an excellent Guardian comment piece, if you address this by giving certain “deserving” groups credits even when they do not work and contribute, the concept of a “contributory” basis to social security breaks down, not least because it prevents you from creating a watertight fund that doesn’t have to depend on general state revenues to sustain itself.

It would be lovely to think that we could start to draw the best from European systems of social insurance, where workers are genuinely protected by ring-fenced funds that give them a proportion of their salary when they are not working. But I would be astonished if the present debate led to improved benefits of this kind. It seems more about adopting the less attractive other side of social insurance systems, the limiting of entitlements for those (especially migrant workers) who fall outside the contributory net, to a much more meagre form of support, “social assistance”. Creating clear-cut differences of this type would institutionalise the debate about the divide between the “deserving” and “undeserving” poor. It would not resolve the highly fraught issue of where to draw this line. And it would push those who fall the wrong side of it into even more abject poverty.

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From → welfare system

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