Globalization and the Reform of European Social Models*

TLDR

Globalization creates both threats and opportunities, and the notion of a single European social model is largely irrelevant when considering reforms. Europe must become flexible to seize opportunities and overcome threats posed by globalization. Reforming labour market and social policies is required to achieve this flexibility. Four European social models exist: Nordic and Anglo‑Saxon are efficient, but only Nordic balances equity and efficiency, while Continental and Mediterranean are inefficient and unsustainable and therefore need reform.

Abstract

Abstract Globalization implies changes that create both threats and opportunities. The challenge for Europe is to become flexible in order to avail of the opportunities this brings and surmount the threats. This requires reforming labour market and social policies. When thinking about such reforms the notion of a single ‘European social model’ is largely irrelevant. There are four different European social models, each with its own performance in terms of efficiency and equity. The Nordic and the Anglo‐Saxon models are both efficient, but only the former manages to combine equity and efficiency. The Continental and Mediterranean models are inefficient and unsustainable; they must therefore be reformed.