Welfare’s purpose should be to eliminate, as far as possible, the need for its own existence.

– Ronald Reagan

More and more countries are implementing some form of minimum wage, others have had it for a long time but are finally elevating it to levels where it actually makes a difference for people.

I think rather than a set minimum wage per sector or industry (why should there be a difference??), we should have a discussion about what kind of society we want to live in and how we want to take care of our weaker members.

I would like to put forward a few fundamental ideas around how I think we should build our society.

Over the past few years, there have been more and more stories in the news about people falling through our safety nets. These are almost exclusively people with lower levels of education who often had their fair share of bad luck on top of many other things. And then there are stories about companies exploiting social security systems to systematically underpay their employees. Next up we have ever changing circumstances which leave people feeling insecure about the future.

ONE – Automatic Adjustments Firstly, I think that any law/policy should be stated in relative terms so that they automatically adjust for the future and take care of factors like inflation, depressions, booms, etc. This would install a contract valid for many years to come and give people a sense of stability and security which in term will enable them to plan for the long run.

This would mean that all numbers/values are to be adjusted year after year, with obvious advantages. Without the need for a political debate:

  •  in a recession, benefits would stagnate or decrease, easing the burden on the social welfare systems,
  • in a boom, benefits would rise, making sure that especially the poor benefit from overall economic success.

I believe it is most important to make the re-evaluation mandatory (each year, or at least every other year). Calculations should be based on official numbers, be accessible to the public and should have to be voted on by parliament asap. Should a vote be delayed, revised numbers should take effect automatically, delays should only be possible in extraordinary circumstances. While in the short run, political parties at large might agree with the policy, this can change quickly in a time where extremist parties all around the world are on the rise. Leaving most of the decisions to technocrats and officials not directly affected by elections will make the system more reliable in the long run.

TWO –  Fair Pay My original thought was that a full-time job (10-12 hours work per day) should pay enough to “make ends meet” for a single person. When I revised my notes, I changed it to “for a single mother with one child”. After having thought about it some more, I do not think that it is a company responsibility to pay someone more only because they have a child.

I think it is very important that someone who works all day, should not have to supplement their income with state sponsored social security schemes. The minimum wage should apply to all jobs, though its amount should vary by region. Companies must be checked regularly and held accountable in case they exploit their employees.

Supporting families is a decision made by society and politicians, it is hence their responsibility to set up schemes to make sure children in this country grow up in safe environments, have access all the way to higher education and have equal opportunity in all other aspects of life.

THREE – Permanent Employment In recent years there has been a shift by companies to hire people on a temporary basis. Labour leasing should give people access to the same social welfare schemes as permanent employees, they should also have the same rights within the companies they work in.

There is the argument that labour leasing allows companies to quickly adjust employment numbers in a recession, which might ensure the company’s continuity. While this is certainly a valid argument in favour, I do not think it is fair that companies reek the benefits of employing cheap labour on a temporary basis, and when the going gets rough they pass them on to the state and let tax money pay for them.

Permanent employment gives people real security and enables them to plan for the long run.

There should be a basic human right to freedom from the fear of losing one’s livelihood! (ein Recht auf Freiheit von Existenzangst)

One way to fix the problem might be to force labour-leasing-companies to permanently hire their employees, which would put them in a comparable position to any other employee. This, in turn, would mean that workers would be leased to other companies at a premium to cover the time while the worker is not being leased (as they would still be employed, get a salary and pay all social security contributions). This would set a strong incentive for any company to convert them to permanent employee faster.

FOUR – Sufficient Pension One of the saddest things still plaguing our society is poverty amongst the elderly. At a time when people require help and support more than ever, they fall through the grid.

Two things need to be said here, in light of a population growing ever older:

  1. people who have worked their entire adult life must get a pension which enables them to live more than just a dignified life until the end.
  2. Those who failed to work all their life, for whatever reason, still need to receive enough money to live a dignified life.

In an age of low interest, an ageing population and fewer births than ever, we need to make sure pension schemes are future proof. Society needs to be told the true cost, this cannot be left for future generations.

Calls for people to prepare and save enough money for their retirement and good and reasonable in theory, in practice, however, they fail to take reality into account. There are too many people who won’t ever be able to save nearly as much money as required, even owning your own house/home is no longer a guarantee for a sufficient financial cushion for the last days.

Anyone who has (tried to) worked and paid taxes all their life should be taken care of by society. The contract between generations should be true once again!

Another point to consider is the average life expectancy. It has been rising constantly and with advanced in medicine and nutrition, this trend is unlikely to change. Automation and IT-ation on top of healthier old people mean that they will be able to work much longer hence the retirement age can and should be raised continuously.

FIVE –  Basic Universal Income Today the term usually refers to a lump sum paid to everyone, regardless of their situation. For multiple reasons I do not think this is feasible or even necessary. I would like to do away with most, if not all the of social security/welfare systems and replace them with one BUI-payment for those who need the support. It should supplement income, but not be fully replaced with it once a person starts earning again, to give people an incentive to find work. The BUI  needs to be complemented by the strict minimum wage mentioned above, and its enforcement.

SIX – Accessibility As mentioned above, one goal alongside the BUI is to dramatically reduce the complexity of our welfare system. For the foreseeable future, this will remain a utopian dream, and even if we ever get close to it, the system will still need to accommodate for many exceptions and various incentives. This “bureaucracy” makes it very difficult to find out what you are entitled to and how and where you can apply for it. Naturally, this favours the better educated and well off, as it is easier for them to find out about all schemes, find the time to apply, fill out the application correctly and adjust their living situation in such a way that they benefit as long as possible. As an example, in order to apply for child support in Germany today (something most/all families are entitled to), one has to fill out between10- forms alone! After that, there are day care centres, kindergarten, school, after school tuition, higher education loans any many, many more applications to be filed.

These processes have to be streamlined, the most important ones should even have automatic enrollment, for instance helping parents to fill out the child support application while they are still in the hospital with their newborn. Furthermore, as much as social security services are in charge of guaranteeing children’s welfare

Furthermore, as much as social security services are in charge of guaranteeing children’s welfare, in particular in troubled families, it should also be their responsibility to check that these families are getting all the help and support they are entitled to. Should this still not be enough, they should do their utmost to get them the help they require!

SEVEN- Progressive Tax System Please read this funny explanation of how our tax system supposedly works: Our Tax System Explained.

This explanation reflects the previous decade’s view on economics, which is changing now. “Trickle-down economics” has done the opposite of what was supposed to do; it attracted the rich, but rather than helping spread their wealth to the rest of the country, it has made them even richer and everybody worse off (BBC 2: The Super-Rich and Us).

The article also assumes that the rich can simply not show up the next day. This is not true. First of all, they have to “show up” somewhere. Secondly, the richer you are, the more invested you are in a place and the more diversified your portfolio is, which means you simply cannot leave overnight without enormous losses. Thirdly, a society where wealth is more evenly spread has greater stability, better social systems, and a less divided society (see Scandinavia for all of this where taxes are very high).

I truly believe that those in our society who are better off should pay a (much) greater share. After all, they benefit a lot from it.

Most recent Sources:
http://www.n-tv.de/wirtschaft/Amazon-belohnt-Gesunde-article19775598.html
http://www.alternet.org/news-amp-politics/6-things-paul-ryan-doesnt-understand-about-poverty-i-didnt-either