Is Social Protection a Means of Production During Crisis? The Role of Prior Social Protection Reforms in Economic Performance in the EU Bailout Countries

An often-repeated declaration in the context of the EU Lisbon Strategy in the early 2000s was that ‘Social Protection is a means of production’. This in Greece, Ireland and Portugal provided partial justification for strong social protection expenditure growth. However the three countries differed in the extent to which structural change accompanied this growth: At one extreme, Greece retained existing structures, at the other, Ireland underwent considerable social reforms, while Portugal added some new programs. In all countries the crisis necessitating the bailout was ultimately a fiscal crisis in which the total size of social protection expenditure played a significant part. In contrast to the macro picture, turning to the structure of social protection system, the three countries faced austerity with social protection structures at differing stages of reform and adaptation. The question arises to which extent was their progress under the bailout coloured by the differing social protection machinery in place? Was Social Protection is a means of production, in the sense of societal risk management as the original declaration had it, during the crisis? This comparative paper starts with an conceptual overview of the idea of social protection as social risk management. The pre-crisis situation of the three countries is compared using macroeconomic and ESSPROS data. This is followed by an examination of their record in social policy reforms in the period 1995-2009. The post-crisis reaction of social protection in the context of austerity is examined by looking at fiscal data, official reports and survey based evidence , in order to offer replies as to the extent to which social protection played a role (positive or negative) to help weather or prolong the crisis.