Foundation Forum 2009 - Reflections on the recession

The future of public services

The global economic downturn is going to have a significant impact on the provision of health and social services systems throughout Europe as economies come under increasing pressure to revive demand at the same time as dealing with growing unemployment and falling tax revenues.

As needs multiply and grow across all member states, resources to fund the requirements of public services such as health, education and care are being targeted as a resource for more urgent spending requirements such as unemployment. At the same time, political pressure from several quarters, is forcing cuts in overall social spending and public sector costs. Less spending on health and education in terms of budgetary allocations are likely to have long-term consequences for European economies and not all will be good.

Andrew Watt of the European Trade Union Institute, John Halloran of the European Social Network, and Gerhard Naegele of the Institute of Gerontology gave their opinions and solutions on the way forward for public services in difficult economic times.

Public sector to lead innovative change?

'In Germany social services is seen as a promoter of economic growth and an innovative sector that can create jobs. We would like to see a greater professionalisation of the service,’ said Gerhard Naegele.

The ability of the public service sector to produce new intelligent jobs was supported by Andrew Watt. ‘I would argue in particular that the care sector encourages economic growth. However, there has until very recently been an intellectual and political hostility to public services,’ he said. ‘Fortunately, while the demands will be great due to an ageing population there is still an underlying productivity growth in the economy. There will be perceptible shifts in demand, but these are manageable. The sector also needs to do everything it can to shorten the recession. We need to steer the economy in the direction of consuming more low carbon goods.’

John Halloran was, however, more sceptical, not of the job creation ability of the sector but if the demands being put on the sector could give it a sustainable future.
‘Let us ask ourselves, “What is sustainable?” Governments need to meet the demands of the present, but will that allow them to meet the demands of the future? Apply this to the public sector and you find that supplying services to all dependents is not sustainable. And in a recession you have to do more with less and you have to move funds in new directions as more people claim benefits. Since the beginning of the current downturn, case loads in Germany and France have risen by 30%.’ Halloran also suggested that provision could be made more efficient by improving the connection between services.

However, Tim Page, senior policy officer at the TUC was slightly more optimistic. ‘The economic crisis provides us with a chance to think what sort of society we want to live in. It will be political decision,’ he said. ‘There are all sorts of efficiencies that can be made, but it is a question of resources and allocating resources.’

Andrew Watt also said that future provision may not be as expensive as was often thought the case. Healthcare systems in the EU are expected to face huge challenges, with public expenditure on healthcare projected to grow by 1.5 percentage points of GDP up until 2060. Spending on long-term care is equally expected to grow by 1.25% of GDP during the same period. ‘These are the projected demands for the next 50 years, but with some economic growth I do not think this heralds the collapse of capitalism,’ he said.
Europe’s public services do face enormous demands in the near future, but perhaps in the aftermath of the financial crisis there will be less political hostility to them from some quarters as they prove that are a vital part of the economy as well as an important resource.

Caring as a growth sector

One of the areas where Europe faces a challenge is looking after the growing numbers of people who cannot work and require substantial care: the aged, the ill and the disabled. There has been a significant under-investment in the caring sector. The main providers of caring services in Europe are families and friends, who are not provided with proper supports by outside agencies. Over 80% of caring happens in people’s homes, given by family and friends. Social care offers an employment opportunity for the 14 million people who will be entering the labour market, according to Imelda Redmond, Chief Executive, Carers UK.

Proper investment in the sector could provide new career paths for the young and for the significant numbers of people aged 45 to 65 years who have fallen out of the jobs market because they have caring responsibilities. Currently, the jobs are low paid, have poor career paths and are mainly taken by women, contributing to the gender gap. By taking a different approach to caring, by viewing it as an infrastructure which we need to come out of recession, and by making proper investment, the sector could provide new career paths and much needed jobs.