How are other European countries building fairer societies?

The Scottish Government’s Building a New Scotland paper not only shows how the UK’s near neighbours are wealthier, fairer and happier societies but it also highlights the features they share that deliver those more successful societies.

Whilst each of our neighbours has different national models there are factors which are, to a greater or lesser extent, common to those countries which distinguish them from the UK.

A key aspect of those countries – and where the UK is something of an outlier – is the relative generosity of unemployment benefits. Comparing those benefits to the incomes the unemployed received before losing their jobs shows that the UK has lower benefits. 

UK policy has tended to be designed in the belief that generous benefits will reduce work incentives and that people should get back into jobs as quickly as possible.

However, the experience in  neighbouring nations is that higher benefits not only cushion the impact of unemployment on household incomes, but also help the labour market and improve the economy. The unemployed workers take time to find a job to fully suit them leading to better ‘matches’ between employer and worker; plus the stronger safety net emboldens workers to change jobs more often – a key mechanism by which higher wages are achieved.

The UK’s neighbours are also able to sustain relatively high spending over the long-term compared to the UK where we invariably face spending cuts imposed by Westminster. The evidence suggests higher confidence in government is correlated with higher levels of spending. In terms of confidence in government all the comparator countries bar one are more successful in this respect.

In terms of Scotland the regular Scottish Social Attitudes survey has found that people in Scotland have far greater trust in the Scottish Government than the Westminster government. That stability in trust is an example of confidence in the Scottish Government compared to Westminster, and is a great starting point for an independent Scotland to grow Scotland’s economy and make the country fairer.

Although different countries operate different models, all the comparator countries have highly developed forms of social partnership which has been defined as ‘institutionalised co-operation between business and labour compared to the UK. Social partnership is a major factor explaining the ability of the comparator nations to manage industrial change and pursue consensus-driven economic development.

The UK has long pursued a different economic path to that of most countries in northern and western Europe, and the policy choices it has made have resulted in worse outcomes. With the powers of independence Scotland can take a different path and emulate the success of our more successful neighbours.