A sustainable economy aims to meet the needs of a society without compromising the needs of future generations as it was announced at the United Nations Brundtland report in 1987. Health and social policies must control the resources so that future generations can also benefit them. That is to say that each State has to ensure services for the common good of society such as health, education, employment and pensions without leaving a pharaonic debt to future generations.
How do States ensure sustainable health and social policies?
First it depends on the economic situation of the country, its culture, its ideas. Health policies include health care and pensions. In a State of well-being, the Government pays them through taxes and social security contributions. The State guarantees to all its members a compensation in the event of labour accident, maternity leave, unemployment benefit, pensions for retired workers… The welfare State can be sustainable when there is a high level of employment because more people pay taxes and social security fees. The demographic factor has also a significant importance, since pensions are paid in most of the countries by active workers. When the people who work are less in number than the retired people, the system is unsustainable.
In Spain, due to the actual economic situation this system seems to be unsustainable since in the first quarter of 2013 there were 27.16 million unemployed, therefore non contributing to the social security fund. This situation has led the State to increase its deficit in order to sustain social benefits. The budget on education and research was reduced which is a bad policy for the future. Spanish scientists and high qualified professionals look for opportunities abroad, causing in the long run a cultural and economic impoverishment of the country.
How could it be sustainable?
To increase the funds of the social security system in order to guarantee the universal public healthcare and the payment of future pensions a solution could be the copayment. This is already in place in some of the Spanish regions. Instead of the expenses being covered 100% by the social security a small part of it is paid by the user in an equitable way. Investing in preventive medicine is a long term solution to cut the social security expenses, as early detection of a disease costs less than treatments for chronicle and degenerative diseases. Education has also an important role in the prevention of illness. For example, In schools today students learn the consequences of smoking, alcoholism and the importance of exercise to reduce the probabilities to develop cancer. Social and health policies are interconnected as we have seen previously.
Another way to contribute to sustainability, especially in what refers to the payment of pensions could be that each worker individually quoted for its own future pension. Although painful and at a very high political cost, lower the pensions is another way to make the economy sustainable. In some countries like the United Kingdom where state pensions are very low, workers are encouraged to make their own private pension plan so as to complete the social security one. Some companies offer workers a private pension plan, which could be an incentive for the worker to accept lower salaries. Measures like this might be necessary to sustain the system in times of crisis.
However a sustainable economy should not be based only on cuts. Investing in education is necessary to create a human capital capable of working in research, preventive medicine, in companies which invest in new technologies. Investment should not be regarded as an expense. Governments investing in education, research and development are contributing for future growth. Enabling companies to innovate, will produce a new economic cycle as Schumpeter announced leading to the creation of new professions and new jobs. At the same time, this will attract foreign capitals which are looking for innovative infrastructures and high qualified staff so as to gain in productivity. The deficit is then reasonable in a sustainable economy when it is an investment that brings growth in the long term.