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One of the key lessons from income security reform in Canada isthe crucial importance of interjurisdictional cooperation. Problems havearisen in the past (and continue to arise) from lack of coordination and theinability of the senior levels of government to agree to coordinated structuralchange in their interdependent income programs. The only serious attemptto institute a system of earnings supplements (in the mid-1970s) failed in partbecause of the inability of the federal and provincial governments to strike adeal. The current National Child Benefit is a rare and welcome example of- and, hopefully, model for- close cooperation betweenthe central and provincial governments.

Reform of programs and redesign of benefitscannot succeed without considering the respective roles of the various levelsof government. If programs are not structurally integrated, at leastthere might be improved coordination between levels of government (e.g.,sharing of administrative data). Canada’s positive experience in childbenefit reform underlines the importance of close cooperation and joint work atthe level of both politicians and public servants. The National ChildBenefit was engineered and implemented by a federal-provincial officialsworking group that is still operating actively, and a similar organization hasbeen established for reform of services and supports for Canadians withdisabilities (another important area where the federal and provincialgovernments are very much intertwined in responsibility and expenditure).

Canada’ssocial security system overall has tried to cope (with debatable success) withthe problem of imbalance of responsibility and revenue capacity mentioned inthe Russia Paper. Canada has used three main instruments.

In the 1970s, the federal government cededsome tax points to the provinces (i.e., allowed the provinces to occupy alarger part of the income tax field) to enhance their revenue generatingcapacity. The Canadian central government provides social transferpayments and equalization payments intended to help pay for provincial socialexpenditures and to help level the playing field between poorer and richerprovinces. And the federal government has increased its role in one keyarea of income security -child benefits - withcompensating payments to the provinces. They can shift their expendituresfrom social assistance to other program and services for low-income familieswith children. Russia could consider the Canadian experience in thisimportant aspect of income security policy on a federal system ofgovernment.

v. Public role in reform

Canadian governments (especially the federal government) have longfollowed a tradition of seeking the views on public policy reform of thegeneral public and of nongovernmental interest groups, through such mechanismsas Royal Commissions, public inquiries and task forces and (on a permanentbasis) Parliamentary committees that head witnesses and accept writtenbriefs. In recent years, there has been increasing emphasis on the needfor governments to form ‘partnerships’ with various nongovernmental actors (e.g., employers, unions,voluntary groups, communities) both to design and implement public policyreform.

There is cynicism from some quarters(especially social groups) about the extent to which these consultative andpartnership efforts are mere window dressing that play only a tangential rolein policy making and give merely the appearance of democratic government.Nonetheless, these partnership arrangements have played an important role fromtime to time in generating ideas and responding to governmentproposals.

6. Post-Welfare State: Canadian Experienceof Designing Social Policies and Some Lessons for Present DayRussia


The transformation process is seemingly ofthe universal nature and differs in various countries only by phases ofgrowth and packages of methods and mechanisms within the economic and socialpolicies frameworks applied in any given case.

Russia, which has been apparently behindhandwith reforms in the social sphere, is interested in an analysis of causes,consequences, and methods applied to settle problems in the social area inpractically any country with traditions of such a reformation. In this respect,Canada may be of a special interest, since notwithstanding considerabledifferences in the levels of citizens’ welfare, different legaltraditions, long-time domination of the Northern American model of marketeconomy, two our countries have much in common -- from the state basing on thefederative principles to belonging to the same northern group of countrieswith similar demographic and labor market situation.

The formation of the conceptual and legalframework of social policy, alongside with the creation of mechanisms ensuringits financial and organizational aspects in the course of economic reform inRussia of 1990s was affected by rather contradictory factors.

The first five years of the reform may bedefined as the period dominated by the liberal thesis that an effective systemof social assistance may be established only on the foundation of an adequateresource base, which may be created only in the framework of an efficientlyfunctioning economy. At the same time, the necessity to smoothen socialtensions in the society over resulted in the fragmented governmental actions inthe social sphere, which were adapted to current challenges, that sharplydecreased the stability and predictability of social policy thus underminingthe public confidence.

The August 1998 crisis has caused completeparalysis of the reform component of social policy, which lasted untilend-1999. The government actions were mostly aimed at mitigation of negativesocial consequences of the crisis on the one hand, and to restrainpro-inflation components of social policy on the other hand.

The elimination of old social and economicsystem, and the designing of new rules of the game were often formalized bydirectly adopting organizational and legal mechanisms in force in developedmarket economies. Since the newly created institutions lacked consistency withboth their formal pre-reform analogs, and, more importantly, current informalrules and traditions, the underestimation of real interests of economic agentsand changing social structure resulted in sharp deterioration of effectivenessof social innovations.

The dominance of macroeconomic approach tothe reform relegated institutional transformations to background (for instance,the reorganization of financial and organizational infrastructure of the socialsector and the regulation of labor relations was neglected).

A profound transformation of the social andeconomic system carried out without regard to the mutating system of interestsresulted in the emergence of informal adaptation mechanisms with intrinsic tothem customs, behavior stereotypes, organizational forms of production andconsumption.

Dualism of the modern Russian social andeconomic system (the shadow economy generating, according to different estimates from 1/3 to ½ of the GNP, is the most commonform of the manifestation of adaptive trends) results in the high realauthority of unwritten rules of social behavior, which, due to theiruniversality and relative stability negatively affectthe perception of a number of social innovations by the society, on the onehand, and, on the other hand, forms a certain social demand with regard tothe philosophy and implementation methods of transformational social projects(for instance, the social pact as a pledge of the continuation of reforms,much discussed recently, since long exists in the framework of the shadoweconomy).

The objective, pursued by social policiesimplemented in modern Russia, is a contradictory one. Ideally, it is necessaryto improve the effectiveness of the state discharging its responsibilities tocitizens in the framework of Constitutionally set social guarantees to thepopulace in the situation of constantly shrinking budget capacities of thestate.

Narrow range of possible decisions createsincentives to study foreign experience more thoroughly, especially that of thenext step, since the cost of both theoretical and administrative mistakesmanifold increases under the present conditions.


The description of elements of the Canadiansocial security system (more precisely, the system of public income support)presented in the paper is of a certain methodological interest (in particularwith regard to the recent debate about the reform of the mechanism of fundingsocial payments in Russia), since it rather clearly structures various types ofsocial assistance by category.

The authors base the typology on the natureof the source of funding of social payments – insurance or tax.

Social insuranceprograms (in the framework of such programs individual contributors seek toprotect themselves from the insecurities associated with a given risk) inCanada are:

  • At the Federal level - Employment Insurance (formerly known asUnemployment Insurance); the Canada Pension Plan;
  • At the regional level - workers` compensation systems, whichprotect employers from potential financial ruin in the event that an employeeexperiences a work-related accident and decides to launch a lawsuit fordamages.

There are also four tax-supported income programs.

The authors introduce additionaldifferentiating criteria for this group dividing it into three types.Tax-supported programs include universal,income-tested and needs-tested programs2.

  1. Universal income security programs

At present Canada does not have in place anyuniversal income security programs funded from budgets of different levels,i.e. not based exceptionally on social and demographic eligibility criteria forprovision of income-support payments (such as old age, presence of children,etc.) 3.

Two programs basing on this principle (OldAge Security for all Canadians age 65 and over, and Family Allowances, underwhich all families with children qualified for the payment) were in place untilearly 1990s.

  1. Income-testedprograms

At present all4 of Canada’s tax-supported income securityprograms are delivered on an income-tested basis.

  1. Needs-testedprograms

The major program based on thisprinciple5 in place in Canada is the social assistance program funded from regional budgets.

The conclusions the authors arrived at aftercomparing different models of social mechanisms in place in Canada are of acertain interest:

Type ofprogram



Social InsurancePrograms

1. They areefficient, effective and fiscally responsible income replacement for thecontributors who fell victim to a designated risk;

2. The use of collective provision offerseconomies of scale;

1. They decouplecontribution from entitlement, both in the sense of lesser entitlement, and thevariance between the number of contributors and recipients, what

results in the undermining of thefundamentals of the social contract.


1. They are objective(eligibility can be established through tax statistics);

2. They are administratively simple and donot create incentives for corruption (no contact between recipients andgovernment officials);

3. No decisions are made on the basis of adetailed assessment of personal circumstances.

1.Absence of built-inindicators of fairness and reciprocity of social payments since they areprovided on the basis of only one criterion.


1. They provide themost complete information about the real social and income situation ofrecipients.

1. They requireextensive information;

2.They employ administrative discretion.

In principle, the assessments presented inthe table look very convincing. The basic disadvantages in determining theeligibility of recipients are apparently inherent to these very mechanisms. Atthe same time, it shall be noted that under present conditions in Russia thesystem of social payments based on the criteria of households incomes can notexist without a declaration component (due to the absence of objectivestatistical data, etc.), thereby it becomes very complicated. Needs-testingrequires complex bureaucracies with corruption and biased decisions inherent tothem.


The authors review the development ofCanadian social security system in the context of transition from thetraditional market residualist system via the post-World War Twouniversalist model to the emerging system of the post-welfare state.However, this transition is far from being completed.

At the technological level, this developmentis seen as the transition from universal and needs-tested techniques to thesystem of income-tested targeting.

A brief outline of the basic parameters ofthe consequent concepts of social security predominant in Canada may bepresented as follows:

Dominant concept ofsocial policy

Basic parameters ofconcepts


1.A laissez-faireapproach dominates, the market is seen as the main regulator of social andeconomic processes; 2. Government shall play a limited role in questions ofsocial policy, distribution of goods and services, its role shall be limited toa last resort only for the poor and destitute. 3. Reliance on oneself, family,church or charities.


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