Better off but less secure

Family stress and economic insecurity appear to be growing worldwide even though we are much better off in per capita income than 20 or 30 years ago. A combination of intensified global competition, the growth in non-standard work such as contract and part-time employment, rising income inequality, the weakening of social support systems and the end of steady employment with a single employer for most workers - these are all contributing to this sense of insecurity.

Insecurity surely determines how satisfied we feel with our lives. Our own NSO has made an attempt at measuring how the Maltese rate their satisfaction of various aspects of life. The 2003 Lifestyle Survey shows that, on average, life is rated as "satisfactory", those who are employed rate their job as "satisfying", while the average family's standard of living is rated as "fairly satisfactory" to "satisfactory", though with a marked tendency by people and households in the southern harbour and south eastern areas to rate them more negatively.

A new report from the International Labour Organisation, Economic Security for a Better World, has published for the first time an economic security index. The report marks the first attempt to measure global economic security as perceived by ordinary people, based on detailed household and workplace surveys covering over 48,000 workers and more than 10,000 workplaces worldwide.

Economic security is measured on the basis of seven forms of work-related security including income, labour markets, employment, skills, work, jobs and representation. These factors take account of various parameters ranging from health care, pensions, income support programmes and on-the-job safety to the role of unions, income inequality, access to training, literacy levels and unemployment.

The top five countries for economic security, not surprisingly, are Sweden, Finland, Norway, Denmark and the Netherlands, with scores ranging between 0.86 and 0.98. The United States, in contrast, ranks 25th - the worst showing of an advanced economy. The report cautions, however, that economic security remains out of reach for the vast majority of the world's workers, about three-quarters of whom live in circumstances of economic insecurity that fosters what the report calls "a world full of anxiety and anger". Only eight per cent of people - fewer than one in 10 - live in countries providing favourable economic security. Nepal, the lowest-ranked at 90th place, scores 0.05.

Unfortunately, Malta has only been included in the Skill Security Index, because the ILO does not have sufficient data to develop the other six indices. In this respect, at least, the Maltese are better off than those in most countries. Here, we rank well, coming in with an overall score of 0.653 at 39th place among 139 countries. The composite result is made up of a score of 0.738 in terms of policy variables, 0.528 in terms of institutional variables and 0.674 in terms of the effectiveness of such policies and institutions.

People in countries that provide their citizens with a high level of economic security have a higher level of happiness on average, as measured by surveys on national levels of life satisfaction and happiness, the report finds. The most important determinant of national happiness is not the income level, though there is a positive association, but rising income seems to have little effect as wealthy countries grow wealthier. Rather, the key factor is the extent of income security, measured in terms of income protection and a low degree of income inequality.

In addition, the report finds that a high level of skills security, measured by an index incorporating indicators of schooling and training, is actually inversely related to well being when jobs are poorly attuned to the needs and aspirations of people, especially as they become more educated and acquire more competencies. At present, too many people are finding that their skills and qualifications do not correspond to the jobs they have to perform, resulting in what the report calls a "status frustration" effect.

The report shows that political democracy and a trend towards civil liberties significantly increases economic security and that government spending on social security policies also has a positive effect. But there is only a weak impact of economic growth on security, measured over the longer-term. In other words, rapid growth does not necessarily create better economic security, although it sometimes can do it if accompanied by appropriate social policies.

In looking at national levels of economic security, countries are divided into four clusters - Pacesetters (with good policies, good institutions and good outcomes), Pragmatists (good outcomes in spite of less impressive policies or institutions), Conventionals (seemingly good policies and institutions but with less impressive outcomes) and Much-to-be-Done countries (weak or non-existent policies and institutions and poor outcomes).

Many wealthy countries could easily achieve more economic security for their citizens since the report shows that some lower-income countries achieve higher levels than some of the rich countries. Indeed, the ILO analysis finds that the global distribution of economic security does not correspond to the global distribution of income and that the countries in South and South East Asia have a greater share of global economic security than their share of the world's income. Whereas South Asia has about seven per cent of the world's income it has about 14 per cent of the world's economic security.

No advanced country has moved as far as the US in weakening the economic security of workers, facilitating such huge income and wealth inequality, or jailing so many of its least-skilled males, but pressures exist in many countries, including Malta, to become more "flexible".

Interestingly, though, the ILO report finds that "people in countries that provide their citizens with a high level of economic security have a higher level of happiness on average, measured by surveys on level of life satisfaction and inequality in happiness within countries".

Moreover, it argues that the most important determinant of national happiness is not income level, though this is not unimportant. Rather, "rising income seems to have little effect as wealthy countries grow wealthier. The most important factor is the extent of income security, measured in terms of income protection and a low degree of income inequality".

One of the report's key concerns is the threat to health care. In fact, it argues, "probably the highest source of increased income insecurity is the series of changes taking place in health care systems". In Malta these pressures are intensifying too. There is a strong effort by business groups, right-wing lobbies and conservative politicians to weaken Malta's public health care system. It is this system that could help Malta rank among the better-off in economic security.

The ILO report is a useful reminder of the extent to which our political agenda has strayed from efforts to reduce poverty and pursue full employment. Instead, our elites are much more focused on finding ways to cut taxes for the better off (vide the GRTU's emphasis on the middle class's tax burden) while dismissing measures to improve life chances for those in the bottom quintiles of society as unaffordable.

Measures to provide literacy and language skills, improve access to training for low-skilled workers, pursue economic policies for full employment and curb growing income inequality should have a higher place on public policy agendas, as should public institutions such as a universal health care system and sound public schools. Likewise, there is an urgent need to improve the life chances of all Maltese by making significant investments in early childhood development.

This will have to be done despite pressures to become more like other "advanced" countries, where top corporate executives earn 400 to 500 times as much as ordinary workers and neo-conservatives have hijacked the tax system to create a high-income plutocracy that can shield much of its wealth and income from any kind of taxation in a winner-take-all world.

It's all about the kind of society we want. By designing its economic security index, the ILO has done a public service in reminding us that a healthy and productive society is also one that provides economic security and confidence in the future for all of its members, not just those at the top of the pyramid.