Chapter 6: Perception and Management of Social Risks: ‘In the Past the Future Always Seems Better’?
Once a word has entered the public domain, there it will remain for the next nine years. (Zen Master Huang Long) In this chapter1 the intrusion of the term risk management on the employment policy discourse is taken as a moral opportunity to reconsider the balance between solidarity and individual responsibility in managing risky labour market transitions during the life course. The argument is developed in ﬁve steps. Section 6.1 covers the psychology of intuitive beliefs and choices pointing to the bounded rationality of risky choices. I demonstrate how the institutionalisation of opportunity structures recommended by the concept of transitional labour markets (TLM) can overcome various kinds of asymmetries in risk perception. Section 6.2 shows how imperfect or strategic information may also cause biased risk perception. I provide examples of how the analysis of labour market transitions throughout the life course can vastly improve the methodology of risk management. Section 6.3 explains that attention to risk asymmetries and the reduction of information deﬁcits does not yet provide clues for acceptable institutions of risk-sharing. Normative principles of justice have to be revisited. I suggest complementing Rawls’s theory of justice with Dworkin’s ethical theory, enriched by Sen’s capability approach. Section 6.4 focuses on the labour market, making the point that the most important institution managing risks is social insurance, including unemployment insurance. Most modern welfare theorists argue for a replacement or at least a retrenchment of social insurance favouring individual savings accounts or even privatisation of unemployment insurance. I therefore discuss...
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