Chapter 7: Are welfare states prepared?
The Impact on Labour Markets and Welfare States
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If fewer people are employed in the labour market this will imply a risk of lower income for the public sector; further, dependence on the social security system implies significant pressure on its ability to finance the welfare state and to cover those who have previously been covered by employers’ social security contributions. If wage incomes fall then consumption will go down – as will overall economic activity. This will increase the need for new ways of redistributing income and consumption possibilities in many countries. Naturally, the use of new technology can imply the possibility of cheaper delivery of services, for example welfare technology may help in the area of long-term care; however, here also a reduction in the number of jobs will imply more segregated labour markets. The chapter will also include a debate on guaranteed minimum income as one possible way of approaching the problem. New technology will challenge existing ways of measuring societies’ development, as we will be able to have more consumer goods without this influencing economic growth.

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