Social Security Analysis

The social security is a form of expression of the state social policy, what is referred to as a material security of a certain category of citizens from agents of the state budget and special off-budget funds in case of socially significant events for the purpose of alignment of the social status of citizens in comparison with the other members of the society. The need for the social security appeared at the same time with the emergence of the human society. In any society, in spite of its economic and political system, there are always people, who according to the natural reasons of not depending on them, cannot get sources and methods of the existence with their own efforts. Children and old men are in the number of these people, first of all. Besides, each person who lost the ability to work, can fill up series of the invalid temporary or constantly, according to health disorder. With the development of the society and the complexity of social relations, among the causes of the human-tested social assistance, there are even such causes that are related to nature of the prevailing of economic relations in the society, which generate unemployment, inflation and poverty.

Social Security

The term "social security" in different countries has different interpretations. For example, in the USA, this term means the old-age pensions; in the UK it includes all cash payments plus the cost of the healthcare. However, in all countries, the social security system is the center in the mechanism of the social protection, which also includes the non-state forms of the social insurance, private philanthropy and others. The public social security in Russia is a system of the financial security of Russian citizens in old age, in case of sickness, supporting the low-income families, etc.

The main types of social services traditionally are pensions (old-age, survivors, etc.), benefits (for temporary disability, maternity, for the children of low-income families, etc.), social services (the storage in nursing houses and houses for disabled persons, the employment of disabled persons, etc.).

Looking after the elderly and disabled persons in the primitive communal system was carried out probably by the custom. In the slave society, there was no form of the security slaves in old age or in case of disability, but for veterans of the military service in Greece the pension was introduced. In an ancient Rome, the service was rewarded by the provision of land.

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The feudal period is characterized by predominance of the subsistence farming, which is based on family with responsibilities for the material support of the elderly and disabled people. In the same period, and there were other forms of social support for those, who could not work and had no facilities, such as charity, the sanctioned begging, etc. The state pensions are starting to be given to big dignitaries, bishops, prefects and others, who service to the monarch. So, the pension at that time had the character of awards, but not the kind of employable people security.

The national social security system was formed with the specific of economic, social and cultural development. However, despite the differences in the way of development and characteristics of the organization, the quality and scope of services, as well as methods of financing all social security systems were operating on the basis of the common principles.

Typically in European countries, the casualty insurance was firstly introduced; then the medical and the pension insurance, and much later, the unemployment insurance. This sequence is explained by varying degrees of relevance of these types of liberal market economy insurance:

  1. The insurance against accidents contradicted less with the existing principles of liberal economics.
  2. The insurance coverage for old age people and illnesses required the deeper transformation of market principles, as risks was the major source of poverty, so it was transferred from the individual to the collective responsibility. In addition, such insurance required a greater level of the administrative innovation and larger funds.
  3. The unemployment insurance contradicted the most with the prevailing that neoclassical approach had on the economic policy. According to this approach, unemployment was understood as a voluntary choice of the individual, and its growth was understood as a temporary phenomenon. In addition, the dependence on cyclical fluctuations complicated the unemployment insurance.

The social security principle provides the social protection to the next categories of people (civil servants, soldiers, orphans, etc.), and it is supplemented with tax revenues into the budget. The social policy is financed according to this principle, including the programs in the healthcare and the secondary and higher education.

The principle of social security is crucial in social protection systems with a unified set of basic social services to all citizens of the state. These systems operate in the Nordic countries (Denmark, Sweden and Finland) and in the UK. A characteristic feature of the social security systems in these countries is the governmental funding of social programs (especially in Denmark, Sweden and the United Kingdom) and the state organization of social institutions (such as the National Health Service of Great Britain). The principle of the insurance plays fewer roles in such economies, as they have the high volume of national income and they are financed through the state budget to reduce the social inequality. Thus, the principle of the social security is the principle of solidary support of all society members to certain groups of individuals. However, in Germany, the principle of social security is the principle of damage compensation from the state.

Funding of the social security by budget funds depends on the economy efficiency, so that during the economic downturn it can lead to overloading the public finance and to the related negative consequences. However, the application of this principle is necessary in cases of inability to provide social guarantees regarding the risks, to which the principle of the insurance would be impossible to apply.

There is also the principle of help in the international society. According to this principle, a person who gets into trouble and is not able to get out of it, may seek the assistance from the relevant authorities and to rely on social protection (social benefits, social services) in an amount, what is sufficient to overcome the problem, which led to appealing for help. Like the principle of social security, this principle provides funding through the tax revenues.

The feature of social programs based on the principle of care (also known as the principle of help), characterized by the need to verify the beneficiary poverty and to confirm or disapprove his eligibility. This test can determine the nature of the problem and the required amount of assistance and to prevent the abusing of available programs in public social protection from some unscrupulous people. However, the need for such checks shows the imperfection of this principle, since it requires the additional resources to carry them out and cannot guarantee the neutrality and impartiality of those, who review and decide for the assistance.

At the same time, elements of social assistance are an essential part of the social security system in the market economy, because only principles of the social insurance and social security do not allow to take into account all the possible social risks and to build a multi-faceted and comprehensive system of social security.

There is even a solidarity principle in the world. This principle provides a mutual assistance of all participants of the social protection system. Such reciprocity is realized in the form of costs transferred between different socio-economic and socio-demographic groups. There are three components of this principle.

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  1. The social solidarity is providing by association of various risks under the same insurance premiums (here is a contact with the principle of social insurance redistribution).
  2. The social solidarity implies inter temporal redistribution. This is the Treaty of generations, according to which, there is a redistribution of profits from the able-bodied young people to old disabled members of the society.
  3. The social solidarity is the basis of interpersonal redistribution. In this case, the redistribution of income is:

-         between the richest and the poorest social groups;

-         directly between the insured entities;

-         between the insured and uninsured members of the social security system.

Four main models dominate in the European Union member states: continental (Bismarck), Anglo-Saxon (Beveridge model), Scandinavian and South European. This typology is recorded in the documents of the European Commission.

The continental model (another name - the Bismarck model) sets the strict relationship between the level of social protection and duration of the profession. The basis of this model is the mechanism of the social insurance. The social expenditures are financed mainly through the insurance contributions of employers and the insured employees. So, this model provides the implementation rules of the equivalence, when the value of claims is determined primarily by the size of contributions.

The Anglo-Saxon model (known as William Beveridge model) is represented in Europe (the UK and Ireland). It is based on the following principles:

-         the principle of social security system universality (universal), which is spreading it to all citizens who need the social assistance;

-         the principle of uniformity and unification of social services and benefits, which is expressed in standard  methods of calculating the size and terms of pensions and healthcare;

-         the principle of the distributive justice is the main in this model, because it is not professional (as in Bismarck model), but national solidarity.

The Scandinavian model of social protection characterizes Denmark, Sweden and Finland. The social protection is a legitimate right of citizens here. A distinctive feature of Scandinavian model is the wide coverage of various social risks and situations, which requires the public support. Getting social services and benefits is usually granted to all inhabitants of the country and are not driven by the employment and payment of premiums.

In general, the level of social protection offered by this model is relatively high. It is achieved by the active redistributive policies aimed to equalize the profits.

A necessary precondition for the functioning of this model is a highly organized society built on the basis of  institutional commitment to the community welfare. Financing the social protection systems in this model are mainly due to the taxation, although, the insurance contributions of employers and employees play some role.

The South European model is presented in Italy, Spain, Greece and Portugal. In these countries, the social security systems have been created or improved only in recent decades. This model can be interpreted as developing and transitional.

Typically, the level of social protection in this model is relatively low, and the task of social protection is often seen as a matter of family. Therefore, the family and the other civil society institutions play an important role; and social policy is usually passive and focused on the compensation of losses in earnings of the certain categories of citizens.

The social protection is, on the one hand, a functional system, a system of areas where it occurs, on the other hand, the institutional system, a system of institutions that provides it (the state court, trade unions and other civil society organizations).

In its full manifestation, the social protection should cover the following areas:

-         providing the living wage to the members of the society and providing the material aid to those, who need it by objective reasons, the protection from factors that reduce the standard of living;

-         creating conditions that allow citizens to earn easily for living in any way, which does not contradict the law;

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-         creating conditions for satisfying the certain level (in the amount of social opportunities, taking into account the national and historical specificity) of local needs in education, healthcare, etc.;

-         ensure the favorable conditions for laborers, protecting them from negative effects of the industrial production;

-         the environmental security of the society;

-         protecting citizens from criminal attacks;

-         protection of the civil and political rights and freedoms, consistent with the principles of legal democratic state;

-         creating conditions, which preclude armed social and ethnic conflicts;

-         protection from the political persecution and the administrative arbitrariness;

-         ensuring the free spiritual life, protection from the ideological pressure;

-         creating the favorable psychological climate in the society in general, in some cells and structures, protection from the psychological pressing;

-         ensuring the maximum stability of the public life.

So, the social security has always been and still is one of the key determining places in the state and society. It depends on the economy and is closely connected with politics and social well-being of working people and unemployed population.

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