Social Insurance Origins and Evolution: A Historical Analysis
The Emergence of Social Insurance
In the context of exacerbated liberalism in the last third of the nineteenth century, a significant social conflict emerged, known as the social issue. Moreover, the Industrial Revolution was accompanied by a major economic crisis after 1880. The changes required by the circumstances were not adopted, which considerably increased poverty, not offset by efficient public services, especially in health and welfare.
This compensation constitutes a desideratum (desired situation), because in an economic crisis, it is very difficult to maintain efficient public services. These services are funded from two sources: wealth produced by vigorous economic activity, or income collected from citizens through taxes. In times of crisis, economic activity is not vigorous, and citizens have less income to contribute through taxes.
These incidents marked a change of course in contemporary history. The Industrial Revolution produced a massive exodus from the countryside to the cities, creating the proletariat as a new social class without legal working conditions. The previous models of care for basic needs did not serve the working class, so a new form of social protection was sought, of common interest to workers and employers. This model would become Social Security.
Social insurance was born following the emergence of a new type of work: paid employment. This linkage of social insurance and work started when the law incorporated the professional risk theory, overcoming the traditional tort liability (criminal), contractual liability (civil), and liability for reasons of force majeure. According to the former, the employer is responsible for risks suffered by the operator in service, without the existence of fault, breach of contract, or act of force majeure, and is therefore obliged to pay compensation. This was an international movement.
In short, social insurance did not arise as a replacement for the previous inefficient charity but as a new social protection system that later became the main instrument of social policy.
Specific Features of Social Insurance
- Relationship to Paid Employment: Previous systems of social protection also addressed the social integration of the poor through labor but were primarily aimed at protecting precarious workers or those forced into destitution. The rise of Social Security is linked more with productive work, and the rules that regulate it are taught in context as part of contemporary labor legislation aimed at improving working conditions. The relationship between social insurance and labor was so important that the contract between employer and employee legally required affiliation to Social Security.
- Adoption of Forecasting and Saving Techniques: This character is possibly the key difference between the new social insurance scheme and former Welfare systems. The protection that workers need in the future, when they cannot work, or when adverse circumstances prevent their work, is financed in advance, while the worker is active, through contributions from employers and employees. It presupposes a contribution from those protected. The forecasting system is reflected well in the draft law of 1908 that created the National Welfare Institute.
- The forecasting technique was classic insurance, which is why the new system of social protection is given the name of social insurance. Insurance was a legal institution that assumed great importance in the eighteenth century as a technique for forecasting marine risks, commercial, and economic issues in general. The term ‘social’ emerged in the early twentieth century to mean that insurance should not be directed only to the security of capital and commercial risks but also to the greater dignity of labor and security for it.
- Mandatory Nature: One way of forecasting which sought to serve its purpose effectively guarantee had to be imposed, albeit gradually, be compulsory. Accurately expressed in the Explanatory Memorandum to the Royal Decree of January 24, 1908 cited above, which is to say, that the insurance has been imposed because the social mass is short-sighted and can not leave them to their own devices.