The Changing European Labour Market and its Consequences on Social Expenditure System

During the second half of the 20th century, significant changes in the structure and concept of the welfare state in Europe have emerged, mainly due to the changes in labour market. Since the 70s last century, progressive implementation of labour - saving technologies and current technologies based on the Internet of Things, Data and Services have been changing economic activity and consequently the character and forms of work. The accompanying phenomenon of these changes has been growing labour market uncertainty and unemployment. People threatened by the unemployment, especially by the long-term unemployment became dependant on social benefits and do not adequately contribute to the social system used to finance the benefits. Therefore, welfare state has found itself in a crisis. The aim of our discussion is to evaluate social expenditure trends of the EU Member States in the light of the labour market changes. Social expenditure trends are researched on the ESSPROS - Eurostat database on social protection. The methods used are extrapolation and prediction. The original welfare state was built on a well-functioning labour market with sufficient jobs creation, but new social risks emerged in last decades. We agree that the European countries will have to make a crucial decision, whether the European social model, which has played a key role in maintaining social contract in the past, is sustainable even in the future.