Unequal Europe. Recommendations for a more caring EU. Final report of the High-Level Group on ‘Social Union’

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Unequal Europe: Recommendations for a more caring EU | 2015 1
Unequal Europe
Recommendations for a more caring EU
Final report of the High-Level Group on ‘Social Union’
Spring 2015
2 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 3
UNEQUAL EUROPE
Recommendations
for a more caring EU
Final report of the High-Level Group on ‘Social Union‘
Spring 2015
Brussels
Some of the familiar faces and household names who have used Friends of Europe’s high-profile yet neutral platform
to put across their ideas to decision makers and to public opinion
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4 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015
5
This report has been drafted on the basis of a series of meetings,
discussions and written contributions from the members of the
High-Level
Group, under the sole responsibility of
Friends of Europe
and the
Chairman of the High-Level
Group,
Frank Vandenbroucke.
Members have agreed to co-sign this report as they have judged
it to be a fair and balanced exercise.
The views expressed in this
report are opinions of the individuals in the High-Level
Group, and
not necessarily the views of the organisations they represent, nor
of
Friends of Europe’s Board of
Trustees, its members or partners.
Reproduction in whole or in part is permitted, provided that full credit
is given to
Friends of Europe and that any such reproduction, whether
in whole or in part, is not sold unless incorporated in other works. Friends of Europe would like to thank the King Baudouin Foundation,
the European
Social Observatory and
Thomas
Fischer of DGB.
Publisher:
Geert
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Director: Nathalie
Furrer
Programme
Manager: Lindsay
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©
Friends of Europe –
Spring 2015
This report is printed on responsibly produced paper
Table of contents Members of the high-level group
7
Introduction 11 Tackling inequalities and regaining self-confidence 13 From where do we start, and what are
the greatest challenges? 17

Criticisms of social policy 17

The evidence in rebuttal 18
Competitiveness and social spending levels in europe 18
The efficiency of european social systems 18
Social investment versus capital investment 19
Income distribution and globalisation 19
The eu’s ageing population and the erosion of pension systems 19
The costs and benefits of immigration 20

The true challenges 20
EU member states must improve the effectiveness and
efficiency of their social policies 20
Demographic change demands a more ambitious education
and skills agenda, with a strong emphasis on fairness 21
What’s to be done: recommendations for a caring europe 24

The meaning and role of social policy 25

The balance of eu and national responsibilities 26

The connections between social, education, employment, budgetary
and economic policies 27

Social and civic dialogue 28

Social investment, inter-generational solidarity and education 30

Mobility and migration 32

Social inclusion 34

Improving the effectiveness of social policy through mutual learning 36 Convincing younger generations with tangible
common actions 38
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MEMBERS OF THE HIGH-LEVEL
GROUP
Frank Vandenbroucke
Professor, University of Leuven, former Deputy Prime Minister
and Minister of Social Affairs, Belgium, Trustee of Friends of
Europe, and Chairman of the High-Level Group
Etienne Davignon
President, Friends of Europe
László Andor
Former EU Commissioner for Employment, Social Affairs and
Inclusion, and Trustee of Friends of Europe
Tony Atkinson
Honorary Fellow, Nuffield College, University of Oxford
Fabrizio Barca
Director General, Ministry of Economy and Finance, and former
Minister of Territorial Cohesion, Italy
Pervenche Berès
Member of the European Parliament Committee on Economic
and Monetary Affairs, and former Chair of the Committee on
Employment and Social Affairs
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Geert Cami
Co-Founder & Director, Friends of Europe
Philippe de Buck
Member of the European Economic and Social Commitee, and
former Director General, BusinessEurope
Aart Jan De Geus
Chairman & Chief Executive Officer, Bertelsmann Stiftung, former
Deputy Secretary General, OECD, and former Minister of Social
Affairs and Employment, The Netherlands
Anna Diamantopoulou
President, Diktio Network, former Minister of Development and
Competitiveness, Greece, former EU Commissioner for
Employment and Social Affairs, and Trustee of Friends of Europe
Nathalie Furrer
Director, Friends of Europe
Reiner Hoffmann
President, Deutscher Gewerkschaftsbund (DGB)
Danuta Jazłowiecka
Vice Chair of the European Parliament Committee on
Employment and Social Affairs
Sony Kapoor
Managing Director, Re-Define, and Trustee of Friends of Europe
Pascal Lamy
Former Director General, World Trade Organization, former EU
Commissioner for Trade, and Trustee of Friends of Europe
Roger Liddle
Chair, Policy Network
Giles Merritt
Secretary General, Friends of Europe
Rhodri Morgan
Chancellor, Swansea University, and former First Minister of
Wales
John Morley
Senior Policy Advisor, Applica, and former European
Commission Head of Employment Policy
Riccardo Perissich
Former European Commission Director General for Industry
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Christopher Pissarides
Regius Professor of Economics, London School of Economics
and Political Science (LSE), and 2010 Nobel Laureate in
Economic Sciences
Conny Reuter
Secretary General, Solidar
Vladimír Špidla
President, Masaryk Democratic Academy, former EU
Commissioner for Employment, Social Affairs and Equal
Opportunities, and former Prime Minister of the Czech Republic
Freek Spinnewijn
Director, European Federation of National Organisations working
with the Homeless (FEANTSA)
Dimitris Tsigos
President, European Confederation of Young Entrepreneurs
(YES), and European Young Leader “40 under 40”
Bart Vanhercke
Director, European Social Observatory (OSE)
Fabian Zuleeg
Chief Executive, European Policy Centre (EPC)
Introduction
The unwelcome truth that ‘Social Europe’ has been slipping down the EU’s
policy agenda last year impelled Friends of Europe to convene a high-level yet
heterogeneous group of experts to analyse the facts and propose solutions.
This report sets out to assess the strengths as well as the weaknesses of the
social policies that have been fundamental to the creation of the European
Union itself. On the basis of these findings, it recommends to the new European
Commission and the EU institutions as a whole actions both to reaffirm Europe’s
social principles and to address its competitiveness goals.
The members of the group span an unusually wide range of opinion, and at first
there were fears that they might only agree on a limited number of issues. The
first meeting of the Working Group in Spring 2014 quickly dispelled those doubts,
for their shared concerns and a spirit of cooperation placed the emphasis firmly
on consensus.
Three plenary meetings and a complex process of written contributions were
chaired by the report’s lead author, former Belgian deputy prime minister and
social affairs minister Frank Vandenbroucke. His earlier Friends of Europe social
policy report ‘Ten tough nuts to crack’ supplied a valuable background to the
group’s discussions, and his own ministerial track record play a vital part in the
recruitment of Working Group members with such disparate backgrounds.
The list of members can be found at the beginning of the ‘Unequal Europe’
report. Its wide-ranging nature can be judged, though, from the inclusion
of trades union leaders like Reiner Hoffmann, head of Germany’s DGB,
Philippe de Buck, who for many years ran the BusinessEurope employers’
confederation, Anna Diamantopoulou, former Greek minister of development
and competitiveness, Pascal Lamy, former head of the WTO, and the then EU
social affairs commissioner László Andor.
The Working Group’s proposals should be read carefully, for they contain the
precise wording and nuances needed to achieve members’ agreement. But
the thrust of the recommendations is simple and clear – policymakers at EU
and national levels must act urgently to recover lost ground in areas stretching
12 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 13
TACKLING INEQUALITIES AND
REGAINING SELF-CONFIDENCE
• The EU is going through a great economic, political and social crisis, and
it is confronted by pressures that threaten fundamental change.
• The break-up of the eurozone is still possible, and the EU’s social fabric
is under major stress. This results from growing inequalities and social
imbalances, and is also caused by increased fears for the future of our social
model, and not just among young people.
• The steady decline in public confidence in the EU’s ability to reconcile
openness and cross-border mobility with robust welfare states and their
generous social protection has seen a rise in disenchantment with the concept
of ‘European solidarity’, and in doubts about the European project itself. The
risk is a vicious circle of political paralysis and inaction.
• Friends of Europe has gathered a High-Level Group to analyse and address
this situation. Its members come from different backgrounds and hold different
opinions on many questions, but they share a fundamental conviction that we
can be confident about the future of our welfare states. This isn’t based on a
return to the pre-crisis status quo, but on the opportunities for change that are
still available.
• Change must address Europe’s widening inequalities and social
imbalances, and open the way to greater cohesion between EU member
states1
. This implies addressing tensions between generations and enhancing
trust on issues like mobility and migration.
• Europe has become unequal and unbalanced, between people and
between member states:
Giles Merritt
Secretary General
Friends of Europe
Geert Cami
Co-Founder & Director
Friends of Europe
1 These widening inequalities are documented in detail in the Bertelsmann Stiftung’s 2014 publication ‘Social Justice in the EU’ [http://news.
sgi-network.org/uploads/tx_amsgistudies/Social-Justice-in-the-EU-2014.pdf].
from education to employment and job creation right across to the treatment of
immigrant job-seekers, within the EU and from further afield.
The group calls on Jean-Claude Juncker’s new EU Commission to take a far
broader approach to social investment. That is essential, the report argues, to
avoiding long-term burdens on economic growth. It sees a need for greater
investment in caring arrangements for the deprived and under-privileged, and in
education and training to ensure equal opportunities for all.
In short, a return to the solidarity that was such a feature of European integration
from the days of the Rome treaty to the EU’s ‘big bang’ enlargement of 2004 and
thereafter. Inter-generational solidarity and a renewed sense of social cohesion
and cohesion between richer and poorer member states are twin concerns.
The message of the report, against the background of unacceptably high
unemployment in so many EU countries, particularly of young people, is that
human investment must be given equal priority with investment in infrastructure,
innovation and all the other areas seen as crucial to Europe’s global
competitiveness.
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✓ In many EU countries, there is marked inequality between people
with a good job and people without one. This is exacerbated by
high unemployment, with youth joblessness in some countries now
unacceptable;
✓ In many EU member states, income inequality and poverty are still
rising. Some countries see growth, but the economies of many others
are sluggish;
✓ Europe’s inequalities often relate to skills. Some EU governments
have invested in education and vocational training, but others have
been forced to drastically cut spending on these.
• Europe must address its structural economic weaknesses along with its
macro-economic, financial and monetary management shortcomings. There
is a new consensus on an investment push to stimulate short-term economic
growth, and also to address the long-term results of under-investment in
infrastructure, energy networks and new technologies.
• Europe’s future is equally threatened by under-investment in people –
in their work-oriented education and in their early family life, health, social
development and schooling.
• Investment in education and training must be part of a broad social
investment strategy. An adequate supply of educated people is one side of the
equation; there must also be demand for them. That’s why we welcome the
investment initiative announced by the new European Commission. Credible
unemployment, and notably youth unemployment, measures need to be
associated with this investment effort. Policies to promote economic growth
and employment are not central to this Working Group on social policy, but
we propose a reinforcement of existing initiatives on youth unemployment to
help reboot the European social dialogue.
• This report’s main message is that investing in people is crucial to the
new investment effort. The challenge isn’t just to raise education levels but
to bridge the widening skills and education divide between the ‘haves’ and
‘have-nots’. This implies a broad social investment agenda that starts with
early childhood education and health care. The challenge is to invest more so
as to increase effectiveness and efficiency.
• Our call for the revival of Europeans’ self-confidence is based on facts
and figures. Widespread and persistent political misrepresentation of social
policies has too often presented them as an economic burden. This view
is ill-founded, and we are convinced that social policies are fundamental to
living standards and greater opportunities for all within modern competitive
market economies. As well as their fundamental support of fairness and
social cohesion, social policies are vital to competitiveness, and are a crucial
investment for the future. A recent OECD study underlined redistributive
social policies’ positive impact on economic growth2
. There is still room for
improvement and innovation, as there are significant weaknesses in the
performance of social policies, education policies and labour market policies
in a number of European welfare states.
• It is possible to reconcile in a positive and mutually-supporting way
open labour markets and mobility between EU countries with social order
and cohesion. Exactly how to do so is not self-evident, and requires specific
initiatives at EU level. It also demands a greater sense of responsibility by
member governments for what goes wrong at the national level – instead of
blaming the EU.
• Social policy is primarily the responsibility of member states. But many of
them lack confidence in the European social model while the EU lacks a sense
of common purpose that inspires policymakers, social actors and citizens.
There is controversy and confusion about who should do what – nation states
or the EU as a whole. The result is a generalised failure to communicate to
the European public ways to make joint EU and national economic and social
policies more successful than purely national ones. The EU must tackle transfrontier
issues like mobility and migration, but national developments also
have spill-over effects where EU initiatives can have important added value
too.
2 Cingano, F., Trends in Income Inequality and its Impact on Economic Growth, OECD Social, Employment and Migration Working Papers, No.
163. (9 Dec. 2014).
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• Controversy and confusion on social policies isn’t confined to the EU’s
role. Many now see ‘social cohesion’ and ‘Europe’ as enemies, so while we
need EU policies that support cohesion and fairness, the EU must show
through concrete initiatives that Europe genuinely cares.
• The EU’s most relevant common purpose is the well-being of future
generations of Europeans. Children should grow up in a world that offers
them equal opportunities. There is no reason for pessimism if our European
societies offer young people opportunities and fairness, but that requires clear
priorities, tough choices and effective common action.
FROM WHERE DO WE START,
AND WHAT ARE THE GREATEST
CHALLENGES?
The EU is a union of welfare states, diverse in their history, architecture and
achievements, but bound by shared values. In other words, we do not willingly
tolerate inequalities in our societies and believe public policies should protect the
vulnerable and support the development of people’s skills and education. We
also share the view that social dialogue and well-organised industrial relations
are crucial, and that jobs should be associated with decent conditions in terms
of pay and working and living conditions.
However different our national economies may be, we believe that social
cohesion and fairness are shared values throughout the EU. That also means
we are united in wishing to protect the body of European anti-discrimination
legislation that exists, including the free movement of people, including workers.
Social policy priorities differ across the EU, yet despite their differences, European
nations are on the top twenty international equality rankings. Social rights make
European welfare states unique, yet we need to restore our self-confidence in our
social model, so in the subsections 1.2 and 1.3, we rebut critics of the welfare
state by stressing the insights of studies that show how social policies are not
just valuable per se but are also competitiveness factors.
Criticisms of social policy
Critics of Europe’s social policies say:
• That social spending is so much higher in the EU than in countries like the
U.S., that it is undermining Europe’s competitiveness.
• That largely public social systems in Europe are inefficient, and should be
provided or managed by the private sector.
• That the EU would improve productivity by reducing social spending and
instead investing more in physical plant, machinery and infrastructure.
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• That increasing income inequalities are inevitable consequences of
globalisation, so there is nothing much that policymakers in the EU can do
about the widening wealth gap.
• That the ageing of Europe’s population makes pension systems
unsustainable unless we significantly lower the future level of pensions.
• That immigration from outside the EU, and the movement of workers from
poorer to richer EU countries are reducing job opportunities for nationals and
are the cause of major social problems.
The evidence in rebuttal
There are significant weaknesses in some welfare states in the EU, but the facts
do not support across-the-board criticisms of the European social model:
Competitiveness and social spending levels in Europe
When private spending on health, education and social services is taken into
account, there are no major differences between most European welfare states
and the U.S. on the cost of welfare to citizens and the economy3
. Among OECD
countries, there is no correlation between low levels of social spending and a
high competitiveness score. In Finland, Germany, the Netherlands and the UK
(which also has an important share of private spending) social spending is high,
at around 30% of GDP, but they are in Global Competitiveness Index’s top ten.
Swedish social spending is higher still, but that does not prevent Sweden from
coming sixth in the ranking.
The efficiency of European social systems
Evidence suggests that Europe’s social systems are more efficient in terms of
health care and education than in countries like the U.S., but the evidence also
shows major differences between EU member states in spending priorities,
and in achieving results. This is an argument for a greater co-operation on the
benchmarking of performances by EU countries.
Social investment versus capital investment
EU member states that invest more in social policies like health, education and
labour market support perform better overall than those that spend less. Social
investments and other forms of capital expenditure are complementary, not just
substitutes.
Income distribution and globalisation
Globalisation is altering the overall balance of demand for high and low skilled
workers in the EU as elsewhere in the world, but some member states have been
more successful than others in reducing the impact.
The EU’s ageing population and the erosion of pension systems
The EU population is going to decline and age. This is partly because people
are living longer, but also because young people have been discouraged from
having children by the lack of social policy support and the growth of two-tier
labour markets.
The demographic shift is notably a challenge for pension systems, and our
response must be a combination of labour market and pension reforms. We
must encourage people to postpone retirement, and in terms of quantity and
quality provide jobs that allow elderly workers to stay active (whilst also taking
into account that in some professions earlier retirement is legitimate due to the
nature of the work involved). Increases in female participation rates in countries
like Italy where these are still relatively low, are needed, and migration also has
to play a role.
The huge challenge is multi-faceted, but it is wrong to say we cannot sustain
a fair inter-generational contract based on a decent relation between average
pension levels and average earnings of active people. We are not doomed to
accept steadily eroding pension systems. Nor are Europe’s labour markets
‘frozen landscapes’; despite relative timidity of policy reforms in a number of
member states, employment rates of women and older workers are steadily
increasing in many EU countries.
3 This is demonstrated by long-standing OECD analyses; see the reference in the Background Report to the Friends of Europe High-Level
Group in Section 1.2. 4 This is briefly documented in Sections 1.3 and 1.4 of the Background Report; the European Commission’s annual reports on Employment and
Social Developments in Europe, notably the issues of 2013 and 2014, contain an impressive body of analysis on efficiency and effectiveness
of European welfare states.
5 This is, again, documented extensively in the Commission’s annual reports on Employment and Social Developments in Europe. 6 This is extensively documented in two major volumes, published recently by Oxford University Press, on the basis of the GINI research project
(Changing Inequalities in Rich Countries; Changing Inequalities & Societal Impacts in Rich Countries, OUP, 2014).
20 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 21
The costs and benefits of immigration
Studies show that immigrants make a positive contribution in their host
countries, and this is highly relevant given the EU’s need for additional workers
in the future. EU member governments commonly fall down by failing to support
local communities that experience greatly increased immigration, and fail to
ensure that immigrants are integrated into mainstream national labour markets
and social systems7
. At the same time, the countries from which people have
emigrated also face problems with their own changed demographic balance and
the lost return on investment in young, educated people who have left.
The true challenges
The criticisms of social policy in section 1.2 fail to identify the true challenges
we face. This subsection presents the real challenges, and seeks to distinguish
between the efficiency and effectiveness shortcomings of social policies and
thematic challenges related to demography and education.
EU member states must improve the effectiveness and efficiency of their social
policies
Social policies are competitiveness factors, and there is a positive relationship
between well-run social systems and competitiveness. There is nevertheless
room for improvement as there are significant weaknesses in the performance
of social policies, education policies and labour market policies in a number of
European welfare states.
Rather than calling the essence of our welfare states into question, we need a
wide-ranging review of the balance of demand and supply for different social
programmes and social services, and their costs. This should be backed by an
EU-wide effort to improve the performance of all member states’ social systems.
Although responsibilities lie essentially at national level, an over-arching EU policy
framework agenda could make a valuable contribution.
Demographic change demands a more ambitious education and skills agenda,
with a strong emphasis on fairness.
• Europe is confronted by three long-term and inter-related challenges:
ageing, its shrinking population and a growing shortage of skilled labour.
These are already raising the thorny question of increased migration. Apart
from the need for sustainable and adequate pension systems (and all the
reforms this requires), an adequate answer to these challenges involves three
broad policy domains: 1. child care, education and training; 2. open labour
markets that promote mobility; 3. migration in support of the labour supply.
• There are undeniable tensions between the policies for meeting the
demographic challenge, and European citizens’ aspiration to live in a cohesive
and inclusive society. We must see to it that:
✓ a knowledge society does not imply a growing divide between those
who are successful and less successful in education. A knowledge society
must also provide opportunities for people with lower education levels;
✓ open and flexible labour markets do not lead to disruptions of
national social practices regarding minimum standards in pay and
working conditions.
• Openness and cohesion can be reconciled, but this requires:
✓ an ambitious and creative skills agenda aimed at building on
adequate child care, quality education and training, and networks of
life-long learning;
✓ a well-balanced labour market agenda. We have to balance
flexibility with security, to maintain minimum standards and to invest
in working conditions and through occupational safety and health, the
quality of jobs. Countries like Denmark have been successful in this
respect. There is no reason why others should fail;
✓ an adequate and modern social inclusion agenda implemented
through a true participatory approach. 7 This is briefly documented in the Background Report, Sections 1.5 and 2.2.
22 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 23
• Mismatches between supply and demand of skills are an important
concern. A skills agenda must address the growing divide between the
educational ‘haves’ and the ‘have-nots’ for reasons of social equality and also
for economic efficiency.
✓ In terms of job opportunities and levels of earnings, there is a
widening gap between high-skilled people and those with medium or
low skills.
✓ Improving the general educational and skills levels is essential to
economic growth and social progress. But raising the average level is
not enough. Countries with fewer low-skilled adults and more highly
skilled ones do better in economic terms than countries with similar
average levels of skills but with larger differences in skills across the
population. Greater access to education for people of all skill levels
stimulates both economic growth and social inclusions.
✓ Educational attainment has to translate into social mobility. The
EU’s welfare states have not greatly improved social mobility through
education. In many countries, young people whose parents were
university students are still five or six times more likely to go to university
themselves than those whose parents are not graduates. The OECD
warns that the biggest threat to inclusive growth is the risk that social
mobility could grind to a halt.
• The OECD’s ‘literacy score’ shows a Europe that is unequal for individual
citizens’ skills and in terms of member states’ performances:
✓ the huge gap in the U.S. between the mean literacy score of people
with tertiary education and those with less than secondary education
is absent in Europe, so in those terms, Europe is a more egalitarian
knowledge society than the U.S.;
✓ in some European countries the mean literacy score is higher than
in the U.S. But, in countries like Spain and Italy the mean literacy score
is 10%, lower than in the Netherlands, Finland and Sweden. For a
mean score, this is a considerable gap;
✓ the literacy scores of graduates vary widely, showing that formal
educational qualifications can be misleading: educational policies do
not lead to the same level of skills across Europe, so reform is clearly
needed.
‘Unequal Europe’ is a problem and also an opportunity. If
underperforming countries could catch up with the EU’s best, the
European economy and society would outperform the U.S. both with
regard to mean literacy and to its distribution over the population.
Social policy can contribute to success in the inter-related agendas of
effectiveness and efficiency, education, integration and openness. Well-conceived
social policy is a productive asset, not a pure cost-factor. That is the purpose
of ‘social investment’ in the long term. The pan-European convergence of our
social policies would be a convergence towards successful social investment,
and the Social Investment Package of the previous European Commission rightly
pointed this out.
8 This is documented in the OECD’s Education at a Glance 2014; this paragraph is based on the introduction to Education at a Glance 2014,
which summarises the evidence.
9 Idem, pp. 14-15 and table A4.1b p. 93.
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WHAT’S TO BE DONE:
RECOMMENDATIONS FOR A
CARING EUROPE
The debates within the Friends of Europe Working Group addressed the following
issues:
• The meaning and role of social policy
• The balance of EU and national responsibilities
• The linkbetween social, education, employment,budgetary andeconomicpolicies
• Social and civic dialogue
• Social investment, inter-generational solidarity and education
• Mobility and migration
• Social inclusion as a credible component of the European agenda
• Mutual learning to improve the effectiveness and efficiency of social policy
This second section of our report is based on these debates because they
highlighted fundamental issues that all policymakers and stakeholders must
address. We summarise these issues in the following subsections, without
claiming to have been able to solve them all, as there remain some ‘tough nuts to
crack’. Our discussions nevertheless pointed to ways the EU can take concrete
initiatives to show that it cares for its citizens, and that progress is possible. We
illustrate this with recommendations which were put forward in the context of
our debates.
The meaning and role of social policy
The Working Group’s view of social policy’s core ambitions and role can be
summarised as follows:
• The over-riding aim of social policy is prosperity and cohesion, while
providing collective insurance and protection for the most vulnerable. Social
policy works through investing in people, helping them develop as citizens
with the skills and abilities they require throughout their working lives. The goal
is to improve the quality of their lives, and to raise their capacity to contribute
to the material success of society and the economy. This investment in human
resources is as vital as investments in buildings, equipment, technology,
research, the environment and culture, and contributes to social well-being
and economic competitiveness.
• To maximise the benefits of human investment we need the highest
possible equality of access for people from all backgrounds. We also need to
ensure that those who cannot meet minimum living standards through their
own efforts – for whatever reasons – can rely on society to come to their aid.
This includes minimising and containing the cost of failure.
• Given that our market economies fluctuate as confidence ebbs and flows,
social policy spending must support household incomes in downturns. In the short
run, it acts as an automatic stabiliser and helps restore economic confidence10.
One of the Working Group’s conclusions is to raise public awareness of the
economic benefits of social policy. Recent OECD research on the impact of
social equality on economic growth is an important message on the role of social
policy, although it still has to reach public opinion.
10 Should the European Monetary Union equip itself with a stabilisation mechanism such as an unemployment benefit scheme (see Background
report, pp. 96-97)? The members of the High-Level Group consider this an important question, but did not have time to study it.
26 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 27
The balance of EU and national responsibilities
The social policies of different EU countries can benefit from working together
for two important reasons. The EU’s economic integration and openness exerts
considerable influence on the development of national welfare states, and even
closer, cooperation can have an added value per se. Cooperation should not,
though, lead to fudging respective responsibilities; political and social actors
need to make a clear distinction on what is ‘EU’ and what is ‘member states’,
and define the role of ‘Brussels’ in trying to link the two.
• Welfare states are national, but the added value of the EU is the capacity
to see the long term. By working together, governments can better identify
common challenges. This justifies a broad conceptualisation of social policy
that allows us to visualise the sort of Europe we want. Developing a shared
vision is a common responsibility of the EU and its member states. The prime
responsibility and capacity for implementing a shared vision of the kind of
societies we Europeans want to live in remains with the member states.
• Reconciling openness and social cohesion within the EU requires
transparent legal frameworks. The EU and its member states share crucial
responsibilities, so scapegoating each other for real or perceived problems
over mobility is unfair and inefficient.
• Europeanambitionsforsocialpolicieswithoutdeliveryarecounterproductive.
Their delivery requires political mobilisation and adequate resources. Social
policy budgetary resources such as the European Structural and Investment
Funds aim at accompanying mobility and enhancing social inclusion; they are
limited but not absent and should be used most effectively by being aimed at
measurable outcomes and relying on an enhanced citizens’ participation. The
Background Report to the Working Group discusses in detail the link between
cohesion policy and social policy, so we do not repeat its rather elaborate
technical details. We would nevertheless stress that regional and territorial
policy and social policy should be seen as intrinsically linked.
The connections between social, education, employment,
budgetary and economic policies
The EU’s economic and budgetary policy coordination (as developed in the
European Semester) undeniably exerts a strong impact on social policies. In
the eurozone crisis, budgetary policies were in the driving seat. We now have
to establish strong reciprocal links between social, education, employment,
budgetary and economic policies. The Working Group makes the following
recommendations:
• Employment is part of social policy and macroeconomic policy.
Mainstreaming social policy means putting it on a par with macroeconomic
objectives.
• There is a real risk that ‘mainstreaming’ will remain an empty concept,
and will be discredited. The new Commission must clarify how it will make
‘mainstreaming’ a transparent practice and a reality. The Background Report
for the Working Group lists a number of ways mainstreaming can be enhanced
and underlines the need for clarification of instruments and methods. An
important challenge is giving real bite to the ‘Horizontal Social Clause’ in Art.
9 TFEU, in all domains of EU policy, including competition law.
• The blatant contradictions between the EU’s proclaimed ambitions and
actual budgetary priorities are unacceptable, and need to be taken into
account when deciding Country Specific Recommendations. Education is
a telling case; when public education spending in 2012 is compared with
average education spending over 2004-2008, in at least seven member
states, real spending is now lower on average than in the five years before the
crisis.
• Because employment cannot be separated from economic policy, Jumbo
Councils for Employment and Economic Affairs were organised in the past
with some success. This formula could still be useful to link the employment
and economic policy and to create a stronger link between employment and
education initiatives.
28 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015
Social and civic dialogue
Co-operation at EU level between social partners has been crucial to different stages
of development. However, notwithstanding ongoing positive developments in some
areas of social dialogue, this machinery no longer produces the results it once did. To
re-invigorate this partnership and build others, the Working Group makes the following
observations and recommendations:
• The EU treaties define a social market economy, and confirm that social
dialogue is a key component of the European social model. This is not just a matter
of principle, for there is a social dialogue system within the institutional set-up of the
European Union, even if sometimes forgotten. The joint Declaration by the European
Social Partners at the Tripartite Social Summit of 23 October 2013 listed proposals
for the involvement of the social partners in the new economic governance, and
these should be taken seriously by the European Commission and the Council.
• We should not deny that it is difficult to organise social dialogue effectively at
the European level. In some countries, social dialogue is effective, efficient, and
representative, but in others the social partners have lost representativeness and
credibility, and even barely exist. The way in which the financial and economic crisis
was managed, notably in the so-called programme countries, was at odds with
the normal functioning of the social dialogue, and weakened the position of the
social partners. The European Union should invest in the social partners’ capacity
to play a more meaningful role, for instance by revisiting the role of the tripartite
summit, rather than persistently emphasising that collective bargaining needs to be
decentralised.
• The challenge is not just to reach collective agreements on topical issues, but
on challenges ahead and on the ways Europe should be reformed. We propose
a high-level employment and social policy conference at the EU level to have a
thorough debate on future orientations; not a ‘big conference’ but a real exchange
of views involving key people.
• The success of actions to strengthen the European social partners will be
measured by their capacity to put forward solutions to the main problems of EU
labour markets, and their contributing to the implementation of these ideas. Social
dialogue at European level can be successful if its aim is to promote change. A
priority for bold action is youth employment.
• Initiatives adopted at EU level to tackle youth unemployment included
the ‘Youth Guarantee’, and the European social partners also adopted a
framework of actions on youth employment in June 2013 which is being
followed up at national level until 2017. But to avoid a lost generation in
Europe, these past initiatives should be only the beginning of a strengthened
commitment towards youth’s future. The European social partners should
seize the opportunity of the 30th anniversary of the launch of the European
social dialogue with the Val Duchesse agreement to concentrate and intensify
EU actions for youth employment.
• Member states and social partners together need first of all to guarantee
at national level the implementation of the ‘Youth Guarantee’. Then, on the
basis of social dialogue, new proposals can be put forward to reinforce EU
action on youth employment, whether through financial support initiatives like
the better mobilisation of ESF funds or a new financial package to replace the
€6 bn ‘Youth Employment Initiative’ that will not be in place until the end of
2015. Also through such initiatives as complementing the quality framework
for traineeship with a quality framework for apprenticeships and/or vocational
education. The Youth Guarantee must not lead to the ‘parking’ of young
unemployed in inefficient training or occupational activities.
• The EU must address the broader issue of citizens’ participation. This
requires a space of informed and open debate where people can assess,
interact with and influence the decisions of EU institutions. This means a rethink
of participations so citizens come to own the process, especially on
policies with an impact on labour and welfare. The idea is that this new public
arena should complement the decision-making process, not just legitimise
it. The European Structural and Investment Funds are particularly suited to
promoting measurable outcomes with the public’s involvement. This implies
that the Regulation on the ‘European code of conduct on partnership’ is put
into effect by involving citizens on the base of their ‘relevance’, i.e. on them
being affected by the policy under discussion. Open participation by citizens
also means assessing the impact of social policy on specific groups, both
people and places.
30 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 31
Social investment, inter-generational solidarity and education
Social policies are valuable products of modernisation, and they are factors of
competitiveness, not obstacles. We must take a broader view – both long and
wide – of the need for social investment. Although it is on the agenda of the
European Commission and the European Parliament, are we really delivering on
it?
The Working Group makes the following recommendations:
• A long view implies a life-cycle approach, recognising the need for major
investments in care and education, especially in the earlier stages of people’s
lives, for compensating economic returns in the productive phase of working
lives, and the drawing down from accumulated reserves and investments for
older people.
• Improving inter-generational solidarity and embedding it in credible
‘social contracts’ is a key challenge throughout Europe, with the financial
sustainability and adequacy of pension systems, and a life-cycle approach to
social policies, intrinsically interwoven.
• A wide view should reflect the inter-dependence between social and other
investments: the success of investments in technology and infrastructure
depends to a large extent on the quality of the associated human resources.
• We must avoid a narrow view of social investment; it is not only about
preventing but also about repairing the spill-over effects of social failure,
whether in education, health or social integration. These can place debilitating
and disruptive long-term burdens on economies and societies.
• As a starting point, the new Commission should ensure that the EU and
the member states deliver on the Social Investment Package of February
2013, and must recognise that a far broader and ambitious approach to
social investment is needed.
Education is key to social investment. The European Commission has a
comprehensive agenda on education, training and skills, and has issued excellent
recommendations on the modernisation of education systems. This agenda has
not exerted sufficient pressure at the highest levels of political decision-making
or in the setting of budgetary priorities. This is all the more alarming given the
limited success in improving social mobility through education, so that we risk
seeing social mobility through education grinding to a halt. We should put public
investment in education higher on the agenda if we are to reverse the trend of
diverging investment in education across Europe. To pursue reform, the Working
Group makes the following recommendations:
• we shouldpursue real equalityofopportunity at all levelsoftrainingandeducation;
• disparities in skill levels across Europe despite similar levels of formal
educational attainment mean we must reform education systems with a view to:
✓ helping those countries most under pressure to deliver basic education;
✓ promoting the development of key and transversal skills;
✓ promoting the development of entrepreneurial skills and financial literacy;
✓ improving the transition from education to the labour market and
providing a better match between skills and demands of labour markets.
• we should broaden our understanding of ‘learning’, beyond the traditional
educational institutions;
• we should develop a European-wide alliance between the worlds of
‘work’ and ‘education’. Education obviously is not the ‘maiden’ of economic
necessities but is inspired by the right to personal development; but by
working together both the performance of the world of work and the world of
education can be improved. And we should reconsider the ways we finance
and implement subsidised training programmes; some group members argue
that rather than subsidising training, the attention should be on promoting
start-ups.
32 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 33
Mobility and migration
There is a need to confirm and clarify the rules on intra-EU mobility and on
reciprocal benefits for all EU citizens from education through to employment and
retirement. There is also a need for a more coherent view on migration within the
EU and from outside the EU. The Working Group has formulated the following
recommendations:
• The debate on mobility and migration should make a clear distinction
between intra-European mobility and permanent migration, which has both
internal (intra-EU) and external dimensions.
• Mobility within the EU is an unquestionable right, but in the context of
freedom of movement problematic issues should be identified and addressed.
• Myths about intra-EU labour mobility must be disproved. The European
Court of Justice has confirmed that European citizens cannot simply move to
another member state to claim benefits. Member states can prevent ‘benefit
tourism’ within the existing European legal framework11. Nevertheless, we
should not be blind to some problems. Even if there is no large scale social
dumping, there are still blatant cases of illegal work and exploitation linked
with problems of inspection and enforcement of regulation and these should
be addressed. But intra-EU mobility problems go beyond social dumping.
For most people, moving to another country for work reasons represents a
success, but for others it can be a failure; half of London’s homeless population
is repeatedly made up of migrants, with more than half of them EU citizens, so
we have to address the failures of free movement.
• Mobility is not a ‘silver bullet’ for all social issues, but we make the following
recommendations:
✓ we must explicitly resist protectionism and give tangible support
to member states confronted with the greatest need to house and
integrate migrants. A new fund attached to the European Social Fund
(ESF) to support the integration of EU migrants should be considered;
✓ we need an EU programme for fair mobility through finance for
help desks, information and legal help for all mobile workers in Europe;
✓ where possible, we should define minimum standards of European
labour conditions and social protection, taking into account all new
forms of labour like part-time workers. We should carefully monitor the
implementation of the enforcement directive on the posting of workers, and
we should consider the gradual introduction of ‘a guaranteed wage floor’;
✓ we need tangible measures at EU and national levels, to improve
the social context of mobility by:
– improving the portability of supplementary pensions across
countries and sectors;
– strengthening the enforcement of social and employment
rights of mobile and migrant workers.
✓ the European Commission should examine how it can take a new
initiative to clarify the appropriate balance between economic freedoms and
the right to industrial action, thus solving the problems raised by the Viking
and Laval judgments12. Decisions by the European Court of Justice suggest
more work on the relation between social rights and free movement.
• Discussion of external migration into the EU must be placed in a longerterm
demographic context. A shrinking European population means migration
should be seen as a positive contribution (this does not preclude the
adjustment of other policies, in order to allow men and women to have the
number of children they wish, whilst developing their careers).
• A major source of resentment in some countries about immigration is not
migrants’ nationality but their labour market status. The potential for creating
a second class workforce is dangerous, for although we need flexibility in
the labour market a peripheral workforce adversely affects a country’s core
workforce and contributes to a downgrading of working conditions.
11 ECJ judgment in the Dano case, published on 11 November 2014. 12 See the Background Report to the Friends of Europe High-Level Group, p. 55.
34 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 35
• On immigration, the issue is not only how to manage immigration flows
but also how to manage social and professional integration. We need to
recognise the enormous waste of immigrants’ skills when they are not
adequately integrated into the labour market, or not allowed to develop their
entrepreneurship potential.
• The intense non-EU migration pressures on Mediterranean member states
means more needs to be done to revive and strengthen support for EUbacked
social policy development programmes in countries of origin. Europe
must help to achieve improvements in their own territories to reduce pressure
on the EU, and contain brain drains from those countries.
Social inculsion
Social inclusion rhetoric by the European Union without delivery is
counterproductive in terms of the EU’s own legitimacy. We must be clearer on
what social inclusion means in practice, and how member states can deliver it.
• Universal access to social services is a basic feature of the European social
model, and should enjoy greater prominence in a social investment strategy,
with access to quality child-care a prime example.
• We should consider a European policy on the overall quality of minimum
income protection, with minimum wages playing a key role together with
social benefits. Minimum income protection systems should be assessed
with reference to the economic development of each EU country, with the
current ‘reference budget’ methodology a promising tool for developing social
benefits benchmarks. On that basis, ‘open coordination’ can be a way for
national governments to learn from each other and improve the effectiveness
and efficiency of minimum income protection.
• Making the economic case for migration must be complemented with a
strong social case for minimum standards and against discrimination based
on origin or ethnicity.
• We must give the Youth Guarantee real bite by embedding it in
social dialogue, increasing its funding and scope, and ensuring its rapid
implementation with transparent monitoring.
The European Union must be seen as caring for the most vulnerable people in
our societies. Homelessness is a societal problem with cross-border features,
so European cooperation based on shared values can make a real difference:
• Europeans mostly agree that we cannot accept homelessness in our cities,
but it remains a sad reality. Yet it is an area where innovative easy wins are
possible.
• Some of the mobility and social inclusion issues discussed previously are
particularly relevant when homelessness is concerned:
✓ The quality of social services and the disparate nature of hostels and
shelters across the EU is not only a problem, but can trigger the cross-border
mobility of homeless people. A European quality framework for homeless
services, promised but not delivered by the European Platform Against Poverty
is needed to help ensure proper use of European Structural and Investment
Funds (especially the European Social Fund) against homelessness;
✓ A caring Europe should establish a guaranteed right to shelter for
all EU-citizens who become destitute, whatever their status13;
✓ The European Youth Guarantee does not ensure that young
people with complex needs like homelessness are included in member
states’ policies. One possibility is to develop a Care Guarantee for
young people who leave state care, which can be the first step towards
homelessness. Vulnerable young people often lose support when
they turn 18, so a guarantee that every 18-year old gets a care plan
that identifies problems and proposes appropriate solutions could be
pursued at EU level to complement the Youth Guarantee.
• Member states can learn a lot from each other on homeless policies and
practices. To that end, a European Action Plan against Homelessness is needed.
13 This would be in line with a recent decision of the European Committee of Social Rights of the Council of Europe related to the collective
complaint FEANTSA against The Netherlands
36 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 37
Improving the effectiveness of social policy through mutual
learning
Social innovation holds a key to the challenges of demographic change, show
growth and growing demand for public services. We need social innovation
as part of the general drive to improve the EU’s social systems.
That in turn demands the strengthening of Europe-wide policy comparisons
on efficiency in delivery and equity in outcomes. We don’t have to start from
scratch because for the EU to be a laboratory for learning we already have
instruments like the Open Method of Co-ordination. Australia, Canada, the
United States and other countries with federal and quasi-federal systems
take a positive view of Open Co-ordination, yet within Europe it has often
met with sceptical reactions, being perceived as too soft to deliver or a feeble
excuse for the inconsistency of economic, budgetary and social policies.
However, stronger and more credible links between the economic, the
budgetary and the social and employment policies of the EU hold out
the promise that mutual learning could regain its credibility and be further
developed as an important policy tool. The approach we propose would
take us away from the ‘behind closed doors’ character of the Open Method
of Co-ordination; our recommendation is that the European Commission
and the European Parliament should confirm their joint commitment to the
Union’s basic social goals and support a comprehensive rolling review of the
performance of national social policies and especially inequalities over the
life cycle.
This review would aim to help national authorities to improve the operational
performance of their own social schemes and ensure that resources are
allocated in the most balanced way possible in relation to different goals
by drawing on the experience of other member states which would include
‘learning from failure’. A focus of attention should be our welfare states’
capacity to tackle inequalities at each stage of the life cycle. Setting up such a
broad-ranging and ambitious review would signal that the EU and its member
states take rising inequalities very seriously.
The policy support work should draw on:
• The practical experiences of member states, building on and greatly
enlarging the co-operative work undertaken through the Open Method of Coordination;
• Technical support by the European Commission on the effectiveness of
alternative social policy interventions, including social experimentation.
The findings should be made public in an open format for ongoing comments by
social partners and stakeholders, along with research institutes and international
organisations like the OECD.
38 Friends of Europe | Quality Europe Unequal Europe: Recommendations for a more caring EU | 2015 39
CONVINCING YOUNGER
GENERATIONS WITH TANGIBLE
COMMON ACTIONS
By working together, EU member states will not lose out in terms of legitimacy,
as their sovereign national social policies will be more successful.
We must develop a stronger sense of common purpose, based on shared
concrete ambitions. This won’t be easy because in our national welfare states we
can see signs of an erosion of solidarity between generations. Our young people
are losing trust, with growing distrust of the EU fuelled in part by public frustration
about the lack of leadership and transparency from the European institutions
in response to the current crisis. This has given ammunition to those who aim
to minimise the role of the EU, or even to encourage some member states to
withdraw altogether.
Breaking this vicious circle is perfectly feasible. We Europeans don’t lack
common ground but self-confidence. The members of this Working Group come
from different backgrounds and hold different opinions on many questions, but
share our mission statement on what the European Union now needs. We resist
an unequal and unbalanced Europe, because Europe should stand for fairness
and social cohesion, openness and social mobility, and hope for a better future –
not just in solemn declarations, but also in practical day-to-day policies.
Background report:
A EUROPEAN SOCIAL UNION:
10 TOUGH NUTS TO CRACK
Friends of Europe is a leading think-tank that aims to stimulate new thinking on
global and European issues that span political, economic, social and environmental
challenges. Our publications and debates produce sharp analysis and bold
solutions because we promote the confrontation of different ideas.
Friends of Europe is part of the Europe’s World Group, an alliance that also includes
the Europe’s World policy journal and the Debating Europe online platform.
Friends of Europe’s background report is
written by Frank Vandenbroucke, former
Belgian Deputy Prime Minister and Minister
of Social Affairs and Trustee of Friends of
Europe.
It served as the basis for discussion of the
High-Level Group on ‘Social Union’ convened
by Friends of Europe with the ambition to take
the EU’s social dimension out of its ‘specialistonly’
corner and to bring these social concerns
to the top of the political agenda.
The background report argues that we need
a coherent conception of a ‘European Social
Union’. It provides an encompassing survey
of the development of the social dimension
in European cooperation and defines 10 key
questions that have to be tackled with a view
to developing this Social Union.
friendsofeurope.foe @FriendsofEurope friendsofeurope friendsofeurope
Read the background report at
www.friendsofeurope.org/quality-europe/10-tough-nuts-to-crack/
40 Friends of Europe | Quality Europe
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