The EU and social policy
The case for a European Social Union
Frank Vandenbroucke
Summer School ‘The EU Inside Out’
22 May 2015
Main argument
A basic consensus on the European Social Model and the role the
European Union has to play (and not to play) in the domain of
social policy…
… is not a luxury.
It is an existential necessity.
Structure of the presentation
• The diversity of European welfare states
• Why is a basic consensus on social policy a necessity?
– Eurozone
– EU28
• Which solidarity?
• The idea of a ‘European Social Union’
• Example: social investment as a common ambition
• Policy recommendations & tough nuts to crack
The diversity of EU welfare states
Input: expenditure on social protection, gross, in % of GDP (2010)
35
30
25
20
15
10
05
00
RO LV BG EE
SK
PL
LT MT CZ
CY LU HU
SI
ES
PT UK GR
IE
IT
BE AT SE
FI
GE NL DK FR
old age & survivors
Sickness/Health Care
Unemployment
Disability
Family/children
Housing & Social Inclusion n.e.c.
Other & adm. costs
The diversity of EU welfare states
Outcome: a two-dimensional map of outcomes
The diversity of EU welfare states: poverty
Poverty risk and poverty threshold: “national” conception (SILC 2010)
25.0
18000.0
16000.0
20.0
14000.0
12000.0
15.0
10000.0
8000.0
10.0
6000.0
4000.0
5.0
2000.0
.0
.0
CZ NL SK AT HU SI SE FI DK FR LU BE MT CY GE EE IE UK PL PT IT GR LT BG ES RO LV
AROP total population, SILC 2010
Poverty threshold PPP
The performance of European welfare states
At-risk-of-poverty rate total population, SILC
2012 (IE=SILC 2011)
8.0
Low poverty
Low employment
10.0
CZ
NL
Low poverty
High employment
12.0
SK
14.0
SI
FR
CY
HU
BE
MT
IE
AT
UK
EU28
PL
18.0
PT
LT
IT
SE
LU
16.0
20.0
DK
FI
DE
EE
LV
CR
BG
22.0
ES
GR
24.0
RO
High poverty
High employment
High poverty
Low employment
26.0
50.0
55.0
60.0
65.0
70.0
Employment rate 15-64, LFS 2012
75.0
80.0
Finland
Germany
United States
Sweden
Netherlands
Japan
United Kingdom
1
3
4
5
6
8
9
10 11 14 15 16 17 18 21 22 23 25 28 31 32 34 35 42 44 46 49 51 55 62 63 78 91
OECD countries ranked according to Global Competitiveness Index 2013-2014
Public Spending 2009
Private Spending 2009
Greece
Slovak Republic
Hungary
Slovenia
Mexico
Portugal
Italy
Czech Republic
Turkey
Poland
Spain
Chile
Estonia
Iceland
Ireland
Korea
France
Luxembourg
Australia
New Zealand
Belgium
Austria
Denmark
Canada
Norway
Switzerland
Public and private social spending as a % of GDP
The welfare state is not ‘the problem’
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
.0
Structure of the presentation
• The diversity of European welfare states
• Why is a basic consensus on social policy a necessity?
– Eurozone
– EU28
• Which solidarity?
• The idea of a ‘European Social Union’
• Example: social investment as a common ambition
• Policy recommendations & tough nuts to crack
The consequences of monetary unification
Transfers might mitigate the symmetry/flexibility trade-off
The EU’s way: more symmetry, more flexibility
Competitiveness:
symmetrical
approach
necessary
=> convergence
Flexibility determines social order
Institutional advantage of coordinated bargaining
Defining the EMU’s social objective is a necessity rather than a
luxury
•
EMU forces upon the member states a shared conception of flexibility
•
A basic consensus on the functioning of the social model is necessary for the
long-term sustainability of EMU
– short term: stabilisation
– mid term: a symmetric guideline on wage cost competitiveness
& institutions that can deliver
– long term: sustainability of pensions
•
Symmetry => convergence w.r.t. fundamental parameters => shared objectives
•
Legitimacy => convergence in prosperity
‘excessive social imbalances’ associated with
inadequate and disparate investment in human capital
The human capital asymmetry: employment and formal
educational attainment
85.0
Few low-skilled
High employment rate
Employment rate 15-64, 2012
80.0
75.0
DE
AT
SE
NL
DK
UK
FI
70.0
CZ
EE
65.0
LT
60.0
LV
LU
CYEU28
FR
BE
SI
SKPL
BG
HU
PT
RO
IE
MT
IT
ES
55.0
Many low-skilled
Low employment rate
GR
CR
Few low-skilled
Low employment rate
50.0
45.0
.0
10.0
20.0
30.0
40.0
50.0
60.0
% of population (15-64) with lower secondary education attainment, 2012
Why a ‘European Social Union’?
• an inevitability of European Monetary Union
• integration and social regulation in EU28
– Social dumping?
– Social sovereignty?
• the very core of the European project.
Why a ‘European Social Union’?
• an inevitability of European Monetary Union;
• Freedom of movement and national social cohesion in EU28:
– Social dumping?
– Economic freedoms  right to strike (Viking, Laval)
• the very core of the European project.
Social dumping…
… or “convergence machine”?
Source: Lefebvre and Pestieau, Peut-on mesurer la performance de l’Etat Providence?
Why a ‘European Social Union’?
• an inevitability of European Monetary Union;
• Freedom of movement and national social cohesion in EU28:
– Social dumping?
– Economic freedoms  right to strike (Viking, Laval)
• the very core of the European project.
Why a ‘European Social Union’?
• an inevitability of European Monetary Union;
• Freedom of movement and national social cohesion in EU28:
‘a balancing act’
– Social dumping?
– Economic freedoms  right to strike (Viking, Laval)
• Two dimensions of solidarity: domestic (national) and panEuropean
Why a ‘European Social Union’?
• an inevitability of European Monetary Union;
• Freedom of movement and national social cohesion in EU28:
‘a balancing act’
– Social dumping?
– Economic freedoms  right to strike (Viking, Laval)
• Two dimensions of solidarity: domestic (national) and panEuropean
Structure of the presentation
• The diversity of European welfare states
• Why is a basic consensus on social policy a necessity?
– Eurozone
– EU28
• Which solidarity?
• The idea of a ‘European Social Union’
• Example: social investment as a common ambition
• Policy recommendations & tough nuts to crack
A European Social Union
A Social Union would
• support national welfare states on a systemic level in some of their
key functions
• guide the substantive development of national welfare states – via
general social standards and objectives, leaving ways and means of
social policy to Member States – on the basis of an operational
definition of ‘the European social model’.
 European countries would cooperate in a union with an explicit
social purpose, pursuing both national and pan-European social
cohesion
Convergence in prosperity: the social investment imperative
• A social investment agenda (cf. Europe 2020, SIP)
–
–
–
–
–
–
Child-centred social investment strategy
Human capital investment push
Reconciling work and family life
Later and flexible retirement
Migration and integration through education and participation
Minimum income support and capacitating service provision
• The political deal the EU needs is one wherein all governments pursue
budgetary discipline and social investment, and are supported therein in a
tangible way by the EU.
Spending on education 2004-2008-2012
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Real public spending on education, 2012 vs. 2004-08
Spending % GDP, 2008, vs. average
Spending on education 2004-2008-2012 and PISA results
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Real public spending on education, 2012 vs. 2004-08
Spending % GDP, 2008, vs. average
PISA 2012 (Math, Science, Reading) vs. average
Convergence in prosperity: the social investment imperative
• A social investment agenda (cf. Europe 2020, SIP)
–
–
–
–
–
–
Child-centred social investment strategy
Human capital investment push
Reconciling work and family life
Later and flexible retirement
Migration and integration through education and participation
Minimum income support and capacitating service provision
• The political deal the EU needs is one wherein all governments pursue
budgetary discipline and social investment, and are supported therein in a
tangible way by the EU.
Structure of the presentation
• The diversity of European welfare states
• Why is a basic consensus on social policy a necessity?
– Eurozone
– EU28
• Which solidarity?
• The idea of a ‘European Social Union’
• Example: social investment as a common ambition
• Policy recommendations & tough nuts to crack
The case for a European Social Union
• support national welfare states on a systemic level in key functions
(e.g. stabilization)
• guide the substantive development of national welfare states
– via general social standards and objectives
 symmetric w.r.t. to competiveness (wage policy & capacity to deliver)
 social investment
 minimum wages and minimum income protection
 solidarity in reform
– leaving ways and means of social policy to Member States
The case for a European Social Union
• support national welfare states on a systemic level in key functions
(e.g. stabilization)
• guide the substantive development of national welfare states
– via general social standards and objectives
 symmetric w.r.t. to competiveness (wage policy & capacity to deliver)
 social investment (investment in and protection of human capital)
 minimum wages and minimum income protection
 solidarity in reform
– leaving ways and means of social policy to Member States
The case for a European Social Union
• support national welfare states on a systemic level in key functions
(e.g. stabilization)
• guide the substantive development of national welfare states
– via general social standards and objectives
 symmetric w.r.t. to competiveness (wage policy & capacity to deliver)
 social investment (investment in and protection of human capital)
 minimum wages and minimum income protection
 solidarity in reform
– leaving ways and means of social policy to Member States
The case for a European Social Union
• support national welfare states on a systemic level in key functions
(e.g. stabilization)
• guide the substantive development of national welfare states
– via general social standards and objectives
 symmetric w.r.t. to competiveness (wage policy & capacity to deliver)
 social investment
 minimum wages and minimum income protection
 solidarity in reform
– leaving ways and means of social policy to Member States
Thank you!
1.
F. Vandenbroucke, The Case for a European Social Union. From
muddling through to a sense of common purpose, Euroforum
Policy Paper, Sept. 2014 www.kuleuven.be/euroforum/papers
2.
F. Vandenbroucke, with B. Vanhercke, A European Social Union. 10
Tough nuts to crack, Friends of Europe, Spring 2014
http://www.friendsofeurope.org
3.
Unequal Europe. Recommendations for a more caring EU. Final
Report of the High-Level Group on Social Union, Friends of
Europe, Spring 2015 http://www.friendsofeurope.org