The case for a European Social Union. From muddling through to a - PowerPoint PPT Presentation

The case for a European Social Union. From muddling through to a sense of common purpose. Frank Vandenbroucke EIB Institute Luxembourg, 5 March 2015

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

A European Social Union • Why? – Eurozone – EU28 • Which solidarity? • Social investment as a common ambition • Conclusion

The consequences of monetary unification

Transfers might mitigate the symmetry/flexibility trade-off

The EU’s way: more symmetry, more flexibility EMU’s fragility  No lender of last resort (=> Draghi) Competitiveness: symmetrical  Intensification of national approach booms and busts & necessary divergence in competitiveness => convergence Flexibility determines social order Institutional advantage of coordinated bargaining

Defining the EMU’s social objective is a necessity rather than a luxury • Basic consensus on 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 • Social investment

The human capital asymmetry: employment and formal educational attainment 85.0 Few low-skilled High employment rate 80.0 Employment rate 15-64, 2012 NL 75.0 SE DE DK AT UK 70.0 FI EE CZ LU 65.0 CY SI EU28 FR LV LT BE PT 60.0 SK PL RO MT BG IE HU IT ES 55.0 GR Many low-skilled CR Few low-skilled 50.0 Low employment rate Low employment rate 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; • integration and social regulation in EU28: ‘balancing’ – Social dumping => subsidiarity & proportionality ( Viking, Laval ) – Social sovereignty => horizontal social clause? • the very core of the European project.

Why a ‘European Social Union’? • an inevitability of European Monetary Union • integration and social regulation in EU28: balancing – Social dumping => subsidiarity & proportionality ( Viking, Laval) – Social sovereignty => horizontal social clause? • a dual perspective on solidarity: pan-European and domestic

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 PISA 2012 (Math, Science, Reading) vs. average Spending % GDP, 2008, 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.

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  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

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