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SPEECH/11/456

Mr. László ANDOR

EU Commissioner responsible for Employment, Social Affairs and Inclusion

"How can Europe become again a driving engine?"

Annual Summernight Symposium

Vienna, 20 June 2011

Introducing Europe 2020

Ladies and gentlemen,

The Europe 2020 strategy is built around the ambitious goal of inclusive, sustainable and smart growth, based on social fairness, environmental protection and investment in technological advancement. Europe 2020 represents the EU's vision for its long-term socio-economic progress; it is how we see sustainable development over the coming decade.

Our challenge now is to turn this vision into reality. To support this, the Commission has launched a series of seven Flagship Initiatives, three of which fall into the area of employment and social issues: Youth on the Move, an Agenda for new skills and jobs, and the Poverty Platform. They identify specific actions through which the Commission and the Member States will achieve the Europe 2020 headline targets.

For instance, the Agenda for New Skills and Jobs outlines actions to improve the functioning of our labour markets by giving a new momentum to the flexicurity approach, as we all concrete initiatives such as the EU Skills Panorama, which will provide information on skills supply and demand. This will support efforts to reach the target of a 75% EU-average employment rate.

Furthermore, as part of the Youth on the Move Flagship, the project ''Your first EURES job'' will be launched with the help of the European Parliament and the Council. Its aim is to help young people to find a job in any of the 27 EU Member States.

In addition, within the wider framework of the Poverty Platform, the Commission will be presenting the White Paper on Pensions this autumn. It will address sustainability and adequacy of pensions in a post crisis context. The Commission will also tackle the issue of child poverty. Indeed, the at-risk of poverty rate is higher for children (about 20%) than for the rest of population (16%).

Europe 2020 as a response to the crisis

Ladies and gentlemen,

The European Union is facing the worst economic crisis since its foundation. The situation has improved and there are some signs for optimism, with unemployment stabilising and growth picking up in some Member States. However, let me be clear: citizens and governments across the EU are still feeling the impact of the crisis and facing unprecedented pressures.

Furthermore, certain groups have been particularly hit, notably young people and the most vulnerable. For many there is a prospect of hardship for some time to come, triggering reactions of anger and frustration in some occasions.

The Europe 2020 strategy is the EU's response to the crisis to come out stronger. Nonetheless, it is clear that pulling Europe out of the crisis requires a coordinated approach and a comprehensive programme of reforms covering fiscal consolidation, growth enhancing measures and labour market reforms for higher employment.

We need to respond effectively to structural and global challenges. In the coming decades our economies will become even more interlinked, global finance will expand further, climate and resource issues will gain more prominence and the impact of demographic ageing will materialise in full scale.

The first European Semester

Ladies and gentlemen,

This is the first year in which we are using the new working method - the European Semester – to ensure collective discussion-making on key priorities at EU level before national decisions are taken, and not after.

The publication of the first-ever Annual Growth Survey kicked off the European Semester. In it the Commission proposed 10 key priority measures to Member States encompassing fiscal consolidation and structural reforms. Both of these are the necessary pre-conditions for sustainable growth and job creation. And these are, in turn, are essential to secure the long-term sustainability of our social protection systems, as well as the financial means to promote employment, and tackle poverty and exclusion.

In the area of employment the main concern was to prevent a jobless recovery. As such, the Annual Growth Survey suggested a number of reforms tackling a range of different areas, including:

­ promoting skills;

­ creating incentives to make work more attractive;

­ reforming the pension systems;

­ activating and helping the unemployed back to work, and

­ improving labour market functioning through a balancing flexibility and security in an appropriate way.

Following this, the Member States submitted in April and May their Stability or Convergence and the National Reform Programmes based on the Annual Growth Survey and, where relevant, communicated their commitments under the Euro + Pact.

The Commission has assessed the various national programmes and commitments and on 7 June it adopted a set of Country Specific Recommendations that are addressed to the Member States.

Country Specific Recommendations

Ladies and gentlemen,

The Commission recognises that there is no "one-size fits all" solution and that the situation across Member States can differ significantly. As such, while the Annual Growth Survey provides more general guidance to help frame national efforts, the country specific recommendations provide specific guidance tailored to each Member State's situation.

In terms of employment and social policy, the recommendations cover a wide range of labour market reforms - including payroll taxes, childcare, education systems, wage-setting mechanisms and retirement patterns.

Nonetheless, labour market recommendations address four main challenges:

- First, to enhance labour market participation. We believe that increasing the retirement age, reducing early retirement schemes and improving the accessibility of childcare are key priorities in many Member States for the immediate future. In addition, we need to achieve a better balance between years spent in employment and in retirement to help increase our labour supply. This will also enable the greater financial sustainability of pension systems and, ultimately, their long-term ability to provide adequate pensions.

- Second, structural unemployment must be addressed. We must do everything possible to reduce the tax and social security burden on labour, especially for low and medium-income earners. Moreover, we need to improve the effectiveness of active labour market policies, in particular by targeting more the vulnerable groups.

- Third, we need to reduce youth unemployment. Young people have been hit particularly hard by this economic crisis. In some Member States, the reform of labour contracts is an essential step in offering young workers the chance of long-term employment. Reducing early school-leaving and improving the links between education and the world of work should also e given priority so young people can a real chance for the future.

Finally, wage developments have to be attuned to productivity growth. In recent years, some Member States have experienced imbalances between wage-development and productivity. Yet, in these difficult times, it is more important than ever to ensure that the emerging economic activity is not hampered by short or medium-term imbalances in wages and productivity which can negatively affect a country's competitiveness.

This is a very ambitious list of reforms that should be initiated in the next twelve months as a matter of urgency.

Furthermore, in September 2010 the Commission launched a comprehensive set of proposals for enhanced economic governance at EU level.

These proposals seek to ensure the stability of the economic and monetary union, as well as to carry out ex-ante coordination of economic policies in the EU. By strengthening the enforcement mechanisms for public finances and macroeconomic imbalances, the legislative package will strengthen the EU's capacity to take preventive and corrective action. It will also increase the incentives for Member States to implement the country-specific recommendations.

Strengthening the social face of Europe

Ladies and gentlemen,

Our vision for the EU is not just about economics – we must also strengthen the EU's social dimension.

Europe 2020 introduced the notion of 'inclusive growth', where social policies are seen as a long-term investment in a cohesive and integrated society, not as a burden or cost for the economy.

Inclusive growth is about ensuring that everyone has the change to develop to their full potential and participate fully in both the economy and in society.

We need to keep a close eye on some vulnerable groups: people with low skills, people with no or little work experience, people at risk of being discriminated against, people who are forced to change jobs because their contracts are running out.

These groups need our explicit attention as they are most at risk of dropping out of the labour market, which could in turn potentially lead to the risk of social exclusion. Indeed, preventing social exclusion through ensuring a solid link with the labour market is also one of Europe's 2020 key challenges.

Inequality

Ladies and gentlemen,

Inequality undermines solidarity and poses a threat to a strong social Europe.

And while data indicates that the EU average income inequality level has remained relatively stable over the past five years, our surveys have shown that just under two-thirds of Europeans (64%) are not happy with the way the inequalities and poverty are addressed in their country.

Part of this is because we must look at inequality as a broad concept that goes well beyond income. It also relates to unequal wealth, opportunities, access to services, education and employment.

Around 113 million people in Europe live at risk of poverty or social exclusion. This means 23% of the population. It is shocking number. Nine Europeans out of ten (89%) say that urgent action is needed by their national government to tackle poverty.

Europe 2020 marks a major step forward in this area, as the EU Member States are committed to reducing the number of people living at risk of poverty by 20 million by 2020.

Moving beyond GDP

Europe 2020's focus on poverty and inequalities subscribes to a broader reflection on the measurement of socio-economic performance and the progress of societies – a process known as 'Beyond GDP'.

GDP is an indicator of economic market activity that has become a standard benchmark used by policy-makers throughout the world, it is ultimately a measure of production. However, it does not measure environmental sustainability, resource efficiency, social inclusion and social progress in general – issues which of key importance for the EU.

It is no longer enough to simply look at GDP when trying to explain what goes on in the EU or when planning for our future. It is not able to tell us how the life of a typical citizen is changing or how national wealth is distributed. Nor can it accurately measure major issues like resource depletion or whether current levels of resource use are sustainable in the long-term

As such, I believe that we need to look beyond measurement of economic development and productivity, to other relevant indicators that influence and explain the living standards in a country. In some cases, these indicators already exist, but just haven't been quantified.

For example, we could:

- develop indicators for measuring medium- and long-term economic and social progress;

- develop clear and measurable indicators that take account of climate change, biodiversity, resource efficiency and social inclusion; and

- focus indicators more closely on the household-level perspective, reflecting income, consumption and wealth;

The European Parliament has recently recognised the increasing awareness of the need for improved data and indicators to complement GDP.

The Commission also takes this issue seriously. Over recent years we have made important progress, including :

- the development of the European Statistics for Income and Living Conditions;

- the development of common European indicators for social protection and social inclusion and

- the development of surveys to monitor the social impacts of the crisis and the changes in the quality of life.

We are working on more timely data on the situation of households to better measure inequality based on a broader view of the quality of life. This is a very technical process that has engaged colleagues from not only the Commission, but also the European Parliament and other international partners such as the OECD.

Conclusion

Ladies and gentlemen,

In order to be successful in implementing this ambitious list of reforms we need to build and make use of the right partnerships in Member States, social partners and last but not least the private sector.

The economic crisis has shown how robust our European social model is. Indeed, it can stand some of the strongest stress tests experienced in recent economic history. And although, the recession was incredibly difficult, its impact on our labour market and on society as a whole could have been much worse if we look at some of our international neighbours. Europe has shown it has the strength to deal with them.

As we progress up the pathway to recovery, we need to be ambitious and determined when preparing the growth-enhancing reforms of tomorrow. It is vital that we ensure that any recovery is rich in jobs with a positive impact on our labour force.

I look forward to today's discussion.


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