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Mr. László ANDOR

EU Commissioner responsible for Employment, Social Affairs and Inclusion

"Confronting Europe's challenges: getting on board for the 2012 European for active ageing""

EPP Group Experts Conference

Brussels, 24 January 2012

Ladies and gentlemen,

This Conference comes at the right time — right at the start of the European Year for Active Ageing and Solidarity between Generations.

It asks some searching questions regarding the social and employment impact of certain recent landmark EU decisions that we need to consider.

At a time when dark clouds hang over Europe’s economies, we need to look candidly at the situation — without excessive despondency or false optimism.

What I want to do today is tie the European Year for Active Ageing and Solidarity between Generations into our wider efforts to deal with the challenges facing Europe — both those stemming directly from the crisis and those that were there anyhow.

Population ageing

We have long been aware of population ageing, but it is now a fact as the baby-boom cohorts reach retirement age. The crucial balance between the active and the retired members of society will start changing very fast as more and more people retire and fewer and fewer come onto the labour market.

While population ageing is a huge achievement — the inevitable consequence of people living longer and reducing mortality significantly — it also holds a threat for the welfare state, for economic growth, for solidarity between generations, for the very cement binding society together.

The deteriorating economic situation

Ladies and gentlemen,

That threat has been there irrespective of the crisis. But the crisis has made it worse because Member States’ budget positions have worsened as a result.

As we all know, over the last three years, governments have taken massive public support measures to mitigate the adverse employment and social effects of the economic downturn and distribute the adjustment costs more evenly.

These measures have succeeded in lessening the labour-market impact of the crisis. But the use of discretionary stimulus measures and automatic stabilisers has come at a price.

Aggravated by less government revenue, public debt has soared since the crisis began. It is some 20 percentage points up, equalling 79% of GDP on average.

This deteriorating budget situation has eroded the international capital markets’ confidence in certain of the worse-affected Member States, and that has significantly increased the cost of financing budget deficits.

While tackling the problem of stricter financial and economic governance is vital, it also raises such questions as: How does employment and social policy tie up with the new economic governance? And will such policies be governed by macro-economic concerns?

During the first European Semester, we succeeded in ensuring that the country-specific recommendations combined budgetary, economic and social concerns.

The new macro-economic imbalance procedure may clearly have links with employment, since such areas as wages, labour taxation and flexibility on the labour markets may affect the economy’s capacity to adjust to internal and external macro-economic imbalances.

The fiscal union agreement

The unfolding economic crisis, in particular over the last year, has shown that Europe’s progress towards greater economic integration over the last decades has brought a number of additional challenges and consequences.

The growing lack of confidence on the capital markets shows that nowadays the effects of imbalances in one Member State can quickly spill over onto other Member States.

What one Member State does in terms of economic governance may have far-reaching consequences for a number of other Member States, even if they are not directly concerned. Clearly, economic and monetary union does not give the Member States carte blanche to manage their economies totally as they wish.

This underlines the need for viable instruments for budgetary, fiscal and macro-economic surveillance, and for stricter enforcement mechanisms in the event of non-compliance.

More than ever, Europe needs more robust economic governance arrangements that ensure the Member States follow budget rules strictly. This is vital if we are to make sure that a sovereign debt crisis of the sort we are currently witnessing never reoccurs.

As we speak, a new treaty is being drafted to step up the rules on the Member States’ budgets, and in particular those in the euro area. While we do not yet know exactly what the treaty will say, it is essential that it does not complicate governance by adding in extra processes and structures.

The existing institutions need to be used, and major reforms should be discussed in connection with the European Semester, with the Member States reporting in their National Reform Programmes.

From my perspective, as Commissioner for Employment, Social Affairs and Inclusion, incorporating the new treaty’s provisions into existing processes will help ensure coherence and coordination with the EPSCO Council.

It will make sure we do not miss relevant employment and social aspects of macro-economic adjustments. The EPSCO Council has the necessary expertise on labour market and social issues to advise the Ecofin Council in the macro-economic surveillance process.

Ladies and gentlemen,

To come back to my argument, what concerns me — as Commissioner for Employment, Social Affairs and Inclusion — is the social and employment dimension of these developments.

I spoke of the danger of the potential undermining of the results of decades of work to build a European social model that defends and protects workers’ rights and working conditions.

While recognising the need to tackle the issue of financial governance, I also believe we must tread a fine line between applying sensible austerity measures and preserving people’s hope.

The current macro-economic situation in some Member States unfortunately calls for tough austerity policies to ensure that future economic stability is not jeopardised.

We need to ensure that the necessary austerity measures do not generate a downward economic spiral that drastically reduces income, consumption and investment.

In the pensions area, we cannot — morally speaking — just pass on the bill to future generations, leaving it for to smaller cohorts to defend a social model that is less and less sustainable.

It is therefore vital now to limit the burden of debt on future generations and prevent a situation where they can no longer sustain adequate social protection systems. And active ageing can certainly help here.

Active ageing allows people of all ages to enjoy the fruits of rising life expectancy, and it pre-empts the risk of increasing tensions between the young and the old.

Ageing societies are, and can remain, prosperous societies. And that, of course, is also the goal of our Europe 2020 Strategy for smart, sustainable and inclusive growth.

Europe 2020 aims to achieve an employment rate of 75% among people aged 20 to 64 and to lift at least 20 million people out of poverty and social exclusion by 2020.

Those targets cannot be met — and strong solidarity between generations cannot be maintained — without active ageing.

Without active ageing, more older people are likely to be living in poverty, as our pension systems grow increasingly unsustainable.

Active ageing seeks to promote better opportunities for older people on the labour market through accessible workplaces and age friendly working conditions and allow them to achieve an adequate income in old age.

Adequate, sustainable pensions depend on good jobs and a sound balance between time spent in employment and in retirement.

That will be a key message in our forthcoming White Paper on pensions. But we will have to lay much more emphasis on creating better opportunities for older workers on the labour market, as the Eurobarometer results have shown.

Of course, employment is not the only form of activity. Many people over 55 are very active in volunteer organisations or providing informal support for friends and relatives. This may involve offering emotional or financial support, or helping with housework, or doing someone's shopping or childcare and babysitting.

I said that the European Year will only be a success if government at all levels, business, the social partners and the public are ready to get involved.

What I hope to achieve during this European Year is ensure that all players commit themselves to specific actions and goals during 2012, so that we see older people’s opportunities improve tangibly and they can start making a greater contribution to society during the Year itself.

I am convinced that we need not fear for the future as society ages

  • if we preserve our health for longer;

  • if we create more opportunities for older workers on the labour market;

  • if we remain active members of the community.

  • In short, if we live in an environment rich in opportunities where growing old does not have to mean we become dependent on others.

Ladies and gentlemen,

Deep down I believe no one really wants to be a burden on others. The European Year needs to capitalise on the desire to stay active by creating better opportunities for older people.

More widely, it aims to foster the conditions that make for a better future for both young and old in our ageing societies.

The key lies in ensuring that people can continue to contribute to the economy and to society and to look after themselves as they grow old. That is what active ageing is about.

Thank you.

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