European Commissioner responsible for Employment, Social Affairs and Inclusion
Speech Tackling poverty by investing in people
Annual Convention European Platform against Poverty and Social Exclusion / Brussels
5 December 2012
Ladies and gentlemen,
One year after the first edition of the annual convention, we note that the situation in our Member States has not improved. The crisis has further increased and deepened the inequalities within and between Member States. Unemployment, poverty and exclusion continue to be on the rise. Those at risk of poverty are getting poorer in many countries — especially in countries where the overall risk of poverty is high. And those who are already in a vulnerable situation are hardest hit.
The percentage of people in households experiencing financial distress is at an all-time high. From 2009 to 2011, the income of the average household declined in two out of three Member States.
These developments undermine social cohesion and put a strain on solidarity, also between Member States as we can witness from the ongoing discussions between the heads of state and government.
If the European Union is to come out of the crisis stronger, more cohesive and more competitive, we need to tackle the social situation and the long-term challenges too.
And we need to do that by focusing on structural reform and social investment.
In the European Union, we have not been idle over the past year.
The Commission has adopted the Youth Opportunities Initiative and the Employment Package and launched the Social Business Initiative to boost employment. Employment remains above all one of the best ways to get out of poverty, provided that the jobs created are of good quality and ensure a decent living.
The European Year for Active Ageing and Solidarity between Generations has focused minds on the need to keep older people in employment, participating in society and living independently for as long as possible.
And we have launched initiatives to promote social inclusion of marginalised groups, such as the Framework for National Roma Integration Strategies.
We have continued to test reforms and ideas through social policy experimentation and the social protection committee has developed a Social Protection Performance Monitor to improve the monitoring of social policy. This will usefully feed into our further work on the Europe 2020 strategy.
During the so-called European Semester of this year, the Member States, upon the Commission's proposal, adopted not only recommendations on economic and employment policies but also 37 country specific recommendations on pension reform, health, poverty reduction, Roma inclusion and on the effectiveness of social protection.
But much more needs to be done. To make the right choices and design the most effective policy, we need a sound understanding of the social situation and of the challenges facing us.
There is the challenge of population change as Europe’s demographics evolve.
The rise in numbers of retired people, lower childbirth and the shrinking working-age population are threatening the long-term sustainability and adequacy of our social protection systems.
We need to acknowledge the impact of social protection spending on reducing poverty. Leaving pensions aside, social welfare benefit in the EU brought the poverty rate down from 26% to 16% in 2010.
We note at the same time that there is scope for improving the effectiveness of spending on social protection. Some Member States clearly are more successful in reducing poverty than others.
Social Investment Package
Ladies and gentlemen,
At the Platform’s first annual convention last year, I said "social protection is not there just as a remedy when things are going badly. It is a social investment — an investment in our future prosperity and well-being"1.
This stays even more true now. We need to modernise the European social model so that it mobilises a larger share of Europe's human capital, while at the same time ensuring social inclusion of disadvantaged people and an adequate level of social protection.
This is why the Commission will present early next year a Social Investment Package for Growth and Cohesion.
The Social Investment Package will provide concrete guidance for the modernisation of welfare states, on the shape of such reforms and on how the EU can support Member States in this context.
The conventional social protection paradigm would need to be supplemented by a more forward-looking social investment approach, inter alia by pointing to good practices that already exist in some Member States and regions.
Five main themes will be addressed by the package:
First, our social policy budgets need to be sustainable and adequate.
As I said, there is room to improve the efficiency and effectiveness of social policy budgets in many Member States.
We should adopt the policy that yields the highest return in social and economic terms.
Second, we must focus on services that enable people and on benefits that improve human capital.
Fighting exclusion and promoting employment at the same time contributes to sustainable growth in a climate of budget constraint and a shrinking workforce.
Active inclusion strategies and services that are more effective, more efficient and of better quality are vital if we are to avoid wasting human capital.
As recalled by this year's annual growth strategy, these active inclusion strategies should consist of support to inclusive labour markets, benefits that provide an adequate livelihood and social services that pre-empt the onset of hardship.
In a time of crisis, it is vital to improve such services and maintain effective social safety nets. And what makes it possible is smart investment.
For example, job-search assistance, flexible working arrangements, improved childcare, and lifelong learning opportunities are more effective in raising employment rates, especially among women, than cash benefits on their own.
There also needs to be a stronger link between social assistance and activation measures — thanks to more personalised services and a "one stop shop" — to improve efficiency and enhance people's productive potential.
Thirdly, we need to invest in trans-generational policies that address specific needs in childhood, for young people and for the transition from school to work, in parenthood, when people reach the end of their careers and in old age.
Tackling childhood disadvantages at an early stage is the best way to help people fulfil their potential.
That is why access to early childhood education and care is so crucial. We will address this with the forthcoming recommendation on child poverty, as part of the package.
Policies to ensure adequate livelihoods at each stage of life cycle combined with active ageing enable people to maximise their potential and increases older people’s employment opportunities.
The fourth building block of the package involves strengthening evidence-based policy-making to identify and apply the most efficient and effective measures.
That means the Member States need to ensure that adequate and predictable financing is available for testing and scaling up social innovations.
Social innovations help address newly emerging social needs and are often more cost-effective.
Policy based on more sound evidence and statistics that measure performance and outcomes more precisely will allow us to learn more effectively from each other.
Ladies and gentlemen,
The fifth theme addressed by the package will cover ways to making the best use of the EU budget, and in particular the European Social Fund. As you know, the Commission proposal for a Multiannual Financial Framework for 2014 to 2020 has a strong social investment dimension. It proposes allocating at least 25% of Cohesion Policy funding to the Social Fund, and allocating 20% of Social Fund resources in each Member State to projects to promote social inclusion and combat poverty.
The final decision on the budget for the next financing period still needs to be taken. It will show us how strong the Member States are committed to the key principle of solidarity and the employment and social targets they set themselves as part of the Europe2020 strategy.
Economic and social governance
Ladies and gentlemen,
More effective spending as part of social and employment policies also calls for stronger EU and Member State economic and social governance.
The consolidation and completion of the Economic and Monetary Union is set to strengthen it further.
Meanwhile, the arrangements for social policy coordination at EU level — the open method of coordination — are non-binding.
There is therefore a risk of imbalance in overall coordination of economic, employment and social policy.
That is why the upcoming package will also start a discussion on how to upgrade and streamline the EU’s procedures in the social policy area.
This will improve the monitoring and governance of reform under the Europe 2020 Strategy.
To implement the Social Investment Package effectively and strengthen the social dimension of Europe 2020, we need to work even more closely together at all relevant levels.
The Platform against Poverty could be developed further into a venue for stakeholder involvement in meeting the Europe 2020 targets, sharing ownership and securing collective commitment.
Stakeholders such as regions and cities, social partners, civil society and where possible those directly affected by our policies must have a say in designing, implementing and monitoring national reform programmes.
Ladies and gentlemen,
The Europe 2020 targets for employment, education and poverty reduction are central to the economic and social model of the Europe we are striving to build — a Europe that is smart, sustainable and inclusive.
Our approach must be valid for addressing the consequences of the crisis and must tackle at the same time longer-term challenges comprehensively.
Our Social Investment Package will set out an agenda for meeting those challenges and helping the Member States deliver on Europe 2020. I trust that this Convention will give the Commission and all further actors involved significant input on how best to design renewed policies for social investment and social protection capable of tackling the social challenges facing Europe today and in the future.