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European Commission

László ANDOR

European Commissioner responsible for Employment, Social Affairs and Inclusion

Speech: Looking Forward: Social Investment as a way out of the crisis

Eurofound Forum Social and Employment Policies for a Fair and Competitive Europe/

Dublin, 15 February 2013

Ladies and Gentlemen,

It is my pleasure to be with you in Dublin today.

I would like to begin by thanking Eurofound for this invitation to address the Foundation Forum on Social and Employment Policies for a Fair and Competitive Europe.

While emerging from the crisis as a stronger and more stable Union is our common goal, we need to ensure that when growth picks up, this growth creates jobs and is inclusive.

But still now we are facing a social emergency in certain parts of the EU, as also President Barroso put it in last year's State of the Union address.

The crisis has led to growing risks of poverty and social exclusion. Since 2008 the number of people at risk of poverty and social exclusion has increased in 18 out of 26 Member States.

Not only do these trends run counter to European values of fairness and dignity for all, they also pose a threat to our societies, as poverty and social exclusion bring with them significant costs which are not only economic but also social, as the excellent recent Eurofound Quality of Life Survey has pointed out.

The title of my intervention is 'social investment as a way out of the crisis'. But I do not intend to make such a lofty promise here today. What I do intend to communicate is that by investing in our citizens – to develop their skills and capabilities and ensure their adequate livelihoods - we will be better equipped to emerge out of the crisis stronger, more cohesive, and more competitive in the long run.

This is especially true as we are heading towards a situation of structural labour market shortages. With increased ageing and decreasing fertility, we will soon need all available hands on deck to sustain our budgets and preserve our quality of living.

This is why the Commission will be presenting in 5 days from now the Social Investment Package.

This Package is grounded on the idea that social policies should empower people from an early age, strengthen their capabilities to adapt to risks such as changing career patterns, new working conditions or an ageing population and enhance their opportunities to participate in society across the life course.

Furthermore, it recognises that social policies can yield significant returns over time and represent an investment for growth that is inclusive as well as smart and sustainable.

The Package will call for a strengthened focus on social investments in the context of fiscal consolidation without forgetting about the social protection and stabilisation functions of social policies. Well-designed reforms should enable people to contribute to the economy and to participate in society thereby helping to tackle the social consequences of the crisis and to achieve the objectives of the Europe 2020 Strategy.

The Package will do this by presenting an integrated policy framework that makes the case for an increase in the sustainability and adequacy of social systems through simplification and better targeting.

The fact that some countries have better social outcomes than others while having similar budgets shows there is room for improved efficiency in social policy spending. The package will give clear guidance on how to achieve this.

Improving people's opportunities to integrate in society and the labour market by strengthening their skills and capacities is key. In this sense, social policies need to be a trampoline and not a fishtrap: once in, never out. The Package will therefore outline that support systems need to be targeted, enabling, activating and in principle temporary.

In the past, we have often focused on groups rather than individuals when designing our social policies. The package will give a new direction and stress the importance of a needs-based, individualised approach. Social systems should respond to people's needs at the moments needed. This already starts at young age, and continues throughout life. Think about it: the adequacy of future pensions depends on the human capital of those who are today children.

Preventing and preparing people against life's risks reduces the future need for higher social spending to repair after hardship has happened.

The Commission expect Member States to report on the enhanced focus on social investment in their national reform programmes as part of the European Semester.

The Commission will monitor progress in these reforms and where relevant propose country specific recommendation in this area.

The Commission will also guide Member States in making the best use of the EU funds, notably the ESF, for supporting social investment.

Furthermore, the Social Investment Package will serve to inform our current discussions on strengthening the social dimension of a genuine Economic and Monetary Union.

Social dimension of the EMU

Ladies and gentlemen,

If the crisis has taught us anything, it is the extent to which Member States' economies are dependent on each other. Increasingly, employment and social policies, and the attendant challenges faced by Member States are a matter of common concern, especially in the Euro zone.

All these aspects represent a strong argument for a social dimension of the EMU to be developed without further delay.

In December, the European Council mandated the President of the Commission and of the European Council to develop proposals and a roadmap for ex-ante coordination of major economic reforms, as well as for solidarity mechanisms to enhance these efforts.

At the same time, the European Council has mandated both Presidents to present measures to develop the social dimension of the EMU, including social dialogue.

In my view, the social dimension of a genuine EMU must be adequately reflected in the EMU’s rules and governance mechanisms, to ensure that economic efficiency and social equity are pursued simultaneously.

The proper functioning of the EMU requires that Member States work together to restore socio-economic convergence, address employment and social imbalances that risk affecting the EMU as a whole, and set up solidarity mechanisms to support Member States in addressing those imbalances.

The monetary union must be able to collectively address the key employment and social problems facing it.

This requires that fiscal objectives are reconciled with employment and social ones. In practice, this also means that fiscal coordination should be supported by fiscal transfers, if these are needed to enable Member States to undertake structural reforms that will help restore growth and jobs.

While the economic crisis has been a stress-test to the EMU, the way we reform the EMU is now a test for the entire EU integration.

A genuine Economic and Monetary Union will mean coordinating reform and investment in the Member States by strengthening a common strategy for growth and jobs and acting on macro-economic imbalances as well as on key employment and social problems.

If the Member States agree to pool more financial, budget and economic sovereignty and want this process to be legitimate in the eyes of the citizens, employment and social problems will need to be addressed. This calls for an improved framework for coordination of employment and social policies.

To ensure that employment and social policies are sufficiently able to deal with the challenges at hand, we need stronger policy benchmarks, for instance on the quality of active labour market policies or on the coverage of life-long learning. The Youth Guarantee also represents a policy benchmark.

Putting such policies in place is a structural reform, which should be supported, if needed, from an EMU fiscal capacity, such as the Convergence and Competitiveness Instrument which the Commission proposed in its Blueprint for a deep and genuine EMU last November.

Policy benchmarks or eventually minimum social standards or national floors should also be envisaged in areas such as social dialogue or minimum wages.

In these areas, policy benchmarks or standards would not require much public investment to implement, but they would provide a clear social underpinning to the way the EMU works. Crucially, they would represent a safeguard that employment and social outcomes are not simply treated as residual variables in the process of macroeconomic adjustment.

Conclusion

Ladies and Gentlemen,

Thank you for again inviting me to take part in this Forum at such a crucial moment in the European year. We are currently preparing for the third European Semester and the forthcoming meeting of Ministers for Employment and Social Affairs on 28 February will be particularly important. Not only do we expect the Ministers to adopt there the youth guarantee, one of the most concrete measures to help the growing group of young people neither in employment education or training. The Ministers will also be discussing the social dimension of the Economic and Monetary Union.

This will be an important step in the development of proposals that the President of the Commission, in close cooperation with the President of the European Council, will present to the June European Council.

I hope today's conference is thought-provoking and informative.

Thank you


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