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European Commission

László ANDOR

European Commissioner responsible for Employment, Social Affairs and Inclusion

Fighting poverty and preserving democracy through social investment

Council of Europe Conference on Poverty and Inequalities in Societies of Human Rights / Strasbourg,

21 February 2013

Ladies and gentlemen,

I am grateful to the Council of Europe for inviting me to address you on poverty and inequality in Europe.

We are all aware of the impact of the crisis, and the extent to which poverty and social exclusion have increased and inequality has grown.

Almost 120 million people, one in four of the EU population is at risk of poverty or social exclusion. Unemployment has reached a new high of more than 26 million people. The youth unemployment rate has dramatically increased to above 20%, and 7.5 million young Europeans between 15 and 24 are not employed, not in education and not in training.

Furthermore, across the EU we have seen increasing divergence between and within the Member States. The risks of entering into and the chances of getting out of poverty vary in the EU. Labour markets become increasingly polarised between high- and low-income jobs, triggering more and more inequality and poverty.

Young adults, inactive or unemployed women, lone mothers, and older working-age adults outside the labour market are among those at a higher risk of persistent poverty.

Not only do these phenomena run counter to our European values of fairness and dignity, but they also pose a threat to democracy.

At this year’s Davos World Economic Forum, Christine Lagarde, the Managing Director of the IMF, referred to the effect of excessive inequality on growth and social cohesion as corrosive.

It corrodes the legitimacy of government and undermines the foundations of society.

Finding the way out of the financial crisis, of course, remains crucial. However, modernising welfare states is not less important and plays an important role in reducing inequality and poverty, boost economic competitiveness and foster growth.

In his State of the Union speech last autumn, Commission President Barroso said that "the European countries with the most effective social protection systems are also among the most successful and competitive in the world".

That is behind the idea of inclusive growth in the EU’s Europe 2020 Strategy.

This strategy seeks to build “a high-employment economy delivering economic, social, and territorial cohesion”.

In particular it sets a target for lifting at least 20 million people out of poverty and social exclusion by 2020.

To achieve this target, major reforms are needed in Member States which also need to take into account structural trends, such as demographic ageing.

Action or inaction in one Member State can have a major noticeable impact at European level. For instance, low investment in education or training in some Member States has implications in terms of lower skilled workforces, which can have negative impacts on overall economic competitiveness.

Conversely, more participation in employment, better social spending and fairer taxation can help offset inequality and fight against poverty across Europe.

That is the aim of the Social Investment Package, which the Commission adopted on 20th February.

It draws on good practice in the EU Member States in setting out an integrated framework for social policy reform.

We should not revise our goals but revise the ways to be more efficient.

The Package comprises three policy reform strands to help the Member States adapt their social protection systems to the challenges of the 21st century.

First, using social policy budgets more effectively.

It is a reality that some countries have better social outcomes than others while having similar budgets. Those Member States which put greater focus on child care, active labour measures and long-term care, while among others things readjust tax bases to avoid negative impacts on the labour market, obtain a more sustainable social system.

The package also emphasises that simplifying benefit administration can save time, money, and make accessing support easier.

It also makes it easier to properly address the individual’s complex situation.

The second strand aims at improving people's chances of participating in society and the labour market based upon three pillars, namely: access to quality services, adequate income support and inclusive labour markets.

It means making services accessible to people. Job-search assistance, training to acquire skills, lifelong learning opportunities, housing support and accessible health care all have an important role to play here.

These measures work best when they are coupled with benefits that address inequality of resources.

The Package proposes an integrated approach combining services with benefits guaranteeing an adequate standard of living.

The proposal also pays special attention to the needs of women, migrants, Roma, older people and other vulnerable groups, and pursues measures which give a fair chance of their entering the labour market and earning an adequate living.

The third strand focuses on preventative measures in order to safeguard against risks and prevent disadvantage from compounding. This will reduce the need for higher social spending later, once hardship has occurred.

Social policy should be geared to the individual’s needs at various stages of life — in childhood, during adolescence, when making the transition from school to work, in parenthood, as the end of one's career approaches, and in retirement and old age.

Ladies and gentlemen,

Investing in the fight against child poverty in particular is vital if poverty and social exclusion are not to pass from generation to generation, and people are to have opportunities in later life. That is why a Recommendation on this issue is annexed to the Package.

Studies show that tackling childhood disadvantage early is the best way to ensure that people live up to their full potential. This means, for instance, providing accessible quality education or extra-curricular activities. Measures to improve the family's economic situation, such as employment support, and adequate child and family benefits can also prevent the intergenerational poverty trap.

Good-quality childcare and early-childhood education have been proven to have a strong positive impact on children's chances of finishing studies and finding employment, and can help children avoid extreme risks like delinquency and drug abuse later on.

Within the framework of the Recommendation, the Commission will set up a European Platform for Investing in Children that will collect and disseminate innovative practices.

The Social Investment Package also highlights other types of preventative support.

Another important concern is preventing homelessness or mitigating its effects on people through housing-led policy.

Putting resources into permanent rehousing for the homeless and reintegrating them into the labour market offer a sustainable solution.

It can also bring savings by reducing the use of shelters, the need for crisis-support services and healthcare, and by boosting employment.

Ladies and gentlemen,

The implementation of policy guidance given under the three policy strands will feed into future European Semester procedures for Member State reforms, and the EU Structural Funds will provide the Member States with support.

Indeed, the Package offers guidance on how best to use EU financial resources, notably from the European Social Fund, to support social investment, in particular on social innovation and strengthening the role of the social economy.

In order to put social policy reforms in place, involvement of stakeholders is important.

Exchange of views and sharing best practices through international fora organised by institutions (for instance, the Council of Europe), networks, the social partners, NGOs, civil society, think tanks, and regional and local representatives can promote its implementation. The Platform against Poverty and Social Exclusion will serve as a venue for this and will bolster shared ownership and will secure collective commitment.

Stakeholder involvement is a cornerstone of Europe 2020 Strategy as well. Mobilising the social partners and civil society at national level is also required to the success of policy reform.

I would therefore encourage stakeholders to participate in consultations at both Member State and EU level in the European Semester.

I conclude that we must take into account the human and social implications when deciding measures for fiscal consolidation and growth.

Social investment is not a zero-sum game, but a win-win situation, from which European societies and European citizens can benefit.

Economic efficiency and social equity should be pursued at the same time.

Ultimately this will help the European Union to emerge not only stronger and more competitive from the crisis, but also more inclusive and cohesive.

Thank you.

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