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European Commissioner responsible for Employment, Social Affairs and Inclusion
The role of the European Social Model
Joint seminar on "The European Social Model: Key driver for competitiveness" organised by European Parliament, Cedefop, EU-OSHA, ETF and Eurofound /Brussels, 25 September 2013
Ladies and gentlemen,
I want to congratulate Parliament and the four agencies for organising this seminar.
It provides an excellent illustration of the work the agencies are doing.
They back up the work of the Commission by providing evidence for a wide range of policy debates.
The Commission and those who rely on their activities warmly appreciate the work done by the Cedefop, OSHA, ETF and Eurofound.
Ladies and gentlemen,
In the last five years, Europe has experienced its longest financial and economic crisis since World War Two. During this crisis, the European Social Model has been a great asset that has protected people from the consequences of the financial turmoil.
Through strong and high quality social dialogue, many jobs have been saved and flexible responses have been found. Through automatic social stabilisers within Member States, household income has been protected in the first phase of the crisis, which was also important to sustain aggregate demand.
However, the crisis has taught us that in order to create a more prosperous and more resilient socio-economic model we need further improvements on the level of Member States but also at the level of the European Union.
Needless to say, in order to emerge from the crisis, Europe needs to repair its business model most of all. We need proper financial sector regulation, we need a more robust industrial and innovation policy, and the Monetary Union also needs to be reformed.
On the other hand, we also need to see what needs to be done differently on the side of the social model. On this side, Europe needs to do more, not less.
Our commitment to the objectives enshrined in the Treaty must not be overlooked. They are:
The Treaty also says the European Union is to promote economic, social and territorial cohesion, and solidarity among the Member States.
It strikes a balance between the Member States’ individual responsibility and the solidarity of the Union.
Because the EU is about individual responsibility and solidarity.
Ladies and Gentlemen,
I believe solidarity within Member States can only be strengthened if solidarity between the Member States is boosted significantly. That will not happen without a stronger role for the EU.
National welfare states have suffered, particularly after the implementation of fiscal adjustment programs during the debt crisis.
The Social Investment Package of the Commission provides guidance to Member States to modernise their national welfare systems, to use the available resources more effectively, in order to tackle such issues as child poverty and homelessness.
Also within the national context, important social security reforms have been launched in order to improve the adequacy, sustainability and safety of pensions. The Green and White Papers of the Commission have been instrumental in providing the right arguments and orientation for such debates and reforms.
The Youth Opportunities Initiative, as well as the Youth Employment Package of the Commission have helped Member States to tackle the chronic youth unemployment, by mobilising financial resources, and by taking over the best available models of vocational training and school to work transition.
The Council Recommendation on establishing a Youth Guarantee, and the introduction of the related Youth Employment Initiative with funding of 6 billion euros provides a good example of how the Union can take collective action to tackle a major employment and social challenge collectively and on the basis of a clear policy benchmark.
The Youth Guarantee will help strengthening the employment security of young people, which also helps to maintain the employability of young people in the longer run, by avoiding losing skills and morale.
By focusing on the NEETs and offering them vital training or apprenticeships, our modernised public employment services can also contribute to the fight against youth poverty.
I believe these initiatives will help the economic recovery directly, but also point towards a long-term reconstruction of the European Social Model.
Other parts of the reconstruction effort are more bottom-up but of course require a supportive environment. For example, the “social economy”, which includes cooperatives, mutual societies, non-profit associations, foundations and social enterprises, provides a wide range of products and services across Europe and generates millions of jobs.
The potential of the European Social Fund and other EU financial instruments should be exploited better within the Member States in order to develop more social enterprises and a broader social economy. A conference in January 2014 in Strasbourg will bring many participants and stakeholders under a common tent.
Among the key components of the European Social Model, I also need to speak about the social dialogue, of course.
We need to step up the social partners’ involvement and participation in EU policy debate and decision-making. The EU has supported social dialogue within the Member States, through financial assistance to capacity building, among other ways.
Existing procedures for consulting the social partners at EU level could be made more effective and used to greater advantage.
The aim would be to achieve stable, transparent consultation of the social partners throughout the European Semester procedure.
Involving and consulting the social partners at national level is also vital and further development is needed here.
Ladies and gentlemen,
I would like to highlight three policy areas where the EU level activities of the forthcoming months will be crucial in order to deliver on our social commitments.
First, we need to do more to ensure that the European labour market gives good opportunities for our citizens.
Alongside high unemployment, there are 2 million unfilled vacancies in the EU. There is a shortage of health professionals, IT personnel, engineers, sales representatives, and accounting and finance personnel.
Of course there will always be some vacancies at any given time, but we could reduce the mismatch by improving labour mobility at regional, national and European level.
The Commission is working to improve and modernise the online matching capabilities of the European Network of Employment Services — EURES — to give it real-time access to vacancies and make interaction between supply and demand more fluid.
The proposed reform will make EURES a more effective employment instrument that enables the Member States to offer mobility services in a flexible demand-driven way, in line with the special needs of their labour markets.
A properly functioning labour market can improve productivity and economic performance by ensuring that people can move quickly between jobs, from education to a job and from being unemployed to getting a job.
But more is needed to improve the performance of public employment services and the effectiveness of active labour market policies.
Second, this is the period when a lot will be decided about the future of the EU financial instruments, on the level of the EU as well as the Member States.
In the talks on the next multi-annual financial framework, we need to ensure the future and adequate funding of the ESF, but also with the EGF, the Youth Employment Initiative, the Programme for Employment and Social Innovation and the Fund for European Aid to the Most Deprived. These instruments represent important resources for improving labour market functioning, strengthening Europe’s human capital and help maintain social cohesion.
Implementing the right social policy means investing actively in human capital and social cohesion. These are prerequisites for competiveness and economic growth in the global marketplace of the 21st century. And the ESF plays a vital role in this.
Ladies and gentlemen,
A well-functioning labour market also implies fair working conditions, including the protection of health and safety at work. This is another crucial component of the European socio-economic model, and an important task for the EU today.
Good health and safety at work can help boost social cohesion, combat exclusion, promote reintegration into the labour market, improve employability and reduce early retirement.
In this economic crisis, improving occupational health and safety contributes substantially to meeting the Europe 2020 targets and coming out of the crisis stronger.
The European Agency for Safety and Health at Work has convincingly demonstrated that effective management of health and safety also makes sound economic sense at company level.
A healthy, safe workplace where both managers and workers are motivated and involved are more efficient and productive, and they help boost Europe’s competitiveness.
Apart from health and safety, we also work on other initiatives in order to improve working conditions, such as the Quality Framework on traineeships and the European Platform against Undeclared Work.
Ladies and gentlemen,
Today the EU, and in particular the euro area, is going through an economic, employment and social crisis that features growing divergence between the Member States and increasing polarisation within societies.
These trends contradict our endeavour for full employment, which along with social progress, within a highly competitive social market economy is spelled out in Article 3 of the Treaty on European Union.
These are not fair weather objectives, but must be at the core of economic policy-making and of an improved design of our monetary union.
People from all social groups, and not just the elites, need to be involved in and support the European integration project.
The crisis has shown how dependent the Member States' economies are on each other.
Employment and social problems in individual Member States are increasingly a matter of common concern, especially within the euro area.
EMU’s original design has failed to take sufficient account of real economic developments and structural issues – like unemployment, poverty or inequalities – that are vital to the sound functioning of a currency union. Moreover, the currency union is based on a fiscal compact with no provision for transnational fiscal transfers.
Now, what we have seen since the crisis broke is growing disparities between the northern or “core” Member States and those on the periphery, most of which are in the south.
While the former have weathered the crisis rather well, in the latter unemployment has risen, especially — and sometimes dramatically — among young people, household incomes have declined, and poverty has increased.
This polarisation is particularly marked within the euro area, where currency devaluation is no longer an option.
As the sole remaining options for restoring their competitiveness, the euro-area Member States are left with internal devaluation or the loss of population through emigration.
The negative effects of all this on aggregate demand, human capital and social cohesion — not to mention the political risk of growing populism and political extremism — have become all too evident during this lengthy crisis.
Severe social imbalances can threaten EMU as much as fiscal and external imbalances. This will be addressed in next week's communication on the social dimension of the EMU.
Ladies and Gentlemen,
Repairing the Monetary Union is a major task, but it is a fundamental pre-condition for future balanced growth and social cohesion in the EU. Our initiatives for strengthening the social dimension, through improved governance, must ensure that the functioning of the monetary union does not contradict the social objectives all EU Member States share.