by Benjamin Fox
The ‘Social Europe’ model must be revived if the EU is to avoid lumbering itself with low social mobility and other economic millstones, according to a report published Monday (23 February) by Brussels-based think-tank Friends of Europe.
The ‘Unequal Europe’ report is the product of a 25-member ‘expert group’, chaired by former Belgian deputy premier and social affairs minister Frank Vandenbroucke, including former employment commissioner Laszlo Andor and Pascal Lamy, the former director general of the World Trade Organisation.
The report, which is addressed to Jean-Claude Juncker’s Commission, now in its fourth month since taking office last November, argues that social policy in the EU needs to be put “on a par with macroeconomic objectives” to avoid long-term burdens on national economies.
It says “human investment must be given equal priority with investment in infrastructure, innovation and all the other areas seen as crucial to Europe’s global competitiveness”.
“In some countries, social dialogue is effective, efficient, and representative, but in others the social partners have lost representativeness and credibility, and even barely exist,” contends the report.
The so-called ‘Social Europe’ model of high tax and social spending has taken a battering in the wake of the economic crisis, particularly in the five eurozone countries which have had to resort to EU-funded bailouts for their government and banking sector.
Under the terms of their bailouts, Greece, Portugal, Ireland, Cyprus and Spain have been required to adopt wage, pension and job cuts, often with little or no consultation with trade unions.
The report is an attempt to influence the Juncker commission to choose a different path as the bloc gradually returns to economic growth and budgetary pressures ease.
“The blatant contradictions between the EU’s proclaimed ambitions and actual budgetary priorities are unacceptable, and need to be taken into account when deciding country specific recommendations,” states the report.
It notes that education spending in 2012 was lower in more than seven EU countries compared than the average in the pre-crisis years between 2004 and 2008.
Meanwhile around one in eight Europeans are unemployed in the eurozone following the economic crisis, but jobless rates in Spain and Greece are four times higher than in Germany and Austria.
The ‘expert group’ argues that Europe’s main problem is one of ‘self-confidence’ rather than an inherently flawed economic model, and that the EU does not need to follow the US path of lower social spending and taxation.
It notes that there is no correlation between low levels of social spending and a high competitiveness score, with Finland, Germany, the Netherlands and the UK all having social spending of around 30 percent of GDP, but still being among the global competitiveness index’s top ten.
Meanwhile, labour market flexibility should be balanced with job security and investment in working conditions. “Countries like Denmark have been successful in this respect,” the report states. “There is no reason why others should fail.”
Among its policy priorities, the report says that lawmakers should consider a European policy to guarantee a minimum income, combining minimum wages with social benefits.