Economic and social progress are two sides of the same coin

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.com PLC.

The economic crisis wiped out a lot of social protection in the EU. [daliscar1/Flickr]

When EU heads of state and government gather in Gothenburg to debate fair jobs and growth, it will be the first such ‘social summit’ in 20 years, writes Juan Menéndez-Valdés.

Juan Menéndez-Valdés is the director of Eurofound, the European Foundation for the Improvement of Living and Working Conditions.

At the heart of the agenda will be the formal proclamation of the European Pillar of Social Rights – 20 principles focused on equal opportunities and access to the labour market, fair working conditions and social protection and inclusion.

It is to serve as a ‘compass for a renewed process of convergence towards better working and living conditions among member states’ taking account of the changing realities of Europe’s societies and the world of work.

So far, so laudable.

But let us remind ourselves of where we are. This is a time when the United Kingdom’s somewhat shambolic exit grabs headlines. It is a time when populist and anti-EU sentiment is present in many member states.

A time also when many are questioning the benefits of an EU which had at its core the promise that we would all advance together towards a better quality of life and work.

Why then, at this critical juncture – as it battles to respond effectively to the complex new economic and political parameters – does the European Union focus on ‘feel-good’ phrases in a pillar of social rights?

The answer surely lies in the increasingly manifest need for a stronger link between economic and social developments. For the story of the European Union is, in fact, the story of upward economic and social convergence of the soon-to-be 27 member states – in a way that sees all benefit.

In fact, the social model has always differentiated Europe from the rest of the world, explicitly trying to balance both economic and social needs.

But populist sentiment perceives the EU as inherently unbalanced; as the vanguard for austerity, as facilitating unfettered migration and mobility and as spawning over-zealous regulation in all aspects of life.

The ensuing ills of society are placed firmly at the EU’s door. In reality, however, the EU’s mandate in social affairs is limited, and both successes and failures result from responsibility shared with member states.

Indeed, the economy has been the primary vector of the integration process – from the European Economic Community through to the single market and Economic and Monetary Union. The logic was that rising prosperity and the intertwining of European economies would make war ‘not merely unthinkable, but materially impossible’.

However, pan-European markets require rules and much of the social and employment legislation in the Union is related to this process of market-building.

Ensuring a ‘fair playing field’ has motivated European legislation on health and safety at the workplace and the principle of equal treatment, not least as regards gender, led to legislative initiatives on work-life balance, on part-time and temporary agency work, among others.

Furthermore, the Collective Redundancies Directive and legislation concerning information and consultation of workers provided a framework for structural change. These European laws have contributed to significant upward convergence in social and employment standards – not least among new member countries.

But if market-building legislation has consistently had more impact on economic and social outcomes, economic and social cohesion has also played a role. It has become the EU’s main investment policy via the various Structural Funds, and in recent times has accounted for over half of public investment in some countries.

There is little doubt that the policy has met considerable success.

However, the strong growth during the period from the mid-1990s up to the onset of the recession in 2007 masked the fragility of various aspects of employment and social protection in many member states.

For example, the decades before the recession saw a large increase in the number of temporary contracts. The crisis saw them largely wiped out. In some member states, insurance schemes were ill-equipped to provide income support and cutbacks in social protection expenditures weakened safety nets further.

This was the catalyst that placed the current social convergence concept at the centre of European policy discourse. On the one hand, the crisis signalled the interruption of a long-standing process of convergence of real standards of living among the member states.

On the other, the recession challenged the stability of the Euro, casting doubts on the existing system of financial governance.

As Greece and other countries affected by fiscal consolidation battled to stay afloat against a background of deteriorating employment and living and working conditions, and as other member states perceived the increased movement of workers, people and services as a growing threat to their standards of working conditions and social protection, political consensus grew that ‘ever closer’ integration – and the stability of the euro – required a strengthened social dimension.

It was against this background that the European Pillar of Social Rights, after a wide consultation process, emerged from the European Commission in April this year.

The Social Pillar makes it clear that economic and social progress are two sides of the same coin. Without social safety nets, people do not take risks. Education and training, and other activation policies are key ingredients to long-term competitive advantage and social protection plays a vital role in stabilising economies in the Economic and Monetary Union.

This is the significance of the Proclamation – it represents the inextricably linked political, economic and social integration of a continent.

As all countries return to growth, this is surely the time to demonstrate that integration can deliver. The Pillar is a first and essential step towards a new start for social Europe.  Its implementation will require action not only at European level but by member states, social partners and governments at national and regional level.

This is the story of the European Union. A new chapter opens in Gothenburg this week.  After that, it will be in Paris, Madrid, Prague… that the most important pages are penned.