Social policy indicators such as unemployment could soon form part of the European Commission’s regular monitoring of EU countries’ economic and budgetary imbalances under plans floated by Brussels today to deepen the social dimension of the Economic and Monetary Union (EMU).
Presenting the proposal on Wednesday (2 October), Commission President José Manuel Barroso said the EU had made “giant leaps forward” to strengthen scrutiny of national public deficits during the eurozone debt crisis but that these breakthroughs had yet to be matched on the social policy side.
Under the plans, a “social scoreboard” would be added to the list of indicators already being monitored by the Commission as part of its annual scrutiny of national budget deficits and economic imbalances.
New social indicators in the scoreboard would include:
- The overall unemployment level and its evolution
- The youth unemployment rate and the number of young people who are not in education, employment or training (NEET rate)
- The real gross disposable income of households
- The percentage of the working age population at risk of poverty
- income inequalities as measured by comparing the richest 20% of the population with the poorest 20% (the S80/S20 ratio).
Youth unemployment rates have reached unprecedented levels across the EU in the aftermath of eurozone debt crisis, averaging 23% for the EU as a whole, and reaching up 63% in Greece, the Commission said.
More worryingly, the debt crisis has opened a gulf between the stronger countries in the single currency bloc – Germany in particular – and the weaker ones, with unemployment rates in the south and periphery of the euro area reaching an average of 17.3% in 2012, against 7.1% in the north and core of the euro area, it added.
Sanctions would require treaty change
But the Commission’s good intentions were put in doubt by the European Socialist Party, which described the proposal as a “belated and weakened attempt to redress neglect of social policy by the Barroso Commission”.
Indeed, “there are no sanctions foreseen” for EU countries that breach the indicators, the Commission indicated in an accompanying note, explaining that the scoreboard should be seen as “an analytical tool”. Introducing such sanctions – as is already the case for countries that breach budget deficit limits – would require transferring new powers to Brussels, and “a substantial treaty change,” it said.
The Commission plans came in response to calls by the EU’s heads of states and government, who agreed at their June meeting to strengthen “the social dimension of the EMU”, in an apparent breakthrough for France.
EU leaders vowed to take the first step at their upcoming October summit by introducing statistical indicators to better monitor social and labour market conditions, alongside budget deficit figures and other economic indicators. Discussions to reinforce the EMU would conclude at the December EU summit, the leaders agreed.
French President François Hollande said after the June summit that Paris was committed to deepening the eurozone’s integration, and responded favourably to German demands to strengthen the Commission’s hand in scrutinising national budgets.
“We want coordination, we even want harmonisation,” Hollande said. “But there must also be a social dimension” to the eurozone, he added, saying “France is very committed to harmonisation [on social policy], including minimum wages.”
Germany is “of course in favour of deepening the EMU and shifting the focus on social issues”, said an EU diplomat with knowledge of the discussions in Berlin. However, he said it was too soon to elaborate on the Commission’s proposal, saying a clearer position from Germany could be expected at the next meeting of EU social affairs ministers.
European socialists responded to the Commission paper in critical terms, describing it as a “belated but weakened attempt to address the imbalance of this Commission’s neglect of European social policy”.
“While it is welcome that the Communication has been published at all, the contents will need serious concrete follow up if the proposal is to have any meaningful impact on the lives of ordinary Europeans”, said Sergei Stanishev, the President of the Party of European Socialists President (PES).
“The provision for a scoreboard to follow employment and social developments is welcome but will need to be bolstered by other measures. Social Cohesion policies must be strengthened, especially in the commitment to the European Social Fund. In particular, the measures to tackle youth unemployment must be ‘up-front and centre’ in the battle against the social cost of the crisis. This means that Member Parties must try to add to the 6 billion set aside for the ‘youth guarantee’.”
“For the fact that the Communication contains any concrete measures at all, credit must go to social affairs Commissioner László Andor. He has fought tooth and nail for the concerns of ordinary working people. Unfortunately the Commission is populated by too many intransigent Conservative Commissioners who failed to see the importance of a strong social dimension to EU policy”, Stanishev concluded.
The centre-right European People’s Party (EPP) said it welcomed the Commission proposals to better monitor social policy indicators. However, it stressed that the social agenda should remain in the hands of the EU member states, and “should not be moved to the narrower context of the EMU”.
“We have to fully respect national competences”, said Csaba Őry MEP, EPP Group Coordinator in the Employment and Social Affairs Committee of the European Parliament.
“We refuse the introduction of an unemployment benefit scheme applied at European level. Due to their heterogeneous economic development, this competence should stay within the responsibility of the member states.”
The French socialist delegation in the European Parliament hailed the Commission’s proposal as “an innovation” and “a step forward on the path of solidarity and integration.”
However, this should only be considered as “a first step”, said Pervenche Berès, the Chairman of the European Parliament’s employment and social affairs committee.
“The euro area does not only suffer from state deficits, it also suffers from growing imbalances between countries, including in the social field. It is to correct these situations that we ask that social indicators be used in the framework of the ‘macroeconomic imbalances procedure’.”
“The severity of the crisis also shows that we need to invent new ways to address its social consequences. It is in this spirit that we are fighting for the establishment of a set of automatic stabilisers, which must include a European unemployment insurance system. "
The European Social Platform, a coalition of social NGOs, said the indicators put forward by the European Commission represented “a minimum requirement to begin to balance the social dimension of the EMU and its economic and financial dimension”.
However, it said the mechanism will remain toothless unless EU countries agree to power transfers that will allow the European Commission to sanction countries in social policy matters, like is currently the case with excessive budget deficits. “We hope that when the Council discusses the Social Scoreboard it will call on the Commission to develop a system that triggers preventative and corrective actions once the social indicators reach a certain value” said Heather Roy, President of Social Platform.
- 15 Oct.: Employment and social affairs ministers meeting to discuss Commission proposals to strengthen social dimension of EMU
- 24-25 Oct.: EU summit to look at indicators for the social dimension of the EMU
- 19-20 Dec.: EU summit to decide on way forward to deepen EMU