To put vigour back into its social model, the discrepancies and contradictions which are the byproducts of the enlargement and deepening of the Union during the last twenty years need to be addressed, writes Alfred Sant.
MEP Alfred Sant is the Head of the Maltese (S&D) Delegation in the European Parliament.
When the 2008 financial crisis struck, it showed up all the structural flaws that the enlargement and deepening strategy of the nineties had injected within the EU, especially with relation to the eurozone. However, the collapse of the eurozone was avoided through successive austerity strategies, applied nationally and EU-wide. In them, social cutbacks played the most important role.
Shortcomings in the structures of the eurozone came to mean that the only way by which to overcome the crisis situation posed by government deficits and lack of competitiveness on external markets was by so-called internal devaluation. You reduced the cost structure of products and services outputted by the national economy, by reducing the nominal amounts paid out as wages, pensions, social transfers, and so on, while also cutting back on government expenditures. This also included measures to roll back or limit collective agreements reached in the labour market, effectively trimming workers’ rights.
As the financial crisis continued, beyond the pain of those countries subjected to austerity policies, disparities between regions and strata of the European population, already widened statistically by the latest enlargements, were actually increasing, rather than shrinking. In turn this led to a wider recognition that social policy within the EU was not achieving results. Many social targets that the EU set for 2020 were going to be missed.
With time, economic recovery has been taking place. However, the rule of internal devaluation still applies today within the eurozone. Just as importantly, economic recovery has not really overcome or reversed the deep social losses incurred during the years of crisis. Too many young people are still out of work, or have low wages or hold precarious jobs. People at risk of poverty are still too numerous. There is little sign that regional divergences can be soon reversed, especially as there are no real policy tools by which to make this happen.
The Juncker’s European Commission was alive to this problem right from the start of its term. It declared that it wanted social policy to be reaffirmed, on the back of new economic growth. It launched the EFSI programme by which to finance new investment projects that would create infrastructure and generate new productive jobs. One can disagree, like I do, about the effectiveness of this proposal as implemented, but one cannot deny that inherently, it was a socially progressive move. Beyond this, Juncker’s Commission launched an initiative to reassert the European social model.
Europeans had been forced in the last years of crisis to swallow austerity measures, supported by left, centre and right, that blew apart their vision of the EU as a haven from which economic performance fed social rights for all. The contrary turned out to be the case. In theory, the current spate of economic growth should offer a chance to redress the balance, not least by proclaiming what the EU stands for by way of social rights.
The declaration about the social pillar on which the EU has and should continue, to function is the outcome of the Commission’s initiative. It was signed in November by the Presidents of the European Council, the European Commission and the European Parliament. However, on close inspection, it turns out to be a recall of all that the European Union has committed to in social policy, one way or the other, across a wide spread of directives and regulations.
Now, all these feature in one comprehensive document. This is not something to be decried. But it leaves us well short of any innovative commitment to define European social policy in a way that reflects current realities while breaking new ground in terms of social protection.
Earlier this year, in the run up to the setting of the social pillar, the European Parliament proclaimed this commitment in a comprehensive resolution that passed by a big majority. It listed social policy measures across an exhaustive range of areas and concerns. Perhaps it was over ambitious and set targets that surely cannot be reached in the foreseeable future. But at least, the Parliament’s approach acknowledged that much remains to be done.
The truth is that in social policy, the EU lags well beyond the expectations it has aroused and the targets it had set for itself. Crucially, the economic machinery now in place to counter negative growth rates, monetary instability and financial imbalances relies through “internal devaluation” almost exclusively on a push back of social conditions.
It seems to me that we need a radical evaluation of where we are and why we got here. In such an exercise, it will be important to determine the extent to which the enlargement and deepening strategies of the nineties are circumscribing today our options for social renewal. There was much overreach in what they attempted to achieve, and we are now facing the consequences, even though growth has returned in a consistent way for the EU as a whole. The strategies adopted in the nineties are limiting drastically the scope for advances on the social front, given the significant retreats that were carried out since 2008.
In the present circumstances, the need is for consolidation. First, the divergences between north and south, between east and centre of Europe, have got to be tackled though a political programme that does not rely uniquely on free market mechanisms. The same applies to the social divergences within member states, between people who enjoy the benefits of safe and well paid employment, and those who work for much less remunerative pay and/or who must accept precarious employment conditions.
Ploughing forward as many are suggesting should be done, with further projects of integration towards economic and monetary union, without taking into account the social divide that is still growing, will be counter productive. It will continue to increase the disparities between social facts as they prevail on the ground in Europe, and the guidelines described in the social pillar document signed in Sweden – even if the document, as I have said, simply recycles the EU’s social acquis, already existing – at least on paper. Such disparities become even more glaring with respect to the European Parliament’s resolution on social rights.
There is a genuine recognition that the European project needs to put vigour back into its social model. That will only happen after we will have really addressed the discrepancies and contradictions which are the byproducts of the enlargement and deepening of the Union during the last twenty years