The case for a European Social Union. From muddling through to a sense of common purpose. Frank Vandenbroucke EIB Institute Luxembourg, 5 March 2015

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1 The case for a European Social Union. From muddling through to a sense of common purpose. Frank Vandenbroucke EIB Institute Luxembourg, 5 March 2015

2 A European Social Union A Social Union would support national welfare states on a systemic level in some of their key functions guide the substantive development of national welfare states via general social standards and objectives, leaving ways and means of social policy to Member States on the basis of an operational definition of the European social model. European countries would cooperate in a union with an explicit social purpose

3 A European Social Union Why? Eurozone EU28 Which solidarity? Social investment as a common ambition Conclusion

4 The consequences of monetary unification

5 Transfers might mitigate the symmetry/flexibility trade-off

6 The EU s way: more symmetry, more flexibility EMU s fragility Competitiveness: symmetrical approach necessary => convergence No lender of last resort (=> Draghi) Intensification of national booms and busts & divergence in competitiveness Flexibility determines social order Institutional advantage of coordinated bargaining

7 Defining the EMU s social objective is a necessity rather than a luxury Basic consensus on social model is necessary for the long-term sustainability of EMU short term: stabilisation mid term: a symmetric guideline on wage cost competitiveness & institutions that can deliver long term: sustainability of pensions Symmetry => convergence w.r.t. fundamental parameters => shared objectives Legitimacy => convergence in prosperity excessive social imbalances associated with inadequate and disparate investment in human capital Social investment

8 Employment rate 15-64, 2012 The human capital asymmetry: employment and formal educational attainment Few low-skilled High employment rate 75.0 DE SE AT NL DK CZ EE SI LV LT SK PL FI UK BG HU LU CY EU28 FR BE RO IE IT ES MT PT 50.0 Few low-skilled Low employment rate CR GR Many low-skilled Low employment rate % of population (15-64) with lower secondary education attainment, 2012

9 Why a European Social Union? an inevitability of European Monetary Union integration and social regulation in EU28 Social dumping? Social sovereignty? the very core of the European project.

10 Why a European Social Union? an inevitability of European Monetary Union; integration and social regulation in EU28: balancing Social dumping => subsidiarity & proportionality (Viking, Laval) Social sovereignty => horizontal social clause? the very core of the European project.

11 Why a European Social Union? an inevitability of European Monetary Union integration and social regulation in EU28: balancing Social dumping => subsidiarity & proportionality (Viking, Laval) Social sovereignty => horizontal social clause? a dual perspective on solidarity: pan-european and domestic

12 Convergence in prosperity: the social investment imperative A social investment agenda (cf. Europe 2020, SIP) Child-centred social investment strategy Human capital investment push Reconciling work and family life Later and flexible retirement Migration and integration through education and participation Minimum income support and capacitating service provision The political deal the EU needs is one wherein all governments pursue budgetary discipline and social investment, and are supported therein in a tangible way by the EU.

13 Spending on education % 30% 20% 10% 0% -10% -20% -30% -40% Real public spending on education, 2012 vs Spending % GDP, 2008, vs. average

14 Spending on education and PISA results 40% 30% 20% 10% 0% -10% -20% -30% -40% Real public spending on education, 2012 vs Spending % GDP, 2008, vs. average PISA 2012 (Math, Science, Reading) vs. average

15 Convergence in prosperity: the social investment imperative A social investment agenda (cf. Europe 2020, SIP) Child-centred social investment strategy Human capital investment push Reconciling work and family life Later and flexible retirement Migration and integration through education and participation Minimum income support and capacitating service provision The political deal the EU needs is one wherein all governments pursue budgetary discipline and social investment, and are supported therein in a tangible way by the EU.

16 The case for a European Social Union support national welfare states on a systemic level in key functions (e.g. stabilization) guide the substantive development of national welfare states via general social standards and objectives symmetric w.r.t. to competiveness (wage policy & capacity to deliver) social investment minimum wages and minimum income protection solidarity in reform leaving ways and means of social policy to Member States

17 The case for a European Social Union support national welfare states on a systemic level in key functions (e.g. stabilization) guide the substantive development of national welfare states via general social standards and objectives symmetric w.r.t. to competiveness (wage policy & capacity to deliver) social investment minimum wages and minimum income protection solidarity in reform leaving ways and means of social policy to Member States

18 The case for a European Social Union support national welfare states on a systemic level in key functions (e.g. stabilization) guide the substantive development of national welfare states via general social standards and objectives symmetric w.r.t. to competiveness (wage policy & capacity to deliver) social investment minimum wages and minimum income protection solidarity in reform leaving ways and means of social policy to Member States

19 The case for a European Social Union support national welfare states on a systemic level in key functions (e.g. stabilization) guide the substantive development of national welfare states via general social standards and objectives symmetric w.r.t. to competiveness (wage policy & capacity to deliver) social investment minimum wages and minimum income protection solidarity in reform leaving ways and means of social policy to Member States

20 Thank you! 1. F. Vandenbroucke, The Case for a European Social Union. From muddling through to a sense of common purpose, Euroforum Policy Paper, Sept F. Vandenbroucke, with B. Vanhercke, A European Social Union. 10 Tough nuts to crack, Friends of Europe, Spring Unequal Europe. Recommendations for a more caring EU. Final Report of the High-Level Group on Social Union, Friends of Europe, Spring

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