Thursday

17th Aug 2017

Opinion

Future of Europe needs more social investment

  • Both the IMF and OECD called for an end to austerity, favouring investment to reduce inequality. (Photo: europarl.europa.eu)

The recent financial and economic crisis has resulted in a social crisis, with sharply rising socioeconomic inequalities in member states across the European Union.

The Rome Declaration commits member states and institutions to a social Europe where addressing unemployment, poverty and social exclusion are priorities, and where sustainable growth reduces inequality.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

This is a positive commitment to social Europe but member states and the European institutions can only achieve this ambition if there is greater momentum and mechanisms for social investment in European economic governance.

There are inherent economic returns and advantages in social investment. Economies with more social investment have proven to be more resilient to shocks and perform better in crises.

Automatic stabilisers

Adequately resourced social protection systems can work as automatic stabilisers and maintain positive effects on demand.

Furthermore, improved social cohesion prevents tremendous economic costs of inequalities in the long-run. It also generates social and economic returns, as it enables people to be more socially and economically productive.

The benefits of social investment clearly align with the Rome Declaration pledge for a social Europe to fight poverty, social exclusion, unemployment and discrimination.

However, there are limitations in the EU's economic governance framework that will prevent such pledges from being fulfilled.

Levels of social investment have been persistently low across member states - to date the EU has failed to facilitate substantive increases.

EU-level initiatives, such as the European Fund for Strategic Investments (EFSI), do not deliver sufficiently on social investment projects, whereas the Stability and Growth Pact (SGP), in many cases, restricts member states’ means of engaging in social investment themselves.

The reason for this is that necessary investment in human capital and essential services - including housing, social, health, and education - can quickly result in a breach of the SGP’s deficit rules. Accordingly, the so-called investment clause in the SGP has had limited use so far.

The European Commission should encourage more social investments through a more systematic application of the investment clause 2.2 of the Stability and Growth Pact in relation to social investment.

The Rome Declaration commits member states and the European Institutions to upward social convergence. This cannot be realised if economic policies restrict social investment and where economic governance overlooks the long-term social and economic returns of social investment.

When in Rome

Otherwise, leaders’ commitments in Rome stay in Rome and do not reach the people of the European Union.

A ‘Silver Rule’ for public social investment could be introduced to European economic governance in order to effectively incentivise member states to upscale social investment.

The rule would allow for specific areas of social investment, which yield demonstrable economic and social returns, to be excluded from the SGP’s current deficit provisions.

Public spending in fields such as health care, childcare, housing and education must be seen as an investment in both social and economic convergence and not treated merely as a burden or a cost in national budgets.

The European Commission is increasingly supportive of social investment, stating in a communication to other EU institutions and the eurogroup that it is "a prerequisite for a successful and lasting recovery."

At a time of intensive scrutiny of the European project, it’s important that EU member states follow the advice of the IMF and OECD, both of which have called for an end to austerity, favouring instead investment to promote growth and reduce inequality.

Jana Hainsworth is President of Social Platform. Klaus Heeger and Heather Roy are Secretary Generals of the European Confederation of Independent Trade Unions (CESI) and Eurodiaconia, respectively.

Italy presents anti-austerity roadmap

In a document published Monday, Matteo Renzi's government calls for growth policies and cost sharing of the migrant crisis.


EU needs lasting solution to refugee crisis

If we continue with the failed approach of the last two years then this could become a systemic crisis that threatens the EU itself, writes Gianni Pittella.

Young Poles can halt Kaczynski’s illiberal march

Debates are ongoing on whether president Duda vetoing two out of three bills on judicial reform should be seen as the opposition's success. But the protests brought about another, much less disputed success.

Column / Brexit Briefing

The return of the chlorinated chicken

Britain has only just started on the path towards a post-Brexit trade deal with the US, but you can already see the same all-too-familiar disagreements.

Stop blaming Trump for Poland’s democratic crisis

If you were to judge events purely on the US media's headlines, you would be forgiven for wondering if the Polish government had anything to do with its recent controversial judicial reforms.

News in Brief

  1. Russian power most feared in Europe
  2. UK unemployment lowest since 1975
  3. Europe facing 'explosive cocktail' in its backyard, report warns
  4. Danish police to investigate misuse of EU fishing rules
  5. German constitutional court questions ECB's €2tn spending
  6. Low support for Norway's labour party ahead of elections
  7. Slovakia's future is with core EU, says PM
  8. Italy relieved as migration drops to lowest level since 2014

Stakeholders' Highlights

  1. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  2. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  3. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  4. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  5. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  6. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  7. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  8. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  9. ACCAAnnounces Belt & Road Research at Shanghai Conference
  10. ECPAFood Waste in the Field Can Double Without Crop Protection. #WithOrWithout #Pesticides
  11. EU2017EEEstonia Allocates €1 Million to Alleviate Migratory Pressure From Libya in Italy
  12. Dialogue PlatformFethullah Gulen's Message on the Anniversary of the Coup Attempt in Turkey