Sunday

3rd Jul 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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.


Nato's Madrid summit — key takeaways

For the most part Nato and its 30 leaders rose to the occasion — but it wasn't without room for improvement. The lesson remains that Nato still doesn't know how or want to hold allies accountable for disruptive behaviour.

If Russia collapses — which states will break away?

Increasingly, analysts — both inside and outside of Russia — are considering the possibility of the Russian Federation's collapse into a series of independent states. Who are the most likely candidates for secession in Russia's south, east, and centre?

Column

One rubicon after another

We realise that we are living in one of those key moments in history, with events unfolding exactly the way Swiss art historian Jacob Burckhardt describes them: a sudden crisis, rushing everything into overdrive.

Expect Czech EU presidency to downgrade V4 priorities

The Czech Republic is already in the throes of an extremely difficult period — several waves of Covid, high inflation, energy fears, an influx of Ukrainian refugees and a Prague corruption scandal. Now it has the EU presidency.

News in Brief

  1. EU Parliament 'photographs protesting interpreters'
  2. Poland still failing to meet EU judicial criteria
  3. Report: Polish president fishing for UN job
  4. Auditors raise alarm on EU Commission use of consultants
  5. Kaliningrad talks needed with Russia, says Polish PM
  6. Report: EU to curb state-backed foreign takeovers
  7. EU announces trade deal with New Zealand
  8. Russia threatens Norway over goods transit

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Nato's Madrid summit — key takeaways
  2. Czech presidency to fortify EU embrace of Ukraine
  3. Covid-profiting super rich should fight hunger, says UN food chief
  4. EU pollution and cancer — it doesn't have to be this way
  5. Israel smeared Palestinian activists, EU admits
  6. MEPs boycott awards over controversial sponsorship
  7. If Russia collapses — which states will break away?
  8. EU Parliament interpreters stage strike

Join EUobserver

Support quality EU news

Join us