1. European Social Observatory
Integrating the European Pillar of Social Rights into the roadmap for deepening Europe's Economic and Monetary Union Key messages
Study conducted by the
European Social Observatory

2. Aim of the study Two goals:
2/08/2019
Two goals:
Analyzing some proposals aiming at integrating the European Pillar of Social Rights into the E(M)U
Providing policy-makers and stakeholders with concrete recommendations to achieve such an objective
Focus on three objectives:
Socialization of the EU budget
European Unemployment Benefit Scheme
Social Imbalance Procedure

3. 2/08/2019
Setting the scene: reconciling the economic and social dimensions of the EU
Financial crisis unveiled the structural asymmetry between social and economic dimension in the EMU
First part of the crisis ( ): austerity and no attention to social dimension of the reforms
Second part of the crisis ( ): raising awareness of the importance of the EMU social dimension
The European Pillar of Social Rights: a window of opportunity for “Social Europe
What can we expect now?

4. Towards a “socialisation” of the EU budget ?
2/08/2019
Towards a “socialisation” of the EU budget ?
The MFF as a constrained political arena by overlapping set of interests
Net contributors vs. net beneficiaries
New programs to be added
Necessity to maintain some budget line
Brexit

5. A conservative approach
2/08/2019
A conservative approach

6. The EU budget social expenditure within the current MFF 2014-2020
2/08/2019
The EU budget social expenditure within the current MFF
Social policies by means of Structural and investment funds:
European Social Fund
European Regional Development Fund
European Agricultural Fund for Rural Development
European Maritime and Fisheries Fund
New post-crisis social programs:
Youth Employment Initiative
Fund European Aid to the most Deprived
European Globalization Adjustment Fund
Erasmus +

7. Main limits of social spending under ESI funds
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Main limits of social spending under ESI funds
Logic of territorial (regional) cohesion is prevailing
Resources allocation criterium is GDP-led
Lack of flexibility in programming: structural convergence vs countercyclical function
Macroeconomic conditionality and link with the European Semester

8. Social investment dynamics:
New social programs under MFF
2/08/2019
Social investment dynamics:
Stock function: Erasmus +
Buffer function: EGF, YEI, FEAD
Flow function: EGF, YEI
More flexibility and counter-cyclical function
Better targetisation of the social needs and beneficiaries
No macroeconomic conditionalities

9. An “EU budget for the future” falling short of its social ambitions
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An “EU budget for the future” falling short of its social ambitions
European Social Fund Plus (former ESF, YEI, FEAD, Health, EaSI): € 89,688 mld (-7%)
European Regional and Development Fund: € 200,629 mld (+2%)
Agricultural Fund for Rural Development: € 70,037 mld (-28%)
European Maritime & Fisheries Fund: € 5,448 mld (-13%)
Erasmus +: € 26,368 mld (+92%)
European Global Adjustment Fund: € 1,4 mld (+16%)
InvestEU Fund,‘Social Investment and Skills’ Window: € 4 mld (new)
Reform Support Programme: € 22,181 mld (new)

10. ESI funds: main novelties
2/08/2019
Creation of the ESF +: increased policy complementarity, more flexibility, link with the Social Pillar
Stronger link with the European Semester: better targeting, increased steering capacity, but maintenance of macroeconomic conditionalities
New allocation criteria in the Common Provisions Regulation
Simplified rules to access ESI funds

11. Three steps in the right direction
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Three steps in the right direction
Eramsus +: strong investment in human capital, but still lack of inclusiveness
European Globalisation adjustment Fund: higher budget, larger scope, simplified rules, but still lack of institutional complementarity and low ambition (small budget)
Social Investment and Skills window in InvestEU: strong investment in human capital, education, childcare (stock), housing, social infrastructure (buffer) and training, reskilling, upskilling, long-term care (flow)

12. Reform Support Program: Reform Delivery Tool: € 22 billion
Boosting social investment through convergence?
2/08/2019
Reform Support Program:
Reform Delivery Tool: € 22 billion
Technical Support Instrument: € 840 million
Convergence Facility: € 2.16 billion
Eurozone budget
Goal: boosting structural reforms in the Eurozone countries by providing them financial incentives
Type of investment: human capital
Financing: Member States regular contribution or/and EU own resources (e.g. FTT)
Legal basis: Art. 175(3), 182, 173, 136 TFEU + Intergovernmental agreement

13. European unemployment benfit scheme (EUBS)
2/08/2019
European unemployment benfit scheme (EUBS)
Rationale of a EUBS:
Economic: stabilize automatically the economic cycle in case of symmetric/asymmetric shocks
Social: provide income support to the people most hit by the crisis
Models of a EUBS :
Genuine: replace national unemployment schemes
EU fund financed by employer/employee, directly pays out to unemployed continuously
More harmonisation: level of benefit (reference wage, replacement rate, cap) eligibility criteria and duration decided at EU level
Reinsurance: re-insure national unemployment scheme
EU fund financed by Member State
Activation on the basis of an indicator that triggers the fund automatically
Less harmonization but need some common standards

14. Challanges for a EUBS Institutional moral hazard
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Institutional moral hazard
Possible solution: claw-back mechanism
Fiscal rule for a EUBS :
Annual balance/ Balanced over economic cycle/ No fiscal rule
Role of social partners
Different involvement of TUs across the EU in design and management of the national unemployment insurance schemes
Legal basis in terms of
Payments: Art. 352(1) Flexibility clause
Financing: new budget line in EU budget or new fund outside EU budget
Minimum requirements

15. Academic debate First wave (Marjolin Report, 1975):
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Academic debate
First wave (Marjolin Report, 1975):
Goal of the EUBS is to:
Reducing structural and regional imbalances
Guaranteeing unemployed persons income support
giving a visible expression to Community solidarity
Second wave (late 80s, early 90s):
Majocchi & Rey and Italianer & Vanheukelen
Attention to EUBS as automatic stabilizer (less on solidarity)
Third wave (post financial crisis):
Three main proposals:
Sebastian Duillen: genuine scheme
CEPS: reinsurance scheme
von Weizsäcker and Fernandez: hybrid

16. Political debate First wave (Commissioner Laszlo Andor)
2/08/2019
Political debate
First wave (Commissioner Laszlo Andor)
DG EMPL (supportive) vs DG ECFIN (opponent)
Strong support from the European Parliament (S&D, Green)
Strong opposition from creditor countries
No position of ETUC and Tus
Second wave (Italian Finance Minister Padoan)
DG EMPL and DG ECFIN both caoutiously supportive: but commission had other priority
Medium support from the Parliament
Initial discussion within the ETUC
Third wave (French-German declaration)
EUBS based on back-to-back loans
Ongoing discussion

17. Policy recommendations
In the short term:
European Reinsurance scheme based on
Short-term unemployment rate (StUr) as indicator
Deviation from average StUr as trigger
Introduction of claw-back mechanism
In the long term
European Unemployment Re-insurance scheme
Link the EUBS to European Transition Support Fund

18. A Social Imbalances Procedure (SImP)
Asymmetry between monitoring of social and employment trends and surveillance of the macroeconomic problematic for three reasons
Subordination of social dimension to economic one
Deterioration of social standards affect fiscal stability of MS and can have negative spill-over effect on EMU
Distrust and loss of credibility of EU project
Two possible solutions:
Integrating social and employment indicators in the MIP
Creating a parallel monitoring system for the detection and correction of social imbalances within the E(M)U

19. Designing a Social Imbalance Procedure
Broad and right-based definition of social imbalances. 5 areas of intervention:
Unemployment, poverty or social exclusion, education, healthcare and housing
Objective of the SIMP: boosting social investment
Governance:
Identification and understanding of excessive social imbalances (Social Scoreboard rating)
Defining Interventions (upon request of MS or suggestion Commission): multi-annual action plan (MAP). The MAP should be adopted by EPSCO
Types of intervention: technical assistance, targeted financial support (RSP, ESI funds), silver rule
Monitoring system: Semester documents

20. Conclusions
Need for realistic solidarity
Functionalist argument: social imbalances can have negative spillover effect on other MS
Normative argument: upward social convergence is objective of the EPSR
Political argument: necessity polity maintenance and contrast the lack of legitimacy of the EU
Need for a responsible solidarity
Combine EU solidarity with national responsibility: pardon and promise maxim
Need for a visible solidarity:
EU should add social value not only for movrs but also for stayers

21. European Social Observatory
2/08/2019
European Social Observatory
Authors:
Sebastiano Sabato, Francesco Corti, Bart Vanhercke and Slavina Spasova