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European Social Observatory

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Presentation on theme: "European Social Observatory"— Presentation transcript:

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
2/08/2019 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
2/08/2019 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
2/08/2019 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
2/08/2019 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):
2/08/2019 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


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