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May Day 2012: Looking at Europe's social model – today and tomorrow

30/04/2012

Since World War II Europe's social model has allowed generations to grow up safe in the knowledge that they would be better off than their parents.

The social consequences of the global financial crisis are dire -- especially in Europe's peripheral regions -- and painful austerity measures to reduce deficits and debt are aggravating this harsh reality. Some have concluded, both inside and outside Europe, that our social model is dead. To quote Mark Twain, I consider that reports of our social model's death are "greatly exaggerated". And in order to understand why our social model is still very much alive,we need to look more closely at what exactly it consists of.

First, Europe’s institutions that underpin social cohesion have always been linked to economic prosperity and a high level of industrial and technological development. The welfare we share must be built on the wealth we produce in Europe. Our economic performance is the guarantee for our social security and social mobility.

Second, there was no golden age before the crisis. Where there was prosperity and a high rate of growth, it was not necessarily sustainable or inclusive. There were periods of dynamic job-creation, but we had drifted far away from full employment, and the number of those working and living in precarious conditions grew fast. We can look back to find what was working well, but there is a clear need for a new construction.

Third, the concept of the European social model has always been partly reality, and partly an ideal. We are proud of what has been achieved, and share a common European vision. We can use the best practices of the more advanced European countries for inspiration and to help to develop EU standards.

Fourth, we have been speaking about a European social model despite diversity in Europe, and this diversity has increased with the successive waves of enlargement. National and regional traditions matter. However, as economic integration develops, the social dimension of the EU also has to catch up.

Fifth, the social model is not simply about redistribution. Social policies and institutions are also assets that help to develop the economy's full potential. The crisis has proven the strength of social dialogue in this respect. And, in the context of an ongoing fiscal consolidation we need to remember that social investment and inclusive labour markets are key for Europe's long-term economic growth.

The current crisis, which is unprecedented in the history of European integration, has worsened our living conditions, but the discourse about the decline of our social model is not entirely new. It has already been announced in the context of globalisation and demographic change. None of these three developments should be allowed to undermine our commitment to equality and social justice, or our capacity to combine economic openness and dynamism with social fairness. Today our efforts must focus on modernising that model – not burying it - so that it can continue to function in a new global environment.

In tough economic times, we have to be sure that the most vulnerable social groups are better protected at a time of national budget cuts, and civil society organisations can play a valuable role in this effort. While there is a risk at a time of financial emergency and fiscal consolidation, we need to prevent the erosion of social, environmental and occupational health and safety standards. Beyond this, we must also ensure that austerity does not undermine growth-enhancing measures, and that weaker regions are supported to follow in the same direction. All these concerns, principles and objectives drive us towards more EU level coordination of employment and social policies.

How to address the current challenges in Europe's core and periphery, often simplified as North and South, is therefore a key question of this time. Readiness to reform in the South has to connect with a readiness to support in the North. If we do not stabilise the peripheral regions, from both an economic and social point of view, their continuing crisis will undermine both the prosperity and the social achievements of Europe's core countries.

For all these reasons, ministers from several countries have already expressed their view that there is an urgent need for a fresh look at social Europe. EU leaders also made a clear case for resolute action on employment and a stronger social dimension when they last met in March. So there is, I believe, a realisation that a policy of fiscal discipline alone may prove self-defeating. A similar European effort has to be made for solidarity, cohesion and investment.

There is a new awareness of the importance of social as well as economic returns, and the interconnection between the two. Our short-term stabilisation efforts therefore have to be better coordinated with the Europe 2020 strategy, the framework for the EU's long-term economic and social development. And all this will ring hollow without ensuring that the new long-term budget of the EU (Multiannual Financial Framework) also has a strong social dimension, with a robust European Social Fund and other visible instruments.

Employment must be recognised as a source of economic growth, and not just a delayed by-product of the recovery. After all, the Europe 2020 strategy recognises that smart and inclusive growth can go hand in hand. Developing the social dimension is important both for the supply-side of the economy (more people able to work more productively), and the demand side (more people able to buy each other’s products).

This is the context in which I presented, on the 18th of April, a package of employment measures to identify opportunities in the EU that will support job creation (for example related to protecting the environment, health care and ICT) and setting out how EU funds can be used to help Member States make long-term investments in human capital. The package is about laying the ground for a genuine European labour market where workers can move confidently between and within jobs across the EU and progress in their career in a growth friendly environment.

Crucially, the new package is also about the social partners -  not only their role in employment policy but also their increased involvement in EU governance and EU decision-making. We have seen through European integration how the EU-level social dialogue plays an essential role in advancing the European social model, delivering benefits for employers, workers, and for the economy as a whole. Investing in robust social dialogue between employers, workers and governments is essential, and we need to highlight the importance of this particularly for the newer member states, where recent institutional developments have sometimes gone in the opposite direction. Convergence for the new peripheries cannot simply mean adoption of rules and discipline, but also real opportunities to catch up with higher social standards.

On Labour Day, I cannot emphasise enough that we need to emerge from this crisis with more, not less, social dialogue. This is crucial if we are going to move beyond austerity and achieve sustainable and job-rich growth, and restore fairness and equal opportunities as core objectives of public policy. The social partners need to be on board for any long-term recovery plan and any labour market reform.

The essence of the European social model is that we do not allow economic policies and activities to disconnect from social values and rights. We also believe that a civilised society always responds to a crisis with more solidarity. What is therefore the most important requirement in order to secure the future of the European social model is to redefine solidarity on the EU level, and to reinforce our alliance with social partners and civil society organisations.