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Reinforcing the social dimension of the growth and jobs strategy – new report

29/09/2009 Reinforcing the social dimension of the growth and jobs strategy – new report

The EU's strategy for growth and jobs must pay more attention to social cohesion goals in the future, says a new report presented by the European Commission on 29 September 2009.

The report from the Social Protection Committee – which brings together experts from each EU country – finds that social protection systems have helped shield Europeans from the worst effects of the financial crisis. But it concludes that social protection alone is not enough to prevent poverty and exclusion, calling for more emphasis on goals such as fighting child poverty and promoting active inclusion. Further modernisation of social protection needs to be fully articulated with growth and jobs strategies.

Over the past decade, economic and employment growth has in general improved overall living standards in Europe, says the report. However, inequalities have often increased and poverty and social exclusion remain a major issue in most countries, although with substantial differences across the EU. Poverty rates in the EU range from 10% in the Czech Republic and the Netherlands to more than 20% in Bulgaria, Latvia, and Romania.

Certain groups – such as the low skilled, lone parent and migrants – still face specific hurdles to the labour market such as poor access to enabling services, or poor design of benefits that create financial disincentives. At the same time, job quality remains a problem, and precarious forms of employment have contributed to persistently high levels of in-work poverty. Evidence shows that workers on temporary or involuntary part-time contracts are generally paid less per hour after controlling for differences in education and experience; and for many, these jobs are not stepping stones towards better jobs.

As a response, active inclusion strategies are crucial, both to support the most vulnerable in the crisis and to limit losses to human capital and preserve future growth potential. Lessons from past experience show that addressing labour market segmentation and promoting job quality are both crucial.  

In terms of social protection systems, recent reforms have improved their long-term financial sustainability but projections show that there are still challenges ahead. Efforts to modernise all functions of social protection should be sustained to ensure effective access to quality services for all, while contributing to the efficiency of public expenditure. Ensuring adequate and sustainable pensions will require further efforts to prolong working lives, which also means combating health inequalities.

The report also shows that Member States are in very different positions in terms of facing the social impacts of the crisis. In some countries, there are significant weaknesses in the social safety nets provided by social protection systems; others are faced with major public finance imbalances, leaving little room for manoeuvre in social policy; and some are better prepared to cushion the impact of the crisis but face questions about financial sustainability in the long run. Promoting labour market participation while improving the fairness, efficiency and effectiveness of social spending will be crucial for all countries, both in good and bad times. If social protection expenditure is to be effective as an automatic stabiliser in the economy, it has to increase in bad times (i.e. when unemployment is rising) and subsequently decrease when the economies recover.

The report is a contribution to the EU's reflections on its future strategy for growth and jobs in the period after 2010. EU leaders are due to adopt a new strategy next year covering the coming ten years.