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Social policy – a new economic treatment? 11 March 2013

Posted by cooperatoby in EU.
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The Social Investment Package marks a genuine step forward for the Commission’s economists, says Lieve Fransen from the Employment DG. At today’s OSE seminar, the Commission is invited to go further.

130311 OSE SIP seminar“Thanks for the scoop!”, said Bart Vanhercke, welcoming Lieve Fransen, Director for Social Policies and Europe 2020 at DG EMPL, to today’s OSE lunchtime seminar provocatively entitled ‘The Social Investment Package: just hype or the Next Big Thing?’. This was indeed the first public discussion of the Commission’s recent proposal. Ms Fransen labelled it an “elephant delivery” – and indeed the package weighs a kilo, even printed on both sides of the paper. But is it as heavyweight in quality terms as it is in quantity? Are the economists at the Commission really serious about treating spending on human beings as an investment, with all that implies?

Elephant delivery

Ms Fransen explained how the SIP, which comprises a communication, a recommendation and seven staff working documents, has three jobs to do: to set out how the European Commission can help Member States to reform their social models, to explain how social policy is an investment not pure consumption, and to show how to equip European citizens for the future. It addresses three challenges: the economic and financial crisis – which has caused rises in poverty, exclusion, unemployment and youth inactivity, demography – which means aging, a higher dependency ratio and skills mismatches (the demand is for skilled people not unskilled ones), and fiscal pressure – the need for deficit reductions and the refocusing of public expenditure.
It has three main characteristics. Firstly it takes a lifecycle approach, addressing life risks, rather than a target group one. This translates into early years education and care – which the PISA studies show is an investment with a tenfold return), reconciliation and active aging. Secondly it looks at activating and enabling, through better targeting of benefits and services – and this includes conditionalities such as linking unemployment benefit to employability training as well as installing a minimum income or ‘social floor’. “There are trade-offs and you need to make them with your eyes open,” she said. Thirdly, it has to be sustainable (in DG ECFIN’s terms) as well as adequate (in DG EMPL’s terms), and this implies simplification.

From package to pact

The package came in for some trenchant criticism from Bruno Palier, Research Director at the Centre National de la Recherche Scientifique (CNRS) in Paris. Professor Palier had nothing but praise for the analysis, which stresses quality and recognises the need to compete at the top end of the labour market and create jobs in the knowledge economy. In this it is the opposite of the revised Lisbon strategy embodied in the Wim Kok report. Some Member States, which have chosen economic strategies based on finance or traditional manufacturing, do not need a highly-skilled workforce, he pointed out, and they are imposing an austerity policy on other countries.
His main critique was that the ‘package’ did not go far enough – in fact it should have been a ‘pact’. There is an imbalance; while economic policy, enshrined in the Stability and Growth Pact, is binding, social policy is not. The SIP should be included in the Open Method of Co-ordination, which would bind the Member States into a transparent co-ordination process.
Secondly, he reminded her that according to the treaty, the Commission has the right and responsibility of initiative. Therefore, if it believes that early years education is an investment, then it should propose to the Member States that childcare costs should be taken out of the Maastricht formula, so that they would no longer count towards a budget deficit.

Be bolder!

Finally, Prof. Palier urged the Commission to play the political game and communicate better. Whereas Ms Fransen talked of the responsibility of partners (member states, regions, business and the third sector), Prof. Palier would prefer her to think in terms of building alliances. It was through political alliances with the regions that the Employment Committee and the Social Policy Committee were established. This time it could be the NGOs. The 20% ESF allocation to social inclusion will go nowhere – social investment has to be visible.



1. katalin - 11 March 2013

thanks for this excellent wrap up note. It give the feeling that SIP is already getting stuck before moving forward… social policy needs more coordinated political commitment for sure but reversely, the national and regional authorities in charge of implementing the package should not despise the potential capacity for social innovation it carries along and translate it into their own programming exercises.

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