Members' Research Service By / May 9, 2017

The European social pillar and reform of economic and monetary union: setting European priorities

Written by Nora Milotay, On 1 March 2017, the European Commission launched its white paper on the future of Europe….

Written by Nora Milotay,

EPRS roundtable discussion - European Social Pillar and EMU: Setting European prioritiesOn 1 March 2017, the European Commission launched its white paper on the future of Europe. The Commission also plans to publish five reflection papers before the end of June on major EU issues, such as the social dimension, globalisation, economic and monetary union, defence and finance. In this context, EPRS  is organising two public events, aiming to assist preparatory work in the European Parliament on its forthcoming resolution on the proposals (scheduled for July 2017) ahead of the European Commission’s 2018 work programme (scheduled for October 2017). The first event in this series, held on 27 April 2017, focused on economic and social policy, while part two (on 10 May 2017), will look at the EU’s external dimension.

The day before the event, the European Commission published its first reflection paper on the social dimension of the EU, as well as a package of documents to guide EU social policies in the future. These were in line with the current Commission’s political guidelines and Commission President Juncker’s state of the Union speech, which promised to respond to the changing realities of Europe’s societies and the world of work. The new initiatives included a recommendation on the European pillar of social rights and related documents, as well as an initiative focusing on achieving a better work-life balance, including legislative and non-legislative proposals; two documents launching a consultation with social partners on social protection; the Written Statement Directive (aiming at improving written communication of employee working conditions) and an interpretative communication on the Working Time Directive.

RODRIGUES, Maria João (S&D, PT)Maria João Rodrigues (S&D, Portugal), the rapporteur for Parliament’s resolution on the European pillar of social rights, opened the event by emphasising the importance of a wide and deeply informed evidence-based discussion on the future of Europe for better policy-making. Giving an overview of main questions and topics to steer the debate about how to link EU social and economic policy, João Rodrigues emphasised three main questions: (1) What should be done at EU level to update social standards? (2) How can the EU help create an environment for (upward) social convergence? (3) How should the EU address issues of ‘governance’, improve existing euro area structures and beyond, and safeguard the effective implementation of upcoming legislative and non-legislative proposals, such as the European social pillar?

Several speakers agreed on the need to update social standards across the EU, but as Professor André Sapir (ULB, Senior Fellow Brueghel) pointed out, the social dimension of the EU is a ‘political minefield’. While the social pillar does not contain anything truly controversial, its ambition is simultaneously ‘too little’ for those who hoped for substantial progress in the debate on the EU’s social dimension. Sapir suggested that there is a non-controversial EU dimension to labour mobility, which calls for an EU-wide labour and social policy related framework, and thus some convergence. Claire Dhéret, senior policy analyst at the European Policy Centre, stressed that the Commission’s new proposal encourages innovative thinking and a social investment logic. Nora Milotay, policy analyst with the EPRS Economic Policies unit, explained that the new initiative on the social pillar takes individuals and their rights to equal opportunities and access to labour markets, to fair working conditions and to social protection, as its starting point. The pillar creates a comprehensive framework of 20 principles that stretches the current social body of EU law, on the one hand, and on the other, makes allowances for the different starting points, contexts and strategies to implement these rights in Member States.

EPRS roundtable discussion - European Social Pillar and EMU: Setting European prioritiesThe real challenge identified by all speakers concerns the implementation and enforcement of these rights and standards. To explain the broader context of this issue, Lúcio Vinhas de Souza, leader of the Economics Team at the Commission’s European Political Strategy Centre, emphasised that with an estimated share of 0.3 % of total social policy spending in the European Union (EU-27), the EU’s budget contribution is very limited, as is EU activity in this field. This is why, he explained, the current white paper process seeks to increase the political feasibility of EU policies. The Commission needs a clear mandate from the EU Member States for further integration, making the implications of the different choices clear to the public. This is particularly important, as past experience has shown that without such mandate, the Commission cannot succeed.

The discussion then focused on the methods and policies that could lead to the successful implementation of these new initiatives with a real positive impact on citizens. In the newly published Commission documents great emphasis is placed on the joint opportunity for Member States, social partners and EU institutions to make the European social pillar a reality. They also present the available European level guidance and financial tools that can facilitate implementation in the Member States. However, there is no clarity on how these policies can or will be enforced It is possible that this might lead, yet again, to less impact from the reforms, to less upward social convergence and to gridlock, as is often the case with social policies. Speakers’ proposals to counter the phenomenon included the development of a clear vision, instruments and institutions, as well as a budget to implement the principles, focusing initially on euro area countries. Moreover, stronger ownership of the European Semester and the introduction of conditionality for real implementation at national level, evaluation of policy inputs as well as outputs, and a contribution to awareness raising from the countries which have gained from the added value of European social policy, were also emphasised.

Successful implementation also calls for a deeper and more stable economic and monetary union. However, Andrej Stuchlik, policy analyst at the Economic Policies unit in EPRS, highlighted that only two legislations in the pipeline are related to the issue to date: the European deposit insurance scheme (EDIS, proposed in October 2015); and the revision of the Single Resolution Mechanism Regulation (SRMR, proposed in November 2016). As for a common fiscal capacity in the euro area for convergence and future shock absorption, the Commission has not taken further steps. Some argue that a fiscal capacity, for instance, a common unemployment insurance, would help to increase the resilience of the economy through increased risk-sharing. However, the debate on the priority of risk-sharing versus risk reduction is still ongoing. In this context, André Sapir emphasised that, due to the great diversity of social models and labour market policies in the Member States, a risk-sharing mechanism is not feasible. Sapir concluded by advocating the transformation of the European Stability Mechanism (ESM) into a full-fledged European Monetary Fund.

This slideshow requires JavaScript.

Related Articles

Be the first to write a comment.

Leave a Reply