Unequal Europe

Presentation by Frank Vandenbroucke

Réunion des Présidents des Commissions des Affaires Sociales

Chambre de Commerce, Kirchberg, Luxembourg

19 October 2015

A Social Triple A Europe?

The EU deserves a Social Triple A, if it actively supports both: • convergence towards higher levels of prosperity and well-

being between the Member States

and

• convergence towards more equality within the Member States.

Europe is becoming more unequal, within and between MS

Europe is becoming more unequal, within and between MS

Denmark

Finlan

d

Czech Rep

ublic

Netherl

ands

Slove

nia

German

y

Swed

en

Cypru

s

Belgium

France

Irelan

d

Estonia

Austria

United Kingd

om

Slova

kia

Hungary

Poland

Latvia

Luxe

mbourgMalt

a

Portuga

lIta

ly

Lithuan

iaSp

ain

Bulgaria

Greece

Romania

.000

10.000

20.000

30.000

40.000

50.000

60.000

Child poverty

Poverty (<18) 2007 Poverty (<18) 2012

At-r

isk-o

f-po

vert

y ra

te

Europe is becoming more unequal, within and between MS

Denmark

Finlan

d

Czech Rep

ublic

Netherl

ands

Slove

nia

German

y

Swed

en

Cypru

s

Belgium

France

Irelan

d

Estonia

Austria

United Kingd

om

Slova

kia

Hungary

Poland

Latvia

Luxe

mbourgMalt

a

Portuga

lIta

ly

Lithuan

iaSp

ain

Bulgaria

Greece

Romania

.000

10.000

20.000

30.000

40.000

50.000

60.000

Child poverty, anchored in time

Poverty (<18) 2007 Poverty (<18) 2012, threshold 2007Poverty (<18) 2012

At-r

isk-o

f-po

vert

y ra

te

Europe is becoming more unequal, within and between MS

Denmark

Finlan

d

Czech Rep

ublic

Netherl

ands

Slove

nia

German

y

Swed

en

Cypru

s

Belgium

France

Irelan

d

Estonia

Austria

United Kingd

om

Slova

kia

Hungary

Poland

Latvia

Luxe

mbourgMalt

a

Portuga

lIta

ly

Lithuan

iaSp

ain

Bulgaria

Greece

Romania

.000

10.000

20.000

30.000

40.000

50.000

60.000

Child poverty, anchored in time

Poverty (<18) 2007 Poverty (<18) 2012, threshold 2007Poverty (<18) 2012

At-r

isk-o

f-po

vert

y ra

te

Divergence & risk of vicious circles

Policy packages for convergence ‘between’ and cohesion ‘within’ do exist…

Example: child care and education • The EU is deeply affected by a human capital divide, both

between and within the Member States.

• Reducing background inequalities between families with children and investing in child care and education contribute both to national cohesion and to long-term EU-wide convergence (cf. OECD).

If we believe that human capital is key to long-term growth…more economic divergence to come?

Romania

HungaryIta

lyLa

tvia

Ireland

United Kingdom

Spain

Portugal

Greece

Estonia

Slovenia

Lithuania

Bulgaria

France

Netherla

nds

Finland

Sweden

Austria

Denmark

Czech

Republic

Poland

Germany

Belgium

Luxe

mbourg

Slovakia-60%

-40%

-20%

0%

20%

40%

60%

Real spending on education, 2013 vs. 2006-08Real spending on education per inhabitant less than 19 years old, 2013 vs. 2006-08Spending % GDP, demogr. adj., vs. average, 2013

The need for a comprehensive social agenda

• The social investment imperative

• Design flaws of the Eurozone

• Cross-border mobility and domestic social cohesion: a ‘balancing act’ is possible

• An EU framework on employment quality, => e.g. role of minimum wages

• Scope for industrial action to safeguard minimum standards

• The tax basis of welfare states: taxation of mobile factors

A European Social Union

A Social Union would

• support national welfare states on a systemic level in some of their key functions

• guide the substantive development of national welfare states – via general social standards and objectives, leaving ways and means of social policy to Member States – on the basis of an operational definition of ‘the European social model’.

Þ European countries would cooperate in a union with an explicit social purpose, pursuing both national and pan-European social cohesion

Thank you

• Vandenbroucke-Rinaldi (Delors Institute), Social inequalities in Europe. The challenge of convergence and cohesion, paper for the Vision Europe Summit, 17-18 November 2015

• Vandenbroucke, A European Social Union: Unduly Idealistic or Inevitable?, European Debates, 7, European Investment Bank Institute, September 2015. (http://institute.eib.org/wp-content/uploads/2015/09/A-European-Social-Union-Unduly-Idealistic-or-Inevitable.pdf)

• Unequal Europe. Recommendations for a more caring EU. Final report of the High-Level Group on ‘Social Union’, Friends of Europe, Brussels, Spring 2015 (http://www.friendsofeurope.org)

• Vandenbroucke-Vanhercke, A European Social Union. 10 Tough nuts to crack, Friends of Europe, Spring 2014 (http://www.friendsofeurope.org)

• Vandenbroucke, The Case of a European Social Union. From Muddling Through to a Sense of Common Purpose, in Marin, B. (Ed.) (2015), The Future of Welfare in a Global Europe, Ashgate: Aldershot UK, pp. 489-520.

www.econ.kuleuven.be/frankvandenbroucke