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8 May 2017

Europe 3.0? Debating the pillar of social rights

European dialogue closing debate

The European Dialogue – the annual conference organised by the Hans Böckler Foundation (HBS) with the support of the ETUI – was held on 27 and 28 April in Albert Hall in Brussels. This year’s topic was the need to ‘rewrite the rules for shared prosperity’.

During the closing debate of the 2017 conference, Karl Pichelmann, senior advisor at the European Commission’s DG Economic and Financial Affairs, presented the Commission’s ideas on what a ‘Europe 3.0’ could look like. He put forward various possibilities for the future development of the EU, involving different degrees of integration of the Member States, which he considered to be ‘united in diversity’. The question is how much diversity can the EMU sustain in both the short and long run? Although the economies of all Member States have positive growth trajectories the current recovery is still weak and the EU is threatened by persistent economic and social divergences as well as political fragility. It cannot be denied that the hopes and promises of the EMU have not been realised in terms of overall economic convergence, and it needs to be revised in order to address these divergences. There are two competing models: ‘Back to Maastricht’ and ‘Fast forward’. Pichelmann stressed that fairness is crucial if we want to restore prosperity in the Union and achieve a positive feedback cycle.

Another element that needs special attention is the renewed vision on structural reforms. According to Pichelmann, there are five main levers: education and training, the quality of public spending, open and competitive markets, ‘securiflex’ in labour markets (i.e. more security than flexibility, as opposed to the previous ‘flexicurity’) and tax benefit systems (the shifting of taxes away from labour). The EU is taking concrete action, for example with the recent proposal for a pillar of social rights (EPSR), the refocusing of the EU budget on investment, innovation and education, the mainstreaming of distribution considerations in EU policymaking, new requirements for more flexible market adjustment such as the ‘securiflex’ principle, etc.

The following debate began with the question of whether the recent social pillar proposal would have any real significance at EU level. Karl Pichelmann admitted that the spirit of the proposals was aspirational rather than concrete but that the follow-up would be decisive. He added that much depended on the Member States, and that several were very opposed to some of the proposals.

Anke Hassel, Scientific Director of the Institute for Economic and Social Research at the HBS, expressed doubts regarding this initiative due to the huge discrepancies in the EU and the overall mistrust of the European project among the population. She questioned why the European Commission had so far disregarded the fact that the most competitive countries in the EU are the ones with the strongest welfare states.

Maria Jepsen, director of the ETUI Research Department, admitted that while there were different possible interpretations of the EPSR she was convinced that it was not the first time such an initiative had been proposed. She referred to the EU Charter of Fundamental Rights and the European Social Fund, which have contributed a great deal to creating a social dimension in the EU. It is however crucial that the actors concerned take ownership of this initiative. There has been no social agenda for 10 years, but now we are being offered a new structure which can respond to a lot of pertinent questions. Despite its apparent weakness, it is a real opportunity.

Gustav Horn, Scientific Director of the Macroeconomic Policy Institute of the HBS, agreed that a change of paradigm was necessary and that it could not happen without such aspirational initiatives as the EPSR, as well as action from the Member States. However, Horn criticised the European Commission for having underestimated the impact of the austerity policies.

On the question of where to go from here, the Commission’s recent White Paper presents different scenarios. Is a multi-speed Europe the solution? Maria Jepsen expressed doubts. In her view, a multi-speed social Europe will have a negative impact in terms of how the EU is perceived. Karl Pichelmann agreed that this scenario might not be very workable, but pointed out that different integration models were already in place, such as the Schengen agreement, the Eurozone etc. According to Anke Hassel the EU would do better to reflect on what it can deal with best in an efficient way and not overreach its capacities. Doing less might in fact be more effective. Gustav Horn called for a political revolution rather than reform; European issues should be tackled from a European perspective and not a national one as is currently the case. There was general agreement that business as usual is not an option if Europe is to regain its credibility.

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