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12 April 2019

Reboot Social Europe: the pillar, re-insurance scheme, wage increase, gender equality

In a little more than two months, European citizens will elect a new European Parliament which will codetermine the direction which Social Europe will take in the years to come. Now is therefore the right time to look at where we are with the European social agenda and put forward some proposals on how to advance it.

This was the idea behind the lunch debate organized by the French Economic Observatory (OFCE) and the ETUI on 1 April, at the International Trade Union House in Brussels. Four of the contributions to the OFCE’s Revue 158 Improving the European Construction were presented to a sizeable audience of Brussels based trade unionists, EU officials, researchers, NGO, lobby organizations and students, and they were commented on by Federico Lucidi from the European Commission and ETUC Advisor, Ben Egan.

ETUI Director of the Research department, Maria Jepsen, presented her jointly written paper with Philippe Pochet, ETUI General Director, putting the European social dimension in a historical perspective. They divide the construction of Social Europe into four big historical periods of about 15 years based on a central logic of economic integration, with the social dimension being derived from this integration. The advancement of the social dimension has mostly coincided with moments of crisis of the European project. “Every time we have needed to move forward in social dimension, a way has been created to do it”, according to Jepsen. The European Pillar of Social Rights can be the start of a new push ahead for the social dimension, but this is very much dependent on the prevailing economic and structural situation, she said.

Hélène Périvier from OFCE then talked about the effectiveness of the European Union's strategy to promote professional equality. Equal pay is the subject of particular attention in EU legislation, especially in anti-discrimination legislation, as is the protection of part-time workers - but there are no quantifiable targets. She said that employment rate targets do not take working time into account, yet part-time work remains a major factor explaining pay inequalities. What is more, the crisis put on a second plan the objective of professional equality and the reduction of the employment rate gap between the sexes.

Xavier Ragot, President of the OFCE, presented a chapter on the European labour market(s), written by his colleagues Eric Heyer et Pierre Madec. They argue that the analysis of the evolution of the unemployment rate is far from sufficient to compare labour markets. How can it be explained that the share of part-time employees in Germany is 10 percentage points higher than in Spain, and part-time work in Italy is 9 points higher than in Germany? It seems to be necessary to analyse the structure of the labour market as well as wage developments if we want to get the full picture. Xavier Ragot pleaded for the idea of an unemployment re-insurance scheme which would stabilize the economic situation providing for a “European layer on top of national ones, in case of a bad shock”. But for the moment he regretted that there is “lack of political leadership and very limited European budget” available to introduce this instrument.

In the last presentation Sandrine Levasseur from OFCE looked into the evolution of exchange rates, prices and wages in the Central and Eastern European Countries (CEECs) where there are different developments between the tradable and non-tradable goods sectors. In the tradable good sector, the wage growth since 2008 is clearly lower than productivity growth. In this respect a wage increase that is more in line with productivity growth in some CEECs and/or sectors would allow the real exchange rate to be closer to its equilibrium value, according to the research done by Sandrine Levasseur. “To produce 1h of work in the EU15 you get 55€ but only 23€ in the CEECs”, she showed. She also added that if workers in CEECs would have higher purchasing power they would be less keen to look for work in Western Europe.

Commenting on the presentations, Federico Lucidi said that we are now back again in a time of convergence and the EPSR (European Pillar of Social Rights) can be applied through a much stronger process of policies which is the European semester. “The fact that member states have agreed to be assessed via country specific recommendations is an important step”, he said. Ben Egan pointed to the recently adopted labour market paper of the ETUC which focuses on four main challenges - less work, more workers, Technological innovation, Labour market segmentation and the use of Active Labour Market Policies.

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