Download presentation
FESSUD_conference_Vandenbroucke_28.9.2016
A European Social Union.
Unduly idealistic or inevitable?
Frank Vandenbroucke
University of Amsterdam
FESSUD Conference
28 September 2016
The social dimension of the European project according to the
founding fathers: a belief in convergence
• European integration would support the simultaneous pursuit of economic
progress and of social cohesion, both within countries (through the
gradual development of the welfare states) and between countries
(through upward convergence across the Union)
• Initial division of labour:
– economic development: supranational
– coordination of social security rights & anti-discrimination: supranational
– social development: national sovereignty (in theory)
• The convergence machine worked… more or less… until 2004/2008.
• A tragic dilemma of integration?
• Design flaws in the European project?
The social dimension of the European project according to the
founding fathers: a belief in convergence
• European integration would support the simultaneous pursuit of economic
progress and of social cohesion, both within countries (through the
gradual development of the welfare states) and between countries
(through upward convergence across the Union)
• Initial division of labour:
– economic development: supranational
– coordination of social security rights & anti-discrimination: supranational
– social development: national sovereignty (in theory)
• The convergence machine worked… more or less… until 2004/2008.
• A tragic dilemma of integration (in the enlarged and heterogeneous EU)?
• Design flaws in the European project?
Minimum wages and what governments can do: net disposable
income of couple with 2 children, one minimum-wage earner
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
LU IE AT FI UK DE FR NL DK BE IT SI EL CZ ES SK EE PL HU LT PT LV RO BG
Net disposable income with 2 children Gross wage income
Bron: CSB/MIPI
Poverty risks in the population < 60, by work intensity of the
household
0
10
20
30
40
50
60
Very high work
intensity
High work
intensity
Medium Low work
intensity
Very low work
intensity
At-risk-of-poverty rate (< 60)
Work intensity of the household
2004-06 2012
Bron: Eurostat, SILC 2005-2007; SILC 2013
Poverty risks in the population < 60, by work intensity of the
household
0
10
20
30
40
50
60
Very high work
intensity
High work
intensity
Medium Low work
intensity
Very low work
intensity
At-risk-of-poverty rate (< 60)
Work intensity of the household
2004-06 2012
Erosion of welfare states?
Changing composition of households?
More precarious jobs?
Migration?
Bron: Eurostat, SILC 2005-2007; SILC 2013
The social dimension of the European project according to the
founding fathers: a belief in convergence
• European integration would support the simultaneous pursuit of economic
progress and of social cohesion, both within countries (through the
gradual development of the welfare states) and between countries
(through upward convergence across the Union)
• Division of labour:
– economic development: supranational
– coordination of social security rights & anti-discrimination: supranational
– social development: national sovereignty (in theory)
• The convergence machine worked… more or less… until 2004/2008.
• A tragic dilemma of integration (in the enlarged and heterogeneous EU)?
• Design flaws in the European project?
Macro-economic stabilisation: smoothing of economic shocks:
US vs. EMU
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
US EMU 1979-1998 EMU 1999-2010
Saving
Net taxes and transfers
Factor income and capital
depreciation
Total smoothed
US:
- Federal tax-and-benefit system
- State-based unemployment insurance
with federal framework & extensions
Furceri & Zdzienicka, The Euro Area Crisis…, IMF Working Paper
EMU: stability, sovereignty and solidarity
• Why are stabilization instruments centralized in monetary unions?
– Risk sharing (pooling)
– Externalities (vaccination)
• Paradox: in the US, solidarity systems at the state level are weak, but they
are supported by solidarity mechanisms at the federal level; the EU is not
ready to support strong mechanisms of solidarity at the member state
level by solidarity at the EU level.
• Puzzle of:
– Binding agreements sovereignty
– Distrust solidarity
– Legitimate concern about moral hazard, which has become an obsession
Defining the EMU’s social objective is a necessity rather than a
luxury
• EMU forces upon the member states :
– a shared conception of labour market flexibility
– symmetric guidelines on wage cost competitiveness
& institutions that can deliver
– long term: sustainability of pensions
• Any ‘Eurozone re-insurance’ of ‘national stabilization policies presupposes
(a) minimum requirements w.r.t. the adequacy of national unemployment
insurance and the concomitant labour market regulation; and (b) general
trust in the quality of each other’s social fabric.
• The need for conceptual clarity: a European Social Union ≠ a European
Welfare State
A European Social Union
A Social Union would
• support national welfare states on a systemic level in some of their key
functions (e.g. stabilization, fair corporate taxation, minimum wages)
• 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’.
⇒ European countries would cooperate in a union with an explicit social
purpose, pursuing both national and pan-European social cohesion
A European Pillar of Social Rights: arguments & caveats
• A basic consensus about the general features of the ‘social
order’ that is associated with the Monetary Union is a
necessity; the EPSR can contribute to such a consensus.
• Upward convergence across the EMU/EU28 requires a
combination of social investment, sufficiently egalitarian
background conditions and social protection, as embodied in
the EPSR.
• Caveat: perception of ‘replay’ of earlier soft initiatives will
backlash
Thank you
1) Vandenbroucke, A European Social Union: Unduly Idealistic or Inevitable?, European Debates, 7,
European Investment Bank Institute, September 2015 (http://institute.eib.org/wpcontent/uploads/2015/09/A-European-Social-Union-Unduly-Idealistic-or-Inevitable.pdf)
2) Vandenbroucke and Rinaldi, Social inequalities in Europe – The challenge of convergence and
cohesion. In: Vision Europe Summit Consortium (eds.): Redesigning European welfare states – Ways
forward, Gütersloh (http://www.vision-europe-summit.eu/)
3) Vandenbroucke, Automatic Stabilisers for the Euro area and the European Social Model, Notre
Europe Jacques Delors Insitute, Tribune, September 2016 (www.delorsinstitute.eu)
4) Furceri, D. en A. Zdziencicka, The Euro Area Crisis: Need for a Supranational Fiscal Risk Sharing
Mechanism ?, IMF Working Paper 13/198, 2013
5) Beblavy, M., G. Marconi en I. Maselli, A European Unemployment Benefit Scheme. The rationale
and the challenges ahead, CEPS Special Report No. 119, 2015
6) Vandenbroucke, Sociaal beleid in een muntunie: puzzels, paradoxen en perspectieven,
Inaugural Lecture at the University of Amsterdam, 1 June 2016 www.frankvandenbroucke.uva.nl
7) Vandenbroucke, The Case for a European Social Union. From Muddling through to a Sense of
Common Purpose, in Marin, B. (Ed.), The Future of Welfare in a Global Europe, Ashgate: Aldershot
UK, 2015, pp. 489-520.
www.frankvandenbroucke.uva.nl