The European Pillar of Social Rights: White or Toothless Tiger?

The 2008 Economic Crisis and Entrepreneurship in Europe

June 13, 2017

Rethinking post-2020 Cohesion Policy: structural transformation and inclusive growth

June 26, 2017

Within EU institutions, there is an increasing perception of the need to revisit the European approach to growth and revive the European social model, introducing a stronger dimension of social equity in public policies and increased protection of social rights for EU citizens and residents.

Concerns about interpersonal inequalities, opportunities for all and social mobility are not new in the political agenda of the EU :

The EU has supported human capital development and access to employment during the past 60 years through the European Social Fund – the first of the Structural Funds, established with the Treaty of Rome. In the current, 2014-20, programme period, the ESF and the required accompanying national co-financing, will invest c. €120 billion in the EU28
The European Regional Development Fund, established in the 1970s, has historically endeavoured to support job creation in less developed regions and areas facing industrial reconversion. In the current period, it finances investments in the region of €276.8 billion
The Europe 2020 Strategy (2010) foresees ambitious targets on unemployment and poverty, to be achieved not only through the support of the policies funded by the EU budget but also with the synergic action of Member States’ own policies, as well as institutional and regulatory reforms. The Strategy embodies a shift from the traditional focus on employment and HR development to inclusive growth, placing more emphasis on social policies, and foresees three out of seven ‘Flagship initiatives on: (i) skills and jobs; (ii) youth on the move; and (iii) poverty (European Platform against Poverty and Social Exclusion), with targets monitored as part of the European Semester.

It is against this background that the European Commission proposed in April 2017 a new European Pillar on Social Rights which should work alongside measures implemented under the European Social Fund, the European Youth Initiative and Guarantee, the EU Anti-poverty platform and other similar existing EU instruments.

What does the Pillar entail?

The new Pillar sets out a number of key principles and rights to support fair and well-functioning labour markets and welfare systems … [and] an ambitious agenda for better-performing economies and more equitable and resilient societies. It is organised in three chapters. Chapter 1 – Equal opportunities and access to the labour market – focuses on education, training and lifelong learning, gender equality, equal opportunities, active support to employment. Chapter 2 – Fair working conditions – deals with secure and adaptable employment, wages, information about employment conditions and protection in case of dismissals, social dialogue and workers’ involvement, work-life balance and healthy, safe and well-adapted work environment and data protection. Chapter 3 – Social protection and inclusion – focuses on children and support to children, social protection, unemployment benefits, minimum income, old-age income and pensions, healthcare, inclusion of people with disabilities, long-term care, housing and assistance to the homeless, and access to essential services.

What can EU citizens expect? How effective is the Pillar likely to be?

The Pillar is intended as a compass for a process leading to renewed socio-economic convergence and to drive reforms at national level. Its implementation lies largely with the Member States, since they are primarily responsible for the competences involved, although there are areas where the EU has direct remit (the proposed Directive on Work-life balance, launched at the same time as the Pillar, is a case in point). The main EU-wide lever for the Pillar is the monitoring, benchmarking and peer review that will be realised under the European Semester. There are many positive aspects of the Pillar. First, the acknowledgement of the existence of new groups of individuals whose employment and social rights are not adequately protected under the current labour market conditions. The Pillar acknowledges this and upgrades principles and standards. Second, the Pillar is accompanied by a "social scoreboard" - ‘a reference framework to monitor ‘societal progress’ in the Member States. This will make it easier to assess progress in the relevant Council formations and to benchmark countries. Third, the Pillar will act as a reference point for the use of the ESF and other ESI Funds, and other EU initiatives dedicated to employment and social rights. Lastly, the Pillar was designed through a wide-ranging consultation. Consultations are undertaken also for the legislative and non-legislative associated initiatives. This should contribute to raising awareness on the social dimension of Europe, on the persisting disparities that exist across MSs, and on options regarding the way forward.

However, there are also some more doubtful features. First, the reliance on the OMC and peer review mechanisms, anchored in the European Semester process, expose the Pillar to uncertainty as to its ability to achieve the intended goals of increased social protection for all EU citizens and residents. The disappointing performance towards the poverty and employment targets of the Europe 2020 strategy demonstrates that effective action cannot solely rely on peer pressure; that institutional and regulatory reforms can only go so far; and, related, that there may be a need for an active EU-wide policy response, if the differences between MSs have to be reabsorbed in a process of upwards convergence on the principles set out in the Pillar. Since the crisis, the European Commission has launched a number of ad hoc instruments and initiatives - the Youth Employment Initiative, Youth Guarantee, and the Investing in Europe’s Youth Initiative ; the European Globalisation Fund ; the European Employment and Social Innovation Programme (EaSI); the Fund for European Aids for the most Deprived (FEAD) – but their scale is minor and their effectiveness is to be demonstrated (see, for example, the recent ECA Special report No 5/2017: Youth unemployment). A second contentious point is that the Pillar is intended for the Euro area. Although other MSs can ‘join-in’ on a voluntary basis, since the Pillar deals with social rights, the differentiation between residents of Euro-area-countries and non-Euro-area-countries is uneasy. Further, the Pillar, by nature, has no territorial dimension. However, the problems that it aims to address and the political consequences of those problems are indeed highly territorialised. Lastly, the future of the Pillar will depend on the wider discussions on the future of Europe, and the agreement to be reached about which scenario – among or beyond those proposed in President Juncker’s White Paper on the Future of Europe – should be pursued in the re-engineering of the Union at 27. As summarised by the Commission in the related Reflection paper on the social dimension of Europe , at one end of the spectrum, the social dimension could be limited to free movement, at the other, convergence of social outcomes could be pursued across the entire EU27 in a Europe that could be ‘doing much more together’.

There are no doubts that the European Pillar of Social Rights represents an important opportunity for the strengthening of social rights in Europe. Amidst contrasting views within the Commission, MSs reluctance to cede policy competences to the EU, and the need to find a suitable balance between competing socio-economic partners and stakeholders (particularly workers associations versus employers’ associations), the launch of the Pillar is in itself to be viewed as a success. Nevertheless, while the importance of this achievement should not be underestimated, there is also a need to debate the scope for more significant, systemic and territorialised EU investments in the spheres touched upon by the Pillar. The ongoing debates on the post-2020 MFF and Cohesion policy represent the opportunity to do so.

There seem to be increasing awareness that ‘economies with less inequality and less inequality of opportunity actually perform better’ and that reducing inequality does not have to come at the expense of economic performance. A key issue for the EU at this time is to capitalise on the momentum generated with the launch of the Pillar, to create wide-ranging consensus and actively pursue the Pillar’s goals with (financial) commitment and determination.

Dr Laura Polverari
Senior Research Fellow, EPRC, University of Strathclyde