Commission issues social investment package in response to crisis

In February 2013, the European Commission issued a Communication on social investment for growth and cohesion. It called on Member States to prioritise social investment and to modernise welfare states. Member States are being asked to focus on ensuring social protection systems respond to people’s needs at critical moments in their lives. It also called for simplified and better targeted policies to provide social protection systems, and upgraded active inclusion strategies.

Background

On 20 February 2013, the European Commission issued a Communication called Towards Social Investment for Growth and Cohesion – including implementing the European Social Fund 2014–2020 (160Kb PDF). It called on European Union (EU) Member States to prioritise social investment and to modernise their welfare states. It also gave guidance to Member States on how best to use EU financial support, notably from the European Social Fund, to implement the objectives it suggested.

The Communication was issued in response to the ongoing financial crisis and the pressing need to mitigate its social consequences. In particular, the Commission highlighted high levels of financial distress, increasing poverty and social exclusion, and record levels of unemployment, particularly among young people.

These urgent developments sit alongside more long-term social developments in the EU which pose their own challenges to Europe’s social security and labour market systems, such as the ageing population and the proportionate decline in the numbers of people of working age.

The package in detail

The Commission’s social investment package focuses on a number of central issues, including making sure that social protection systems respond to people’s needs at critical moments throughout their lives. The Commission said more needs to be done to reduce the risk of social breakdown and so avoid higher social spending in the future.

It calls for the provision of simpler and better targeted social policies to provide adequate and sustainable social protection systems. The Commission says some countries have better social outcomes than others, despite having similar or lower budgets, and it believes this demonstrates there is room for more efficient social policy spending.

The Communication added that upgrading active inclusion strategies in the Member States was vital. There needs to be affordable quality childcare and education, prevention of early school leaving, and training and job-search assistance. Housing support and accessible health care are all policy areas with a strong social investment dimension.

The Communication was accompanied by a range of documents, including:

• a Commission Recommendation, Investing in children: breaking the cycle of disadvantage (134Kb PDF);

• a staff working document on demographic and social trends, split into Part I (1.53Mb PDF) and Part II (1.83Mb PDF);

• a staff working document (651Kb PDF) on the 2008 Commission Recommendation on active inclusion for people excluded from the labour market;

• a staff working document (250Kb PDF) on how the European Social Fund could contribute to implementing the social investment package.

Monitoring performance

The Commission said it would closely monitor the performance of social protection systems in individual Member States through the European Semester process. It planned to formulate, where necessary, country specific recommendations.

László Andor, EU Commissioner for Employment, Social Affairs and Social Inclusion, said:

Social investment is key if we want to emerge from the crisis stronger, more cohesive and more competitive. Within existing budget constraints, Member States need to shift their focus to investment in human capital and social cohesion. This can make a real difference if we want to make real progress towards the objectives of the Europe 2020 strategy. Social investment today helps to prevent Member States having to pay much higher financial and social bills tomorrow.

Commentary

This package of measures sends an important signal from the Commission that the policy response to the ongoing crisis needs to focus more on social issues if the EU is to emerge socially intact from its economic and financial difficulties. Alongside long-term ongoing trends such as the ageing workforce, European policy makers now have to contend with the very real issues of growing poverty, social exclusion and high levels of unemployment, particularly among young people.

It is to be hoped that this social inclusion package will make a real difference. It is backed by the European Social Fund, based on sharing good practice, and will contain an aspect of regular monitoring through the European Semester process.

Andrea Broughton, Institute for Employment Studies