Recovery and resilience in the EU – Back to the future? Some reflections on Foundation Forum 2022
When it comes to Europe’s COVID-19 recovery and its aspiration to build back a more resilient society, the so-called green and digital transitions have dominated EU policy discussions. And as Eurofound made preparations for the 2022 Foundation Forum – a unique occasion for high-level debate on the state of living and working in Europe – these twin transitions were at the forefront of people’s minds. That is, until one week before the event, when Russia invaded Ukraine.
Conflict: a new driver of change
In keeping with the sombre context of the occasion, therefore, the Foundation Forum opened with an acknowledgement of the humanitarian crisis unfolding while yellow roses on a blue ribbon adorned the lapels of in-person participants.
When considering the drivers of change, it is poignantly clear that we will now also need to factor in the effects of war in Europe, including refugee migration, supply chain challenges, food security issues, instability in the energy market, to mention just a few. And this was clearly to the forefront of the opening intervention from French Presidency representative Minister Élisabeth Borne and again in the comprehensive contribution from IMF First Deputy Managing Director, Gita Gopinath, who commended Europe’s strong recovery thanks in large part to policies such as labour retention schemes. Without these, the IMF estimates that four million additional workers would have become unemployed; however, she underlined that this positive trend will now be impacted by the geopolitical uncertainty emerging.
We have an opportunity to build back better…
Notwithstanding the fact that the crisis in Ukraine and its potential impact loomed large, participants were largely optimistic that Europe could build back better, post-pandemic. 88% of Foundation Forum poll respondents viewed the COVID-19 crisis as an opportunity to re-set and build a more resilient Europe. This could be because the pandemic has proved a timely accelerator of change; as Commissioner Schmit remarked, had it hit 20 years ago, we would not have been able to harness the potential of already ongoing economic and social transformation, both in terms of new ways of working (supporting platform and remote working) and regarding new social and human-centred standards (ensuring the right to disconnect and a more equitable work-life balance).
But another element working in Europe’s favour is the fact that its economy was not rattled quite so sharply during COVID-19 as during the great recession, evidenced in part by a significant drop in the unemployment rate (figure 1).
…but we first need to ensure recovery for all
But as we know, the effects of the pandemic were not evenly felt (young people and lower paid workers were hit harder, rural areas and certain regions more deeply affected), and so we need to double our efforts to ensure that the recovery itself is more evenly shared. Participants were positive about the EU’s path to recovery, albeit most think that some Member States will improve more than others – with 75% foreseeing a trend of upward divergence or a differentiated growth.
Barbara Kauffmann, Employment and Social Governance Director at the European Commission, reflected on the positive results of the EU’s policy response, noting no major increase in EU inequality and poverty indicators, as well as steady convergence in central and eastern European Member States.
Added to this, national policies turned out to be effective, thanks in part to the relaxing of fiscal rules and flexibility of funds at EU level. And while most participants also believe that the social protection measures that Member States put in place were successful, the question remains: what happens when this support stops?
This question was answered to some degree by Taoiseach Micheál Martin in his keynote address when he recalled how, during the COVID-19 crisis, the EU demonstrated ‘the strength that there is in unity’. He added that the ambitious NextGenerationEU recovery package ‘sent the message that in the most testing of times European Union leaders can work together and find a compromise, that delivers for its citizens’. The key instrument of NextGenerationEU, the Recovery and Resilience Facility, has successfully supported Member States in responding to the crisis – a response that is tracked via a dedicated scoreboard.
The effects of NextGenerationEU on the EU’s real GDP (until 2024 in a high productivity scenario)
Source: Quantifying Spillovers of Next Generation EU Investment, Discussion Paper July 2021.
But as we move from recovery to resilience, the Taoiseach echoed what many others also affirmed, that it is essential that both employer and employee representatives are involved in the implementation of Member States’ Recovery and Resilience Plans. This will increase the legitimacy and the effectiveness of the structural reforms needed to achieve fair and inclusive sustainable economic growth and to ensure social recovery.
The future of work is now
Everyone shares the view that teleworking is here to stay, with the vast majority of Foundation Forum participants stating they would prefer some form of remote working options going forward. And while new forms of hybrid employment offer numerous benefits, there are also a few potential challenges, not least the danger of exacerbating the gender divides. Notwithstanding the long-standing gender imbalance in the share of invisible labour (spoiler: women do more of it), Eurofound research shows that women are also more likely to work in ‘teleworkable’ jobs, as well as the fact that more women than men will probably remain working from home, even as some version of a return to office is slowly taking place (figure 3).
Carlien Scheele, Director of the European Institute for Gender Equality (EIGE), also revealed that, during the pandemic women carried out 36 hours a week of informal care work – essentially another full-time job – underlining the fact that while there is no right to disconnect when it comes to care, the responsibility shouldn’t rest solely on women’s shoulders.
We need to change the way we manage
Less controlling, more coaching: that’s the mantra to keep in mind as a new way of working becomes a permanent reality. Microsoft Director Anna Kopp made it clear that the managers of today and tomorrow need to have a different approach to that of 30 years ago. The era of digitalisation calls for a more modern outlook: while technology gives the option to be ‘always on’, the idea that longer hours result in increased productivity is a relic from a bygone industrial era.
In this regard, a generational rift is emerging – epitomised in the reactions to a story, told by Financial Times columnist, Camila Cavendish, of an employee who declined an early morning meeting as it clashed with their yoga schedule. Senior staff regarded it as unacceptable while junior staff felt it was entirely consonant with modern-day expectations of a healthy work–life balance.
While digital skills are obviously needed to manage teams working remotely, managers will also now need to make connections beyond the computer. The so-called ‘great resignation’ has seen young people reassessing their role in the labour market; one study showed that a lack of connection with their manager has been/will be a factor in 70% of decisions to leave. And to optimise employee performance, managers need a deeper degree of emotional intelligence to establish trust not tracking, as employees strive to maintain their balance on a line between work and life that technology is rendering ever thinner.
It’s time to think differently about our space
From offices to cities themselves, the shift to teleworking is an invitation to re-imagine how we use space. Working from home has proved that most of us can get the job done remotely but being physically removed from others can hinder creativity. In response to this, the offices at Microsoft – a company that embraced hybrid working as far back as 2012 – now offer multiple meeting rooms and sofa spaces to encourage collaboration and innovation.
With around 15% of firms looking to reduce their office space – according to Nantes Deputy Mayor André Sobczak – and major retail outlets changing their focus towards online shopping and on-demand delivery instead of heavily stocked flagship stores, this is the time to re-design urban spaces to better address our living and working needs.
A carbon neutral economy requires different kinds of sustainability
The risk that the transition to a climate neutral economy will increase economic and social inequalities was also under the spotlight. European Environment Agency’s (EEA) Eva Jensen stated that one thing is clear: ‘The option of doing nothing is not an option. Doing nothing is doing harm.’ One step would be to acknowledge that this transition requires different kinds of sustainability: sustainable financing, sustainable work and, of course, sustainable sources of energy.
Alexander Boto Bastegieta, General Director of Basque agency Ihobe, offered a positive example, citing how sustainable financing and education, public–private cooperation and a reliance on evidence-based data helped the Basque Country drive an ambition of green reform across all industrial sectors (consisting of 25% of GDP).
Sustainable work is another key consideration, notably the upskilling and reskilling of workers most affected by economic and labour market changes. Additional consideration here should be given to social sustainability: ensuring equal opportunities for women and men in new and emerging sectors associated with this green transition. In a statement echoed by many throughout the day, European Investment Bank Director Debora Revoltella said the need for investment in new skills is one of the biggest challenges of the digital and green transitions.
Last but not least, we need sustainable sources of energy. While statistics show an increase in the share of renewable energy across the EU (figure 4), with the outbreak of war in Europe, the future of some energy sources are being thrown into question.
This shift to a climate neutral economy could cause a significant division of opinion, suggests Otilia Dhand, Managing Director of Teneo, especially as it has the potential to adversely affect certain sectors of society such as lower income families. With an understanding that the benefits of the transition will not be seen immediately, politicians need to be ready to favour longer-term commitments to green policies over short-term gains in public support.
Resetting social protection
We need to modernise our social systems while keeping key mega trends in mind, notably digitalisation and the changing world of work, given that the pandemic highlighted the precarity of Europe’s 28 million+ platform workers and related unprotected employment contracts. But we will need to find alternative ways of funding the welfare state in the future. Economic growth is necessary to fund the welfare state (in terms of taxes and social insurance) but due to demographic change, fall in productivity, and crises, we cannot rely on economic growth in the future.
Milena Büchs from the University of Leeds put forward the innovative idea of universal basic services: making transport and (renewable) energy provision free to every citizen – an initiative that would serve the dual purpose of reducing emissions and tackling poverty.
Rethinking the future of Europe
As the day’s debate drew to a close, it was clear that bigger picture thinking is required to help us find solutions for an ever-evolving array of societal challenges in Europe. Indeed, just one week earlier, on the same stage as the 2022 Foundation Forum in Dublin Castle, several hundred citizens had come together to present their vision as part of the Conference on the Future of Europe.
It is indeed an increasingly uncertain future, where talk about ‘building back better’ would appear to be under threat. But in this context, the words of Ivan Krastev, chair of the Centre for Liberal Strategies in Sofia, reverberated clearly: ‘Resilience is not about preserving the status quo. Resilience is about embracing change.’
So what change do we need to consider when rethinking the future of Europe?
We need to redefine security
The idea of security has changed – it was based on economic interdependency but this is no longer the case. The European Union emphasises soft power, but does the invasion of Ukraine show that hard power matters more?
We need to redefine work
In an increasingly digitalised world (automation of tasks, digitisation of processes, machine learning, boosted by the expanding internet of things), the nature of work – at least for humans – is changing irrevocably.
We need to redefine expectations
Technology gives us the power of precision – think precision agriculture: hyper specific use of fertilisers which would allow us to meet certain climate goals. As Liselotte Lyngsø of Future Navigator proclaimed, ‘science fiction is becoming science fact’.
But the best source of energy for redefining expectations should be young people. Europe’s youth is setting the standards in terms of climate action – voices like that of Emmy Coffey Nguyen who applauds EU Green Deal ideals but questions decisions that serve to undermine it, ‘like labelling nuclear and gas as green energy’.
Europe’s youth are the digital natives who, knowing no actual analogue existence, take for granted the digital tools and techniques that seem new to their elders.
On these issues and more, Europe’s youth are asking the question: what’s next?
The Forum provided the opportunity to explore some of the options and ideas. But clearly, we now have a pressing responsibility to provide the answer.
Photo © Conor Healy, Picture It Photography
Research carried out prior to the UK’s withdrawal from the European Union on 31 January 2020, and published subsequently, may include data relating to the 28 EU Member States. Following this date, research only takes into account the 27 EU Member States (EU28 minus the UK), unless specified otherwise.