Friday, 6 October 2017

Establishing a European Pillar of Social Rights

Under the fifth priority of the European Commission, to deepen the economic and monetary union (EMU) - #deepeningEMU on Twitter - it is creating a social pillar #SocialRights, ahead of the Social Summit for Fair Jobs and Growth #SocialSummit17 in Gothenburg 17 November 2017.

Social Pillar documents   

In April the European Commission published a communication, accompanied by two  staff working documents in 23 official EU languages:
Establishing a European Pillar of Social Rights; Brussels, 26.4.2017 COM(2017) 250 final (10 pages)
Social Scoreboard; Brussels, 26.4.2017 SWD(2017) 200 final (6 pages)

SWD accompanying the communication Establishing a European Pillar of Social Rights; Brussels, 26.4.2017 SWD(2017) 201 final (77 pages)

The eminently readable third staff working document, bridging the transition from the test version to the final proposal, and presented in the blog post Consultation report on European Pillar of Social Rights, was published only in English:

Report of the public consultation; Brussels, 26.4.2017 SWD(2017) 206 final (53 pages)

Social pillar communication

The short communication about establishing the Social Pillar COM(2017) 250 contains the Commission’s final proposal for the Pillar.  The Pillar is primarily conceived for the euro area but open to all EU Member States (page 2).

Page 3 offers a summary of the communication (including references to the official documents mentioned above):

This Communication presents the European Pillar of Social Rights and outlines a way forward for its implementation. The Communication is accompanied by a number of legislative and non-legislative initiatives related to work-life balance, information for workers, access to social protection and working time. In the logic of the Pillar, these proposals, once adopted, will update and complement the EU acquis. The text of the Pillar itself is supported by a staff working document which provides more detailed explanations on each of the principles and rights. Moreover, a social scoreboard has been established to monitor progress on the ground. This will serve to track trends and performances across countries and to inform policy guidance in the context of the European Semester of economic policy coordination. For the EU as a whole, the scoreboard will also serve to assess progress towards its ̔social triple AŹ¼.

Euro area convergence

Even if the Social Pillar is open for willing member states, why does the Commission stress its design for the euro area? After discussing the rapid economic and social changes in our societies, the communication explains (page 5):

These challenges take a specific meaning for the completion of Europe's Economic and Monetary Union, as stressed in the Five Presidents' Report of June 2015. This is not just a social necessity, it is also an economic imperative. Employment and social conditions vary widely across the euro area, partly as a result of the crisis but also partly resulting from the imbalances built up in the years before the crisis. As the Report points out, efficient and resilient labour markets that promote a high level of employment and are able to absorb shocks without generating unemployment are essential for the smooth functioning of the Economic and Monetary Union. Over time, they contribute to the convergence of performances between Member States and to more inclusive societies. Beyond labour markets, it is also important to ensure that every citizen has access to adequate education and that an effective social protection system is in place to protect the most vulnerable in society, including a "social protection floor". Finally, the Report highlights the need to go a step further and push for a deeper integration of national labour markets by facilitating geographic and professional mobility. This calls for a fair and enforceable level-playing field for public authorities, workers and business alike.

For the EMU rationale, here is a link to the Five Presidents’ Report, officially Completing Europe’s Economic and Monetary Union, and for good measure the strategic note from the European Political Strategy Centre (EPSC) The Social Dimension of Economic and Monetary Union. Both were published in June 2015 (and both were designed by people in love with pale pastel colours failing the first accessibility test, readable text for ordinary readers).

The EPSC strategy note started by sounding the clarion call for dynamic and inclusive labour markets:

The social dimension of Economic and Monetary Union (EMU) has too often been neglected, due to the implicit assumption that making EMU more “social” would somehow hamper the economic performance of the euro area. Nothing could be further from the truth. Not coincidentally, the recent financial crisis proved that countries with more dynamic and inclusive labour markets – as well as a better skilled labour force and interventionist social systems – are more resilient: they better withstand shocks and recover more quickly.  
Upward convergence must be seen as the unifying common goal and leitmotif of Economic and Monetary Union.

Investment in skills and a revamped flexicurity are key to resilience and productivity growth. Squeezing the tax wedge, enhancing labour mobility and retargeting the European Semester priorities offer potential gains (often without cost to the public purse), according to the inspirational strategy note, which concluded:

In modern, advanced economies, social and economic goals are two sides of the same coin. It is time for Economic and Monetary Union to embrace this logic and put human capital investment, social benchmarks, well-functioning labour markets and mobility at the heart of its focus. This is the only way to rekindle the upward convergence which inspired European integration in the past, and must now guide its future.   

Recommendation and proclamation

On 26 April 2017, together with the communication (see page 8), the Commission published a Reflection paper on the social dimension of Europe COM(2017) 206  (as part of the Future of Europe discussion), the Pillar as a temporary Commission recommendation (EU) 2017/761 while waiting for the Proposal for a Interinstitutional Proclamation on the European Pillar of Social Rights COM(2017) 251 to become a solemn proclamation by the European Parliament, the Council and the Commission (at the upcoming Social Summit for Fair Jobs and Growth in Gothenburg 17 November 2017, at the latest - #SocialSummit17 on Twitter).    

Social Scoreboard

Even if EU powers are limited in the social area, the communication presents the role of the union and how it coordinates and supports actions within the Social Pillar (from page 7). The new scoreboard and its relation to the Joint Employment Report as part of the European Semester are sketched on page 9:

Social considerations have been mainstreamed and reinforced in the European Semester for economic policy coordination since the start of the mandate of this Commision. The analysis and recommendations will reflect and promote the principles enshrined in the Pillar by assessing, monitoring and comparing the progress made towards their implementation. Benchmarking and exchange of best practices will be conducted for a number of areas, such as employment protection legislation, unemployment benefits, minimum wages, minimum income and skills. Monitoring of progress will be supported by the new social scoreboard, which consists of a limited number of existing indicators of importance to assess employment and social trends. The scoreboard will be dicussed with the relevant Council committees, with a view to its incoporation in the annual Joint Employment Report published each autumn in the framework of the European Semester. It could also become a reference point for the efforts made on the social dimension of the euro area and of Europe more generally.  

For more information, you can go to the Social Scoreboard SWD(2017) 200 and its key indicators, while the Commission’s web page The European Semester offers you access to the annual process of economic governance.

Lucid summary
The communication Establishing a European Pillar of Social Rights COM(2017) 250 is a lucid summary, although I wonder why the Commission mentions the treaty aims only in passing and rarely uses them in its argumentation, namely “a highly competitive social market economy, aiming at full employment and social progress” in Article 3(3) TEU and the horizontal social clause (having general application) Article 9 TFEU.  

For detail people with a professional interest can turn to the accompanying staff working document SWD(2017) 201 we are going to look at in a coming blog post.

Ralf Grahn

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