by Francesco Corti, Advisor to the Belgian Deputy Prime Minister and Minister of Social Affairs and Public Health
Social Fabric into Europe’s Competitiveness Tapestry
In recent months, the discourse on the future of the European Union has been overwhelmingly centered around one key concept: competitiveness. This focus was prominently highlighted by French President Emmanuel Macron and German Chancellor Olaf Scholz in a recent Financial Times op-ed, where they outlined their vision for enhancing Europe’s competitive edge. The European Council in its Strategic Agenda for the next Commission placed the new Europe Competitiveness Deal at the center of the priorities for the next five years.
However, amidst this competitiveness-driven agenda, the Belgian Presidency of the Council of the European Union has been quietly yet effectively working to ensure that social considerations are not left by the wayside. Belgium has been striving to embed a robust social agenda within the broader framework of European competitiveness, ensuring that the benefits of the single market are shared equitably among all EU citizens. The Political Guidelines issued by the re-elected Commission President Ursula von Der Leyen and the proposal for a new Action Plan for the European Pillar of Social Rights centered on a Quality Jobs Roadmap, a Union of Skills, a EU Anti-poverty strategy and an European Affordable Housing Plan reflects the priorities and the consensus gathered by the Belgian Presidency with the La Hulpe Declaration.
On April 16th, in La Hulpe, Belgium’s Deputy Prime Ministers Frank Vandenbroucke and Pierre-Yves Dermagne successfully tabled a comprehensive social and employment agenda. This initiative culminated in an inter-institutional Declaration, signed by 25 EU member states, the European Commission, and the European Parliament together with the social partners and civil society. The Declaration emphasizes the European Pillar of Social Rights as a guiding compass to navigate contemporary challenges and develop appropriate policy responses. Put it differently: yes to enhance competitiveness but it should be built on quality jobs, fair working conditions and adequate social protection for all.
The Franco-German letter mentioned above set the pillars of the EU competitiveness deal: a deeper Single Market
– More innovation = strengthen EU sovereignty and reduce critical dependencies with and ambitious industrial policy, modernizing public procurement and competition rules
– More single market = allowing businesses to develop innovative products and services, to grow and to compete, while ensuring high standards.
– More investments (public and private) = completing capital market and banking union and creating a EU budget fit for future (including European public goods + new own resources)
– More level playing field = ambitious, robust, open and sustainable European trade policy that allows fair trade agreements and promotes EU interests
– Less bureaucracy
The La Hulpe Declaration sets how this deal should be implemented to benefit all, by listing an ambitious social and employment agenda for 2024–2029 that consists in:
· Enhancing Labour Mobility and Fairness, by promoting improving fraud detection, enhancing cross-border cooperation of national labour inspectorates, and supporting mobile workers through better access to information and counselling.
· Strengthening the European Labour Authority (ELA) by expanding its role and competences, allowing for concerted and joint inspections, acting as an arbitrator in member state disputes, and proactively working to improve information accessibility for individuals, and employers.
· Improving the coordination of Social Security Systems by further implementing the Electronic Exchange of Social Security Information system and developing a digital vision to ensure the portability of social security rights, improving the user-friendliness of social protection systems.
· Addressing Workplace Health and Safety by regulating hazards related to climate change, setting minimum standards for hazardous substances, and assessing psychosocial risks linked to digitalization, including mental health.
· Adapting to Digitalization in labour markets and workplaces by ensuring fair working conditions in areas like telework and the right to disconnect, incorporating the ‘human in control’ principle for AI, and regulating algorithmic management.
Balancing Economic and Social Priorities
Beyond contributing setting the legislative agenda with the La Hulpe Declaration, the Belgian Presidency worked to ensure a strong social dimension in the new EU economic governance framework, agreed upon by the Council and the European Parliament in February 2024. Even though the final deal not fully satisfy the highest ambitions, the Presidency worked diligently to ensure that member states retain the ability to invest in social healthcare and labour market policies despite stringent fiscal constraints.
Belgium has secured several key provisions into the new EU economic governance framework:
· Incorporating Social Priorities: The European Pillar of Social Rights remains one of the EU’s common priorities, allowing reforms and investments to be included in fiscal structural plans.
· Monitoring Social Developments: The multilateral surveillance mechanism now includes employment and social developments, monitored via a new Framework for Social Convergence.
Put it differently, thanks to these two provisions Member States have a legal basis to include social and health investments in its national medium-term fiscal structural plans, ensuring flexibility in budget adjustments.
The narrative of the Belgian Presidency has reversed the traditional approach to social and health policies as a mere cost for public budget. In March 2024 the Presidency organized the first ever joint meeting of the EU Ministers of Economic and Financial Affairs and Ministers of Employment and Social Affairs to present the results of one year work conducted together with the Spanish Presidency of the Council of the EU on the economic returns of investing and reforming labour market social and healthcare policies.
The results presented by the researchers from the European University Institute and from Brussels based economic think tank Bruegel are clear: well-designed social investments and reforms produce key returns in terms of economic growth through their impact on productivity and increases in human capital, including via stronger innovative capacity and absorption of new technologies, and/or employment opportunities that ultimately improve countries debt sustainability.
On 20th June meeting of the ministers of employment and social affairs, the Belgian Presidency succeeded in approving key Council Conclusions on the role of social investments and reforms for resilient economies and endorsed guidelines for EU member states for the evaluation of the economic returns of employment and social policies. With the Conclusions the Council set a clear agenda the next EU legislation, in particular by calling on the Commission to:
· Establish a Knowledge Hub on social investment, with the aim to enhance mutual learning and technical assistance on the methods and techniques to measure the economic effects of social reforms and investments
· Continue the work to improve timeliness and availability of social indicators at Union level, including with Flesh Estimates, with the aim to reduce the time lag in assessing poverty and inequality trends
· Supporting Member States enhancing access to administrative data for policy evaluation and impact assessment purposes while ensuring the protection of personal data.
The next steps
The first results of the engagement of the Belgian Presidency are visible in the new Commission political guidelines. Yet, for these Political Guidelines to translate into concrete policy actions as envisaged in La Hulpe, the proposed Action Plan should be put in place and concrete proposals for directives and regulations should be spelled out. A key role will be played by the next Commissioner who will be in charge of Jobs and Social Affairs. The extraordinary work done in the social and employment domain over the past five years has been primarily thanks to the key entrepreneurship of Nicolas Schmit. Second, the European Parliament will have a key role and in particular so the EMPL Committee. Dragos Pislaru, Agnes Jongerius, Gabi Bischoff and Dennis Radke — to name few — played a key role during the past legislation including in teaming up with the Belgian Presidency to strive for an ambitious social agenda. It is vital that the same ambitious and pressure is maintained in the new mandate.
Finally, by the 20th September 2024, Member States will be called to present their Medium Term Fiscal Structural Plans. The fiscal trajectory and so the margins are known for each member state. Now it is up to each country to present the plan and choose the right balance of reforms and investments including in the social domain. For many countries the margins are limited and so the trade off will soon emerge on which policies to place as priority. In such a context the possibility to include social investments and reforms become even more important and hence the incentive to use the adopted guidelines for measuring social investments’ returns.