A social dimension for the Economic and Monetary Union

monetaireOn October 2, the European Commission presented its communication on the social dimension of the Economic and Monetary Union. This much-awaited but ultimately modest text aims to add a social element to economic and monetary governance, in an EU faced with an ever more pronounced social and employment crisis.

 

The communication focuses on three main lines of action to strengthen the social dimension: 1) closer monitoring of unemployment and social problems and greater policy coordination as part of the European Semester; 2) increased solidarity and greater labor mobility; 3) boosting the role of social dialogue.

 

The plan for a European system of unemployment insurance, eagerly awaited prior to the release of this communication, was ultimately omitted; the text mentions the issue only briefly. “Some would say that this is not the Big Bang they expected,” said European Commission President José Manuel Barroso in defense of the text, “but don’t ask us to do the impossible.” He recalled the limited prerogatives laid out in the Treaty of the European Union regarding the labor market and the fight against unemployment.

 

The Commission’s flagship measure is based on creation of a “scoreboard” to monitor a number of social and employment indicators in an effort to better hone in on and anticipate major problems. These indicators include the long-term unemployment ratio, the youth unemployment rate and the proportion of young people who are not in employment, education or training (NEETs), real gross household income, the “at risk of poverty” rate among the working-age population, and finally inequalities (S80/S20 ratio). Additional indicators will be introduced in the alert mechanism used to detect economic imbalances. This scoreboard will be in place for the 2104 European Semester.

 

The second focus, solidarity and labor mobility, includes few new ideas, essentially recalling a number of needs and ongoing initiatives. The Commission particularly advocates better and more socially relevant use of structural funds, advising Member States to devote at least 20% of funds allocated to them through the European Social Fund (ESF) for the period 2014-2020 to initiatives furthering social inclusion and the fight against poverty. It also promotes greater labor mobility, the current rate seen as excessively low at a time when youth unemployment spans a dizzying range from one country to the next (62.9% in Greece; 7.7% in Germany).

 

Finally, the third focus is on social dialogue. The Commission wants to “improve consultations with social partners at key steps of the decision-making procedure during the European semester process.” To strengthen social dialogue, the Commission proposes to meet with EU social partners prior to adopting the Annual Growth Survey every autumn; organize a debate with EU social partners and their national affiliates following the Annual Growth Survey; hold technical preparatory meetings prior to the March Tripartite Social Summit; encourage Member States to work with national social partners to examine reforms inspired by country-specific recommendations.