Social protection and the EU Social Market Economy Model

Identifying current and future challenges

A3
High-level panel - Auditorium
Wednesday, June 19, 2019
14:30 to 16:00

This session will seek to present the European Social Model as it has developed and currently functions, exploring how it can be used to promote higher standards globally, in the context of the Universal Social Protection Initiative, decent work and the Sustainable Development Goals (SDGs). The session will also consider current and future challenges to the European Model, and their relevance for the global dimension.

Key points

  • The European model of combining social protection with a market economy is a success story that has led to unprecedented wealth and social security, but it has been under pressure, most recently because of the financial crisis.
  • The recovery from the crisis is under way but inequality is rising, and the demographic trend is not on the side of social protection models based on solidarity, reciprocity and universalism.
  • The model needs to be improved and adapted, and while it will remain a prerogative of Member States, the EU must play a bigger role than before; the creation of the European Pillar of Social Rights is a step in that direction
  • The EU model remains an inspiration for countries outside Europe and in particular for the developing world. However, Europe also has to lead by example when it comes to fixing the priorities for the most marginalised in society

Synopsis

This session on the history, present state und future of the EU’s social protection model was organised by the European Commission. The Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, opened the session by reminding participants that social security was invented in Europe more than 100 years ago by the German Chancellor Otto von Bismarck, who introduced first a universal health insurance, followed by provisions for a fully-fledged welfare state in the 1880s. The modern welfare state remains very popular in Europe today, with eight out of 10 Europeans supporting it in combination with a market economy. While the model has withstood, and to an important extent absorbed, the shock of the recent financial and economic crisis, it remains under pressure on other fronts. Inequality is rising and the demography of an ageing population raises the spectre of unsustainability. To safeguard it, the EU has created the European Pillar of Social Rights with its 20 principles. Thyssen’s predecessor, László Andor, the EU Commissioner for Employment, Social Affairs and Inclusion 2010 to 2014, and once again working as an economist in an academic and think-tank environment, offered an overview of social policymaking in Europe. It cannot and should never reach a conclusion, being formed in constant dialogue among government, labour, industry, civil society and special interest groups such as minorities, which has to constantly be adapted to a changing environment. This model is now also catching on globally with the G20 process, which has seen the subsequent creation of a L20 for the labour side and a B20 for the business side. In the EU, this process is and will remain the business of Member States, but the Union has important roles to play, not least by striving for cohesion and convergence between Member States. A Europe that drifts further apart in terms of wealth and social security rather than becoming more equal will not be able to remain united. Bea Cantillon, a professor at the Centre for Social Policy Herman Deleeck of the University of Antwerp, presented participants with what she called the lessons of history for use in the future. By means of labour-market regulation, protecting workers’ rights, a social protection which is universal and based on solidarity and reciprocity, and by organising welfare not solely by the state but with strong involvement of civil society, European nations successfully created welfare for the many, if not for all. Looking to the future and to meet the challenges – increasing child poverty and rising precarity among others – Cantillon suggested not to reinvent the wheel but to strengthen social protection by providing a “social floor”, including an adequate minimum wage and unemployment benefits. Kailash Satyarthi, Nobel Peace Laureate and director of the Kailash Satyarthi Children's Foundation, took the audience outside Europe but he stayed with the principal topic of this session: growing inequality. While progress has been achieved in reducing child labour globally from 260 million children to just over 150 million, notably through some effective policies by governments in his home region of the Indian subcontinent, it remains true that the most marginalised person in the world is a child, particularly a girl child. Europe should lead the way in addressing child poverty and slavery as one of the root causes of rising inequality. Speaking for young people, EED19 Young Leader Lourence Balatbat from the Philippines felt obliged to be blunt. The Global South, he claimed, has seen a dramatic and worrying reversal of investments in social security which had reached a welcome peak during the crisis. Now, with the crisis over but its consequences hardly addressed, an obsession with rapid growth and industrialisation is creating the risk that the fragmentation of healthcare systems will become entrenched.

Insight

The EU model remains attractive inside and outside Europe even under continued pressure from a changing environment. It would be foolish to trust this to continue without addressing the challenges. In many ways, because the changes are now predominantly transnational in nature, the EU has to play a bigger part than before, and the Pillar of Social Rights points in the right direction.

Organised by

Speakers

Moderator
Patrick Develtere
Principal Advisor
European Commission
Kailash Satyarthi
Nobel Peace Laureate
Kailash Satyarthi Children's Foundation
Lourence Balatbat
Young Leader - Philippines
Marianne Thyssen
EU Commissioner, Employment, Social Affairs, Skills and Labour Mobility
European Comission
Bea Cantillon
Professor
University of Antwerp - Centre for Social Policy Herman Decleeck