By Allan Larsson, Special Advisor for the European Pillar of Social Rights
When President Juncker asked me to serve as his advisor, I felt I had to begin by better understanding the roots of the discontent in the west. I came to a simple conclusion, that we are witnessing the end of a long political wave, stretching from the 1980s to the financial crises in 2008. Some of the basic economic theories behind this long wave of globalisation imploded in the financial crises:
- The deregulated financial markets did not bring stability, but volatility;
- The trickle down concept did not lift all the boats, instead people were left behind.
Thus, the discontent.
The end of the long wave has left us in an empty room - there are no grand theories, no direction, no broad consensus on where to go. This empty room has become an explosive room - as we have seen in several elections over the last year.
Is this the end of the long wave of globalisation? Or is it the beginning of a new long wave of nationalism?
We do not know. It depends to a large degree on heads of state and government and social partners, on their ability to shape new policies to reconcile open borders, trade, free movement with widely shared prosperity and social justice.
I would like to make three recommendations.
My first recommendation is to upgrade the role of social policy to make it a productive factor. When we started preparations of the European Pillar of Social Rights, I was asked what I meant by that. Here is my answer:
“Look around Europe. Look at the Member States with the best economic performance. Germany, Austria, the Netherlands, the Scandinavian countries, to name some of them. These countries both have strong economies and strong social safety nets. They did not start by becoming rich - and then introduced social policies. On the contrary, they made economic and social policies two sides of the same coin. They made them mutually supportive”. This is now the common wisdom of all leading international organisations: The IMF, the World Bank, the OECD.
The point is that growing inequality is not only a social problem - it is also an economic problem. It is an obstacle to economic growth.
When we look ahead, we see that Europe's workforce is ageing and soon shrinking, and we see a pattern of sluggish productivity growth continuing. To maintain and improve our living standards, we need more people in work, working more productively. Access to jobs matters a lot, so does the capacity of each and every one to perform and add value in these jobs.
To succeed, we need to engage in a new way with business and trade unions - two sides with different interests - with productivity and social progress as a common ground.
My second recommendation is to make the black hole in the social fabric the top of our priorities. I am talking about the lack of bridges into work and back to work. We have a two speed labour market in Europe. There is a high pace of transformation of businesses and workplaces into a new digital world of work. And there is a slow pace in the upgrading of the skills of the existing work force.
On average, only ten per cent of all unemployed in the EU are given a new start through training and other active measures. Some of the other 90 per cent will find a job without a long delay, however, most of the 90 per cent are expected to find a new job in the emerging digital economy - with old skills or no skills at all. This is a vicious circle. At the same time, 40 per cent of employers say they have difficulties in finding workers with digital skills.
It is time to start a social recovery, with investment in skills as the overarching priority.
My third recommendation is to present the Pillar as a “citizen-first” initiative.
My suggestion is to change focus from a top down approach - EU versus Member States - to a bottom up approach, focusing on citizens and their rights - “these are your rights and these are the principles for a decent society, wherever you live”. That is what the Pillar is about.
Thus, my recommendation is to take a bottom up-approach with citizens first.
The Social Summit of November and the European Council of December 2017 were unique opportunities to pave the way for a new, more inclusive Europe. It is now time to use the winds in the European sails for a social recovery.
About the author
Allan Larsson has made a career as a journalist, Undersecretary of Labour, Director General of the Swedish Labour Market Board, Finance Minister, Member of Parliament, Director General of the EU Commission, chairman of Swedish Television and Lund University and a member of international commissions and advisory boards. He is currently involved in local development projects in Stockholm, Gotland and Småland and in a think-tank, Global Utmaning, in Stockholm.