25th February 2016
Hotel Silken Berlaymont
Boulevard Charlemagne 11, Brussels
What kind of strategy will guarantee welfare, wealth and work for Europe in the long term?
More than 150 European stakeholders and decision-makers discussed a « New Strategy for Europe» with top scientists in Brussels on 25 February 2016. This conference was concluding the research project performed over four years by the Welfare, Wealth and Work for Europe – WWWforEurope large scientific consortium led by WIFO. The conclusions pave the way to a European socio-ecological transition where the key words are education and innovation, active social policy, efficient use of resources and well-being.
Please find below a summary of the event.
I. The Project
The strategy starts off by renouncing the long-established concept of using GDP growth figures as the benchmark for economic and societal progress. In contrast, it sets “wellbeing in a sustainable environment” as the optimal benchmark of economic performance and social progress.
Wellbeing for European citizens requires the accomplishment of 3 strategic goals:
- Economic dynamics comprises raising income as well as fostering mobility and structural renewal in an open and heterogeneous society.
- Social inclusiveness puts the focus on fighting unemployment, limiting income spreads and establishing more equity in the distribution of life chances, also from a gender perspective.
- Environmental sustainability calls for respecting the planetary boundaries and enabling an absolute decline in emissions and resource use (strong absolute reduction of fossil energy -80%).
Moreover, the success of the strategy only depends on 3 main guiding principles able to assure the achievement of the strategic goals despite the existing of imbalances and challenges in Europe:
- Simultaneity between goals and instruments: it promises the renunciation of silo approach (that address problems in isolation), as too expensive and inefficient.
- High-road strategy: it is based on capabilities and rising wellbeing, but at lower costs.
- Two-stage implementation: In the first stage – Consolidation and Reprogramming – policies will still have to focus on preventing new crises and solving inherited disequilibria (unemployment, debt, inequality), by promoting new investments in change. In the second stage – Socio Ecological Transition – if the preconditions are given, such as a lower public debt, stable financial sector and a reduced gap between high and low incomes, the priority will be the achievement of higher levels of wellbeing based on low growth rates.
To reach these goals, WWWforEurope developed a reform program, focusing on seven policy fields as they are considered essential drivers of change:
Driver 1: INNOVATION -> boosting its power and redirecting its focus
Innovation is a crucial link which consists in making university funding more competitive and in adopting tenure track model. Besides, the young innovative fast-growing firms are to be more and more promoted. In fact, the change focus proposed it to redirect innovations from labour saving to resource saving.
Driver 2: DYNAMICS -> reducing inequality and uncertainty as well as fostering investment
Economic dynamics will increase thanks to a shift from physical to intangible investment and to projects promoting social innovations and enabling decarbonisation. In fact, this will reduce unemployment, poverty and public debt today by enabling absolute reductions in emissions tomorrow.
Driver 3: WELFARE -> from ex post protection to social investment
It is more and more necessary to adapt the Welfare system to new challenges, by fostering education, retraining and employability. Moreover, migrants should be integrated into schools and labour market quickly as this will reduce public spending and mitigate political conflicts.
Driver 4: EMPLOYMENT -> upgrading skills and symmetric flexibility
Being lower unemployment essential to promote social inclusion, it can be reduced by a voluntary reduction of working hours or work-sharing offers. Besides, reducing mismatch and taxes on labour will lower the pressure on firms to increase labour productivity.
Driver 5: ENERGY -> decoupling energy from output
Decarbonisation is a competitive advantage for Europe and it can be reached by rising more and more the prices of fossil energy and CO2 emissions, as well as improving incentives for energy efficiency and ecological innovation.
Driver 6: PUBLIC SECTOR -> an all-important game changer
Changing the tax structure is probably the most effective game changer proposed by WWWforEurope: halving taxes on labour can be compensated by introducing a carbon tax of 100€ per ton of CO2 raising 2%, moderate taxes on property, inheritance, financial transactions of 2.5%. At the same time, subsides for fossil energy has to be eliminated thanks to a new procurement policy.
Driver 7: FINANCE -> re-committing to the real sector and aligning to the needs of society
An essential precondition for the socio-ecological transition of Europe is a healthy and resilient financial sector supporting the real economy. WWWforEurope proposes the Banking Union with a common deposit guarantee scheme as well as venture capital and crowd funding for innovative firms.
II. How should policy look like?
Europe needs to overcome reform resistances winning the support of outsiders: in fact, it cannot be taken for granted that outsiders are pro-reform pressure group. Socio-economic reforms must be linked to political and administrative reforms such as anti-corruption and clientelism ones.
The main goals are to establish:
- A single global carbon price as a policy solution to integrated the market and linked carbon markets: as a matter of fact, a sufficiently high and predictable carbon price is pivotal and it will reduce the amounts needed for public funding of technologies.
- Coordinating public R&D programs and supporting more competition among a larger set of potential technology trajectories.
- Have a global green technology market where private actors have incentive to diffuse green technologies
III. Social investment as guiding principle for Welfare State development
Welfare State is fundamental to assure an ecological transition but it is evident that it is under pressure nowadays. Economic inequalities and new social risks are rising as well as the role of human capital. If we adapt the Social Investment perspective to every Member State, we will have long term outcomes.
Social policy can increase efficiency and competitiveness by focusing on prevention through human capital development and the activation of unemployed people.
Existing a link between social and ecological levels, SI (Social investment) can promise answer to welfare state challenges if it is understood as shift and not a substitution. Moreover, a stronger anchoring at EU level is the necessary to broaden the base of SI. Finally, social policies are inefficient if applied alone that’s why flanking measures are fundamental to achieve SI goals.
A socio-ecological transition has already started in Europe, but it needs political reinforcement.
Europe really needs structural changes as the sustainable triangle applied until now it is evidently a vicious cycle. The main solutions are the decarbonisation in favour of solar energy and biomass and the production towards human resources and capabilities (from labour saving to resource saving).
Technical solutions alone will not be sufficient as behavioural changes are also required thanks to the educational system supporting socio-ecological transition.
History shows that every transition requires new actors that’s why civil society, NGOs and representatives of new firms, youth and alternative organisations are all important to changing behaviour.
Please find below presentation given
EFMC – European Fund Management