Next steps towards the social dimension of the EMU/EU:
improving policies, their implementation and monitoring
In the six months that have gone by since we addressed the need to deepen European social cohesion at the Tripartite Social Summit, progress has been achieved. I am referring to the creation of the scoreboard to follow key employment and social developments so as to more swiftly identify major problems before they arise. Also to the E.U.'s new Program for Employment and Social Innovation, the European Globalization Adjustment Fund and the Fund for European Aid to the Most Deprived –all of which are instruments that can help us bolster social cohesion.
In terms of bureaucratic speed this is a significant event. In terms of social necessity and of providing valid long-term answers to the issue of social cohesion, we still have a long way to go. As a Union we continue to place primary emphasis on the design and implementation of regulatory frameworks. I cannot disagree with this. I do not agree, though, with the implicit notion that such frameworks provide both the necessary and the sufficient conditions to deal with most of the critical European issues that we face. As a stand-alone action, such a framework will fail to deepen social cohesion in the E.U.
The problem lies primarily with the economic policies that underpin our efforts. Without any conclusive practical evidence we have accepted as a nearly theological belief the need to maintain inflation at 2% and fiscal deficits at 3% of GDP. In this process we have delegated fiscal policy into an effectively neutral economic policy tool. In addition, we continue to place verbally support the need for companies to grow, create jobs and have profits, thus clearly intimating that jobs alone are enough to safeguard social cohesion. But there is much more to social cohesion than a job. And how can we talk of European growth in the face of divergent risks –as exhibited by the large interest rate differentials across the European economic landscape? And, even more, in the face of the fragmentation of the euro as a truly European currency?
It is time we faced the truth. In the name of economic orthodoxy and international competitiveness we have allowed for the erosion of our production base as well as of social cohesion. Even worse, in our disregard for the social impact of these pernicious austerity policies, we have created the conditions for the rise of extremism –of both the right and the left variety– and we have breathed new life into euroskepticism. Allow me to say that it looks as if we disregard also history’s valuable lessons.
I firmly believe that the regulatory and supervisory steps that we adopt in order to deepen the E.U.’s social cohesion will fail to achieve the desired aim unless they are supplemented by a series of steps to restore European legitimacy to the eyes of its people. In terms of successive timelines, I am referring to the need to upgrade fiscal policy as a tool to get growth going; to implement regionally targeted policies for growth in order to deal with the North-South divide; to modernize rather than to downgrade –as is the current tendency– our social security mechanisms in order to demonstrate our continued commitment to the E.U.’s fundamental promise; and to swiftly complete the banking union as well as reform the remit of the ECB so as to make national debt a European sovereignty issue.
Nothing less will suffice –no matter how many rules and regulations we put in place, no matter how much we remain hostage to defunct economic ideologies.
We live in critical times. Unless we are willing to think outside the box; to demonstrate boldness in action and to show compassion for those who live under poverty and insecurity, the European ideal will lose its legitimacy. World events will bypass Europe. And when this happens, the Union’s economic and political integrity will be in grave danger.
Allow me to conclude with a very brief reference to my own country. Our European partners accuse our political status quo of dragging its feet when it comes to reforms. Perhaps they are right. What I can say, though, is that over the last four years it is the people in my country who have suffered as a result of this failure. By contrast, internal devaluation has led to a dramatic drop in living standards without offering an exit from the crisis. It is clear that Greece needs to embark with determination on a wide spread reform effort. It is equally necessary, however, for Europe to realize that unless it acts to remove the uncertainty over the Greek public debt, capital will not flow into my country, investments will not take place, growth and jobs will not be created and thus social cohesion will be in increased jeopardy. Greece will continue to be a thorn in the side of the Union and a source on which euroskepticism will continue to feed.