Risks of keeping the European Pillar of Social Rights to the Eurozone

09/01/2017

In March 2016, the European Commission launched a public debate on formulating an agreement on establishing common standards for social rights across the EU. In their comments on the first draft for the European Pillar of Social Rights, BI experts called attention to two main issues: first, that the initiative will succeed only if the agreement estabishes sufficiently concrete expectations towards Member States, and second, if it applies to all Member States.

To briefly sum up our view on the initiative, we found the overall approach and the main policy goals to be appropriate and well balanced.

However, we believe the final document will need to be more concrete and will need to establish clearer expectations of Member States in order to have any effect. The recommendation of linking the pensionable age to life expectancy indicators is one example for such a concrete expectation.

Furthermore, we strongly doubt that focusing on the Eurozone may promote the welfare of the EU. Such an approach may speed up the negotiation process among the participating Member States, but may backfire once the agreement is in place. First, if the Social Pillar for the Eurozone is combined with the Single Market, it may strengthen incentives for "race to the bottom” social/employment policy reforms in Eastern Europe, and that in turn will divert investments away from the Eurozone and add further impetus to social dumping. Second, most Eurozone countries already have strong welfare systems and civil societies that can hold their governments accountable and achieve improvements in social rights. They need the pressure of a European Social Pillar much less than many of the other Member States, where welfare states and civil societies are weaker.