Recent news about the Eurozone has been dominated by pictures of protesters in the streets of Athens. Europe has become synonymous with austerity and cuts. The message from Brussels, Berlin and Paris is that fiscal rectitude is the only way out of the crisis.
Some within the tradition of European social democracy are arguing against this current. They claim that more competitiveness needs to be complemented by what they call ‘social investment’. The call for a social investment pact has been made by a number of prominent figures within European politics and within the academy. A recent article by Frank Vandenbroucke, Anton Hemerijck and Bruno Palier was entitled ‘It’s a social investment pact that Europe needs!’ Vandenbroucke is a member of the Belgian senate, former social affairs minister and a prominent figure within the Belgian socialist party. Hemerijck is dean of the social sciences faculty at the Free University of Amsterdam and Palier is a researcher at SciencesPo, Paris.
The term social investment itself dates from the end of the 1990s and refers to attempts at mitigating the social costs of labour market reform. It is the missing ‘social’ component to what many on the left consider heartless supply-side policies. Vandenbroucke and his colleagues claim that before the current crisis, European governments were reasonably successful at raising labour market participation rates through welfare reform whilst also protecting social provision. This is what they call “flexi-security”. The idea of social investment is included in the European Union’s long-term economic plan, Europe 2020, a set of employment, growth and social policy objectives that follow on from earlier plans, such as the Lisbon Strategy of 2000.
The impact of social investment on inequality across Europe is difficult to determine. Central is the idea of an equitable reform of public services but whether this has been achieved anywhere in Europe is much contested. It is certainly true that over the last decade welfare state reform has not followed a rigidly neoliberal line, ruthlessly forcing people off welfare and into precarious and poorly-paid work. The term social investment captures a distinctive feature of contemporary welfare state reform in Europe that points to something ideologically more complex than what the term ‘neoliberal’ would allow.
But there are reasons to be wary of a call for a social pact for Europe. For a start, there is a major gap between those calling for this social pact and those for whom it is intended. As argued elsewhere on this blog, the specific content of reforms, whether it be financial or social, will reflect those involved in conceiving and implementing them. There is something paternalistic about a set of ideas and policies that rest on such a gap between proponents and recipients. It is also odd to push the idea of social investment at a time when mainstream politics seems so anti-labour. In a recent wave of public sector strikes in the UK, British Labour Party leader Ed Milliband declared the strikes “wrong” because they were an inconvenience for working parents. Milliband, no doubt, is a firm supporter of the idea of social investment.
It is also unclear whether the social investment idea is anything more than an attempt to soften the bumpy journey towards a more unequal society. The focus is on helping individuals “adapt”, re-skill and manage their transition towards a more flexible labour market. That leaves the biggest question relevant for social equality – wages and the distribution of the social product across society as a whole – untouched. With a Eurozone growth model based on wage restraint and recycled export revenues, what contribution can social investment make? The idea of a social investment pact appears more as a complement to an anti-social Europe than a real challenge to it.