Social impact of the crisis: sweeping reforms needed

Setting the scene at the Special Committee's public hearing on Social Impact of the Crisis, Mr Monti sought to put the social dimension of the crisis in the context of market integration in Europe, which should, in his view, continue and be made more compatible with the Lisbon Treaty.

 

"We shouldn't be afraid to open the question of harmonisation of social and taxation policies, because no issue should be taboo", said Mr Monti. "Exit from the crisis requires this fresh look", but not "the abandonment of competition strategies", he added.

 

Special Committee rapporteur Pervenche Berès (S&D, FR), said she had "greater expectations" of  Mr Monti and invited him to go "much further" on the fiscal issue.

 

 

The situation in Europe is "appalling, with unemployment reaching  more than 10% in some countries", said Special Committee Chair Wolf Klinz (ALDE, DE). "Public funds can't really cope with it," he declared. Mr Klinz called for "long-term reforms, which would allow Europe to keep its competitiveness, strengthen the internal market and ensure it realises its full potential."

 

The crisis will have a "persistent impact" on individuals, those entering the labour market and their earning potential, said Sir Tony Atkinson, Professor at the universities of Cambridge and Harvard. The EU should "seriously think" about guaranteeing a "minimal income for children" as an investment for the future. This would be a clear signal the EU wants to develop its social dimension, he said in reply to a question from Kinga Göncz (S&D, HU), about policy proposals to improve the situation.

 

International Labour Organisation estimates suggest there will be 3 million more unemployed people this year and it will be 2013 before the EU reaches the pre-crisis level of employment, said Alice Ouedraogo, Deputy Director Policy Integration Department, ILO. On the other hand, 11 million jobs have been saved "thanks to the social package" implemented by the G20 states, she continued, warning that "we can't afford to drop the social welfare state measures just because we think that we are getting out of the crisis".

 

Replying to Elisa Ferreira (S&D, PT), who asked about social development co-operation among international organisations, Ms Ouedraogo observed that the crisis had brought at least one benefit as it led to more intensive co-operation between ILO, WTO, IMF, World Bank and other institutions.

 

 

The "fiscal costs of population aging are about ten times higher than fiscal costs of the crisis," stressed Edward Whitehouse, Principal Economist at the OECD. "No country and no pension system are immune," he said, warning against the risk that some counties might reverse pension reform. The way forward is to diversify pension systems, he added..

 

To Othmar Karas (EPP, AT), who asked what could be done to make the system comparable across the EU, Mr Whitehouse replied that one "fundamental obstacle" to a pan-European pension scheme model is the fact that pensions are provided differently across the EU. Other obstacles are "taxation, regulation and supervision."

 

Mr Vit Samek, former special advisor to Commissioner Špidla on pension systems and Vice-President of Czech-Moravian Confederation of Trade Unions, pointed to "huge differences" between so-called "old" and "new" EU Member States in sources of pension income, with the new ones relying far more heavily on public transfers. After outlining various strategies to cope with population ageing and risks for pension funds he concluded that "the best solution is to have not only more children, but many more children, in Europe."

 

 

Experts' findings and observations will serve as input for further discussion among MEPs and the final report by Special Committee rapporteur Pervenche Berès. The draft should be unveiled on 29 April, to allow time for amendments before the final report is adopted in Committee on 13 July. The CRIS report than will be put to a vote by Parliament as a whole at the September II Plenary session.

 

In the chair: Mr Wolf Klinz (ALDE, DE)