Human Capital

The social protection policies that can give Europe a more secure foothold

17 May May 2016 0903 17 May 2016

Social inclusion, poverty reduction, inequality, CSR, migration, NGOs relations with Eu Commission. The state of the art on social affairs, challenges and proposals addressed by Lieve Fransen, former Director, Europe 2020 Social Policies DG Employment, Social Affairs and Inclusion at the European Commission.

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Lieve Fransen 1
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Social inclusion, poverty reduction, inequality, CSR, migration, NGOs relations with Eu Commission. The state of the art on social affairs, challenges and proposals addressed by Lieve Fransen, former Director, Europe 2020 Social Policies DG Employment, Social Affairs and Inclusion at the European Commission.

The best course of action a country should pursue is investing in its citizens since early childhood and along the life course and not only look at social policies as a cost and expenditure. The countries that did this ,while there was growth (such as the Nordic countries) came much better through the recent financial crisis but regrettably, today the exact opposite is happening in those countries with the highest need.
The quest for potential and, in many cases, harmful benefits of financial integration amongst EU states is focusing on the short time and sidelining the demand for social protection policies.
Why? I was presented with an explanation in a one-to-one conversation with Lieve Fransen, former Director, Europe 2020 Social Policies DG Employment, Social Affairs and Inclusion at the European Commission and current senior policy advisor for Royal Philips Health, Plusvalue, Tiburg University, Bozar and the European Policy Centre among others. Doctor Fransen is a medical doctor and also holds a PhD. Her expertise spans from health and development, pensions, social protection, gender, employment, and social innovation.

What was supposed to be a standard Q&A interview, turned into a comprehensive state of the art on social issues in Europe. Very unconventionally for the caliber and background of the interlocutor, her discourse was not celebrative of the EU’s undertakings with regards to social affairs. In all honesty, her views on current social affairs did not sound out rightly pessimistic, nor catastrophic. However, in the case that the EU does not change its course with regards to the pursuit of updated social inclusion and anti-poverty policies, our best days might be over.

The impression that European citizens had more promising prospects during the worst times the continent experienced just after the Second World War compared to the young generation’s today, was mounting on me. A new course and social deal is needed. And it is needed big time.

As with all engaging conversations, Doctor Fransen’s opening was on a positive note. «First of all in Europe we should be proud to have developed a welfare system and social policies. We often forget these achievements. We are the only area in the world with a functioning social protection system». Yet, she acknowledges that this system needs to undergo a process of innovation.

«It needs to innovate. We need to modernize the mobility scheme and the economic system. When I was working at the European Commission, I tried very hard to push an agenda with arguments and evidence that tasked the evolution of the social welfare state into a social investment state. Social investment state basically means that we have to invest enough resources in people and in human capital, and making sure human capital is protected. We should move from a redistribution of resources model to a pre-redistribution one, making sure we invest as early as possible in people’s lives.»

Translated into practice, this means allocating lots of resources for early childhood education programs and policies. Indeed, we would all benefit from the best outcomes and the best returns on the investment when it is endowed as soon as possible, in the early stage of each individual life span.
This is quite the opposite of the current state of affairs. «Instead» she argues «we keep following the purely economic financial model. With the argument of subsidiarity the EU advises less and less directly on social protections, social investments and social welfare, which in my opinion is a mistake. However indirectly the EU makes strong recommendations and sometimes even binding on budget allocations through the European semester exercise and other new instruments. A large part of the public finances of a country is however allocated to social policies, health and pensions and the EU indeed interferes without necessarily the right advise about those policies.
We also reiterated the mistake of looking at the economic integration of capital markets and trade while neglecting the other kinds of integration, those that affect the well-being of citizens, such as health and education. As a consequence, we are losing talented people, human capital, and also people’s commitments to the future of Europe. The EU should clearly not manage the social protection system of countries and regions but we should share common goals and how things are done should be left to the regional players and local communities. I don’t endorse the idea that investments should always be financed by the public. Governments, from the top level to the local layers, cannot do it alone. I strongly believe in social - private partnerships.»

Back in the 50s, among the EU priorities, we Europeans pledged that we would move towards “upwards social convergence”. Unfortunately it was never agreed on how to carry it out.

Lieve Fransen

One of the leitmotivs dear to Doctor Fransen has to do with the fragmentation of the system. She repeated how the fragmentation of the system and increased divergence plays a big role in the increase of inequality. «Back in the 50s, among the EU priorities, we Europeans pledged that we would move towards “upwards social convergence”. Unfortunately it was never agreed on how to carry it out. The social protection system was taken for granted. The priorities for legislative interventions was given to workers and employment safeguards. There has never been a real momentum in favor of a wider social protection and social welfare investment system. In the last ten years, since the crisis hit, we have been witnessing the defense of the neoliberal economic model that has proved not to work elsewhere. Pushing for economic and financial integration has lead us to solely focus on budgets and their stabilization without putting corrections in place for those populations who suffer the short term negative effects from this integration or even globalization. The truth is that the social protection budgets are shrinking in the countries where social investments are needed the most. If we take a snapshot of the European socio and political dynamics we could not print out a picture with a common interest or a popular movement that unites us towards a common goal, and something we can believe in. Many young people don’t believe in a common future the way it is designed at this stage. I find that very worrying unless we start working on new solutions. The fragmentation and the divergence Europe is undergoing is more worrying then increasing inequality

Inequality-wise, the outlook is not very optimistic. According to Doctor Fransen, wrong policies and a structural set-up are the two main forces that are driving this soar in inequality. «The Euro zone has made it impossible to re-balance from the financial shock waves, and automatically re- stabilize our course. The shocks are being absorbed by the people. Policy wise we have not set up a system that protects the adverse consequences of such a crisis. We refused to examine the possibility to forgive some of the Greek debt till now , we went on to cutting welfare, pensions, job benefits and health care in the only country in Europe without a minimum income scheme and where unemployed have very minimal access to health services . If you can not do exchange rate stabilization, you have no choice but to do social protection stabilization. Today, the EU institutions are doing the opposite. Indeed, there is a choice being made. The common belief relies on the notion that the investments in roads, infrastructure, and privatizations will generate growth. In that potential outcome, we would not need a social protection system. However, investments in infrastructures and in human capital must go hand in hand. It would be more difficult to build roads and infrastructures with a workforce that is not educated or out of a job for ten years. That would be a loss of human capital and therefore competitiveness and growth for Europe while less and less people will see the benefit from working together towards a shared future. So in my opinion we are getting into a very vicious cycle. The only way out is investing in social protection and investing in our citizens as early as possible. All the rest is a consequence of the investments in youth

Intrigued by the notion that governments cannot be effective if overloaded with more responsibilities and obligations, I drove the conversation towards the role and the prospects of social entrepreneurs. Are they really protagonists in our society or is the subject just self - referential, and propaganda literature for the non-profit sector? I asked.

«Social entrepreneurs are very important for different reasons. They look for solutions instead of just acknowledging the problems. They see the problem and they seek potential solutions. The apply an entrepreneurial approach and mind-set. Then they bring in private financing for social outcomes into the system. Social entrepreneurship is facing a problem now: social entrepreneurs do well in some countries, in some countries they do not exist, and most of the times they get involved with small-scaled projects. The next phase should be moving from a small - scaled project to a system based – approach. Then, we need to go beyond the classic social entrepreneurship model and move into a social and private partnership where there will be a role for big business too. Successful social entrepreneurs can become big businessmen too. To me what is very promising in business is moving beyond the CSR traditional model, which is basically a side event from the core business. If businesses move in the direction of shared values rather than shareholder / stakeholder interests in the community they serve, then you have a win –win situation. For me, everyone has a stake in civil society. An individual is civil society, a business is civil society, the government is civil society. The civil society universe is still very fragmented. The EU commission invites NGOs only to do a bit of cover up and give them some peanuts as money to do some meetings here and there. But it is not enough to come together in a shared- perspectives society. Unfortunately, NGOs are increasingly becoming dependent on the Commission’s financing. This sort of partnership is preventing them from becoming the key and effective players in the community they serve. Then they become lobbyists for one issue.»

Do you regret something you did not foresee coming when you were working at the Commission?
«I was not able to be convincing on the implementation of social investment but I continue to work in this direction with a range of actors such as the EPC and Solidar. In the fall there will also be a very important publication on social investment and I hope this will reanimante the debate and catalyse implementation. Then migration. In 1999-2000 I recommended that the Commission take into greater consideration issues such as migration and refugees. We understood we had an aging problem in Europe, we needed a wider working population and we also needed to stem the overflow of people from North Africa and in the Middle East who were educated but had no jobs. Europe needs young people with energy and interests. The Commission halted it because migration was becoming politically sensitive. Today we can do what we were able to achieve after World War Two. At that time there were millions of refugees moving into Germany and Western countries, and the economies were shattered. If at that stage accepting refugees was possible, why it is so hard to do it today, when we are in much better shape and collectively richer? The EU leadership is not preparing the population to embrace the truth, which is that taking care of one million refugees is feasible with no drama and positive economic consequences. Instead we spin off the migration crisis into a stream of other problems, such as the identity problem, the religious problem, and the language problem. Why we do it? Because we focus on problems rather than solutions.»

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