1. Social Inclusion and Social Cohesion in the EU 2020 Strategy by Fabrizio Barca* EPP Haring EU 2020 Strategy Brussels, May 12, 2010 * General Director, Ministry of Economy and Finance, Italy. Special Adviser at the EU Commission

2. 2 A MORE PROMINENT SOCIAL AGENDA (I) 1. National welfare systems are increasingly constrained by EU budgetary rules (even before the current crisis). 2.The citizens of every Member States (especially of less developed ones) increasingly look at the EU as a whole, not only at their own country, in forming their expectations on the acceptable standard of their public services. The Treaty concept of “European citizenship” takes relevance. Three factors have recently called for a greater attention to the social agenda at EU level:

3. 3 A MORE PROMINENT SOCIAL AGENDA (II) 3. The single market and EU wide regulation cannot by themselves deliver results. They put people’s well-being under pressure and call for an EU policy for development to complement them. For example:  when the EU (rightly) prevents less developed Regions from tackling their troubles by means of State-aids or by a regional differentiation of tax rates (which would unleash beggar-thy-neighbor conflicts)  the EU is then asked to provide the tools for these Regions to innovative and not to fall backwards;  when the EU opens the internal borders and lets its citizens to move freely and de facto promote inflows of migrants from outside  the EU is then asked by the citizens of the places where migration takes place not to see a worsening of their public services, and by those migrating to enjoy the same rights as those citizens;  when the EU adopts a strategy for mitigating climate change  The EU is then asked to provide the means to innovate the industry of the regions hit by the adjustment. Notice that the great cultural and linguistic diversity of EU Member States and even Regions prevents these social problems to be addressed by labour mobility, as it is the case in the US.

4. 4 The rising of the social agenda puts under strain the traditional division of labour between the EU taking care of markets and MS taking care of welfare:  on the one hand, the demand for the EU to act is stronger, since the EU takes an increasing part of the blame when social tension arise;  on the other hand, “Europeanizing social policies…[is] politically constrained by the diversity of national welfare states, differing… in their ability to pay, [and]… in their normative aspirations and institutional structures” ( Sharpf, 2002 ) THE EUROPEAN UNION UNDER STRAIN This strain reduces the credibility of the recurring promise to bring the Union closer to its people and represent an obstacle to the re-launching of the single market. As the Monti Report has put it: “the EU system has accumulated internal asymmetries between market integration at supranational level and social protection at national level that … are a source of disenchantment and hostility towards market opening”

5. 5 In the March 2020 European Council conclusion, “social inclusion” is one of the missions of the EU 2020 strategy (an improvement compared to the fuzzy mission of “inclusive growth” in the Commission paper), but:  the failure to provide a frank assessment of what went wrong with the Lisbon Strategy makes it far from clear how this mission will be pursued;  no substantial changes in the Open Method of coordinating system are envisaged, the generic reference being to “efficient monitoring”, “holding debates” in the Council, “policy coordination ”. THE STRAIN EXTENDS TO THE EU 2020 STRATEGY This indeterminacy is at serious odds with the EU 2020 ambition to set one, unique social inclusion target for the whole of Europe. It is then no surprise that:  the Commission proposal – a unique target in terms of the “at–risk–of–poverty-rate”- was rejected, since it did not correspond to MSs’ social agendas and it captured only one dimension of social inclusion;  the March Council’s mandate to do “further work” on this issue for the June 2010 meeting is showing no signs of convergence.

6. 6  The EU has at its disposal the means to come out of the corner and to directly promote Social inclusion  truly anchoring cohesion policy into the goals of the EU 2020 strategy. A WAY FORWORD  The architecture of cohesion policy has the potential to reconcile the supranational and national levels by combining subsidiarity and conditionality:  MS and Regions can tailor social interventions to their “social contracts” and to their own specific needs and can establish their own targets;  the EU is given the leverage to set common guidelines, to promote via conditionalities the necessary institutional changes, and to assess results.  But today the EU leverage is weak and cohesion policy results are unsatisfactory. In order to help delivering the EU 2020 goals, cohesion policy must undergo a thorough reform.

7. 7 ABOUT THE EU 2020 GENERAL FRAMEWORK The EU 2020 framework should set the basis for this solution by:  Recognizing that “social inclusion” is a multi-dimensional concept, which includes all the opportunities that make a life worth living. An international consensus (see: OECD global Project and “ Stiglitz Report ”) has singled out the following main dimensions of well-being witch are “responsive to policy interventions”: material deprivation, work and leisure, education, health.  Focusing, for each dimension, on the indicators already selected and endorsed by MS through the Social Protection Committee and surveyed by EU-SILC.  Within this menu of indicators, letting MS to focus on different targets, while monitoring and debating the whole set.  Advocating a “reformed cohesion policy based on strong conditionality “ as one of the requisites for implementing the EU 2020 strategy.

8. 8 ABOUT CHOESION POLICY (I) 1. A definition of “social inclusion” must be adopted. The following one is coherent with both the EU Social Inclusion Process and with the international debate: “social inclusion is the share of people enjoying socially acceptable standards in some essential dimensions of their life (health, education, work, housing, income, etc.).” For cohesion policy to truly be “one of he main delivery channels” ( Monti Report ) for the EU 2020 strategy, a “sharp change of direction” ( Report “An Agenda for a Reformed cohesion Policy ”) must take place concerning:  the conditionality on institutional innovation,  the metric and evaluation of results,  the competence of the Commission,  public scrutiny at ground level,  public scrutiny by the Council and the European Parliament. In this reformed context the goal of “social inclusion” can then be effectively addressed by cohesion policy. Five requisites must be satisfied:

9. 9 ABOUT CHOESION POLICY (II) 4.Interventions aimed at social inclusion should be mostly aimed at improving the quality of public services and the opportunity of people to make use of them. 5. The Social and Regional Funds should be both asked to contribute to social inclusion targets, since:  both material and immaterial “infrastructures” are needed,  the different cultural assets of the two Funds – ESF concern for “people” and ERDF concern for “places” – are both needed in order to develop a “personalized territorial strategy”. 2. The social inclusion objective must be distinguished from the efficiency objective of “making Regions more competitive. Why? For at least two reasons:  because in the short–medium term these different objectives require different interventions (and sometimes a trade–off exist between them);  because the fuzziness between the two objectives has often given public administrators the opportunity to justify the failure to achieve one with the need to take into account the other. 3.Any MS and Region should be asked to concentrate 2/3 of it social inclusion interventions on 1-2 issues which are most pressing and to chose indicators and targets correspondingly.