Inequality Lieve Fransen, MD, PHD.

1.Inequality rising at global and European level, a key challenge of our time.

2.The need for an effective mixed policy response

3.The contribution of social policy and welfare reform 4. A social investment approach and can Europe lead? Europe-insights

1.Inequality rising.• Income / wealth inequality part of broader reality,

including inequality of outcomes /opportunity.

• Extends to gender/ race/ ethnicity/ disability/ age.

• Worlds poorest half controls less than 10% of its wealth.

• Rising inequality and divergence within and between countries in EU a threat for growth , social fabric and credibility of European project.

Income inequality

Inequality increased in half of EU countries

Unequal crisis and recovery• Employment rates: divergence between

North and South of EU 15

2. Need policy mix for inclusive growth.

• Recent attention paid to it, but still denial of many, while promising in conclusions from G20.

• Most (EU) strategies focus on macroeconomic policies and structural reform for growth and less attention to inequality.

• Believe in trickle down economics.(cfr structural adjustment).

• Need of political will and integrated agenda, jobs. health, social protection , inclusion, resources.

Outstanding reform agenda • Policies that simultaneously promote growth and

reduce inequality.

• Address also inequality of opportunity and help broaden participation in process of growt.

• such as:• Access to markets, level playing field for firms,

human capabilities, women participation, education, activation, (re)integration, remove barriers for job creation

3. Transformation of welfare to social investment .

• Realizing peoples full potential is precondition for growth and equality in opportunity/ income and wealth.

• Adapt welfare to ageing, potential future labour market

shortage, changing family structures, roles of women, knowledge based and globalised economies.

Ageing requires highest possible participation

Countries that moved timely in this direction have weathered the crisis better.

The right mix of policies

Social investment approach• Investing in human capital from early age and

lifelong.

• Supporting better women’s participation in labour market.

• Working longer and in more flexible careers.

• Integrated social services and benefits.

• Enabling people to better cope with risks (resilience) across life course .

Upward social convergence or divergence and inequality.

• Effective social investment policies crucial for

• - equality of opportunity,• - convergence, • - smart ,sustainable and inclusive

growth

From fighting unemployment to promoting greatest possible participation of people in labour market and society

+ People to work more and longer, and special attention to women, young, older…• (re) integration disabled, long term unemployed,

migrants…• Active/ individualized support services vs passive

cash transfers.

Stronger prevention and capacitation

• Early interventions, invest in very young.

• Competencies and skills of young.

• Prevent early school leaving/provide youth guarantee.

• Effective employment services, preventing unemployment.

• Life long learning opportunities.• Education, care, independent living.• Reduce tax disincentives to work.

Central idea• Social investments that serve to raise participation

and productivity should not be seen as a drain on the public finances but as productive factors that contribute to economic progress .

• Advocate a new system of public finance surveillance to allow identification of real public investments.

• This could allow to exempt social investments from

the constraints of fiscal austerity.

4. At country and EU level• Human capital is the single most important growth

factor.

• Equality of opportunity and the highest level of participation in labour market and society is the only way forward.

• Affordable for our economies in Europe.

At EU level• Inefficient social investment policies

manifest: in lower educational outcomes.less productive workforce, higher costs and social and economic spillover effects in other member states.

(1)

At EU level (2)• EU is a complex world of multi-tier governance with

social policies at MS or regional level.

• Yet The European project is not perceived as delivering a better life and more equality in opportunity and convergence in the way it once did.

• To sustain a vibrant EU in the future that is equal, open and global more fairer Europe is

needed.

EU level (3)• The crisis has bolstered a macro- economic policy

platform focusing on bringing the budget deficits and public debt down.

• Costly bank bail outs, automatic stabilization, rising social protection expenditures and declining public revenues, make it even more challenging for Europe to live to its full economic and social wellbeing potential.

Conclusion • Addressing inequality of opportunity in Europe by

improving social investments….

…… is urgently needed to change the course towards increased divergence and dualization of society.