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Guy Ryder: “The European Social Model is key to overcome the crisis”

Friday 28 March 2014

“The European Social Model has been subjected to stress and unprecedented challenges - and it’s still facing these huge challenges”, ILO Director-General Guy Ryder …

… stated at the opening of the joint ILO-EU conference on ’The European Social Model in times of Economic Crisis and Austerity Policies’.

European Commissioner for Employment, Social Affairs and Inclusion László Andor stressed that "our social model is struggling, and in some parts of the EU often failing to fulfill its mission”.

During the discussion and with reference to an ILO book prepared for the conference, it became clear that all the pillars of the European Social Model have been strongly affected by the crisis:

With regard to workers’ rights and working conditions, a number of initiatives were taken to reduce wage growth, which led to a fall in real and even nominal nominal wages (for example 22 per cent nominal cut in Greece, wages fell below price increases in Portugal, Spain and UK). These measures led already and will undoubtedly continue to lead to a deterioration of many workers’ working conditions. Reforms and changes in labour market policies since the crisis and the implementation of austerity policies have rapidly multiplied and touched all different areas: procedures for dismissals were simplified, for instance in Greece or Estonia, or even suppressed, like in Slovakia. Recently implemented reforms such as changes in employment protection legislation in severely crisis-hit countries will have long lasting effects, with the risk of further undermining the European Social Model over years to come. More fundamentally, while reforms were needed in many cases – and they still are – the unbalanced nature of the measures adopted so far has reduced social support for any future well-intended reforms that would strengthen the social fabric.

These changes described by participants of the conference led to an increase of social conflicts and had direct economic effects such as disruption of production. Labour market reforms and cuts in education will affect skills and employment prospects of future generations. Most alarming, however, is the rapid increase in poverty and exclusion, attaining more and more the middle class. Progress in terms of discrimination has been halted, nationalism and stigmatisation of some groups increased.

All these alarming signals show that the survival of the European Social Model is at stake if its dismantling continues in a number of countries, as it was summed up during the conference.

It was acknowledged during the conference that there are some positive, encouraging signs, and that awareness – at least partly – seems to be rising that Europe needs a shift in course. For example, France, Germany and Ireland increased the funding of active labour market policy, Germany is working on introducing a national statutory minimum wage by 2016.

These measures are going in the right direction – but aren’t enough, as it was underlined in most of the interventions during the conference. A new start for Europe is needed.

Looking at the future of the European Social Model, Guy Ryder pointed out that “the European Social Model is capable to overcome this crisis, fully intact and even strengthened. But therefore, we have to take action, restore confidence and social dialogue.”

László Andor emphasized that “we have to ensure that the European Social Model is strong and sustainable, because it is one of the defining achievements of our integration, which is all about solidarity, fairness and opportunity."

For “building a greater resilience of the European Social Model in the future”, as Guy Ryder put it, reforms should focus on what really matters: investment, technology, social stability, worker mobility and skills. Economic and labour policies have to be aligned. A more coordinated approach to solving competitiveness problems is needed to make the European Monetary Union truly sustainable and secure the European Social Model for the future.

“It is time to improve the policy mix, making it more job-friendly. It would be one of the most damaging consequences of the crisis if Europe were to abandon the basics of the European Social Model”, Guy Ryder concluded.

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