Speech: Investing in people is the best investment we can make

László ANDOR

European Commissioner responsible for Employment, Social Affairs and Inclusion

Investing in people is the best investment we can make

Irish Presidency Conference on the Social Investment Package

Leuven, 3 May 2013




Distinguished guests,

Ladies and gentlemen,

I want to thank you all for your active participation and constructive suggestions, and your enthusiasm to work together and collectively implement the policy proposals in the Social Investment Package.

This conference has shown that there are some clear ways forward along the lines of investment, innovation and involvement.

I am convinced that social investment is crucial to address the social emergency triggered by the crisis and ensuring Europe's social models are adequate and sustainable in the long-term.

It is encouraging to note that to date the first reactions from the Social Protection Committee, the European Economic and Social Committee, the European Parliament, the Committee of the Regions, the social partners and other stakeholders have been positive.

We are also following the Council’s reactions closely, and are happy to see that the Member States appear to welcome the policy guidance in the Package.

Ladies and gentlemen,

Investing in people is the best investment we can make.

It has been proved that adequate social benefits and services that focus on developing people's capabilities from cradle to grave bring a high social and economic return.

Investing as early as possible to prevent hardship from arising later and 'preparing' people to cope with life's risks rather than simply 'repairing', is the most effective way forward.

For example, accessible quality early childhood education and care services can contribute to increasing female employment (on a full-time and part-time basis) and at the same time tackling childhood disadvantage at an early stage.

Housing-first approaches to homelessness can save people's lives from deteriorating further, and provide the best chances for reintegrating them into society.

And they are more cost-effective.

Well-designed welfare systems can protect people from hardship, safeguard the economy from shocks, develop people's skills and improve their ability to participate in society and the labour market.

This can help the individual, families and society to adapt to such risks as changing career patterns, new working conditions and population ageing, and it can reduce the need for policy to counter those risks.

Conversely, the lack of a coherent social investment strategy may result in significant economic and social damage.

Roma Inclusion

There is perhaps no better example to illustrate the cost of inaction than the situation of Roma people.

The ratio of children attending segregated primary schools or in classes where a majority of their classmates are Roma is prohibitively high.

In Slovakia and Bulgaria it is over 40%.

No wonder only one in three working-age Roma adults are in employment!

Roma inclusion is fundamental to our European values of an inclusive society.

It is also a vital economic opportunity in so far as it puts a stop to the waste of human potential that results from their exclusion.

That is a point we will make when presenting the forthcoming recommendation on Roma inclusion and by formulating country-specific recommendations of relevance to Roma inclusion, and drawing the Member States’ attention to:

- the need to mainstream Roma inclusion goals in public education and employment policy;

- the importance of ensuring that Roma children, like all children in Europe, have effective access to inclusive quality mainstream education as early as possible, and to improve their parents' opportunities and support gender equality too;

The effective implementation of national Roma integration strategies consists of up-scaling or adapting existing good practices. One example is the "Good Start" project implemented by the Roma Education Fund which provides quality early-childhood education activities tailored to Roma children, their parents and pre-schools thanks to well-designed pre-school that is completed by community- and home-based services adapted to the specific needs of each community.

Implementing the Social Investment Package

Ladies and gentlemen,

This is exactly in line with the policy approach proposed by the Social Investment Package.

It contains guidance on how to help the Member States carry out the structural reforms needed to make their social policy more effective and efficient, with a view to guaranteeing a suitable standard of living, improving people's development opportunities, and facilitating their participation in the society and the labour market.

The Social Investment Package will feed into the European Semester framework for steering and monitoring Member States' economic and social reforms.

The Social Open Method of Coordination will also help Member States to share experience and disseminate best practice and will also feed into the European Semester, while the Social Protection Committee will serve as a vehicle for cooperative exchange between Member States and monitoring the performance of social protection systems.

Besides policy guidance, the EU also provides the Member States with financial support to their social investments.

The Commission believes that, if the EU’s efforts to meet its quantified objective for reducing poverty are to be credible, a minimum percentage of Cohesion Policy funding — amounting to at least 25% — must be devoted to investing in people and employment and social reform through the European Social Fund.

This is why the Social Investment Package also offers the Member States guidance on how best to use EU financial support, in particular from the European Social Fund.

It shows how the European Social Fund can be used in different social policy areas to address structural challenges, as identified in the country-specific recommendations, through social investment.

For instance, this may involve improving pathways to work for people with altered working capacities or; combating early school-leaving and ; tackling the educational segregation of children from marginalised backgrounds, including Roma; and by providing access to affordable, quality early-childhood education and care.

The Commission is currently finalising operational guidance on how to use the European Social Fund, to support social investment, in all four of the Fund’s investment priority areas: promoting employment, investing in education, combatting poverty and enhancing institutional capacity.

I urge the Member States to make full use of the opportunities presented by the European Social Fund in all of these areas.

The new European Fund for Aid to the Most Deprived will also be an important resource for those Member States which are feeling the effects of the crisis the most.

It will provide food, clothing and other essential goods in particular in to homeless people and materially deprived children.

In addition to policy guidance and financial support, I would draw your attention to specific follow-up actions the Commission is planning for the upcoming period.

One of them is the Directive on access to basic bank accounts, a proposal the Commission will adopt already next week.

Later on this month, on 29 May, we will be presenting draft country specific recommendations. These should already reflect the social investment approach to a larger extent than last year's exercise. A few days later we will come forward with a recommendation on Roma inclusion.

But we will of course continue on all the strands developed in the package.

For example, to help ensure that minimum income support schemes are adequate, the Commission will develop, with the Member States, a common methodology for the design of reference budgets.

In most Member States, minimum income benefits alone are not enough to lift people out of the risk of poverty.

Reference budgets are a calculation of the cost of a basket of basic goods and services that a family of a specific size and composition needs to be able to live on.

By using reference budgets, policymakers can help ensure that income support reflects the real cost of living, and can help to raise people's standard of living so that they live in dignity.

Commission support will also include awareness-raising, capacity-building and training to help people design and deliver social investments.

Through the Progress programme and the future Programme for Social Change and Innovation, for instance, the Commission will set up tailor-made advisory services for those engaging in social policy experimentation as a tool to test social policy innovations and reforms before they are implemented.

Support for capacity-building will also be offered through the European Social Fund to national and regional authorities to implement effective policy to promote social entrepreneurship.

The Commission is also preparing a policy-makers' manual for designing long-term care strategies, and will be providing support to public authorities for the development of comprehensive active and healthy ageing strategies.

The European Platform on Investing in Children will help to identify and evaluate good practice for investing in children, in particular relating to early-childhood education and care, parenting support, and child participation.

It will help to ensure the Recommendation on Investing in Children is fully implemented.

The Commission will also continue to support Member States in their efforts to confront homelessness, building upon the 6 principles recently agreed at the roundtable on homelessness.

Finally, the Commission is developing a knowledge bank to disseminate examples of social investment.

The objective of all these actions is to provide the Member States with support by pooling and sharing knowledge and expertise in key areas where the Social Investment Package calls for social policy reform and share the lessons learned with a view to evidence-based reform.


Modernising our social policy to meet the current challenges calls for shared ownership and joint responsibility.

Governments have a vital role to play — and great responsibility — in making the social investment necessary and encouraging others to invest too.

The input, resources, experience and insight of the social partners and civil society are also needed.

Exchanging views and sharing best practice through networks among the social partners, NGOs, civil society, academic institutions, think-tanks, and regional and local representatives is important to ensuring that policy reform is grounded on evidence and the experience of the stakeholders.

The Commission has committed itself to strengthening existing partnerships and continuing the dialogue with all stakeholders via collective and coordinated input throughout the European Semester.

The European Platform against Poverty and Social Exclusion, one of the flagship initiatives of the Europe 2020 Strategy, is based on a joint commitment by the Member States, the European institutions and the key stakeholders to fight poverty and social exclusion.

The Platform will be a crucial partner in the implementation of social investment to address poverty and social exclusion.

The Platform’s Annual Convention will provide the venue for bolstering shared ownership and will secure collective commitment.

Regular EU Stakeholder Dialogue meetings should help to ensure collective ownership of the policy initiatives taken to combat poverty and social exclusion.

The partnership principle will also be strengthened in connection with the European Social Fund, bringing together all parties interested in the success of social investment in the preparation, design, implementation and monitoring of the programmes.

I count on the Member States to ensure that this strengthened involvement is reflected at the national, regional and, where relevant, local level too.

Social dimension of EMU

Lastly, I want to point out the relevance of the Social Investment Package to the current debate on stepping up the social dimension of Economic and Monetary Union, in line with the European Council’s mandate.

In this context the key question is what economic, social and political future does it offer to the people of its Member States in the core and on the peripheries?

We need to restore some convergence in terms of the growth potential of the individual countries of the Economic and Monetary Union. But, at the same time, we need to decisively act to reduce unemployment and exclusion in the 'periphery'.

In my view, what the social dimension of genuine Economic and Monetary Union — or EMU for short — means is that its rules, governance mechanisms, fiscal capacity and other policy instruments will work both for economic efficiency and for social fairness.

The June European Council should bring more clarity.

The Spring European Council took stock of work under way, but did not comment on ideas for strengthening the social dimension.

Severe employment and social problems in one Member State of a currency union may have negative economic spill-overs and politically destabilising effects for the whole euro area.

And action or inaction in one Member State can have a major impact at European level.

For instance, low investment in education or training in some Member States has implications in terms of a lower-skilled workforce, which can have a negative impact on overall economic competitiveness.

Conversely, greater participation in employment, better social spending and fairer taxation can help offset inequality and fight against poverty across Europe.

Socio-economic disparities are a bigger problem for the stability of the currency union than of the European Union.

When unilateral currency devaluation is not an option, the individual Member States have fewer economic adjustment tools available.

Social imbalances need to be detected and recognised collectively at an early stage.

This means that macro-economic coordination and surveillance within EMU should include social indicators and targets for assessing progress, and not only economic and financial ones.

In the Commission we have been looking at a social scoreboard of key employment and social indicators for detecting social imbalances and triggering collective preventive action before employment and social problems develop disproportionately.

Such a scoreboard would have two aims:

- it would give the social-policy dimension greater visibility when macro-economic decisions are taken at euro-area and Member State level; and

- it would strengthen monitoring and coordination in the field of employment and social policy with a view to identifying and alleviating major difficulties in good time.

The Commission is currently developing ideas on how to strengthen governance of employment and social policy in connection with EMU.

The reform of EMU needs to go hand in hand with further steps to foster its legitimacy and accountability in the eyes of our fellow Europeans.

The Commission is preparing a position paper on the social dimension of EMU for adoption early June.

Ladies and gentlemen,

We must do our utmost to ensure that employment and social cohesion are given substance in EU policy — on a par with financial consolidation and economic growth.

The Social Investment Package is one such endeavour in our on-going efforts to strengthen the social backbone of our common European project.

Thank you.

04 May 2013

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