Solidarity in the European Union

Thank you for the kind invitation and the very generous introduction. I hope you don’t expect too much by now.

I was asked to talk about solidarity in the European Union, lessons learned from the pandemic, and the road towards a true social union.

In the first part of my lecture, I will simply make a few claims. This will be a kind of axiomatic way of claiming a number of principles.

Then I will say something about the pandemic and the lessons learned from COVID.

Then, I will turn to what we have in mind regarding the presidency of the European Union. We have the privilege of having the presidency in the first half of 2024.

So, what are the buzzwords in my first part?

I will obviously talk about solidarity. I will briefly say something about redistribution. And I’ll say something about insurance. And then I will say: This leads to stability.

And then, in a very axiomatic way, I will explain my argument about solidarity in the European Union is that solidarity would be the moral or ethical underpinning but also an instrumental underpinning of something which I’ve coined already 10 years ago, a European Social Union (E.S.U.).

I will simply explain in a few words what I mean by E.S.U. And then I’ll say: We’ve made some progress in that direction already in the Juncker Commission. And I’ll highlight the initiative taken by the Juncker Commission which was the European Pillar of Social Rights.

And then I will say something about the pandemic. Then I will return on our agenda.

But first about Solidarity

When we think about welfare states, we think obviously about nations states and they are indeed built on very important mechanism of solidarity.

We redistribute income from rich people to poor people. I am not saying that we do this sufficiently, but in general, a fully-fledged welfare state is a nation-state where you have redistribution from rich people to poor people and in that way, you fight poverty. You redistribute income.

But you also have insurance. Insurance means compensation for bad luck, but bad luck in terms of typically socially constructed risks such as becoming unemployed, you lose your job, or you becoming ill and you losing your capacity to earn an income in the market. You have to go to a doctor; you become ill and you need a treatment; you need healthcare.

We organize insurance mechanisms. You might say: but that is a bit of a complicated argument, that a pension system is also a kind of an overall insurance with a contract between generations to see to it. That people when they become older, they have a decent income. But typically, solidarity in welfare states is about redistribution from rich to poor people in order to fight poverty and to guarantee a decent minimum income and minimum resources. It’s about compensation for bad luck in the form of unemployment, illness, and other socially constructed risks.

The point I want to make is that the upshot of insuring people against bad luck and redistributing income from rich to poor people, is economic and social stability. I want to stress that point because, as you might say, redistribution is a moral value; we don’t want people to be poor. Compensating people for bad luck is also a matter of justice; we don’t want people to be in trouble for reasons they cannot control. So these (redistribution, insurance) are, in a sense, moral issues. You might see them as moral issues or issues of justice. But the upshot is a kind of general benefit for society as whole, which is stability.

Why is there stability? I know many people know that argument. If you have insurance against unemployment, people who lose their job retain a certain level of budget empower. And as consumers, they can remain active in society, at least to a certain extent. That stabilizes an economy when it is hit by a shock. This is very well known; it refers to a basic insight that was nearly a hundred years ago developed by people like John Maynard Keynes, who said: ‘In a capitalized market economy, if you want to stabilize it, you must stabilize effective demand. Which implies that you must stabilize the budget empower. And if you have an unemployment insurance system and the economy is hit by a shock, just because you stabilize to a certain budget empower you stabilize an economy. Which in a sense means that by compensating people who lose their jobs through the income you grant them, in a sense you secure other people’s employment. Other people remain in employment because your economy is stabilized. And so an unemployment insurance system is also indirectly an employment insurance system because of that mechanism of stabilization.

Why do I make that argument? I make that argument because maybe over the last thirty years or so, this kind of general advantage of social insurance has been a bit lost in sight. Maybe because between, say, the end of the 1980s and 2008, for nearly thirty years, we did not have mayor economic shocks in Western Europe. We had structural problems; we had a recession at the beginning of the 1990s, but not something like a major shock in which you need large-scale insurance to stabilize your economy. And so, we lost that memory in a sense. And so the idea of solidarity is also a stabilizer to the benefit of everybody: the guy who is an employed, his job is also protected by the fact that the other guy who loses his job has an unemployment benefit and keeps some budget empower. That insight, in a sense, was a little bit lost over the years.

And we became increasingly concerned over those thirty years. Say between the end of the 1980’s and the 1999, beginning of the 2000s. We, and literally we, me included, became increasingly preoccupied by some of the drawbacks or disadvantages of problems of solidarity. Which is: maybe people try to take undue profit from the insurance mechanism; maybe there is moral hazard or bad use or maybe people become a little bit lazy, or they don’t surge sufficiently actively into a job; or maybe when they are ill they remain at home a little bit too long because you have this insurance sickness benefit. So, we became increasingly preoccupied with issues of behaviour at the individual level, moral hazard and bad use. And we became increasingly critical of some aspects of the welfare states. Partly, I think it's justified, but partly we lost of sight the overall benefit of having solidarity and an insurance system. But you need a very big shock to be reminded of that.

This is what happened basically in 2008 for the first time in thirty years in Western Europe with the banking crisis, a very big shock on a large scale.

In a sense, this is a well-known story of national welfare states. And social security, historically, has been very much parallel to nation-state building. Bismarck was about nation-state building. Social Security was about nation-state building. It was solidarity, also underpinning or at least very strongly linked with nation-state building. And so, then the question is for the European Union as a political entity, would we need to introduce elements of solidarity as understood at the level of the European Union? Would that be necessary?

That was a very long and interesting debate, and when I see the audience here, I should repeat that debate here. I will not do that, and I will simply jump over it and come to some rapid conclusions.

Typically, in that discussion, the European Union is seen as basically a project of market integration. Which it was. The European Common Market was a common market. So what started at the end of the 1950s was market integration. And some people have seen this as a kind of antithesis of solidarity and a bit contradictory to nation-state solidarity, the fact that we ventured into large-scale integration of markets set in EU-level without having an EU welfare state, whilst other people did have a kind of more optimistic view on this. Saying, ‘We can have market integration. That is not a problem for these national welfare states. They can continue to prosper’. I will skip the long discussion on that.

And then we came to a point where I think there was a game-changer in that debate. And the game-changer was the creation of the European Monetary Union. They started on the Monetary Union in the 1990s and the creation of the Monetary Union in the 2000s.

My argument, which I will not develop here, is that with the creation of the Monetary Union, we were, you might say, doomed or forced, or luckily it became necessary – you might choose the words – to also organize solidarity, not only in the form of insurance at the level of the European Monetary Union.

But that is what made me say, along with other people, that we should really think through this necessity of organizing solidarity, and not only in the form of insurance at the level of the Monetary Union, and what that means. You cannot have a Monetary Union without mechanisms of insurance and solidarity.

I won’t develop that argument for the sake of time. But let me simply say that this made me coin an expression, which was this expression that exactly 10 years ago I started to talk about: our objective should be a European Social Union.

Why did I use that terminology?

First of all, for a negative reason. Not to say we need a European social welfare state.

I don’t think that that is a good idea. A European welfare state with a healthcare system, a European pension system, and a completely European unemployment scheme. I don’t believe that this is either feasible or desirable. The reason why I don’t believe in that is partly that, and certainly when you think about healthcare and pension systems, they are deeply embedded in national history and in national tradition. And also, you can decently rely on healthcare systems and still organize solidarity. So, the idea of a European welfare state is not exactly what I think we should aim for.

However, and that is the positive argument, the EU as an institution should and must support national welfare states. It must create an environment that is supportive of national welfare states.

A friend of mine, Anton Hemerijck, and I, used another expression, which is a bit bizarre, but I will use it here: we said the EU should be a holding environment for national welfare states. For them to prosper. Now I sensitize a little bit with that expression ‘a holding environment’, because it comes out of child development literature and child psychiatry. And the feminists here might object. Because the holding environment, especially in the 1950s, is about the relationship between mother and child. It is not only protecting but also raising aspirations. It’s that. And so the idea was that the EU should be a holding environment for the national welfare states. Protect them, but also to raise aspiration. Keep them safe.

What does that mean a bit more practically?

It means that some of those functions of national welfare states, as well as some of the insurance and stabilization devices, might need support at the European level, not only in the Monetary Union. Not necessarily support in the sense of giving money – that can be part of the story. But support in a more systemic sense. So, in order for some of those functions to function well at the national level, if you have deep integration, like in a Monetary Union, you might need to start supporting them at EU level.

Now, if you say support, obviously, you cannot say we’ll support something without agreeing at least on a minimum level on what your common objective is. What is your common aspiration when you say we support something?

And so my argument about the European Social Union was that the EU should be a true union of welfare states. Not a welfare state but a union of welfare states. That is supportive of these national solidarity schemes that create a holding environment for them. That is what the EU should do. But in order to do that, the Member States of the club obviously should convene to determine of what the objectives are and what the standards are. And so the EU is a supporter but inevitable also a kind of norm-setter. So you should support it but intrinsically, it is also a norm-setter.

And a lot of what I will come to touches upon this.

How can you be a norm-setter? How can you set standards?

You can do that by law. You can also do that in a softer way by recommendations, guidelines, etc.

As I said, I coined that expression, and I don’t have much merit in it. It was the result of many discussions, nothing terribly original there. I coined that expression some 10 years ago. And I should say that at that moment, it was a rather difficult discussion.

So in 2013, we were over the banking crisis, but we had difficulty in Europe leaving the recession behind us. There was a big debate about the policies that were advocated by the European Commission. They were restrictive. There was a very strong emphasises on a very quick consolidation of fiscal deficits. There was austerity, and not only austerity, organized in a number of countries that were very badly hit, like Greece, Portugal, Spain, and Italy. And so there was a big debate about the kind of economic policies that were pursued and in my mind, they were insufficiently supportive. They were partly misguided. But typically, those policies at that time were very much inspired by the fear of something that I also indicated previously, which is what we call moral hazard. If the EU would too generously support countries in difficulty like Greece, Spain or Portugal, would those countries not badly use that? Would they not become a bit lazy? Shouldn't we exert pressure for reform by not being overly generous?

So, moral hazard was one of the fundamental reasons why the European Commission was so strict. We don’t want moral hazard. But a lot of other people say no, if you have a monetary union, you must create stabilization devices at the level of the Monetary Union and these must be insurance devices. You need insurance devices at the level of the Monetary Union. A Banking Union is an insurance device, obviously with a risk of moral hazard for the banks concerned. Or a European level support of national unemployment insurance schemes, a kind of European re-insurance, second-year insurance of national unemployment insurance schemes in order to stabilize the national unemployment insurance schemes and to help countries that are severely hit in the context of Monetary Union. So some people started to develop this kind of argument with all kinds of variants. But let’s say that the official policy in the beginning was extremely cautious with regard to that, basically for reasons of fear that if you organize solidarity, you might get too many of moral hazards. So you should not have too much solidarity.

I think this was wrong. And the reason why this was wrong is that basically, the positive upshot of organizing solidarity, which is stability, was insufficiently valued. Now, gradually, between, let’s say 2012 – 2017, in those 5 years, I would say, very gradually, there was a shift. Away from the austerity policies that, in the first stage of the banking crisis, became very quickly dominant. There was a shift away from that. The Juncker Commission also understood that austerity may be simply self-destructive. They started to work on stabilization devices. And then they also started to link that with ‘Why is it important to have national welfare states in the EU, and should we not in one way or another valorize that more? So there was a very kind of shift away from the first reaction to the banking crisis, which was very much about austerity, let’s avoid moral hazards, we should not engage in too much solidarity or we should be very strict about it. There was a shift away from that.

Now, as a kind of high moment in that shift away, came the initiative taken by Juncker and Marianne Thyssen, who I think did an excellent job as Commissioner for Social Affairs and Employment in the Juncker Commission. And there was an initiative taken by Claude Juncker and Marianne Thyssen called the European Pillar of Social Rights.

The European Pillar of Social Rights, at first sight, is just a piece of paper with 20 principles. It’s very short, very vague, very general. In the beginning, I was a little bit hesitant about it because I thought, ‘OK, here comes the Commission with a very nice and solid declaration. Twenty principles. They called this ‘rights’. But right is something else. Right is something that is very hard and enshrined in legislation. These are just nice principles. But I have become convinced that it has been a very good initiative. And so in the year 2017, in the high moment of that shift away from the first reaction to the banking and Eurozone crisis towards a more solidarity-inspired reaction, this European Pillar of Social Rights with 20 principles of how the European social model should look like was approved.

But this has taken some time. There was a lot of controversy about what should happen and what should not happen. But then, I think, the Commission did a very good job in shifting away from austerity, in thinking through the need for solidarity, the need for insurance devices also at EU level, banking union, etc. And in thinking about the importance of having Member States that implement a set of principles that are basically well-fixed principles. And you find them in those 20 principles of the European Pillar of Social Rights. I’ll come back to that in a moment.

This is the first part of my story.

But then I come to Covid – the pandemic.

With COVID, there has been a very rapid, I would say nearly immediate, a remarkably solidaristic reaction at the EU level by the von der Leyen Commission. Very swift, bold, I would say, and remarkably. And the challenge is to maintain that momentum, which is not necessarily easy.

Why is that so? But maybe, let me first say: the shape it took. There was the joint procurement of vaccines which was a kind of collective action in buying vaccines. I’ll come back to that in a moment. There was, for instance, the SURE initiative, which provided support for national short-term working schemes. SURE was a very important initiative. It was a very solidary initiative.

Let me simply give me the figures:

It provided 98.4 billion of financial assistance to 19 Member States, including Belgium, to support job retention schemes, contributing the preservation of 40 million jobs in 2020 and 2021. Beneficiary countries could save up to EUR 8.5 billion in interest payments on loans. The loans provided to Member States were guaranteed in a very solidaristic way by other Member States. So this was a very solidaristic, even partly redistributive, scheme. This was launched very swiftly by the Commission in order to help Member States overcome the impact of COVID-measures, and there was the recovery and resilience facility. So the EU began to work in a very solidaristic way. Let’s try to understand why that is so.

My explanation for that is partly that there is still the momentum created by the previous Commission, and obviously Ursula von der Leyen had to take on board the legacy of the previous Commission in order to convince the majority in Parliament that she would become the next Commissioner. So she had to take that on board. But it was not just the legacy of Juncker and Marianne Thyssen; there was also something else, something more fundamental, that I had in a sense already mentioned. So for 30 years in Western Europe, we did not have a major economic shock. Then we had the banking crisis, but it took time before we understood that in such a shock, you need insurance solidarity. It took time. And then, 10 years later, we had the second shock. And then, yes, indeed, we need insurance and solidarity. But in a pandemic, this is also very concrete.

Let me give a very few examples.

You have something like COVID. You tell people if you’re infected, or if you think you’re infected, you might be ill. We don’t have vaccines – stay home, stop working, and stay home. That is the first message you should give as a minister of health. If you feel ill, stay home. Don’t infect other people. You can only say that very effectively in a society with a sufficiently developed system of sickness insurance. And if people stay home a little bit too long, it’s better so in order to take no risk. So moral hazard is not a big deal. Stay home if you feel ill. The stabilizing impact on fighting a pandemic if you have such an insurance device that allows you to say ‘stay home’, is very important.

In a country like Brazil, to take that example, apart from the politics in Brazil, it is much more difficult to say stay home because many of the people work in the black economy or are independent people without any insurance. They cannot stay home and have an income. You cannot say that; you cannot apply that policy. So having sickness insurance was crucial to stabilizing the pandemic. You need that.

The same is true for short-term working schemes and unemployment benefits. If you have short-term working schemes, you can say to a company or a whole sector: ‘We’ll close you for a few weeks. You don’t fire your workers. You keep them in contract; we stabilize the job. We stabilize the whole fabric of your company. We stabilize it, the people stay home, and they have an income through temporary unemployment. And we stabilize the whole fabric of the company. We can stabilize the whole fabric of a sector by using short-term working schemes. But then you need that. And to the extent that you have real unemployment because people lose their jobs, we have employment.

I could give other examples, but fighting the pandemic was much easier in a fully-fledged traditional welfare state than in a society that does not have these kinds of devices. I would even say more, but this brings me a bit further than the topic of tonight. Fighting the pandemic was all about solidarity. It’s all about solidarity. Because obviously, before we had vaccines, we had to implement very difficult, sometimes harsh measures, and my feeling is that let’s say, the majority of the citizens, at least in Belgium, did not comply with all the details, which was not necessary, but they did comply with the spirit of the measures more or less sufficiently so, out of civic solidarity.

And then we had vaccines. Vaccine is science. But a vaccination campaign is solidarity. I want you to be vaccinated because of me. And you want me to be vaccinated because of you. The externality that comes with vaccination is very important. The positive impact on your neighbour of the fact that you are vaccinated. So, a vaccination campaign is all about civic solidarity and getting vaccinated. And so in a society where you have a kind of solidarity that is built in social institutions and where you have sufficient trust in governments in order for them to launch a vaccination campaign, you have all the weapons you need to fight such a thing as an unknown virus and an unknown pandemic. It’s all about solidarity and science. The two.

Now, coming back to the EU. So, I think with COVID, very rapidly, maybe unknowingly in the back of our minds, all the advantages of social security, unemployment benefits, short-term working schemes, insurance for sickness, healthcare, solidarity, became self-evident. And indeed, the European Commission added to that large-scale solidarity action. SURE in supporting short-term working schemes was about solidarity. The joint procurement of vaccines - you might be unhappy with the number of aspects of how that was organised and the secrecy in the contracting. For me, the lack of health technology assessment, the lack of, let’s say, critical scrutiny, not so much of the vaccines but then the number of therapeutics and some fallout in joint procurement because we have these big deals at EU level. You can formulate a lot of criticism vis-à-vis the way that it was organized. But the fact that you have taken joint, collective action in buying vaccines and in organizing yourself vis-à-vis the industry, first with the vaccines than with therapeuticals, has been enormously important. Imagine a small country like Belgium. We think we have Pfizer. Yes, we have the site for Pfizer. But we have nothing to say to Pfizer, nothing, nothing. It’s just by acting at EU level that we can have some leverage. And then you can criticize the way it was done. But you need to organize collective action at EU level.

And so, in a sense I would say that the approach by the von der Leyen Commission was very much inspired by the idea of a social union that is organized collective action in support of national healthcare systems and national welfare states. So I’m not saying that it was done perfectly, but it was a bold move.

von der Leyen coined a different expression. She said: ‘Now we will organize a European Health Union’. As a matter of fact, the way that it was conceived was rather narrow. The Health Union was basically a package of legal measures in order to improve our preparedness for the future. I won’t go into that because I don’t want to talk about public health tonight. But she coined that expression ‘health union’. For me, the challenge is in the sense of combining these ideas so that the health union is more than just a set of legislative initiatives; it is truly putting healthcare and solidarity on the agenda for the EU.

Now, I move on to my third part, the presidency of the European Union

Where are we going?

As you know, national countries have responsibilities for sharing the EU for being president of the EU next to the EU president, Charles Michel. And so, Belgium has the privilege of having the EU presidency in the first six months of 2024. From January to June 2024. We will have the presidency of the EU. We should be modest, obviously. Being president of the EU means that you must play a clever game. You organize yourself with the countries that came for you and the countries that come after you, and you must combine with the Commission to achieve something.

But that is a very important moment for two reasons. First of all, that is the end of the current legislature of the current Commission, and so we have to wrap up a number of initiatives and see that they land well. But secondly, what I would hope to be able to do, modestly, but sometimes you must have high aspirations. What I hope to be able to do or contribute is to set the strategic agenda for the next legislature. The expression ‘strategic agenda’ is not happened stands because that is what the Council and the Commission do. The Commission prepares a strategic agenda, which is then translated into mission statements and debriefs for the individual commissioners, and the Council also decides on a strategic agenda. This is often very summery; this is in headlines. But I think what we should try to do is set a strategic agenda for the next legislature, whoever is the president of the Commission or the president of the Union. But I think we must build upon what has been achieved and set a strategic agenda.

Now, in order to do that, you need to agree on a vision. You need evidence, you must evaluate in a very objective way where you are and what the impact is of a number of initiatives that have been taken. And you need ownership. And that is what keeps us busy these days when we think about the preparation of our presidency. How can we develop vision, how can we gather the necessary evidence on all this, and how can we create common ownership. And we will take several initiatives to see to it that we develop common ownership of a social and solidarity agenda, which is also a health and healthcare agenda, for the next 5 years.

First point: returning to the Pillar.

I think it’s very important to maintain this Pillar of Social Rights, these 20 principles as a kind of common vision. The umbrella concept. And as the inspiration for norm-setting, for the setting of standards that you need if you organize collective action in pursuit of common objectives. And so, my argument would be, ‘Let’s even if 2017, which is by now 6 years ago, is in 2025, it will be 8 years ago, let’s keep that as a kind of set of guiding principles and still work on them. Let me give two examples.

One example is related to something that I did find very important in these 20 principles, which was the principle of equal access to social protection. This was the name of the principle. And for me, the principle basically said: ‘Everybody who works in the EU as an EU citizen or is assimilated with an EU citizen, has the right to a full and adequate scheme of social protection. So, whatever the sector where you work, the kind of employment status or contract, the type of employment. When you work, you contribute something. You should be integrated into an adequate scheme of social protection.

This is a simple slogan, but also reflects a very important principle. And it is important for me, both for reasons of justice and for reasons of stability. I’m repeating myself a little bit: I think it is a matter of justice. Whether you work in the platform economy, as an independent self-employed person or as an employee or on an interim contract: you work and you contribute something. You should be fully protected.

Is that the case? No, it’s not. It depends on country to country, but everywhere we see important gaps linked to precariousness in work and to development like in the platform economy. And so, from a point of view, justice is an important principle. But also in view of stabilization. As a matter of fact, you take the Netherlands. In the Netherlands, there is a large segment of people who are working but are very poorly integrated into social security. These are the so-called ZZP (Zelfstandigen zonder personeel). The self-employed without personnel. I think there are more or less a million people like that in the Netherlands. They are very poorly insured, notably against sickness. So, when COVID erupted, the Dutch government immediately had to take measures to organize protection for those people. Immediately, because that was badly lacking. This was a matter of overall stability. And so, my argument is that full and adequate access to social protection for everybody who is in work is a matter of justice. It is a common aspiration; it should be a norm of decency. But well-organized access to social protection is also a matter of economic and social stability.

Now, that principle of the Pillar has been translated into a soft instrumental Recommendation. So, it was a recommendation issued to the Member States to report on how they perform on access to social protection. And now we have a report on that Recommendation. All the Member States delivered a report on their national performance on that principle, and there is a synthesis report on this. And I would say it’s a mixed bag. Few Member States really tackle comprehensively all the lacunae, all the gaps and all the issues with regard to access to social protection. Some Member States do take some measures with COVID in mind. We have seen all those gaps. But it’s far from done, and so one of the arguments we would like to make during our presidency is: Let’s not stop here; we had that soft Recommendation to implement that particular principle of the Pillar, access to social protection. Let’s take that a step further and put pressure on Member States to improve their performance in terms of completing lacunae, gaps in the social system, which create situations where people who are in work nevertheless do not have sufficient access to social protection. I’m not saying we go that way, but one scenario is that that means that we put more pressure on the adequacy part of it. Access to social protection is also a principle on the adequacy of the benefits and on the level of the benefits. And we could try to reinforce that and say; The principle really means that you should have adequate benefits, and then we will define standards of adequacy at EU level. And there are several arguments for doing that.

Let me take a second example.

Principle number 16 of the Pillar is about care and healthcare, and so far, nothing has been done with it. It’s a principle that says and I’m not quoting it literarily, ‘Europeans should have access to adequate care and healthcare of quality’, etc. So, it’s a general principle about access to healthcare and care, so let’s say, accessibility to and affordability of healthcare and care. Nothing has been done with it. And my idea is: OK, Ursula von der Leyen has this European Health Union initiative, but that is more legislation on preparedness and a number of other issues. Good initiatives, but a bit meager. It lacks a bit of social content. And so what I would like to do is to link these kinds of initiatives, or, let’s say, follow up on them by developing an argument and a policy whereby the EU really sees it as a mission of the EU to support Member States in developing resilient and other adequate healthcare systems. And for me, adequate healthcare systems means healthcare systems that conform with the Pillar principle, that there is accessibility and affordability of care and healthcare for everyone.

Now, so, this would be the kind of agenda that we try to put forward, saying, Ok, let’s develop a vision for the longer term in which Ursula’s health union is pursued and Junckers Pillar is alive and kicking, and, in this sense, we further develop principles that, in the end, are principles of solidarity.

But coming back to the role of the EU, the role of the EU is not to organize healthcare. It’s not to organize pension systems or unemployment systems. It’s to support national welfare states in doing that. It’s to create the kind of holding environment and collective action needed to do that well. That, I think, is the ambition.

I’ll stop here, I have been too long.

Thank you for listening, and I am open to all kinds of critical remarks and comments.