Judith Vorbach gives the foreword for OAG25 on the impact of the economic crisis and the climate from the perspective of the European Union (EU)
The EU, while not yet fully recovered from the financial and economic crisis, is facing another fundamental challenge: climate change and final awareness of the planet’s boundaries.
Moreover, digitalisation is expected to cause a major economic transition.
On top of this, the EU still seems underprepared to manage possible economic shocks. At this stage, important decisions on shaping economic policy are being obstructed by differences of opinion as to what direction they should take. It hinges on a conflict over risk sharing and risk reduction.
A resilient society can faceshocks and persistent structural changes in such a way that it does not lose its ability to deliver societal well-being in a sustainable way, according to the Joint Research Centre of the European Commission. In this sense, the European Economic and Social Committee, which I am a member of, sees a need to tackle shocks as well as disruptive effects stemming from fundamental technological changes and a need to stop transgressing environmental boundaries to ensure resilience.
Article 3 of the Treaty on the European Union, however, gives us a vision that goes further, as it refers among other things to promoting a competitive social market economy, aiming at full employment and social progress.
Today, in 2019, we need to focus on sustainable and inclusive growth, reducing social inequalities, upward convergence, competitiveness in line with the objectives of the Europe 2020 strategy, an investment-friendly environment, quality jobs and pay, combating poverty and social exclusion, sustainable public finances, a stable financial sector and achieving the United Nations Sustainable Development Goals, as well as climate change.
More ambitious action in the context of reforming the European Union’s Economic and Monetary Union (EMU) is needed, to achieve a more integrated, more democratic and socially better-developed Union. Although considerable progress towards completing EMU has been made, we have now ended up somewhere around the halfway mark along the road. There is an urgent need to reinforce and at the same time balance the highly interconnected pillars, which are the basis for a well-functioning EMU: We need a stable monetary and financial pillar as a basis for macroeconomic development. Decisive steps to complete the Banking and Capital Markets Unions can contribute to that.
They must take into account the social and environmental impact of the rules in place, prioritise consumer protection and aim to avoid the burdening of public budgets in a crisis. Strengthening the international role of the euro and the consolidation of the European Central Bank’s stabilising role should accompany these steps. A strong economic pillar as a basis for prosperity and social progress is also needed. It can be achieved by balancing supply and demand measures.
This currently entails boosting the demand side by securing purchasing power through well-paid jobs, which requires strengthening social partners´ collective bargaining systems and autonomy. Other crucial aspects include provisions for sufficient public investment and the creation of a fiscal capacity to buffer shocks. The latter should be funded by a common debt instrument. Stemming harmful tax competition and the prevention of tax evasion and avoidance will make another important contribution to a strong economic pillar.
I am also convinced that the social pillar must be expanded as a basis for societal progress. Minimum social standards, making greater use of the social scoreboard in the European Semester and implementing the European Labour Authority rapidly are all crucial for this purpose.
Finally, a political pillar as a basis for democracy, solidarity and unity should be reinforced. Enhancing the involvement of the European Parliament, social partners and other civil society organisations in key social and economic policy decisions, solidarity and the willingness to compromise – which are basis for EU’s prosperity – are the necessary elements for that.
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