Solidarity is not Charity – EU Commissioner László Andors vision for the Future of European Integration
Solidarity is not charity. Solidarity is help offered to an equal with the expectation of reciprocity. – In the aftermath of the European elections, EU Commissioner László Andor outlined future steps of integration that will give the EU more capacity to prevent economic recessions.
“Social dimension of the Economic and Monetary Union: What lessons to draw from the European elections?” For László Andor, European Commissioner for Employment, Social Affairs and Inclusion, the further deepening of European integration is the best answer to the rise of Euroscepticism. The following is an outline of Andors ideas regarding the creation of a European unemployment insurance as presented in a lecture at the Hertie School of Governance in Berlin.
Sharing a currency means sharing a destiny, Commissioner Andor emphasized. He argued that it was in fact not the financial crisis that hit the EU so hard, but rather the inability of the European political elite to react determined and united. The uncertainty about the best steps to take against the crisis and the end of solidarity – manifesting itself in the manifold speculations about a Greek exit from the Euro – contributed in no small part to the spread of the crisis to even more EU member countries and incited a capital flight within the EU. Instead of taking joint action, Europe’s political leaders tried to minimise the cost of the crisis in their own countries and were hesitant to invest in the future of their neighbours. Instead of stopping the crisis at the early stage, this hesitant reaction lead to a deepening and spreading of the crisis. These heavy consequences show that a breakup of solidarity is no option for the future of Europe, the commissioner underlined.
The introduction of automatic stabilisers preventing recession on EU level is long overdue, as Andor pointed out. The creation of a common EU-budget including tax transfers between the countries was deemed a necessity when the Economic and Monetary Union (EMU) was first envisioned – but failed to receive the necessary political support.
After the introduction of the Euro, Eurozone states have but one fiscal stabiliser left at the moment: internal devaluation. Commissioner Andor outlined, that it is achieved by reducing labour costs through cutting wages and laying off workers as well as by enacting austerity measures. The recent crisis proved that monetary stability can be created via these mechanisms – but the costs are carried by the population and especially by the poor population. Thus the crisis did not only show how worn down solidarity between the member states has become but also served to break up the European Social Model, which essentially consists of three promises: prosperity, inclusion, and democratic participation. The time is ripe for innovative proposals that ensure a fair distribution of the costs within the European Union, as Andor called for. A feasible and credible long term strategy is the best answer – not only to the current economic challenges, but also towards Euro-scepticism.
Andor proposed a common unemployment scheme for the European Union member states, because such a mechanism can lessen the consequences of short-term unemployment and prevent the deepening and stabilizing of a recession. A further key advantage is that the unemployment benefits will be triggered and distributed automatically in times of economic crises and therefore provide predictable and reliable assistance. Thus, the European unemployment scheme would contribute to lessening the effects of financial crises.
The commissioner’s model was similar to the one envisioned by the participants of the Future Lab “Social and Fiscal Policy” in Warsaw: A top-up to the national unemployment aid, organised and distributed through the national welfare systems. The costs for the member states of such a scheme is estimated to be at around 1% of the national GDP. In order to prevent one-sided economic transfers, safeguards have to be established to make sure that countries do not stay net beneficiaries or net payers over several years. As the scheme is only meant to lessen the consequences of short-term economic recession, the European top-up of the national unemployment scheme should only be paid for a limited time, e.g. six months.
Solidarity is not charity, Andor emphasised. Solidarity is help provided to an equal partner with the expectation of possible reciprocity in the future. In his comment to Andors speech, political scientist Claus Offe agreed that solidarity was self-interest rightly understood. Due to the complexity of current political challenges, states increasingly depend on supranational cooperation to enact effective policy. But to ensure the feasibility of long-term supranational cooperation, costs and benefits of enacted policies have to be shared fairly. A carefully designed European unemployment scheme might do both: prevent repetitions of the current crisis and redistribute the benefits and burdens of Eurozone membership more fairly.
But I would like to ask: Is an unemployment scheme sufficient to lessen the costs of monetary stability that have to be carried by the member states’ population? How could mechanisms look like to ensure a fair distribution of the costs of such a scheme between the member states? And given the current scepticism against the deepening of integration: How can the political momentum for such a project be created?
This article was first published on European Circle.
László Andors complete speech is available here.