Opinion of the Economic and Social Committee on the 'Communication from the Commission: A Concerted Strategy for Modernising Social Protection'
Date: 2000-03-01
Institutions: European Economic and Social Committee
Subjects: European Economic and Social Committee, European social policy, social security

26.4.2000

EN

Official Journal of the European Communities

C 117/33

Opinion of the Economic and Social Committee on the ‘Communication from the Commission:
A Concerted Strategy for Modernising Social Protection’

(2000/C 117/07)

On 26 July 1999, the Commission decided to consult the Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the above-mentioned communication.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the
Committee’s work on the subject, adopted its opinion on 8 February 2000. The rapporteur was
Ms Cassina, and the co-rapporteur was Mr Vaucoret.

At its 370th plenary session on 1 and 2 March 2000 (meeting of 1 March), the Economic and Social
Committee adopted the following opinion by 94 votes to three, with four abstentions.

1. Background

There has been a wide-ranging debate on social
1.1.
protection in the EU for a number of years. It was sparked
when, as part of the implementation of the Community
Charter of the Fundamental Social Rights of Workers, two
recommendations were proposed and adopted on:

— common criteria concerning sufficient resources and social

assistance in social protection systems(1) and

— the convergence of social protection objectives and poli-

cies (2).

1.2.
The aim of these recommendations was to promote a
degree of convergence between the social protections systems
of the Member States and to confirm a number of basic rights,
with a dual objective: to ensure compliance with common,
minimum social standards and to establish a welfare set-up
that removed the type of disparities that upset market dynam-
ics. The two provisions were the first (and are, as yet, the only)
European standards in the field.

1.3.
In 1995, the Commission published a communication
on the future of social protection: a framework for a European
debate (3). This document aimed to bring the discussion up to
date against the backdrop of the ongoing process of economic
and monetary union and persistently high unemployment
levels. Demographic trends in the EU countries were seen as a
necessary frame of reference, though current demographic
trends (falling birth-rate and an ageing population), and in
particular the prospect of the baby boomers born three decades
earlier reaching pension age within the next 20 to 30 years,
should have been taken into consideration long before.

1.3.1.
The specific importance of macroeconomic and
monetary convergence and stability policies in relation to
social, demographic and employment policies taken as a whole
had become obvious. The indisputable need to balance public
budgets, was the main factor pushing the Member States’
governments to adjust their social security systems. A look at
the reforms carried out (4) shows that not all the issues were
always taken into account, giving rise to inconsistent results
which sometimes penalised certain social sectors.

1.3.2. With that document, the Commission sought to
in
draw attention to all the various reference parameters,
particular the relationship between social security as a universal
guarantee system and active measures to promote employ-
ment/employability in the EU.

1.4.
A little over a year later, the Commission added more
fuel to the debate with its communication on Modernising
and improving social protection in the European Union (5),
following up the Member States’ reactions to the 1995
document. It undertook to carry out a number of more detailed
investigations including: research into the cost and impact of
social protection, a green paper on supplementary pension
systems, an analysis of measures taken to ease fiscal pressure
on employment, a study into preventive health measures, and
a review of the regulations on the coordination of pension
schemes for migrant workers. The Commission invited the
social partners to contribute to the debate and asked the
Member States and the Community institutions to establish a
permanent dialogue on strategies for modernising social
protection systems.

The ESC issued opinions on the above proposals and
1.5.
communications, and also developed its ideas further by means
of a number of own-initiative opinions (6).

(1) OJ L 245, 26.8.1992, pp. 46-48.
(2) OJ L 245, 26.8.1992, pp. 49-52.
(3) COM (95) 466 final.

(4) See MISSOC reports for 1996 and 1998.
(5) COM(97) 102 final.
(6) ESC opinion on modernising and improving social protection in
the European Union, OJ C 73, 9.3.1998; ESC opinion on the
future of social protection, OJ C 66, 3.3.1997.

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2. A concerted strategy for modernising social protec-

tion

2.1.
As the title suggests, the communication aims to
outline a set of objectives and instruments to develop a
concerted strategy for modernising the social security systems,
against the backdrop of the already established framework,
which combines observance of the stability and growth pact,
a commitment
to make social protection systems more
favourable to employment, and confirmation of social protec-
tion as an important shared value of the EU in the context of
enlargement.

On 29 November 1999,

2.2.
the Council adopted its
conclusions on the Commission proposal with rather excep-
tional speed, before the European Parliament or the Economic
and Social Committee had time to state their views. Nonethe-
less, the decision has the potential to trigger a major process
opening up many opportunities, and the methods and pro-
cedures developed to manage it will certainly affect the social
partners. The ESC will therefore express its opinion as planned,
concentrating mainly on the best methods for ensuring that
the decision is implemented fairly and efficiently.

The objectives proposed by the Commission as the

2.3.
basic framework for modernising social protection are to:

— make work pay and provide secure income;

— make pensions safe and pension systems sustainable;

— promote social inclusion;

— ensure high quality and sustainable health care.

The Commission also stresses that concern for equal oppor-
tunities for men and women must be mainstreamed in all four
objectives.

2.4.
The bid to reach these objectives will be shored up
by ‘enhanced’ mechanisms for exchanging information and
‘monitoring policy developments’. The Member States will
designate ‘high level officials to act as focal points in this
process’. They are also invited to work out the detail of the
strategy, while the Commission has undertaken to prepare a
new annual report on social protection.

3. Comments

those concerned.
It also endorses both the Commission
communication and the Council conclusions of 29 November
1999, subject to the comments and observations set out
below.

3.2. The background

3.2.1.
As the communication has a number of significant
precedents, including the Council’s 1992 recommendations
and the Commission’s communications of 1995 and 1997,
the Committee believes that consistency with the objectives
that have been established over the years is essential. Further-
more, modernisation must in all instances mean improvement.
The four objectives (and the mainstreaming) recommended by
the communication should be taken as a whole, treated as
being of equal value and pursued simultaneously. As strong,
high-quality social protection systems are an integral part of
the European social and economic development model, their
social objectives should be paid just the same attention as their
economic sustainability. In other words, there must be no
doubt that investments in health, living conditions, the fight
against poverty and marginalisation, and active measures to
help people find jobs are by their very nature productive
investments as they enrich society and its contribution to
development. This is the meaning of the statement:
‘social
protection is a productive factor’.

In the past, the European social model has worked effectively
with the social protection systems and provided a vital boost
to the competitiveness of the economic system as a whole;
room must be left for this mutually beneficial relationship
between the social model and the economic system to continue
and develop when the systems are modernised and improved.

3.2.2.
Greater employment opportunities and increased
participation in the labour market are necessary conditions for
modernising social protection without being blinkered by
macroeconomic and budget compatibility. The completion of
the single market and the development of economic and
monetary union have created what ought to be ideal conditions
for sustained job-generating growth. A few months ago, the
Committee stated that growth was still insufficient, productive
investment remained inadequate (1) and domestic demand

The Committee welcomes the Commission’s pledge to
3.1.
promote the debate on these subjects and its intention to base
the modernisation of social protection on consultation of all

(1) See the ESC Opinion on The macroeconomic dimension of
employment policy, OJ C 368, 20.12.1999, p. 36, paras. 5.1.2
and 5.2.2.

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appeared sluggish. More recently, economic results and fore-
casts have been somewhat better, but nevertheless the structur-
al measures used to stimulate employment, the development
of more employability-focused social protection systems and
active reintegration policies must be accompanied by resolute
growth and investment support measures that broaden the
productive and employment base, increase labour productivity
and do not penalise household consumption.

The redistributive function of social protection sys-
3.2.3.
tems is essential and must be preserved,
fine-tuned and
permanently bound to the aim of promoting social cohesion
and overcoming marginalisation and exclusion of all kinds. A
recent Eurostat (1) study shows that social transfers (excluding
pensions) significantly reduce the percentage of people under
the poverty threshold. The extent of this reduction varies,
however, from one Member State to the next, and within
individual countries. Therefore, although the Commission is
right to state that the more interdependent the Member States’
economies are, the more social protection becomes a matter
of common concern, any joint action must pay careful
attention to the differences highlighted by the study. This also
applies to the implementation of other common policies,
especially those relating to the Structural Funds. The Com-
mission admits that current economic change is likely to
generate uneven redistributive effects and that new categories
of people may find themselves at risk (for instance, workers
with fixed-term or temporary contracts who will experience
periods of unemployment with no income support, women,
poorly-qualified
families,
single-income families and people with disabilities). Policies
and decisions on modernisation must be tailored to specific
national and regional conditions. Above all, however, they
must be based on clear forecasts regarding the social effects of
future economic trends, always giving priority to supporting
and promoting the interests of the most vulnerable categories.

older workers,

single-parent

When this is not the case, recourse to early retirement may be
wrongful or at least negative in some instances, particularly
where it is applied by companies or industries that are in
no financial difficulty but simply wish to streamline their
production, carry through mergers or enhance their balance
sheets (the abuse of the early retirement option is no less
damaging when agreed between a company’s workers and
management). For both social and economic reasons, flexible
pension policies should be developed as an alternative to
early retirement and lifelong learning programmes should be
established in order to encourage workers to retrain in good
time and find new areas of employment. Workers who have
been in particularly wearing jobs for long periods should be
given special attention.

3.2.5.
Although many Member States are currently raising
the retirement age, this trend cannot go on indefinitely. The
1997 communication contains a graph that illustrates the
labour productivity gains required to maintain the financial
sustainability of public social protection systems in the coming
decades, on the basis of
the current structure of social
protection systems (without allowance for possible future
changes), and taking the ageing of the population into account.
It shows that annual labour productivity must rise from its
current level of (approximately) 0,2 to a little over 0,7 by
2025. This would appear to be feasible, if sufficient attention
is given simultaneously to research, technological development
and life-long learning. This presupposes ongoing consultation
between the social partners to release the resources for these
investments and sustain them over time.

3.2.4.
In the employment guidelines for 1999, the Council
stressed the need to relieve the burdens on the recruitment of
young people and to encourage older workers to retire
later, in order to help make social protection systems more
sustainable. In general, the Committee is whole-heartedly in
favour of this approach. Keeping older people at work can be
compatible with the recruitment and employability of young
people, providing that quality and productivity are promoted
for both categories. The ESC notes that, in certain countries,
conditions for early retirement are defined by contracts
negotiated between the parties or by legislative provisions.

(1) ‘Social benefits and their redistributive effect in the EU’, by Eric
Marlier, in ‘Population and social conditions’, August 1999.

3.2.6.
Social protection systems and the way they are
financed vary a great deal from country to country. In its
employment guidelines (guideline 14), the Commission has
called for targets to be set for gradually reducing the tax
burden on labour and non-wage labour costs, without under-
mining the recovery of public finances or the financial
equilibrium of social security schemes. There is no immediate,
universally acceptable way to take this guideline into account.
The use of general taxation to compensate for a reduction in
the tax burden on labour (particularly on relatively unskilled
employment) is a non-starter in the absence of tax harmonis-
ation among the Member States, which are tending to reduce
taxes on factors other than labour in order to stay competitive
and keep attracting outside investment. Furthermore, demo-
graphic, economic and social factors play a major role in the
long-term financial stability of social protection systems. For
the time being, therefore, the Member States must continue
trying to strike the right balance by reaching a consensus
between the parties concerned, while always bearing in mind
the need to protect the weakest members of society.

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3.2.7.
Similarly, regarding health spending and the need to
ensure a high quality service, the Member States should
continue to ensure that everyone has access to the services
they need and to care that meets their specific needs. On this
point, the development of mutual associations and universal
preventive measures can play a key role in all the Member
States.

outcome of which remains to be seen. Nonetheless, the
negative demographic trend affecting most of the Member
States, which looks likely to lead to a reduction in the current
European population, appears to lie at the crux of the matter.

analysis of

The present

communication’s

3.2.8.
the
relationship between the concerted strategy for modernising
social protection and enlargement is somewhat brief. The
Commission must
rapidly disseminate the in-depth and
up-to-date study currently being drafted on the current
situation and trends in the applicant countries. It is not enough
simply to suggest that these countries must ‘work towards the
development of efficient, effective and sustainable social
protection systems’. The convergence criteria for the applicant
countries should be well-grounded and clear. Furthermore,
provision should be made, as part of the concerted strategy
(which should involve the applicant country social partners),
to determine how accession aid is geared to developing and
strengthening the social protection systems of the future
members. This is vital for many reasons, not least the need to
address rising unemployment among women, young people
and highly-qualified managers — a new phenomenon in
countries where, until ten years ago, there was a high level of
employment for these categories (higher even than in the
best-placed EU countries). Promoting the European social
model in the applicant countries will also require a specific
look at these problems as they affect each individual country’s
social system, while bearing in mind that issues relating to the
structure and financing of social protection systems are not
covered by the current corpus of Community legislation. The
Committee welcomes the principle of including the applicant
countries in the concerted strategy, but believes this must
happen soon to prevent the accession negotiations from
generating further imbalances and difficulties in the applicant
countries’ welfare systems; such problems could arise during
the process of implementing the body of Community legis-
lation, because of the predominance of economic and monet-
ary concerns.

3.2.9.1.
Although in many cases the current downwards
trend in birth-rates reflects a voluntary decision to have fewer
children, it would also appear to be rooted in a number of
problems linked to social benefits and the way they work.
These problems vary in their form but are common to many
Member States. The causes that have combined to put people
off raising larger families, to name but a few, include high
levels of unemployment; the absence or lack of a family policy
to provide good quality childcare facilities and to ensure an
adequate income and job security during parental leave, and
other measures designed to help reconcile work and family
commitments; inability to accommodate changes in family
structure and to mainstream these issues in national policies;
and uncertainty stemming from a series of rapid social,
industrial and behavioural changes that the European public
have yet to take fully on board.

3.2.9.2. Many experts have suggested that within a few
decades the EU could face a labour shortage and be obliged to
‘import’ labour from third countries, and that the contributions
of those workers would help to finance the social protection
system. This prospect too requires immediate in-depth analysis,
without straying into an abstract debate on whether immi-
gration would/could change the current face of the EU. A look
should be taken, meanwhile, at ways of opening up the current
social protection systems while they are being modernised and
equipping them to deal with the problems associated with the
reception and integration of future immigrants.

3.3. The instruments

3.2.9.
The Commission has published comprehensive
reports on the demographic situation and trends in the EU
over recent years. As the ESC is examining this important issue
in an information report, it will touch on it only briefly here,
inasmuch as it relates to social protection. However, it should
be noted that the Commission communication’s demographic
analysis appears to be geared largely to stressing the need to
guarantee the financial sustainability of public welfare systems.
This vast and complex subject calls for a thorough debate, the

3.3.1.
The Commission quotes from a March 1999 Euro-
pean Parliament Resolution which asked it ‘to set in motion a
process of voluntary alignment of objectives and policies in
the area of social protection modelled on the European
employment strategy’. The formulation of a ‘common political
vision of social protection in Europe’, hoped for by the
Commission, is an extremely important objective that will
involve complex transactions affecting the whole of society.
Effective measures will therefore be needed to guarantee a
truly democratic, i.e. participatory, process.

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3.3.2.
Responsibility for bringing the various social protec-
tion systems up to date lies primarily with the Member States.
The social protection modernisation strategy cannot possibly,
therefore, be based on binding legislation not wholly endorsed
by the Member States, or, most importantly,
labour and
management. The latter must be closely involved in the
modernisation strategy at both national and European level.
Without prejudice to the possible development of a concerted
process of modernisation which takes on board some aspects
of the Luxembourg process, the ESC believes that it is too early
to define quantitative objectives and insists on the need
to build solid qualitative and methodological foundations,
establishing all the conditions for a strong consensus supported
by all social and institutional players at every level.

3.3.3.
The existing welfare systems grew out of agreements,
between social operators and governments, that almost always
involved difficult periods of bargaining and often even conflict.
The strong and responsible involvement of all the interested
parties is, therefore, an essential element in the modernisation
of these systems, as part of a concerted strategy. The Com-
mission does invite the social partners to take part in the
process via the Social Dialogue Committee, but it should also
specify the role and powers of that committee more clearly. In
particular, it should be possible by means of the European
social dialogue to make a detailed assessment of current
developments in a number of Member States that have
launched processes to adjust their social protection systems by
means of negotiations between the various interested parties.
Furthermore, the potential link between the group of national
experts and the European social dialogue must be determined.
If the ‘exchange of experiences, mutual concertation and
evaluation of ongoing policy developments...’, mentioned by
the Commission, does not specifically involve a debate between
all the players, it will be limited to contacts between govern-

Brussels, 1 March 2000.

ments (or, still worse, between the ‘high-level senior officials’
who are to manage the process).

The Committee stresses that, as well as requiring
3.3.3.1.
the participation of the social partners, the concerted effort to
modernise social protection systems must also be backed by
reliable and systematic data. It welcomes the Commission’s
intention to build on the Social Protection in Europe Report (1),
and to publish it annually. The Commission report must
provide a starting point for the discussions of the group of
national experts. The ESC could be involved in the preparatory
work, and after publication the report should be referred for
an opinion (a procedure which would clearly also have to
involve the European Parliament and the Committee of the
Regions). Where appropriate, the European Parliament, the
ESC and the COR could take part as observers in the meetings
of the group of national experts.

3.3.4.
The Committee welcomes the reference to the
involvement of the European Parliament, the ESC, the Com-
mittee of the Regions and, as already mentioned, the applicant
countries. The Committee is willing to provide support,
especially in the happy event of the rapid development of
bench-marking procedures for comparing the situations in the
Member States and highlighting best practice. The ESC stresses
the fact that there should be an ongoing, detailed study of
current national trends and experience, based on practical
examples. To that end, the Committee is ready to lend all its
support to the bench-marking process in conjunction with the
European Parliament.

(1) The Social Protection in Europe Report is currently published
every two years in conjunction with Eurostat and the social
security departments of the Member States. It provides a detailed
summary of trends and suggests measures that could be of use.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI