Opinion of the European Economic and Social Committee – The role of services of general interest (SGI) for competitiveness, social cohesion and democracy in the European Union (own-initiative opinion)
Date: 2025-07-16
Institutions: European Economic and Social Committee
Subjects: EU investment, competitiveness, democracy, economic and social cohesion, promotion of the European idea, provision of services, public service, services of general interest, social security, updating of skills








C_202505143EN.000101.fmx.xml












Official Journal of the European Union


EN
C series













C/2025/5143


28.10.2025






Opinion of the European Economic and Social Committee
The role of services of general interest (SGI) for competitiveness, social cohesion and democracy in the European Union
(own-initiative opinion)
(C/2025/5143)


Rapporteur: 
Thomas KATTNIG






Advisors


Barbara SAK (for the rapporteur)




 


Valeria RONZITTI (for Group I)




Plenary Assembly decision


27.2.2025




Legal basis


Rule 52(2) of the Rules of Procedure




Section responsible


Section for Transport, Energy, Infrastructure and the Information Society




Adopted in section


24.6.2025




Adopted at plenary session


16.7.2025




Plenary session No


598




Outcome of vote
(for/against/abstentions)


175/3/12




1.   Conclusions and recommendations









1.1.


The European Economic and Social Committee (EESC) calls for greater recognition of the holistic role of services of general interest (SGIs) within the European social model, and for their potential impact on sustainable competitiveness, social, economic and territorial cohesion and democracy to be strengthened.












1.2.


The EESC calls for a holistic approach towards SGI policies, as opposed to the current sectoral approach of EU policies, recognising the central role of modern SGIs in promoting sustainable prosperity and competitiveness. In this spirit, the EESC calls on the Commission to take action with concrete follow-up to the Letta report in the form of an SGI action plan.












1.3.


The EESC calls on the Member States to secure universal and equal access to affordable, high-quality basic services. This is a matter of social justice, since SGIs are delivered at a price that does not depend on the purchasing power of users. SGIs, and the delivery infrastructure necessary to ensure their universal provision, play a pivotal role in the EU economy and its wellbeing, serving as a pillar of citizens’ trust in the state and society, thereby contributing to cohesion. This aim has to be achieved by implementing financial and regulatory reforms. The financing of SGIs does not constitute consumption expenditure, but an investment in the future. SGIs need proper and stable funding as they are a key vector in cohesion policy and the long-term security and preparedness strategy.












1.4.


The EESC states that countries with an infrastructure investment policy and correctly funded servicing costs for quality public services enable their citizens and enterprises to spend less on ‘living/operating’ costs. The EESC therefore argues that it is necessary to properly fund and improve SGIs and to align them more closely with citizens’ needs in order to improve satisfaction and trust in democracy.












1.5.


A regional balance must be ensured when deploying investment in public services. In this sense, public investment, particularly in connection with the Cohesion Fund, deserves special consideration in the implementation of fiscal rules, reflecting their contribution to long-term convergence and resilience.












1.6.


When revising the Public Procurement Directive, the main focuses of the reform should be simplification and a clear shift from a purely price-based approach to a system based on an adequate price-quality ratio, while incentivising social and sustainable criteria based on the relevant EU targets, as well as enhanced access to public procurement for SMEs, for a more sustainable and inclusive EU economy.












1.7.


Digital networks are nowadays part of SGIs and are indispensable for social participation and economic development. In line with the State of the Digital Decade report 2025, governmental digital infrastructure should be reformed in order to decrease the dependence on service providers outside the EU, while enhancing the EU’s sovereignty and security, particularly in the realms of connectivity and public service delivery.












1.8.


The universal accessibility and territorial anchorage of SGIs reflect the necessary subsidiarity of their provision, which enables co-determination and democratic control by citizens.












1.9.


The EESC calls for a holistic approach towards SGI policies, as opposed to the current sectoral approach of EU policies. In this spirit, the EESC calls on the Commission to provide concrete follow-up to the Letta report in the form of an SGI action plan which recognises the central role of modern SGIs in the context of the promotion of sustainable prosperity and competitiveness.












1.10.


Considering the wide-ranging role of SGIs, a research-based approach founded on good data has to assess the cross-cutting potential and importance of SGIs across numerous sectors of economic activity. This needs regular monitoring on the basis of statistics, highlighting the crucial structural function of SGIs to ensure sustainable transitions in the current polycrisis.




2.   Background









2.1.


Services of general interest (SGIs), such as healthcare, elderly and child care, education, social services, energy, water and public transport, are a cornerstone of competitiveness, the European social model and democratic participation in Europe. Their importance extends far beyond technical services: they serve the common good, promote social inclusion, strengthen trust in state institutions and promote preparedness and social resilience, especially in times of multiple crises.












2.2.


The Commission should recognise the central role of modern SGIs in its new plan to promote sustainable prosperity and competitiveness, including with the Competitiveness Compass and the Clean Industrial Deal (CID).












2.3.


SGIs play a significant role in the European economy. In 2021, SGIs and public services generated EUR 3 721 billion of value added across the EU27, accounting for 28,4 % of all value added in the EU27. At the same time, they employed 31,1 % of the EU27 workforce (65,2 million people across the EU27) and represented 19,7 % (EUR 632,6 billion) of all investments undertaken in the EU27 in 2021 (1).












2.4.


The Commission defines three categories of SGIs: economic, non-economic and social (2):






—



services of general economic interest, which are basic services that are carried out in return for payment and are subject to EU single market and competition rules. However, there may be derogations to these rules, if necessary, to protect citizens’ access to basic services;










—



non-economic services, such as social security schemes, which are not subject to specific EU legislation or to single market and competition rules;










—



social services of general interest, which are those that respond to the needs of vulnerable citizens and are based on the principles of solidarity and equal access. They can be of either an economic or a non-economic nature.
















2.5.


High-quality, affordable and accessible public services and SGIs are not only essential; they are also a useful tool that benefits citizens, businesses and governments. This has been evidenced during the COVID-19 crisis and the energy crisis caused by the Russian war of aggression against Ukraine. However, without civil society organisations and the structured networks of the social economy, these crises would not have been overcome.












2.6.


Public service providers and people working in SGIs provide vital work and expertise. Their ability to react to prevent environmental deterioration and positively face climate challenges; their room for manoeuvre and their responsiveness in acting for the common good, for the benefit of the community rather than for shareholder value; and the tailored solutions they bring to the local context, make them an ‘essential’ part of SGIs.












2.7.


Disinvestment in public utilities and collective services has long-term consequences that are more costly to solve later on. The well-being of future generations rests on long-term security, strong public services and SGIs in all sectors of economic activity, including non-economic SGIs. As all of them are relevant to the concept of preparedness, efforts to address the current security and defence issues must not be made to the detriment of social cohesion services, education and human well-being.












2.8.


In his report on the future of EU competitiveness, Draghi stresses how important SGIs are for innovation, sustainable growth, EU economic security and preparedness in several areas, such as energy supply, infrastructure, education and training. Employees’ skills and knowledge are particularly important in ensuring lasting competitiveness. The Letta report meanwhile calls for an action plan for SGIs, which require stable financing.












2.9.


Access to SGIs is a fundamental right and is included in the European Pillar of Social Rights (EPSR). While principle 20 of the EPSR explicitly refers to ‘essential’ SGIs, other Pillar principles cover important SGIs such as education, housing and assistance for homeless people, childcare and long-term care, inclusion of people with disabilities, and healthcare. SGIs are part of the shared EU values within the meaning of Article 14 TFEU, as laid down in Protocol (No 26) on services of general interest annexed to the TEU and to the TFEU and in Article 36 of the EU Charter of Fundamental Rights.












2.10.


Surveys of citizens’ satisfaction with SGIs indicate that, on average, only 54 % of citizens are satisfied with their SGIs. The results differ considerably between Member States. The percentage of people saying that the provision of public services in their country is good is 94 % in Luxembourg, 86 % in the Netherlands and 78 % in Austria, whereas in Greece, Italy and Portugal, 70 %, 63 % and 58 % of people respectively are dissatisfied with their public services (3). Countries with an infrastructure investment policy and correctly funded servicing costs for quality public services enable their citizens and enterprises to spend less on ‘living/operating’ costs.












2.11.


SGIs are leading the way when it comes to the circular single market. However, recycling often lacks uniform standards, making recycled products more costly than primary ones. Therefore, producers must be incentivised to use secondary materials. Harmonised technical norms and standards should make products recyclable by design.




3.   General comments









3.1.


Thanks to SGIs, which serve as a pillar of economic development, Europe’s competitiveness benefits from strong structural support, since SGIs ensure that not only citizens, but all businesses, organisations and public bodies have access to the essential services necessary not only for social, territorial and economic cohesion, but also for the functioning of the European economy as a whole.












3.2.


High-quality SGIs for all are a key element of the European social model and also have an impact on democracy and the attitude of citizens towards authorities and governments. The EESC believes that Member States need flexibility and autonomy to organise public services according to their own needs and traditions, while also ensuring high standards, such as universal access (social, physical and territorial), continuity, reliability, safety, affordability, accountability, adaptiveness and responsiveness, as well as sustainability in the long run.












3.3.


Access and local anchorage show the importance of SGIs in enabling participation, co-determination and democratic control, as well as in enhancing trust in institutions. Ensuring equal access to basic services that are affordable for all is crucial for both social justice and social cohesion as SGIs are provided at a price independent of users’ purchasing power. As TEN/772 highlights, co-creation of SGIs is a powerful way to stimulate participative democracy and strengthen European integration.












3.4.


As a key SGI, safe, adequate, accessible and affordable housing is a core human right, a fundamental aspect of wellbeing, and – de facto – a prerequisite for all other SG(E)Is. Housing location is key to citizenship and social relations.












3.5.


In line with the State of the Digital Decade report 2025, governmental digital infrastructure should be reformed in order to decrease the dependence on service providers outside the EU, while enhancing the EU’s sovereignty and security, particularly in the realms of connectivity and public service delivery. Online services also improve the participation of hard-to-reach people and social groups. Adequately funded independent journalism, seen as essential infrastructure for democracy, together with the properly monitored and regulated dissemination and discussion of information, allows for dialogue and can prevent anti-democratic extremism. The EESC is convinced that a democratic society absolutely needs to take back control of the infrastructure and services needed to circulate information, as used to be the case with communication infrastructure in the past.












3.6.


The provision of SGIs plays a central role in the expansion of digital infrastructure in order to provide all citizens with equal access to digital networks and services. Particularly in rural, sparsely populated or economically weak regions such as islands, this expansion is often carried out by public bodies or social economy operators, as the market alone does not invest sufficiently. Digital infrastructure is a prerequisite for many other SGIs, such as eHealth, online education and digital administration, which is also essential for agriculture and all economic operators. Digital networks are therefore themselves part of public SGIs and are indispensable for social participation and economic development.












3.7.


The EESC calls for a holistic approach towards SGI policies, as opposed to the current sectoral approach of EU policies. In this spirit, the EESC calls on the Commission to provide concrete follow up to the Letta report according to the model of the Social Economy Action Plan (4) and to design an action plan on SGIs in the context of the upcoming revision of the Action Plan on the EPSR, including a specific focus on the implementation of the EPSR’s principle 20 as well as on giving effect to the concept of ‘freedom to stay’.












3.8.


The 2019 Eurofound flagship report on quality of life and public services (5) indicates that public services are positively linked to trust, also pointing out the value of public participation in co-designing services. The report emphasises the continuing inequalities between countries and different social groups. There are notable gaps in the provision of services, as well as diverse barriers to effective access. While the results present an uneven picture of service quality, they also give indications of how to offer more satisfactory support. Eurofound stresses that improving the delivery of quality public services is vital to attain the objectives of the EPSR.












3.9.


Alongside economic development, providers of SGIs should aim for the Sustainable Development Goals (SDGs) when organising the provision of SGIs, e.g. the eradication of poverty by providing accessibility and affordability; gender equality; access to affordable, reliable and sustainable energy, water and sanitation for all; and decent work (including supply chain due diligence). These SDGs have a social justice dimension that impacts cohesion, which in turn has positive effects on democracy.












3.10.


Where satisfaction levels are low, it is very likely that the disinvestment in SGIs due to austerity policies, the increase in the cost of services due to market logic and insufficient investment are at the root of this dissatisfaction. The standard Eurobarometer 101 (Spring 2024) data, in conjunction with the 2024 Eurofound Quality of Life survey (6), confirm that 12 EU Member States with higher life and democracy satisfaction rates also rank high in their satisfaction with the provision of public services. The EESC therefore argues that it is necessary to properly fund and improve SGIs and to align them more closely with citizens’ needs in order to improve satisfaction and trust in democracy.












3.11.


The Commission’s strategy of promoting clean industry and a circular economy is evident in the CID and the Circular Economy Act. This marks the beginning of a process emphasising the importance of SGIs for economic strategy as a whole and the planning of and spending on SGIs in particular.












3.12.


The EESC believes that an ongoing, EU-wide analysis of good practices in the field of decarbonation should be established. Additionally, a research-based approach to assessing SGIs’ role and importance is needed to provide data on the contribution of SGI providers to the EU’s sustainable competitiveness. This could also be regularly monitored, for example via a Eurostat scoreboard.












3.13.


As the EESC has pointed out in previous opinions, SGIs must be inclusive, competitive, of high quality and affordable. This aim has to be achieved by implementing financial and regulatory reforms. The financing of SGIs does not constitute consumption expenditure, but an investment in the future. In order to guarantee sustainable investment in SGIs, SGIs should be prioritised and safeguarded in EU economic governance frameworks, recognising their strategic role for social cohesion and long-term competitiveness. As the current example of the exemption for defence spending shows, it is possible to grant such exemptions and this has nothing to do with fiscal limitations, but with political will. Since SGIs must be both part of a holistic defence policy and, independently of this, an urgently needed investment to ensure competitiveness and democracy, such an exception must also be possible here and implemented promptly.












3.14.


It is vital that instruments like the Cohesion Fund and the Transition Fund are strengthened and secured for the long term. These can help to drive forward the green transition and strengthen SGIs. Cohesion Fund spending has been limited to addressing regional disparities. What is needed is an expanded cohesion policy that tackles social inequalities and fosters a sense of European belonging. Cohesion Fund spending must be increased, not reduced. If the increase in military spending comes at the expense of cohesion policy, Europe will not be strengthened. The EU could engage in joint borrowing, as it did during the pandemic. Furthermore, spending on social and regional cohesion should be granted at least with the same flexibility as that granted for strategic sectors, such as defence, recognising its essential role in ensuring the EU’s economic and social stability. The EESC advocates applying this escape rule in a broader approach to security and defence measures as well as SGI, in order to prioritise growth-oriented public investment and avoid a trade-off between defence and social spending.












3.15.


The single market freedoms and competition law, in particular State aid and public procurement law, restrict how SGIs and SGEIs can be organised and financed. The special rules within the SGEI package (7) must be thoroughly revised. It must be clearly established which SGIs are excluded from State aid law. For certain SGEIs, such as housing, healthcare and social services, the EESC also suggests providing more State aid and longer terms for the compensation of service provision. To promote regional and European added value, direct awards should be safeguarded and expanded by increasing thresholds. When revising the Public Procurement Directive, the main focuses of the reform should be simplification and the further incentivisation of social and sustainability criteria based on the relevant EU targets, as well as enhanced access to public procurement for SMEs for a more sustainable and inclusive EU economy. A purely price-based approach should therefore be abolished in favour of a system based on an adequate price-quality ratio. Similarly, subcontracting chains should be reduced and general contractor liability imposed, thereby harmonising important elements at EU level. Furthermore, the duration of contracts for social services, which are limited to three years, should be allowed to be extended to ensure planning stability for both providers and customers, and public in-house schemes should be permitted up to a certain threshold.












3.16.


In addition to the issue of funding for SGIs, it is also crucial to ensure the availability of the necessary skilled workforce and to (re)train a sufficient number of people. This must also include creating quality and productive jobs, supported by effective social dialogue, fair pay and good working conditions for workers in SGIs sectors and beyond.












3.17.


Given the budgetary constraints faced by many Member States, there is a risk that competitiveness and budgetary issues will obstruct our view of more important considerations like democracy, human rights and quality of life. Discussions about the future of SGIs should not be limited to their mere ‘financialisation’. There is a danger of ending up with a two-tiered system of SGIs, where the quality of basic services deteriorates and citizens have to resort to paying for faster, higher-quality services. This market logic is justifiable in the context of non-essential private services that do not constitute SGIs. It is important to ensure that it is not applied to public services, which meet the basic needs of the population and ensure social and territorial cohesion (8).












3.18.


A wider understanding of the key role of SGIs in offsetting income and wealth inequality as well as in reinforcing democracy must be promoted. To encourage constructive engagement, public service providers, workers and users must understand each other’s perspectives. Greater promotion of SGIs could bolster workers’ commitment, as could greater recognition of the importance of SGIs to society and its social cohesion. Highlighting the work of SGI workers in a dialogue between citizens and SGI workers could foster greater respect for collective services and dedication. Open-door policies, school visits and advertisement campaigns have had positive results in the area of municipal services.












3.19.


The more citizens are involved in making decisions concerning their public utilities and collective services, the better for true participatory democracy and for the future acceptance and willingness of citizens to share the financial contributions in a fair way (e.g. via taxes or service fees) in order to obtain the service.












3.20.


The EESC is of the strong opinion that investment in education and research is essential in order to maintain Europe’s economic strength while addressing demographic shifts (labour and skills shortages), technological advancements and climate challenges. This means investing in SGIs, public education systems and higher education, research and innovation (e.g. Horizon Europe), in order to secure our future competitiveness and well-being.






Brussels, 16 July 2025.


The President


of the European Economic and Social Committee

Oliver RÖPKE
               





(1)  Statistical update on Services of General Interest (SGIs) – Federal Planning Bureau, Belgian Government – May 2024.

(2)  
            https://commission.europa.eu/topics/single-market/services-general-interest_en.

(3)  Standard Eurobarometer 101, Spring 2024.

(4)  
            https://social-economy-gateway.ec.europa.eu/eu-initiatives/seap_en.

(5)  Eurofound, Challenges and prospects in the EU: Quality of life and public services, 2019 (https://www.eurofound.europa.eu/en/publications/all/challenges-and-prospects-eu-quality-life-and-public-services#read_publication).

(6)  Eurofound (2024), Quality of life in the EU in 2024: Results from the Living and Working in the EU e-survey (https://www.eurofound.europa.eu/sites/default/files/2025-01/ef24028en.pdf).

(7)  European Commission: SGEI package: https://competition-policy.ec.europa.eu/state-aid/legislation/sgei_en.

(8)  See also: Michael Sandel: What Money Can’t Buy: The Moral Limits of Markets, 2013.


ELI: http://data.europa.eu/eli/C/2025/5143/oj
ISSN 1977-091X (electronic edition)