Debate: Putting the European economy at the service of the middle class
Date: WEDNESDAY, 12 JULY 2023
Speaker: Paolo Gentiloni
Language: EN

This means empowering every European to gain the skills needed to get ahead in a fast—changing world. It means ensuring equal opportunities, fostering active inclusion into labour markets and protecting vulnerable individuals and households, particularly in times of crisis.  We need to deliver an inclusive growth that offers opportunity and social mobility. We need to be aware that growth slowdowns lead to slower improvement of living standards, to less opportunities, to risk of social divergences. We need, therefore, a holistic approach to policy making, delivering access to high quality public services to all with adequate redistribution policies and growth—friendly tax systems. All these factors are key for overcoming challenges for our economy and the middle class in particular.  Economic research and social studies point to the fact that the relationship between skills levels and income classes have changed over the years. Labour markets have been polarising as the result of a tendency whereby new technologies have replaced many middle—skilled, routine jobs with low—skilled jobs to overcome the economic and social consequences of crises such as the global pandemic. To preserve and innovate the European social market economy, this Commission has launched transformational programmes like the European Green Deal, NextGenerationEU and the Action Plan on the European Pillar of Social Rights.  We have then weathered last year’s energy shock far better than almost anyone imagined. Thanks to our coordinated response, the prediction of bankruptcies and blackouts did not come to pass. What happens today, well today inflation is still high, at 5.5%. It has already fallen by almost half compared to its peak in October, when it was 10.6%. But inflation acts like a hidden tax, which hits hardest low— and middle—income households, especially when it affects goods like energy and foods.  Efforts to stamp out inflation must continue, while at the same time we need to be mindful of the broader impact on growth and financial stability. Labor markets remain exceptionally strong. The unemployment rate in June has fallen to a new historic low of 5.9%, and the employment rate now stands at a record 75.3%. This means we are making good progress on the goal that you remember was set at the Porto Summit to reach 78% by the end of the decade.  But we need to make sure that these are future—proofed and well—paying jobs. This is necessary to keep on broadening and strengthening the middle class. Increased automation, digitisation and the rapid rise in artificial intelligence are putting pressure on labour market prospects. Estimates suggest that one in six middle—income workers are in jobs at high risks of automation. Middle—skilled workers are now more likely to be in the lower income class and less likely to be middle—income.  Yet at the same time, different labour market needs and even new professions in green and digital technologies are emerging strongly, but tend to experience a shortage of skilled staff. So the challenge today is to adapt our education and labour market institutions to enable all citizens to take part in, and benefit from, the ongoing transitions. By 2030, we want to have at least 60% of all adults in training every year. That is why we have made 2023 the European Year of Skills. We are helping to match companies’ needs with the right training for workers to help millions of Europeans to upskill and reskill.  Let me recall finally that under the RRF, Member States have earmarked about EUR 63 billion for measures targeting education and adult learning. An additional EUR 61.4 billion is channelled through the European Social Fund+ to continue to put our economy at the service of a broader and stronger middle class. So it is crucial that Member States continue implementing their recovery and resilience plans.  We know there are challenges in implementation. We are working closely with all Member States and with the Spanish Presidency to help things speed up. But with the RRF, we have not only the vision but also concrete plans and the resources to put our economies on a more sustained and sustainable growth path, one that ensures our economies grow not from the top down, but from the bottom up and the middle out.