Time for a new paradigm – the European Commission Autumn Semestral Package

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The European Commission published its European Semester Autumn Package on the 17th December 2019.  Subtitled ‘Creating an economy that works for people and  the planet’, the Annual Sustainable Growth Strategy sets out the economic and employment policy strategy for the European Union.

The European economy has been growing for the past seven years, and is set to continue into 2020 and 2021, although growth prospects have weakened.  Many economic areas have strengthened since the Recession, however investment and potential growth remain below pre-crisis levels. 

Short-term challenges include the current geopolitical uncertainty, and rivalries between the United States and China, which particularly affect the manufacturing industry.

Medium-term challenges include those presented by an ageing population, slow productivity growth and the effects of environmental damage.  By 2024, the ageing population means that the workforce in 11 EU Member States is estimated to fall by more than 3 per cent compared to today.  By 2060 the EU’s workforce is set to decrease by 12 per cent.  Notwithstanding increased automisation, this reduction may still contribute to a decline in productivity and growth.  Environmental damage will also play its part, as more frequent extreme weather conditions, influences on human health and less reliable access to materials is expected to affect economic activity.

With these challenges in mind, the European Commission identifies the need to develop a new paradigm to address interrelated key challenges where leadership on environmental protection and a strong innovative industrial base “must be seen as two sides of the same coin”.  A stable economy coupled with a Just Transition for those most affected by changes are seen as “prerequisites for success”.

Priorities under the four key dimensions, which will be used to implement the Strategic Development Goals, include:

Environment

• Boosting sustainable investment
• Green taxationRe
• Carbon neutrality
• Shifting towards a more circular economy

Productivity

• Research and innovation
• Digitisation
• Efficient and competitive markets
• Strong industrial base
• Supporting SMEs
• Access to finance
• Favourable Business environment
• Deepening the Single Market

Stability

• Completing the Economic and Monetary Union
• Sound public finances
• Stable financial sector
• Preventing domestic and external imbalances
• Structural reforms to boost productivity
• International role of the euro

Fairness

• Implementing the European Pillar of Social Rights
• Invest in skills and health
• Fighting poverty
• Gender equality
• Fair taxation
• Social and territorial cohesion
• Job quality

Much of the priorities listed here are contained in Social Justice Ireland’s Policy Framework for a Just Ireland and we particularly welcome the priorities under the dimension of fairness, as areas on which we have advocated for some time. In our Framework (Table 1), we focus on five key areas: decent services and infrastructure, just taxation, good governance and sustainability, which are essential if the economy is to be stable and vibrant and if it is to grow in a way that is suited to the development of a society characterised by justice, equality and well-being.  This is a long-term strategy that should be designed to outlast a single Programme for Government in order to fully address Ireland’s many crises and protect both the economy and society from future shocks.

Table1:  A Policy Framework for a Just Ireland

This need for a paradigm shift which places justice, equality and well-being at its core was also the subject of the opening remarks by the President of Ireland when he hosted his seminar ‘Re-thinking Economics: The Role of the State’, when he said[1]

The task at hand – to create a sustainable society that is more equal, one in which all work is valued and all jobs are decent and fulfilling, where, as Amartya Sen put it, participation by all citizens without shame is possible, one in which the State plays a key role in improving the quality of life if its citizens – this is not an easy agenda given the current geo-political milieu and Western fixation with neoliberalism… Poverty and inequality have fuelled and empowered the democratic crisis in which we find ourselves. Therefore, a paradigm shift that reduces these social ills will also contribute to the restoration of democracy.

It is time for a paradigm shift throughout Europe.  One which looks beyond economic growth and strives instead to create a more equal, sustainable, society.

[1] https://president.ie/en/diary/details/president-hosts-seminar-rethinking...