POLITICS & INSTITUTIONS - ECONOMY

“Austerity would be the wrong answer to this crisis”



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Nicolas Schmit is Luxembourg's commissioner in Brussels, responsible for jobs and social rights. Photo: Mike Zenari 

The European Commission in March 2021 launched an action plan to strengthen social rights in the EU. Nicolas Schmit, commissioner for jobs and social rights, says it’s time to give the union a more social face and show it works for everyone. 

The Portuguese presidency of the Council of the European Union on 7 and 8 May, in the run-up to Europe Day, hosted the Porto Social Summit, which aimed to renew political commitment to implement the pillar, also with a view to ensuring fair climate and digital transitions.

Delano spoke with Schmit for its May edition, currently available on newsstands and in which this interview was first published.

Cordula Schnuer: The European Pillar of Social Rights is a wide-ranging package of principles and ideas. You presented an action plan in March to turn it into practice. Why is this project so important for Europe?

Nicolas Schmit: The pillar was an important project before the pandemic, and it has become more important since the pandemic. We saw--and this was already the case for the Juncker commission--that after the financial crisis the social gaps in Europe increased, that citizens didn’t really recognise themselves in this kind of Europe, where the social dimension wasn’t considered very important. I think that was the reason why [Jean-Claude Juncker] came up with this proposal. The pillar is 20 principles. And immediately afterwards came the demand to have an action plan. And that’s what this commission decided from the outset. We came up with a document where we outlined the different directions in which we would like to go, and then came the pandemic.

Social issues became very obvious: investment in health, investment in social services; inequality is growing, poverty is growing, unemployment is also growing, youth unemployment is growing. The action plan isn’t fundamentally different from what it would have been if we hadn’t had the pandemic. But I think the urgency of taking care of social issues, and also better integrating the social dimension in our policies, national and European, has been clearly underlined.

The pillar doesn’t give the commission any more competences on social rights. Do you wish the commission had greater powers in this domain?

We could have a bit more competence in some areas, like health policy. This is a consequence of the pandemic. People consider Europe isn’t doing enough. The EU perhaps isn’t doing enough, because we don’t have the competences to do more and national governments, when things don’t work as they should, try to say that’s because Europe doesn’t function as it should. There are areas where there should be clarification, perhaps adjustments in competences, but I do not request major additional competences in the social area. We respect the social systems of the member states. What we need is more convergence, more cooperation, more coordination.

Because social rights are mostly a national competence, what will be required of member states to make the social pillar and the action plan a success?

The pillar is about very clear and concrete issues. It’s about education and skilling; it’s about gender equality; it’s about access to good quality social services; about youth employment. These are very clear issues, which have to be addressed in all the member states. We know that the situations in member states might be very different. We are, in a way, helping member states to build up the right policies in their specific contexts. It’s not one size fits all; our social systems, educational systems are very different. We always have to take this into account. But nevertheless, there are common interests and common approaches. I think we have a role to create the right incentives to improve public policies.

You said that the pandemic didn’t fundamentally change the action plan. Nonetheless, were there priorities that shifted compared to what you originally envisioned in 2019?

Absolutely. Health has become an absolute priority. What has been done during the last 20 years? In a very budgetary logic, some would say austerity logic, there have been a lot of cuts in the health system. We have diminished the number of hospital beds, we have not equipped hospitals with adequate staff, which means that, today, people working in the hospitals are facing an absolute work overload. We have to reflect on how to invest in social infrastructure in the future. Digitalisation, which was absolutely on our radar, has developed much more rapidly than we expected. There is a transformation going on with telework, with robotisation. We have to take into account the social dimension of these accelerating transformations. The pandemic has given more pressure in certain areas, but these are things which were already present before.

Is it somewhat symbolic that the commission launched the action plan under the Portuguese EU Council presidency, given that Portugal suffered a lot under EU austerity in the aftermath of the 2008 financial crisis?

It’s fortunate that we can launch the action plan under the Portuguese presidency. But this wasn’t planned. It just worked out like that. The Portuguese government is very much committed to the social dimension of Europe. They experienced quite harsh austerity policies. They have shown that you can have a balanced economic and social and budgetary policy without austerity. They had cautious but active fiscal policies, trying to rebuild the social fabric, and, at the same time, investing a lot of money in the development of the economy. Thinking that austerity by itself produces growth is absurd. This is a big lesson which we have learned. We have understood that austerity would be the wrong answer to this crisis, as opposed to the previous one.

Comparing the two crises, would you say that Europe is more united now than it was then?

Yes, I think so. Because there is the awareness that this crisis is different. First, everybody was hit, at a different level, but everybody was hit. And there’s also the awareness that if one country is in great difficulty, that might spill over to all the others. This was also the case with the financial crisis, but here the idea was: you have to find your solution and you have to put your house in order. But now, we know that in this pandemic, we have to find solutions collectively. There are still some divergences. But the fact that, for the first time, a common major financial programme was adopted, was a very strong signal.

The aftermath of the 2008 crisis gave rise to a lot of anti-EU sentiment and populism. Has this crisis been better for the EU and for how people feel about the EU?

I hope so. We try to show that Europe is there. Very early on, we launched the Sure instrument, a €100bn programme. We put this together in a very short time. Millions of people in Europe could keep their job. They were supported, they could keep their income, also thanks to short-term work financed by the European Union. I think Europe was very present during this crisis. We did our utmost. There will always be critics. But if AstraZeneca isn’t providing the right stuff? Well, it’s AstraZeneca having a problem because they made commitments they couldn’t fulfil. Overall, I think Europe has done what it could do in many areas. We have to work on showing that the right way was solidarity and not falling apart, because that would have really created major problems.

What are some of your next steps for the action plan?

The steps are already being taken. It’s a work in progress. We have adopted a child guarantee. We have millions of children in Europe living in very poor conditions. 22% of children in Europe are at risk of poverty. We are proposing measures to lift them out of poverty, to help children in need. This is part of the action plan. We will work with member states on how to put into place the right infrastructure. Good childcare for everybody, free childcare for those who need it are things which have to be financed. We will try to provide money to support member states that will have difficulties to afford this. This is a good example of how the action plan will function. We are working now on platform workers [editor’s note: gig economy workers using online platforms, such as Uber]. Should they have social protection? Should they get minimum wage? In some countries, this has been decided, in others not. We will work on a scheme [on] how to address the question of working conditions for platform workers. This is how the action plan will function over the next years.

An EU minimum wage consultation was one of the first initiatives you launched after taking office. What kind of progress are you seeing in that debate?

We have made a proposal which is on the table. The European Parliament is working on it, the council is working on it. The Portuguese presidency is trying to make real and rapid progress on this file, which is an important one. Ten years ago, during the financial crisis, the mantra was that wages have to go down. Overall, now, we say wages have to be decent in all parts of Europe and we have to work on wage convergence. We cannot have one minimum wage in Europe, but we have to have wage convergence more rapidly than in the past, also by investing in the economy. Investing in technology, investing in know-how, in skills, is essential. I hope that we can make progress rapidly and adopt this important proposal.

You recently discussed plans to tackle homelessness in the EU. What do you have in mind for this particular issue?

This is mentioned in the pillar: affordable housing and fighting homelessness. While it’s not a European competence, it’s a European problem. When hundreds of thousands or perhaps more than a million people in our cities have no home and live on the streets, and even children sleep in the streets, we cannot just look the other way. With the Portuguese presidency, we will have a first conference where we will create a framework for combating homelessness all over Europe. We will involve cities, regional governments, member states, institutions in Brussels, the Committee of the Regions, Eurocities and say: this is a European problem; let’s find good European solutions. And the commission helps, supports financially, connecting one with the other. I hope that this will be an important political moment, because it means that Europe takes care of those who are at the bottom, those who are in great difficulties.

How much more difficult has your job become because of the pandemic?

It has become more difficult in some ways, and in some ways it has become easier. It has become more difficult because we have a lot of meetings, we have to take care of a lot of problems. The pandemic is now everywhere, in the job market, in poverty, in schools. It’s become an overwhelming problem. I’ve not travelled, which I regret. But at the same time, I’ve met a lot of people, probably more much more than I would have, had I been able to travel. It’s a new way. It’s demanding. But I think we have to show that we are working for all Europeans on the best possible solutions. That’s also stimulating.