EU Briefing

 

The European Commission’s latest Quarterly Review of the EU’s Employment and Social Situation (September 2013) has some relevant findings for local and regional public social services. As the situation worsens in some Member States, divergences between countries have been growing, especially within the Euro Area. The South and periphery of the EU have been particularly hard hit. However more resilient Member States may also be affected by spill-overs through reduced aggregate demand, eroding consumer confidence, and contagion in the financial markets.

 

 

The uneven impact of the crisis within countries has seen inequality rising. Fiscal consolidation (better known as austerity) has been felt most by lower income groups who have been hardest hit by job losses. Social expenditure, offsetting the recession in the first phase, has been reduced in line with an overall downward trend in public spending.

 

 

The Commission expresses concerns about inefficiencies in social expenditure: “Member States with similar levels of spending achieve markedly not only different economic outcomes (automatic stabilisation), but also different social outcomes, such as income smoothing (typically for pensions or unemployment), poverty and inequality reduction or health outcomes.” Social expenditure is weighted towards different policies across the EU, for example:

 

 

Policies and their weightingMore emphasisLess emphasisGrowing during crisis 2007-10

PensionsPolandGermany, Denmark, Finland, Ireland, SwedenAustria, Italy, Poland, Portugal

Health and disabilityIreland, CroatiaCyprus, ItalyDenmark, Germany, Ireland, Netherlands

Family benefitsAustria, Bulgaria, Denmark, Estonia, Hungary, LithuaniaNetherlands, ItalyAustria

Unemployment benefits and servicesAustria, BelgiumItaly, Sweden, UK 

Housing and social exclusionCyprus, Lithuania, Netherlands, UKItaly, Austria 

 

 

The Commission goes on to point out that social spending in some Southern states (such as Italy, Greece, Spain, and Portugal) is often characterised both by the lowest poverty reduction impact (when excluding pensions), a weak demand stabilisation impact and relatively high expenditure on pensions. The structure of their social spending appears mainly oriented towards pensions and less towards enabling services that support the labour market participation of women (e.g. child care) and lead to lower employment rates (especially of mothers) or unemployment expenditure.

 

 

The Commission’s policy guidance is indeed to shift expenditure towards services which enable labour market participation. However, it also warns that “shifting the focus of social protection spending is not sufficient to increase its effectiveness and efficiency”. In family policy, it recommends “an appropriate mix” of cash benefits and services, seeing childcare provision as more employment-friendly and cash benefits as more likely to maintain consumer demand in the short-term.

 

 

A large number of recommendations are prescribed in health care, which is a particular area of concern for high public spending:

 

 

• Centralisation of medicine procurement


• Streamlining clinical practice


• Strengthening primary and community care


 

 

In long-term care (closely related to health), the Commission favours a blend of formal care provision and support for informal/family carers (via cash benefits and care leave). A number of innovative solutions in Member States are also cited:

 

• Decentralisation of different competencies


• Integration of social and health services


• Monitoring of quality indicators for home care


• Preventative health care and rehabilitation


 

 

You can find out more in the EU Employment and Social Situation Quarterly Review – September 2013.