C Explanatory memorandum
by Mr Andrej Hunko, rapporteur
1 Introduction:
the role of States in stabilising the socio-economic situation in
the face of the pandemic
1. The Covid-19 shockwave has
dominated the lives of all people across the world since its breakout
in late 2019 and will keep policy makers occupied for years to come
as all our countries grapple with the fallout from the pandemic.
Despite early warnings and exhortations from the World Health Organization
(WHO) and from the Parliamentary Assembly,
Note no
country was prepared to face a pandemic challenge of this scale.
When handling the previous financial and economic crisis of 2008-2010,
austerity measures taken by many countries – or imposed by external
rescuers on certain countries – further weakened the resilience
of societies and the State, including the health sector, before
the pandemic hit, directly affecting the most deprived and vulnerable parts
of the population.
Note
2. In spring 2020, massive lockdowns across most of the globe
slowed down economic activity so much that analysts saw a recession
develop, resulting in deep cuts in revenue for enterprises, in income
for many workers, and in tax receipts for the State. All Council
of Europe member States had to roll out emergency support programmes
for both enterprises and vulnerable persons. The States were called
to the rescue and rose to the challenge of stabilising the socio-economic
situation with historically large rescue packages despite shrinking
tax inflows. They must now not only ensure a just, efficient and
transparent use of these funds, but reconsider if these funds and
economic measures are sufficient for the ongoing economic crisis:
the European Central Bank reported an average fiscal package of
4% of GDP in the assessed European countries compared to an immediate
fiscal response of 9% in the USA.
3. The autumn of 2020 and spring 2021 brought new waves of infections,
hospitalisations and deaths from Covid-19, along with the new types
of restrictions or lockdowns affecting economic and social life
in many member States. The situation only got worse at the turn
of the year as infection numbers rose and new variants (first detected
in the United Kingdom, South Africa, and Brazil) of coronavirus
spread across Europe, exacerbating the pandemic and further straining
public, corporate and personal finances. The launch of vaccination
campaigns was hailed as a sign of hope that life would go back to
normal – slowly, but surely. However, against the backdrop of shortages
in vaccine(s) supply and organisational problems with vaccination in
some member States, substantive effects on the ground took time
to unfold.
4. In its
Resolution
2361 (2021) “Covid-19 vaccines: ethical, legal and practical considerations,”
adopted in January 2021, the Assembly called for Covid-19 vaccines
to become a “global public good, accessible to all, everywhere.”
It urged member States and the European Union to “overcome the barriers
and restrictions arising from patents and intellectual property
rights in order to ensure the widespread production and distribution
of vaccines in all countries and to all citizens.” Likewise, a broad
coalition of more than 100 States under the leadership of India
and South Africa called to activate an emergency waiver of the Agreement
on Trade-Related Aspects of Intellectual Property Rights of the
World Trade Organization (WTO) in order to lift intellectual property
rights for Covid-19 vaccines. The failure to act accordingly has
contributed to the observed shortages in vaccine supply and not
only cost lives, but also slowed down the path to normality, which
hugely affects economic and social development.
5. Have our States learned their lessons from the previous crisis
a decade ago? How to avoid the mistakes made in the past and embrace
the challenge of sustainable growth in overcoming the socio-economic
crisis sparked by the Covid-19 pandemic? How can we best protect
social rights and prevent inequalities from widening further? These
were some of the questions we debated together with experts during
the hearing on 7 October 2020,
Note which then led to the tabling of a motion
on this matter (
Doc. 15145). Further to the decision of the Assembly on 12 October
2020 to refer the issue for report to the Committee on Social Affairs,
Health and Sustainable Development, I was appointed rapporteur on
21 October 2020. Moreover, in May 2021, the Assembly referred to
the committee two other motions to be taken into account in the
framework of this report: “For a fairer future: building on the
lessons of the Covid-19 pandemic to promote equality in Europe” (
Doc. 15246) and “Covid-19 impact on global tourism and aviation
industries and their safe revival” (
Doc. 15254).
6. In this context, I should recall that in 2020 I had the honour
to work on and to present our committee’s report on “Lessons for
the future from an effective and rights-based response to the Covid-19
pandemic” (
Doc. 15115), which included chapters on saving the economic system
and upholding social rights and social cohesion. Following a debate,
the Assembly expressed concern about the “potentially lasting damage
to our political, democratic, social, financial and economic systems”
Note from an inadequate
response to the pandemic. Moreover, it recommended that member States
“ensure that their economic recovery and safeguarding plans do not
create the conditions for a future degradation of ecosystems likely
to generate other epidemics of a zoonotic nature, and thus condition
the aid put in place on the fulfilment of ambitious environmental
and social criteria in line with the United Nations Sustainable
Development Goals.”
7. This report seeks to review the socio-economic trends and
policy measures against the background of the still unfolding crisis
induced by the pandemic and the measures taken to contain it across
Europe. We shall focus on the role of the State in using various
policy tools and intervention measures to repair the damage in the
socio-economic tissue and to orient economic actors towards advancing
socially and environmentally balanced development. This is a unique
opportunity for Europe to boost solidarity between countries by
pooling resources, know-how and long-term vision towards reclaiming
and reinvesting in strategically important sectors of the economy
and society, especially the health system, for future prosperity
and social equality. By studying the best available research evidence
and policy advice from the major macroeconomic authorities, we shall aim
to formulate appropriate policy recommendations to our member States.
2 Multifaceted effects of the socio-economic
crisis following the pandemic
8. We have seen the gradual relaxation
of restrictions on personal mobility over the summer of 2020, and the
new round of restrictive measures all across Europe in the autumn
of 2020 and early 2021. However, unlike in spring 2020, we saw last
autumn widespread public exasperation (“pandemic fatigue”) and even
open social revolt in some countries as the second wave of the pandemic
started spiking. Unauthorised gatherings of the population (such
as clandestine parties or opening of restaurants and shops) have
defied the official orders even further during the third wave.
9. It is clear that we are not all equal before the pandemic
and its effects: (pre)existing social inequalities
Note have led to unequal access to
health care, disparate conditions for home-schooling, weaker general
health conditions to confront the illness (such as those linked
to nutrition problems, lack of physical exercise, and poverty),
and harsh psychological consequences (especially for those already
vulnerable, often living in small and/or crowded accommodation),
as well as uneven social protection. The latter is particularly
problematic for “those who fall out of working life and the education
system early”
Note or
do not have proper access to it altogether.
10. The slowdown in economic activity across Europe and the world
is visible through deteriorating economic indicators. The International
Labour Organization (ILO) points to the effects on labour markets, notably
a worldwide decline of 8.3% in labour income before considering
fiscal income support measures, which is equivalent to 4.4% of global
GDP.
Note Working hours globally decreased
by 8.8% or about 255 million full-time jobs – four times more than
during the 2008/09 financial crisis;
Note some compare the situation to that of
1929. Worldwide, more than 80 million people dropped out of the
labour force in 2020 due to inactivity because of the pandemic;
many of them could end up being unemployed if jobs vanish as enterprises
close or downsize activities – in addition to 33 million who lost
their jobs in 2020. The Organisation for Economic Co-operation and
Development (OECD) sees an additional risk of a surge in post-Covid
bankruptcies and as a result in unemployment if no substantive support
is allocated to deeply affected sectors. The World Bank expects
a “truly unprecedented” increase in global poverty with “Covic-19-induced
new poor” to rise to between 119 and 124 million.
Note
11. Most jobs were lost in hard-hit sectors, such as tourism/travel
and food catering services, arts and culture, retail trade and construction;
at the same time, certain sectors – including information, communication, online
retail, delivery, financial and insurance services – managed to
boost their economic activity. Overall, women lost 5% more in employment
than men, and young workers lost 8.7% more than older workers, as
they were already over-represented in short-term jobs and informal
employment, which are not covered properly by social protection
systems even in “normal” times. In this context, as Prof. Karamessini
pointed out during the committee hearing on 7 October 2020, long-term
challenges arising from a policy perspective include: 1) significance
of domestic (unpaid) work mainly carried out by women; 2) lack of
publicly provided care for aging and vulnerable persons; 3) precarious
forms of employment resulting in weaker social protection of women,
migrants and foreign-born people in the care sector. There is also
the need for enhanced social protection for young people who are
in transition towards autonomous living and work. Furthermore, higher-skilled
workers in better paid employment were hit less severely by the
crisis than lower paid and more precarious workers. At the same
time the risk of infection differs clearly in different sectors
of the economy, with less safety in working conditions for lower
income workers.
12. The volume of world trade in goods and services has fallen
precipitously in the first half of 2020 (equivalent to a 17.2% year-on-year
decline) as the pandemic disrupted both production and consumption,
and struggled to recover in the second half of the year. In this
context, Europe was hit even harder with a decline of 24% in exports
and 22% in imports in the first half of 2020; however, its rebound
in the second half of 2020 was spectacular, with a total decline
for 2020 of 2% (exports) and 3% (imports) in a year-on-year comparison. The
WTO (World Trade Organization) estimates that a global decline in
the volume of merchandise trade for 2020 of 5.3% will be followed
by an 8% rise in 2021; trade in services followed a similar pattern
but the official data is yet insufficient to complete the picture.
The recovery of global value chains through trade is essential not
only for development, but also for beating the epidemic: as one
leading producer of vaccines points out, manufacturing a Covid-19
vaccine requires some 280 components supplied by 19 countries.
NoteNoteNote
13. Global GDP declined by 4.4% in 2020 according to the World
Bank
Note and
by 4.8% according to the WTO, with huge differences across regions
and Europe facing a growth downgrade of 4.7%. The European Bank
for Reconstruction and Development (EBRD) sees an overall contraction
across its region of emerging economies of 3.9% in 2020.
NoteNote But
the most spectacular fall is seen in terms of global foreign direct
investment which according to the United Nations Conference on Trade
and Development collapsed in 2020, falling 42% worldwide (down to
USD 859 billion from USD 1.5 trillion in 2019), with a bleak outlook
for 2021 (except for the technology and healthcare sectors). For
Europe, investment inflows dried up completely (from USD 344 billion in
2019 to negative USD 4 billion in 2020).
Note Again, these indicators show a worse
economic decline than that of the financial crisis of 2008/09.
14. Within Europe, economic impact depends on specialisations
and exposure to tradable sectors. In this respect, countries of
southern Europe are particularly dependent on the tourism sector
and were among the hardest hit in Europe by the first wave of the
pandemic in the spring of 2020. The most affected service sector remains
travel, for which revenue in 2020 is down by 68% globally and by
55% in Europe compared to 2019. Worldwide, “a decline in international
tourism in 2020 [was] equivalent to a loss of about 1 billion arrivals
and 1.1 trillion USD in international tourism receipts”, according
to the United Nations World Tourism Organization, while the international
passenger traffic contracted by 60% according to the International
Civil Aviation Organization, putting millions of jobs at risk.
Note
15. In contrast, financial markets resumed “business as usual”
very quickly after the first pandemic wave. Stock indices all over
the world registered all-time-highs and capital incomes remained
relatively constant in 2020 fuelled by Covid-19 vaccines roll out,
ultra-low interest rates, generous government spending or stimulus packages
and – for Europe – a successful, however incomplete settlement of
the divorce between the United Kingdom and the European Union through
a post-Brexit Free Trade Agreement. Despite the pandemic, the number
of millionaires increased by 5 632 000 in 2020 with the USA, China
and Switzerland “gaining” two-thirds of the world’s new millionaires.
Note The winners from the 2020 pandemic
year were involved in software and high-tech companies, enterprises
selling videoconference licenses, streaming providers, and the delivery industry,
as well as financial trading. It appears that enterprises profiting
from the crisis are taking advantage of gaps in global digital taxation
or of precarious employment contracts (such as those common in delivery services).
16. The pandemic has also exacerbated existing economic inequalities
as large multinational companies like Amazon profited enormously
to the detriment of small local shops, and the wealth of the richest
percentile grew further, while vulnerable parts of the population
and certain categories of workers suffered the most (notably the
self-employed, women in short-term, part-time, or gig economy jobs,
those in informal employment, those unable to telework from home,
those subject to a reduction of working time or in temporary unemployment,
and those who lost employment altogether).
Note During the lockdowns, many women,
especially mothers, had to carry the double burden of extra (unpaid)
care work and home-schooling, while also being over-represented
in low-paid jobs (such as in the healthcare sector, elderly-care
homes and the education system). According to the OECD, women also
face greater income insecurity and risk of unemployment. Additionally,
the threat of domestic violence against women and children increased.
Single parents suffered disproportionally from the closing of schools
and day-care facilities for children. In no other group of the society, is
the risk of poverty as high as it is for single parents, and the
pandemic situation has increased it further.
17. As Mr Boček, Vice-Governor of the Council of Europe Development
Bank (CEB), highlighted during the committee hearing on 7 October
2020, disparities had been widening not only in terms of income,
but also regarding unequal opportunities in accessing the labour
market, education, housing and health services. One out of three
low-income households in the bottom 25% in Europe has faced problems
getting a reliable internet connection or personal computer for
distance learning and remote care assistance during the pandemic. Likewise,
unequal access to education was already an issue before the pandemic
as schools in disadvantaged areas often had fewer qualified teachers
and suffered from shortages in material supplies to provide for effective
learning environments. Further lasting collateral damage was caused
by the prolonged and repeated closing of schools and educational
institutions due to pandemic-related containment measures. Given
that the situation of children largely depends on their families’
socio-economic background, the existing gaps and widening disparities
scotched many efforts concerning education equity.
Note
18. This combines further with the urban-versus-rural divide due
to infrastructure shortages after years of underinvestment and budgetary
austerity. As the study on “The impact of Covid-19 on people experiencing poverty
and vulnerability – re-building Europe with a social heart” by the
European Anti-Poverty Network (EAPN) shows,
Note already before the pandemic, 21
out of 25 European countries surveyed were facing challenges in
securing coverage and quality public services for all, particularly
for poor and vulnerable groups. Minimum income schemes have been
largely insufficient, and social protection systems were under-funded
in half of the surveyed countries. Social vulnerability of European
households is amplified by indebtedness, lack of savings and precarious
employment, as well as prevalent diseases and disabilities, poor
physical and mental health, insecure housing or homelessness and
discrimination affecting certain minorities, Roma and immigrants.
19. Young people across Europe are also heavily affected by the
pandemic; as educational institutions have been closed and activities
of young people have been strongly restricted, the youth unemployment
rate increased in many Council of Europe member States: for EU countries,
this rate went up from about 15% at the end of 2019 to about 18%
at the end of 2020.
Note If
the youth unemployment situation in 2019, notably in southern and
eastern Europe, had nearly returned to the level before the financial
crisis of 2008/09, the pandemic year of 2020 annihilated the improvement
attained over the last decade. In general, youth unemployment rate
is above the overall unemployment rate and due to the pandemic,
there is serious concern that the current crisis will exacerbate
young people’s disconnection from the labour market, with a real
risk of seeing a “lost generation” which will drop out of the labour
force and will remain unavailable on the labour market.
20. Overall, there has been an increase in unemployment in 2020
in nearly all Council of Europe member States.
Note The enormous slowdown in economic
activity continues to jeopardise many jobs, especially in low-wage
sectors such as the tourism, gig and catering industries. Many countries
managed to mitigate the rise in unemployment to the extent of their
fiscal ability, mainly through wide-ranging short-time allowances,
but also through fiscal stimulus measures. However, as the sovereign
fiscal capacity varies widely across States in Europe, so do the
possibilities for implementing ambitious economic recovery measures.
3 Emergency
measures taken to counteract “collateral damages”
21. In reaction to the rapidly
eroding socio-economic situation, all Council of Europe member States
took more or less significant emergency measures to compensate for
wage losses, simultaneously softening the social effects of the
crisis, supporting businesses as needed and providing macro-economic
stabilising effects. As the EAPN study shows, many European governments
stepped up income support by extending unemployment benefits, social
allowances and housing protection for vulnerable populations, and
put in place direct payments or moratoria on taxes, social contributions
and rent payments for some types of enterprises. In the education
sector, most countries tried to launch distant learning schemes,
with mixed results. Positive examples of urgent action also include
rapid adaptation of national health-care systems (such as for effective, publicly-managed
testing and tracing of the coronavirus, the early isolation of infected
individuals, and free access to health care for immigrants) and
job retention schemes (including through exemptions from social security
contributions for enterprises to avoid bankruptcies, promotion of
teleworking, short-time working schemes and a temporary ban on layoffs).
22. Remarkably, the European Commission lifted State aid rules
and suspended government borrowing limits (fixed in the Stability
and Growth Pact). Moreover, the European Union found the political
will for common financial programmes not only to provide social
support (such as via the SURE programme), but also for a massive
investment programme (NextGenerationEU) with a “Green Deal” approach.
This investment programme is endowed with € 750 billion. Approved
in February 2021, the European Recovery and Resilience Facility
(the main element of NextGenerationEU) earmarks € 672.5 billion
in loans and grants to member States in support of investment and
reforms.
23. However, member States of the European Union are still facing
a stringent legal framework: the rules for budget deficit management
under the stability and growth pact and the State aid rules were
lifted only temporarily. If the financial and economic governance
of the European Union were reinstated without major reforms, it
could prove harmful to the first signs of economic and social recovery.
At the same time, the disbursement of the European Recovery and
Resilience Facility is linked to the implementation of country-specific
Recommendations of the European Semester, with potentially harmful
reforms of labour markets and of pension systems as conditions.
The recent statement of EU Commissioner P. Gentiloni is a clear
warning on the role of social dialogue in the future: he admonishes
that without greater involvement of the trade unions in the development
of national recovery plans, the desired reforms of the labour markets
and the pension system will be unenforceable.
Note
24. Looking into the future, in combination with the European
Union’s multi-annual financial framework for 2021-2027, a total
of €1.8 trillion are planned to be mobilised to “rebuild a post-Covid-19
Europe, which will be greener, more digital, more resilient and
better fit for the current and forthcoming challenges.” Indeed,
an impressive 30% share – more than ever before – of the EU’s funds
under both the long-term budget and NextGenerationEU will be committed
to fighting climate change and better protecting biodiversity, as
well as to paying greater attention to gender-related issues. However,
if at first sight these figures may look spectacular, they are pale
in comparison to the USA efforts where the overall stimulus package
to businesses and households totals USD 4.8 trillion over 2020-2021.
Note At the same time, the European and
American socio-economic models differ significantly, which explains
why European countries’ support is more targeted, needs-based and
often with “strings attached,” as opposed to the “helicopter money”
Note approach adopted by the USA.
25. In this context, we should welcome the European Union’s plans
to propose raising new resources through a financial transaction
tax and a financial contribution of the corporate sector or a new
common corporate tax base, building on recent developments towards
enhanced co-operation in tax matters (the relevant proposals should
be made by June 2024). I wish to recall that this Assembly proposed
the launching of a European tax on financial transactions in its
Resolution 1905 (2012) “Restoring social justice through a tax on financial
transactions,” advocating that a substantial share of revenue from
such a tax would be used for “priority funding of measures in favour
of sustainable growth, job creation, social needs and global solidarity action.”
Let us hope that with the United Kingdom having left the European
Union, there will be fewer obstacles towards the instauration of
this tax at the EU level earlier than 2024. Yawning inequalities
have, in some countries, triggered a debate on whether a levy on
capital could help prevent a more extreme inequality of wealth in
the population. Such a levy on capital could be considered as an
additional instrument in order to mobilise new fiscal resources.
26. More than ever, European countries need to rebalance their
socio-economic development policies, so as to consolidate real economy
and social protection systems, ensure sound management of the sovereign debt,
while mobilising resources for more sustainable, more human-centred
development, and aim for economic convergence in developing a common
strategic industrial policy. We should therefore welcome the efforts
of the OECD towards brokering a global agreement on taxation of
the digital economy and minimum corporate tax rate by the mid-2021
meeting of G20 finance ministers and central bank governors.
Note
27. However, it is evident that not all States have the same financial
power to stand up to several waves of the pandemic and the resulting
lingering disease burden. The EBRD survey
Note confirms that
“the economic impact of the Covid-19 crisis on people’s lives was
more pronounced in the EBRD regions than in advanced Europe […]
where stimulus packages were typically larger.” Many countries continue
to depend on financial markets (especially those outside the European
Union), with rising interest rates limiting their scope of action or
even threatening their financial stability. In macroeconomic terms,
European countries are experiencing economic downturn, loss of public
revenue and steeply rising sovereign debt regardless of hard or
soft, early, late or no compulsory lockdown measures. Further ahead,
there is a real risk of future economic and social imbalances when
economically strong countries are able to support their economies,
whilst other countries suffer more from the decline in economic
activity. In this context, we should applaud the Council of Europe Development
Bank (CEB) for the timely and valuable support it is providing to
governments and local authorities in 15 countries to help sustain
public health services and mitigate the effects of the pandemic
on the economy.
Note
4 Making
fair, efficient, and transparent use of rescue packages to invest
into “the future we want”
28. As the CEB’s Vice-Governor
explained during the hearing on 7 October 2020, the way forward
is two-fold. Short-term solutions are needed to deal with emergencies
during the crisis, including country-specific measures of income
support and facilitated access to medical services, as well as targeted
support to the corporate sector to prevent massive disruption in
economic activity and chain bankruptcies as a result. Moreover,
long-term investment strategies are needed to enhance public health
systems and make them more adaptable to facilitating quick responses
in the future, shifting the focus of health-care systems to disease prevention
and health promotion, linking up health-care and social care services
to better support vulnerable groups, especially the elderly, and
attracting more doctors and care providers to disadvantaged areas.
States should also invest more in upgrading and adapting their education
systems, boosting the capacity, quality, efficiency, affordability
and accessibility of public services, as well as enhancing access
to social housing and green areas for low-income families through
integrated housing development strategies, and mainstreaming Sustainable
Development Goals through public and private sectors. In addition,
an economic growth strategy combined with social policies is needed
so as to focus on changing the composition of output whilst stabilising the
economy and meeting the objective of improving well-being.
29. It is by no means easy to formulate policy recommendations
to States with widely differing capacities for facing the pandemic
and the socio-economic hardship. I would like to argue in favour
of a paradigm shift so as to avoid repeating errors of past reactions
to economic and financial crises based on massive austerity and cuts
in public expenditure. It is encouraging that major international
organisations (such as the OECD) and institutions (such as the World
Bank) are calling for States to invest and co-ordinate their policies
rather than tighten their budgetary belts. Indeed, as the joint
statement (issued during the Spring Meetings 2021) of 189 member
countries of the World Bank Group and the International Monetary
Fund underlines, “strong international co-ordination is urgently
needed to contain the impacts of the pandemic, resume progress toward countries’
development goals, and lay the groundwork for green, resilient,
and inclusive development” because “a global recovery will require
sustained, differentiated, and targeted financial and technical
support to governments and the private sector.”
NoteNoteNote
30. I believe that we should follow up on the recent key Assembly’s
recommendations to member States in order to help shield the most
vulnerable people and businesses with expansionist social and economic
policies; to contain epidemic outbreaks using tried and tested,
effective and as far as possible evidence-based public health measures
that are implemented in a human rights-compliant way (as recommended
in the Assembly
Resolution
2329 (2020)); and to minimise harm to the economic system while
putting the people and the planet first. This, in my opinion, implies
– first and foremost – that when delivering multilateral financial
support to member States, no punitive conditionalities such as austerity
measures should apply if they could harm social protection systems,
health systems or fundamental rights as defined in the revised European
Social Charter and the European Convention on Human Rights (ETS
No. 5). At the same time, support for enterprises at national level
should promote social and environmental goals as part of the overarching
public interest in pursuing sustainable development. For instance,
the Austrian support programme outlaws workforce reductions for
enterprises benefiting from governmental support. In general, it
seems unethical for enterprises to pay out dividends to shareholders
while receiving financial support from the State and laying off
workers.
31. In its statement on “Covid-19 and Social Rights” of 22 April
2021, the European Committee of Social Rights (ECSR) urged States
to invest in “social rights and in their delivery – consistent with
the use of maximum available resources,” underlining that the European
Social Charter provides a framework which will help “mitigate the
adverse impact of the crisis and accelerate the post-pandemic social
and economic recovery.” The ECSR also asks States to assess if their
legal and policy frameworks are sufficient “to ensure a Charter-compliant
response to the challenges presented by Covid-19.”
Note
32. We should urge member States to take a concerted approach
for a robust and equitable economic recovery based on strengthening
not only social cohesion but also quality in economic performance,
thus underpinning democratic legitimacy in the process.
Note Member States
should evaluate the measures taken to contain the pandemic with
regard to their effect against the spread of Sars-CoV-2 (effectiveness)
and negative impacts on economy and society (collateral damage).
An unchecked pandemic would cause its own collateral damage on the
economy and on society and, given the existing inequalities, lead
to a scenario of social Darwinism leaving the most vulnerable groups
most exposed to the threats of the pandemic and its long-term consequences.
At the same time, it is the responsibility of political decision
makers to ensure that the cure is no worse than the disease as premature
lifting of restrictive measures risks causing a new wave of infections and
new restrictions, with severe consequences for more vulnerable groups.
33. While States have to act to contain the spread of virus, the
principle of proportionality must be guaranteed at all times. In
particular, lockdown measures should always be screened, evaluated
and calibrated in terms of their effectiveness and their uneven
effects on the population, and support measures should be offered
for the most affected groups of people. Moreover, our States should
work together to build mechanisms to allow public finances to be
decoupled from the volatility of the markets.
34. As the EAPN representative pointed out during the hearing
on 7 October 2020, minimum income schemes are insufficient or inadequate
and social protection systems are under-funded in half of the surveyed countries.
In this context, as one committee member pointed out, instead of
discussing fiscal discipline, it is necessary to think about the
substance of fiscal expansion which would focus on rights-based
challenges and the State’s role in providing basic public services
together with progressive taxation.
35. Some economists view the current hardship in terms of public
health, unemployment and environmental degradation as a triple crisis
that our States need to confront in rebuilding a stronger post-Covid
Europe.
Note Considering the central role that
the State has in providing macroeconomic stability and social inclusion,
as well as facilitating structural transition towards more balanced,
more sustainable development for the sake of public good, they put
forward a policy option of a European job guarantee.
Note This
is a policy choice whereby the public sector would provide high-quality
employment opportunities, based on local economic needs and pursuing
the goal of decent work for all; as the private sector and the economy
gradually recover, people would be able to move also to private
sector jobs of comparable quality.
36. In a similar vein, the EAPN advocates in favour of double-track
measures aimed at stimulating employment and protecting the rights
of the working population (such as by guaranteeing adequate minimum wages
to shield the population against in-work poverty). Young people
would in particular benefit from public employment-stimulating schemes
and would also need the extension of social protection schemes to
shield them from the risk of poverty. The ECSR, for its part, insists
on the obligation of States to “maintain a high and stable level
of employment with a view to realising the objective of full employment”,
including “through public employment programmes, public works, hiring
subsidies and various support measures for the creation of quality
jobs with decent working conditions.”
Note I notably appreciate the ECSR’s
position on the situation of women and migrant workers who are over-represented
in the sectors hard-hit by the pandemic (care, construction and
service sectors), significantly exposed to health risks and violence,
as well as trafficking and exploitation in the case of migrant workers,
and need specific protection measures.
37. In this context, we should highlight a legal void in the European
Social Charter: working migrants originating from countries non-bound
by this treaty are excluded from the application of certain provisions
of the Charter. This loophole, one of many, shows the need for the
Charter to be modernised, with new rights being recognised to meet
the manifold challenges made more visible by the pandemic. Moreover,
from a good democratic governance perspective, the Assembly should
become involved in the election of members of the ECSR, as foreseen
by the Turin Protocol (ETS No.142) of the European Social Charter.
Even though this protocol did not enter into force, all its provisions
have been implemented (by decision of the Committee of Ministers)
except the election of the members of the ECSR by the Assembly.
38. Seeing the post-Covid socio-economic crisis as an opportunity
for strengthening economic fundamentals across Europe, three leading
research institutes (Macroeconomic Policy Institute (IMK) in Germany,
Observatoire français des conjonctures économiques (OFCE) in France
and Wiener Institut für Internationale Wirtschaftsvergleiche (WIIW)
in Austria) propose a 10-year investment programme of € 2 trillion for
concrete European projects with a focus on public health, transport
and energy infrastructure, and decarbonisation policies. The main
goals should be raising productivity and living standards, as well
as enhancing regional cohesion and fostering sustainable transition
towards a greener economy. The suggested investment scheme consists
of two pillars: a national pillar with a focus on the hardest-hit
countries (€ 500 billion); and a European pillar with a focus on
the Health4EU (€ 400 billion), ultra-rapid train (€ 550 billion)
and e-highway (€ 260 billion) programmes, as well as support for
measures to mitigate climate change (€ 290 billion). However, the
ambition of this investment programme is open to debate: given the
severity of the pandemic, and the social and climate crisis in 2020,
it is remarkable that this proposal does not exceed the Marshall-Fund
type of proposal seen in 2012.
Note
5 Concluding
remarks
39. In conclusion, we can say that
despite considerable uncertainties, “cautious optimism” prevails
among policy makers and macro-economists with regard to the prospects
for a socio-economic recovery in 2021 and the coming years. Robust
recovery is feasible, but significant risks need to be addressed,
with a high probability of Covid-19 resurgence, increasing both
public and corporate debt levels, potential due-diligence failures,
a lack of a European dimension and policy reversals at country level.
National parliaments and parliamentarians should advocate a strategic,
long-term vision and ambition for a transformative recovery on the
European continent with strong green and social dimensions. The
crucial question of how to distribute the financial burden of the
crisis should be discussed in different political and legal frameworks,
with the involvement of citizens, social partners and parliaments.
The persisting danger of the resurgence of austerity with negative
economic, social and political outcomes should be averted; on the
contrary, it is time to invest in repairing the damages of past
austerity and the current pandemic by building a more sustainable
and more inclusive future.
