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The true consequences of social disinvestment

Five years after its launch, the EU’s Social Investment Package (SIP) has left those in need with mixed feelings. A consortium of EU-funded researchers went back to the drawing board to see whether and how policy-makers could change its course. They hope that their work will help strengthen the philosophical, institutional and empirical underpinnings of social investment in Europe.


Looking back, the SIP was an ambitious attempt at revamping social policies, especially after five years of crisis exacerbated by harsh austerity measures. It introduced a new discourse and aimed to legitimise social expenditures by emphasising their productive value: high economic returns to social services such as early childhood education, health care, social housing, and active labour market policies; maintenance of living standards and stabilised economies in times of crisis. But the truth is that the package only made it halfway through its ambitions. To help future policy, the Re-InVEST (Rebuilding an Inclusive, Value-based Europe of Solidarity and Trust through Social Investments) project highlighted the long-term damage of social disinvestment during the crisis period and aims to identify the boundary conditions and building blocks for a genuine social investment strategy. Looking back, would you say that the SIP had any positive impact on social investment? Ides Nicaise: The impact was rather symbolic. It was probably useful in limiting the damage caused by the austerity agenda to European welfare states and boosted the efficiency discourse in social protection, health care etc. But persistent pressure for ‘budget consolidation’ made the SIP rather powerless and even increasingly suspected of hijacking social policies in a neoliberal economic agenda. Selectivity, efficiency, profitability and privatisation became the new buzzwords – at the expense of equity, basic rights and social minimum standards. It therefore comes as no surprise that the Juncker Commission chose a different flagship for their social policies: the European Pillar of Social Rights. I do not mean to say that there is an opposition between these two frameworks. But the SIP is hardly referred to in EU policy documents of the past three years. So the SIP was doomed to fail? It could only be undermined by the contradiction between the macroeconomic policy context and the social investment discourse. You cannot preach social investment without at least telling the Member States where to find the resources for it. The EU budget itself is just marginal: at 1 % of European GDP, it cannot have any substantial impact. One can only hope that a sustained recovery will create more room for genuine social investment within Member States. But even the Juncker Investment Fund, which was created to boost the recovery, focused on traditional economic infrastructure and largely bypassed social investment. How did you aim to help reverse this trend? First of all, we pointed at the massive human damage of social disinvestment during the crisis years. Most people think that cutbacks in social expenditure just mean a temporary tightening of belts, or indeed a positive incentive to take up work. The reality at grassroots level is radically different. The 13 local Re-InVEST teams spent many months spelling out the longer-term effects of austerity policies on the lives of the most vulnerable people. They collected evidence of damage that is often irreparable: newborn babies sleeping in ice-cold shelters, chronically ill people stopping their treatment because their medication became unaffordable, bankrupt parents leaving their children behind and emigrating to find work in other countries, families breaking up, peaking suicides, etc. If social investment has a high long-term return, brutal social disinvestment can have devastating long-term effects on people’s lives. We need to draw lessons from that experience. The social investment agenda should prioritise human rights; the EU should help set social minimum standards in all relevant service sectors; and governments must be made accountable when pushing their austerity policies too far. In the next phases of our research, we examined the characteristics of sound social investment strategies in various policy domains: social protection, labour market policies, early childhood education, housing, health care, water provision and financial services. What have been your most important findings so far? The research is still ongoing, but I can give some examples. In our study of labour market policies, three teams examined activation measures for young people. This allowed us to draw lessons for the Youth Guarantee (Youth Employment Initiative), which is part of the SIP. In Portugal the scheme was dramatically under-resourced: over-burdened employment services imposed low-quality measures that actually kept young job seekers busy in carousels rather than integrating them; youngsters were not even informed about the existence of a ‘guarantee scheme’, and those who managed to find a job were not lifted out of poverty. In France, things went better thanks to the outsourcing of activation programmes to local NGOs who were more familiar with the target group. In Switzerland, we analysed an experiment (Scène Active) that was based on the capabilities approach: it combined personality training with skills upgrading, and put a strong emphasis on free commitment of the youngsters. From these examples, we learned that one-size-fits-all programmes can produce adverse effects. Long-term, tailored ones are obviously more expensive, but their net return is far higher. Another example relates to water provision in Flanders. The present Flemish government reformed the market according to strict ecological criteria: they invested in wastewater management and purification, and raised the price, partly to finance public investment, and partly to encourage more parsimonious water consumption. However, the pre-existing free-of-charge minimum provision was abolished, as well as the social tariffs. The Combat Poverty Service and Samenlevingsopbouw invested in capacity building and knowledge-sharing with groups of vulnerable households, and subsequently engaged in negotiations with providers and the government. Testimonies of ‘water-poor’ households illustrated that basic human rights are at risk in a market without social corrections. A new social tariff was introduced, and a guide to good practice was developed to better prevent cut-offs and to foster a more socially responsible attitude among all stakeholders. What are your recommendations? First of all, lessons need to be drawn from the crisis period. Austerity policies should always be linked to the non-regression principle in human rights: this means that any cutback in social expenditure should be preceded by a social impact assessment, and whenever the basic rights of vulnerable citizens are at risk, mitigation measures must be taken or the austerity measure must be withdrawn altogether. Secondly, the conceptual framework of the SIP needs to be enriched from a ‘human capital’ to a ‘human rights and capabilities’ approach. Basic human rights (to health, education, family life, social participation etc.) are so invaluable that they deserve top priority in the objective function of the SIP. Thirdly, funding of a large-scale social investment programme needs to be secured. At present, the budgetary and monetary consolidation agenda is so dominant that it leaves little room for this. We simply need more public revenues. Europe is more than rich enough to afford an ambitious SIP through public funding, provided a coordinated and fair fiscal policy is implemented.