EU Forum

Social Europe

Portuguese view: social Europe at the heart of the European project

20 Jun 2016 - 13:35

Among EU countries, Portugal is one of the most insistent upon the need to build a Social Europe. For the Portuguese, the European project intrinsically implies the simultaneous pursuit of economic prosperity on the one hand and social progress on the other, through the strengthening of welfare states and upward economic and social convergence between member states. For the Portuguese government, this Social Europe relies not only on EU Structural and Cohesion Funds, but also on the coordination of social and employment policies and the definition of binding social standards.  The recent crisis and the austerity policies that followed, have damaged the social face of the EU in Portugal. Thus, in order to restore economic and social convergence, Portugal also supports a deepening of the Economic and Monetary Union, based on a rebalancing of European socio-economic governance and the establishment of a fiscal capacity in the Euro area.

30 years after Portugal’s accession to the EU, economic and social convergence are still the country’s main ambitions
After its accession to the EEC in 1986, Portugal recorded a significant improvement in its living standards, thanks in part to the Structural and Cohesion funds it received from the EU. Economic convergence was accompanied by social progress: the development of healthcare and education systems gives two successful examples of this social progress. It comes as no surprise that, for the Portuguese, the EU was associated until recently with prosperity and social cohesion.

The picture has changed since the beginning of the Euro area crisis and the implementation of the macroeconomic adjustment programme which was signed with the EU and the IMF. This austerity programme had a devastating impact on the Portuguese economy and its society (soaring unemployment, deteriorating working conditions - in particular wage cuts and increased working time - and the expansion of poverty and social exclusion). That is why, after the process of divergence from the rest of the EU seen in recent years, the new Portuguese government established in its programme the need for “a new start for convergence with Europe” – both on the economic and the social field – as the key priority for Portugal in the EU.

Coordination of employment and social policies and upward convergence of social standards
Portugal has benefited and attached great importance to the soft coordination of economic and social policies, demonstrated for example by the first EU growth strategy adopted under the Portuguese presidency of the EU. However, from the standpoint of Portugal, soft coordination is a necessary but not sufficient condition to attain a triple A social rating for the EU. Currently, a social competition among EU countries exists, one which leads to a race to the bottom in social standards and endangers the future of national welfare states. In order to tackle this problem, Portugal defends the adoption of binding labour and social protection standards at the EU level.

Reforming the EMU to avoid and solve economic and social imbalances
In the Portuguese view, deepening the Economic and Monetary Union is a necessary condition to repairing and avoiding economic and social imbalances in the Euro area. The Portuguese government is in favour of two main initiatives.

Firstly, it asks for a rebalancing of European socio-economic governance. For Portugal, social imbalances, which undermine economic prosperity and fuel political instability, deserve as much attention as economic imbalances and must thus be better taken into account in the European semester and in the assessment of the country’s compliance with the Stability and Growth Pact’s fiscal rules. In order to put the fight against poverty and unemployment and the promotion of quality of life at the heart of EU leaders’ actions, the Portuguese government advocates a new Eurogroup on Social Cohesion and Employment.

Secondly, Portugal is clearly in favour of the establishment of an effective fiscal capacity for the EMU (built for instance on the resources of the future Financial Transaction Tax). For the Portuguese government, this fiscal capacity would have two main objectives: i) supporting national reforms aiming to promote employment and the reduction of economic asymmetries (financial incentive tool); and ii) responding to future asymmetric chocks (through the implementation of a cyclical adjustment mechanism, which could take the form of a European unemployment insurance scheme).

Enhancing the portability of social rights for mobile citizens
In the absence of a cyclical adjustment mechanism at the Euro area level, labour mobility functioned as a market adjustment mechanism during the recent crisis. If labour mobility appears in the short term as one of the answers to the high levels of unemployment, the Portuguese government is obviously worried about the youth/brain drain phenomenon and its impact on the Portuguese economy and its society. Nevertheless, the country is against any kind of barriers to the free movement of persons in the EU, and supports initiatives aiming to reinforce the portability of social rights for mobile citizens. This is a key question for the country, in particular to guarantee that the Portuguese who left the country during the crisis will be able to come back home without losing the entitlements and rights acquired in their EU host countries.

To sum up, progressing towards a more social Europe is certainly one of the priorities of Portugal in the EU. As the government underscores in its programme, the EU needs new mobilizing projects which improve the quality of life of its citizens; and these projects must start in the social field.

Sofia Fernandes is Senior Research Fellow bij het Jacques Delors Instituut in Parijs.