Bursting the Bubble

An EU minimum income directive – Placebo or the ultimate chance to save an terminally ill EU social model?

9 April 2014 | by

Doctor, the patient looks really bad, it looks blue and yellow. Is there anything we can still do to save it?

Symptoms, treatment side effects and alternative grandma’s medication:

Democracy is seriously threatened by a politics-business symbiotic virus. After the homeopathic medicine of bailouts, states have impoverished themselves to sustain banks. With such a depletion of public accounts, there are neither the tools nor the maneuver range to respond to the crisis’ symptoms. Distrust towards political institutions is growing. Therefore, the private sector is taking over the lead from the public in Member State management. This is reaching Europe’s central nervous system, Brussels. It seems that the patient has lost all its will to survive. Although, there are tangible solutions such as making the European Commission accountable to the European Parliament, companies do not plan to invest in the research of such treatment due to the lack of financial reward.

The desperate and reckless injection of money into European banks is not producing the expected results, and investment is not being transferred down into the real economy: banking glands are still swelling their beneficiaries’ accounts, without creating real beneficial impact for the whole of society. This sickness is revealing new forms of poverty caused by the current EU economic and social model such as homelessness, fuel poverty, financial exclusion (lack of access to basic banking services and credit) and household over-indebtedness.

On the one hand, our grandma used to tell us about regulation: a regulation that would turn the EU institutions into the ugly and boring old creepy institutions that we all expect them to be, rather than the bragging divas showing off their diamonds and jewels to each other. A regulation which would prevent them from gambling with the money, and physical and mental health of EU citizens and EU enterprises.

On the other hand, there is some oriental alternative legendary medicine: the creation of an EU risk rating agency to control the excesses of the invisible hand which threaten to suffocate the patient’s throat.

When it comes to employment, the best one could say is that the doctors are concerned by the infectious spread of precarious jobs and low wages. There’s no need to explicitly state that the peripheral EU members are in serious risk of gangrene due to bad-quality labour reforms, introduced to improve flexibility whilst reducing labour costs, employment rights and job creation.

Medical prognosis:

The disastrous and nefarious treatment of the economic crisis is fostering social divergence amongst citizens, between countries and across Europe. The analytical numbers suggest that we are becoming better off. However, the patient is simply not improving as expected and the doctors remain unable to diagnose the exact condition. Indeed, the only certain diagnosis is that the patient is definitely about to collapse so long as a transfer union remains a science fiction myth and an EU minimum wage continues to cause controversy among the patient’s medical team.

Nevertheless, there is still some hope. In some specialized policy circles, a project is being consolidated as an alternative to save the European Project: EU minimum income directive.

The remedy:

The medication leaflet states that a Guaranteed Minimum Income (GMI) is income support that is not linked to the payment of contributions and that provides a safety net for those ineligible for social security benefits. As the last defence against poverty, it is inextricably linked to the right to a decent life for people who have no other means of ensuring an income for themselves and their dependants (decent life/poverty threshold is defined as the percentage of people below 60% of national median income).

The proposed directive should set common standards and indicators, and provide methods to monitor and analyze its implementation within the patient organism. On the offensive side against the sickness, it should permit for the involvement of social partners, beneficiaries and other  stakeholders when establishing or revising national minimum income treatments. On the defensive, solid data gathering should prevent quacks from implementing pernicious policies which would worsen the patient’s condition.

However, despite the fact that it seems a great idea, one should not think that this medicine will solve everything. While minimum income schemes are directly linked to social protection and assistance systems, they should not generate dependency, and the conditions set as early as 1989 by the EESC recommendation should be reiterated. The GMI directive should be introduced hand in hand with general policies and targeted measures such as policies aiming to diversify the economy and productive activities, and active labour market policies which help the unemployed back to work, and the young into work, such as training and job-creation backed by appropriate implementation strategies to ensure that job seekers have a greater chance of finding work. Effective labour market institutions, health care, housing policies and affordable, accessible public services of high quality are also essential.

The use of the GMI drug can both mitigate the social impact of the crisis and have a counter-cyclical impact by providing further resources to boost demand in the internal market. There are solid figures which demonstrate that it will help to achieve economic and social cohesion.  In addition, it will help to protect the fundamental rights of the individual, guarantee a balance between economic and social objectives and redistribute wealth and income fairly. And, additionally, helping to ensure that the Europe 2020 strategy concerning employment, poverty and social exclusion is actually achieved. It seems to be an utmost fundamental prerequisite to reinforcing solidarity within and among Member States. And in doing so, the introduction of a EU GMI would also  send a strong message to EU citizens  – that the EU project and the EU social model are not dead, and we should all pitch in for a cure.

What do you think?