By Diana Wolski, Senior Officer for Social Policy, EUROsociAL+ European Union Programme
The health emergency linked to the spread of the coronavirus, by hitting societies and national economies globally hard, made inequalities between countries and within countries more visible in terms of the socio-economic situation of citizens, the impact of the crisis and levels of protection against risks by the state, at the same time exacerbating and polarising the differences. This phenomenon has been observed at different levels both in Latin America and in Europe.
The first element that should be noted in this context is the central role of the state in managing the emergency after decades marked by a certain influence of economic neoliberalism and its effects on welfare policies. [1] . This is done through the adoption of health and public order measures and through short-term economic measures for the protection and stimulation of demand (especially monetary transfers) and support for supply (safeguarding of the productive capacity of companies and employment).
To allow the adoption of these measures in Europe, for the first time in the history of the EU, a suspension of the Stability Pact was agreed in order to exceed the deficit/GDP and debt limitations, and thereby increase public spending and revive the economy. This measure goes beyond the decision announced in early March not to record coronavirus-focused expenditures for the purposes of the deficit [2] .
Latin American states, where the crisis began in the presence of low GDP growth (0.5% in 2019 according to ECLAC[3]) and a social expenditure that, on average, in 2018, amounted to 11.3% of GDP (ECLAC, 2018 [4]), also introduced measures to mitigate the impact of the health crisis. Along with the reallocation of resources to emergency management and health protection, governments resorted to monetary transfers of a different nature to offset the loss of income caused by the current paralysis of the economy (for example, ‘Solidarity Income’ in Colombia and funds for informal workers in Brazil and Mexico). However, in the presence of high levels of informality, a fundamental factor for economic measures to be effective has to do with the channels through which subsidies are distributed, since in the region informal workers largely do not have access to banks and are not enrolled in existing conditional cash transfer programmes. The provision of unconditional transfers for the segments of the population that do not participate in these programmes will be key to ensuring the protection of all people affected by the crisis, including women, the young, and informal and self-employed workers.
In the medium and long-term, the reconstruction and the dilemma of a balance between economic growth and social welfare will be considered. From this point of view, the countries of Europe and Latin America are in different phases, with some countries that have already gone through the critical phase of the pandemic and others that are facing it now. Having suffered the pandemic earlier, the EU and its member states have been able to make more progress in developing a set of policy measures towards recovery: in May, the European Commission presented a recovery plan -‘Next Generation EU’- which plans for social and economic measures integrated into the proposal for a 2021-2027 multiannual financial framework [ 5 .
The recovery phase after the health crisis could be an opportunity for reflection on measures to extend coverage and improve the quality of social services at the national level, especially with regard to social protection and employment, with the main objective of improving the resilience of societies. This with the aim of reducing vulnerability risks and the associated costs for states and societies, as well as to bridge the inequalities that the health crisis has revealed [6] in terms of coverage and quality/nature of services.
Another long-term issue is the sustainability of public spending in the face of the need for social policy measures that are counter-cyclical, i.e. that provide an increase in public resources earmarked for this sector in times of economic contraction and decreased revenue. As a first step, it is key to ensure that the reallocation of budgetary funds to the emergency management that is absorbing the social spending of many countries does not harm the availability of resources for the strengthening of social policies, and that this does not lead to a fragmentation of the management of social policies and associated spending.
In general, the role of social policies in addressing inequalities through better management of social spending, investment in human capital, the reduction of informality, and the increase in productivity are key. At the same time, to maximize the impact of social policies and improve their sustainability, a reflection on the future of our societies must also take into account the issue of democratic inclusiveness. The crisis situation of traditional political parties in various countries of Latin America and Europe, the disaffection of citizens, who perceive institutions as distant entities inadequate to meet their needs, the consequent proliferation of new politicians characterised by high levels of anti-elitist populism, poses major challenges to the stability of the democratic system as a whole. In this context, the promotion of participatory modalities of policy design and implementation and the dissemination of democratic culture, to end up with new social contracts, can make a difference.
Searching for solutions to these central questions for the well-being of the citizens of Europe and Latin America is fundamental: the magnitude and extent of the phenomena we are observing requires a strong alliance between the two regions in terms of reflection and exchange on the public policy and management models adopted. Now more than ever the support of EUROsociAL+ as a tool for joint action is needed to counter the negative effects of the crisis and to look towards a fairer future for our citizens.
[1] https://www.centroeinaudi.it/images/abook_file/wp2_12_ferrera.pdf
[2] The estimated GDP contraction for the euro area in 2020 is around 7.4-7.6% (https://ec.europa.eu/commission/presscorner/detail/en/speech_20_822), with growth levels prior to the crisis of around 1.2% (https://ec.europa.eu/info/sites/info/files/economy-finance/ip121_en.pdf)
[3] https://repositorio.cepal.org/bitstream/handle/11362/44969/S1901133_es.pdf?sequence=5&isAllowed=y
[4] Ditto
[5] https://ec.europa.eu/commission/presscorner/detail/en/ip_20_940
[6] For example, one category that is particularly affected by the crisis is that of atypical workers, a segment of the population that currently represents around 40% of the workforce in the EU (https://ec.europa.eu/commission/presscorner / detail / en / MEMO_18_1623), while the expansion of self-employment contributed approximately 49% to the increase in the number of workers in the labour market in Latin America in 2018 (https://www.cepal.org/es/ releases / expansion-work-own-account-increased-informality-threaten-labor-situation-america). In the EU, the Council Recommendation on access to social protection for employed and self-employed workers of 8 November 2019 is one of the keystone initiatives in social rights that could be followed up at the national level to expand the coverage of social protection systems in the long term. In Latin America, where in many cases the phenomenon of atypical workers overlaps with high levels of informality, the adoption of measures to protect employment and prevent the spread of informality, especially of a fiscal nature, in the medium term has been observed.
