The importance of employment and labour market policy for resilient economies

On 20th June, the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) approved conclusions on the role of the labour market, skills and social policy for resilient economies. It emphasises the mutually beneficial economic and social objectives and refers to the importance of social investment. In this context, the Council endorsed the voluntary guiding principles for assessing the economic impact of reforms and investments in the areas of labour market, skills and social policy.

Economic growth and social policy are mutually beneficial

The core message of the Council conclusion is that social and economic policy objectives are mutually reinforcing. It emphasises the importance of reforms and investments in the labour market, skills and social areas for promoting economic growth over and above the pursuit of social objectives. As already emphasised in the report on the future of social protection and of the welfare state in the European Union (EU), skills and qualifications make a significant contribution to increasing productivity and adapting to future challenges. They are therefore of crucial importance for the resilience of national economies.

Compromise on social investments

Approval of the resolutions was preceded by extensive negotiations between the member states to emphasise social investment. Initially, the Belgian Council Presidency, supported by Germany, Spain, Slovenia and Portugal, wanted to highlight the importance of social investment for resilient economies in the conclusions. The focus is now on employment and social policy as a whole, referring "only" to social investment.

Voluntary guiding principles

Measuring the impact of reforms and investments requires solid analytical tools, appropriate data and robust methodologies. Belgium and Spain set up an informal working group on social investment (IWGSI) in connection with their Council presidency in July 2023. The Council has adopted the voluntary guiding principles developed by the working group. These are intended to support the member states in evaluating the impact of social investments on economic growth.

The guiding principles include:
 

• Ex-ante assessments prior to the implementation of measures,
  
• Mid-term and ex-post evaluations to provide feedback to policy makers,
  
• Differentiation between one-off and permanent effects,
  
• Selection of an appropriate analysis period.
  

Work on social investments continues

In the conclusions, the Council calls on the European Commission to further develop the work on the methods developed in the voluntary guidelines together with the Member States. Cooperation with other international organisations and relevant stakeholders will be explored.