Report on employment and social development in Europe.

Social investment in key areas is crucial not only for reducing inequalities and improving people's quality of life, but also for Europe's growth and competitiveness. Social investments, such as those made by pension insurance with rehabilitation measures, health insurance in medical care and accident insurance in the area of health and safety at work, play a key role in the implementation of the European Pillar of Social Rights and its action plan. This is how social investment has made a significant contribution to upward social convergence in Europe in recent years. These are the key findings of the European Commission's most important analysis report on employment and social policy issues in Europe (ESDE 2024).

Social investment

The report emphasises that there is still no generally recognised definition of social investment. This is important because it is the only way to comparably map its economic impact. For this reason, an informal working group on social investment (IWGSI) was set up in July 2023 on the joint initiative of the Spanish and Belgian Council Presidencies. This included delegates from all Member States and the European Commission. The report's analysis is based on the approach developed in this working group, according to which social investment is public expenditure that, in addition to pursuing social objectives, is also intended to generate returns in the form of economic growth through their impact on human capital, labour productivity or labour supply.

Upward convergence

The aim of the European Pillar of Social Rights is to promote "upward social convergence", which means that the Member States should harmonise their social standards in the direction of higher, better standards. Social investment can support this upward convergence in a variety of economic and social indicators. The analysis details the positive effects of investment in early childhood education and care as well as active labour market policies on economic growth, fiscal sustainability, reduction of poverty and social exclusion and upward convergence in the European Union (EU). It is emphasised here that these results are transferable to other areas of social investment such as healthcare, occupational health and safety measures and rehabilitation.

Reformed framework for economic policy management

The reformed economic policy management framework adopted in February 2024 aims to strengthen debt sustainability and promote sustainable and inclusive growth through reforms and investments that contribute to common EU priorities. This includes the European Pillar of Social Rights besides the ecological transition, the digital transformation and the development of defence capabilities. Determining the return on social investments also plays a role in this context. The report shows that well-designed social investments can increase productivity and economic growth. They make a significant contribution to long-term financial sustainability and put people in a better position to respond to future challenges.

European Pillar of Social Rights

Finally, the report refers to the La Hulpe Declaration signed on 16 April 2024. It emphasises the importance of the European Pillar of Social Rights as a compass for (social) investment and for promoting the upward convergence of working and living conditions. This report underlines the importance and potential of social investment.