The financial crisis of 2009 has had a devastating impact on the people of Europe, throwing millions into unemployment and poverty. The impact was most severe in the Southern and Eastern members of the EU. The EU’s response was more concerned with the impact of the crisis on the viability of the banking and financial sector than on employment, poverty and livelihood. Following a brief discussion of the empirical evidence on the social impact of the crisis, this paper provides a critical appraisal of a major EU initiative in 2013: the Social Investment Package (SIP). The social investment (SI) approach to social policy has its origin in the social democratic response to the Great Depression of the 1930s. In Sweden Ava and Gunnar Myrdal argued for a new approach to social policy that would focus on social investment in human capital. Notwithstanding the intrinsic merits of a SI approach this paper argues that it is a policy paradigm without a foundation in any specific economic theory, and its adoption has been influenced by country specific historical, social and economic institutions and developments. The SIP has been primarily focused on the supply side of the labour market in order to increase people’s skills and their participation in the labour market and society at large. It also covered other related key areas of early childhood education, housing and social protection. The SIP has been complemented by the launch of the European Pillar of Social Rights that if backed up by appropriate legislation and setting up of rules similar to the European Monetary Union would strengthen the social dimension of the EU leading to a European Social Union. The EU has to balance its plan for economic and monetary union based on free market with its desire for social cohesion and a social union. The latter requires some degree of fiscal union to provide support for regions and people who have been left behind and have been negatively affected by the economic policies of the EU and member states. Social cohesion calls for asymmetric solidarity and redistributive policies. A Europe that has defined itself by its enlightenment and progressive ideas since the French revolution has to go back to the basics and invoke the rich intellectual heritage that aspired to ‘equality, fraternity and liberty’ for human kind. The idea of a social contract between citizens and the state should be put at the heart of economic and social policies at European level in order to mitigate and eventually eliminate not only the negative social impact of the crisis but move towards a more equitable, democratic and prosperous Europe.

Additional Metadata
Keywords EU, Financial Crisis 2009, Inequality, Social Investment, Social Policy, Social Investment Package
Publisher International Institute of Social Studies of Erasmus University (ISS)
Persistent URL hdl.handle.net/1765/118565
Series ISS Working Papers - General Series
Citation
Messkoub, M. (2019). The financial crisis, poverty and vulnerability: from social investment to an EU social union (No. 647). ISS Working Papers - General Series. International Institute of Social Studies of Erasmus University (ISS). Retrieved from http://hdl.handle.net/1765/118565