The Covid-19 pandemic, and the ensuing economic recession, has proved to be the harshest of ‘stress tests’ for the European Union, probing policymakers’ ability and willingness to emerge from this new crisis without repeating the mistakes of the past. Previous economic downturns have often been seen as an opportunity to impose deregulatory and austerity-driven policy reforms. However, as acknowledged in this twentieth anniversary issue of Benchmarking Working Europe, the EU-level responses to this current crisis appear to depart from the older, broadly discredited, recipes. In this context, this publication sets out the case for outlining a socially responsible and ecologically sustainable path out of the quagmire. The core elements of this strategy are: the need for unprecedented levels of public investment, the acknowledgement of the redistributive function of decent working conditions and fair wages, and last but not least the recognition of industrial democracy as a key pillar of any recovery plan. All of these aspects need to be reconciled with the overarching priority of a just transition to a green economy, undoubtedly the greatest challenge that Europe currently faces and one that it must embrace fully in the years to come. 

The pandemic, and more particularly the policies that have been implemented to mitigate the risks it poses to public health and healthcare systems, have plunged European economies into a recession that is even bigger and likely to be even more costly in terms of job losses than the previous global financial crisis. However, not all countries have been affected to the same extent. This shock occurred at a moment when European economies and societies were facing a series of challenges, from slowdowns in labour productivity and investment to persistent inequalities and the need to engineer green, digital and ‘just’ transitions. Public policy responses have been swift and far reaching, suggesting that at least some lessons have been learnt from the previous crisis. But it remains to be seen whether these lessons will be carried forward into the EU’s recovery strategy.

 

Before the pandemic, the EU had been experiencing a period of prolonged economic recovery, with employment levels at a historic high point. However, as shown by this chapter’s evidence-based analysis of labour market and social developments in the EU, numerous social challenges remain unresolved despite this period of growth, such as persistently high rates of risk of poverty and social exclusion, gender inequalities, and the unavailability of jobs providing decent working and employment conditions. The impact of the Covid-19 crisis on the EU labour market has been immediate, with nearly five million jobs lost by the end of the second quarter of 2020. Without an adequate and coordinated policy response, the brunt of this crisis will be borne by the most vulnerable groups, risking a further deepening of existing social divides across the EU.

 

Prior to the outbreak of Covid-19, the climate crisis and the green transition had risen to the top of the EU policy agenda, with the launch of the European Green Deal in December 2019. Data on Member States’ progress towards key climate policy targets show that the EU has made considerable headway in reducing territorial emissions. However, this is far from the case when it comes to consumption-based emissions, pointing to the important role of carbon embodied in trade. And while there is an encouraging record of decarbonisation to be found in the energy sector, with renewables starting to outprice fossil fuels, road transport is lagging behind. The climate emergency needs to be addressed with the same sense of urgency that has shaped Europe’s response to the pandemic. It is welcome news that the European Green Deal objectives seem to have become a blueprint for the EU’s Recovery Plan, but lessons from the pandemic show that ambitious decarbonisation needs to go hand in hand with a stronger social dimension.

 

The outbreak of the Covid-19 pandemic led to a collapse in wage developments across the EU in 2020. In view of the ensuing economic crisis, it is essential that European and national policymakers draw the right conclusions from the 2008/2009 crisis, when austerity and internal devaluation not only prolonged the crisis but also had dramatic social consequences. The proposal for a European directive on adequate minimum wages in the EU, published on 28 October 2020, can be read as a sign that fair minimum wages and strong collective bargaining are no longer viewed as an impediment to market flexibility but as an integral part of a European recovery strategy. However, in order for its full potential to be realised, the Minimum Wage Directive needs to be improved, especially as regards the inclusion of more precise and binding criteria for adequate minimum wages and the promotion of collective bargaining.

 

The Covid-19 pandemic has provided a ‘stress test’ for occupational safety and health (OSH) in the EU and revealed multiple systemic deficiencies: regulatory failures, inadequate implementation of OSH legislation, disparities in worker protection, and a severe lack of data. Each of these are an indicator of the negative consequences of an interpretation of OSH legislation that is too narrow and does not consider the breadth of contexts to which the rules ought to apply. The results of the stress test clearly show that OSH principles need to be part and parcel of work planning, and thus be integrated into the subsequent development of whole sectors and all workplaces. Finally, for OSH policies and practices to be correctly targeted and truly fair, worker participation in their development must be strengthened.

 

The institutions of workers’ participation and social dialogue are geared to mitigating the impact of the pandemic on the world of work. This may be in protecting the health of workers or in helping enterprises and employees to cope with a complete reassessment and reorganisation of whether, when and where we work. Workers’ voice in all its forms serves to ensure that workplaces changes are collectively agreed and sustainable over the long run. Workers’ participation must therefore be recognised not as an obstacle but as a rich resource in shaping and adapting the workplaces of today for the future. Declarations by EU leaders that social dialogue must help pave a sustainable way out of the crisis need to be implemented through robust policies, regulations, commitments and the means to enforce them.

 

The Covid-19 pandemic has brutally plunged our societies into a world of uncertainty. Ill-prepared for such a shock, the EU and its Member States have improvised measures that have served to shake the very foundations of the European project: free movement, the single market, and supranational economic governance. Are these profound transformations destined to be long term or will they only be temporary? And do they herald structural reforms of European public policies? Future scenarios are shaped by today’s decisions; with foresight methodology, policymakers can make informed choices about how to address what lies ahead.