This chapter analyses how the tension between fiscal discipline and responsiveness to popular demands contributes to widening the prosperity gap in Europe. On the one hand, the author argues, the countries most affected by the Great Recession still have a pressing need to strengthen their budget balances and to reduce their debt levels. If they fail to improve fiscal discipline, they will remain vulnerable to economic crises in the future. On the other hand, austerity is often met by public resistance. The political consequences of going against the voters’ preferences can be dramatic and pave the way for populist parties. Thus, governments should not only increase their budgetary safety margins during upturns in the business cycle, but also take measures to increase public support for fiscal discipline. This will reduce the tension they experience between fiscal responsibility and electoral responsiveness.
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Edited by Ulf Bernitz, Moa Mårtensson, Lars Oxelheim and Thomas Persson
This chapter looks at how the prosperity gap between the member states is affected by the free movement of workers within the EU. One key purpose of free movement is to even out economic imbalances between the member states. The author’s analysis shows that labour mobility within the Union is too limited to make any significant contribution to economic equalization between the member states. However, mobility still has positive effects in terms of the income gain it implies for the migrants themselves and by helping to reduce labour shortages in specific sectors in specific countries. Contrary to common belief, moreover, migrants contribute somewhat more to the public purse than they cost. The author concludes that the Union and its member states should strive to uphold the free movement of labour, although it has never been as questioned as it is today.
Nicholas Charron and Bo Rothstein
This chapter explores the factors that operate at a societal level to build or destroy social trust. The analysis is based on unique data about the quality of public institutions at the regional level within the EU, and the authors test the tenability of four common explanations for variations in social trust: economic inequality, ethnic diversity, the quality of public institutions, and the degree of political participation by citizens. The analysis shows that the quality of public institutions is the strongest factor underlying regional variations in trust within countries. Economic inequality also proves to be a factor to be reckoned with for explaining variations in social trust. By contrast, the degree of ethnic diversity and the extent to which citizens participate politically have less importance for variations in trust. The overall conclusion is that increasing the quality of public institutions should have first priority if our aim is to reduce the prosperity gap between countries and regions in Europe.
This chapter asks whether Europe’s right-wing populist parties pose a threat to freedom of movement and to the Union’s fundamental values. The analysis shows that right-wing populist parties contribute to a better congruence of opinion between voters and parties in European party systems: as a result of their presence, the diverse preferences of voters on questions of immigration and the Union are reflected more fully. The author concludes from this that these parties have come into being and grown because there is a demand among certain groups of voters for their critical line on immigration and the EU. The chapter thus contends that right-wing populist parties put forward pertinent questions about the legitimacy of the EU, as well as about the limits of national, European, and global solidarity in the distribution of economic and social resources. The challenge for the established parties is to formulate answers to the questions that supporters of the right-wing populist parties ask.
This chapter examines how social trust gets conveyed across generations. By studying children of immigrants, the author traces how social trust is conveyed within the family. The analysis shows that children born to mothers from high-trust countries themselves show greater trust than do children born to mothers from low-trust countries. Children of mothers from high-trust countries also enjoy better health than do those whose mothers hail from low-trust ones. Furthermore, the results indicate that trust is a factor behind persistent differences in health and wealth between individuals and between countries. The author concludes that the EU and its member states can work actively to increase trust among citizens, and thus to reduce the long-term prosperity gap within and between EU countries.
Lars Magnusson and Sofia Murhem
This chapter reviews how the Social Dialogue between unions and employers has evolved at the EU level, and asks whether it has a role to play in bridging the growing prosperity gap between the member states. The analysis shows that the Social Dialogue has diminished in importance over the past twenty years. The authors see several reasons to put a stop to this trend. Over the long run, they contend, a strong Social Dialogue can increase citizen support for the Union and strengthen its legitimacy. Through central agreements between the social partners, the European industry and labour market can develop in a way that benefits both sides. Thus the authors conclude that policy-makers ought to promote the Social Dialogue, as an important tool for reducing the prosperity gap between the member states, enhancing the legitimacy of the EU as a whole, encouraging labour mobility, and combatting xenophobia.
This chapter describes how the social rights which, according to the treaties, EU citizens possess, find expression in a Union which is suffering not just from an economic crisis, but from a crisis of confidence as well. The author argues that the confidence crisis itself puts limits on the prospects for realizing these rights, and undermines the solidarity between member states articulated in the Union’s basic treaties. The analysis in the chapter makes clear that the member states have taken a cautious line on the question of European social rights. Furthermore, the European Court of Justice (ECJ) has found this to be a tricky and difficult area, and has hesitated to enter it. It is therefore crucial, the author contends, that the member states themselves take the next step. Within a framework of mutual cooperation, they must actively interpret and utilize the basic rules which have a bearing on social rights.
Jenny Julén Votinius
This chapter addresses the differences in prosperity and well-being that follow from the high levels of youth unemployment in the EU. Not only do the member states that were hardest hit by the economic crisis have the highest levels of youth unemployment; equally important is the rapidly widening prosperity gap between generations in Europe’s labour market. The author reviews the many EU-level initiatives taken to combat youth unemployment following the crisis. Her analysis underlines the risks involved in adopting legislative reforms that weaken employment protection specifically for young employees. Reforms of this kind have worsened the prosperity gap between generations, since they mean that younger employees receive lower salaries and enjoy less job security than their older counterparts. Against this background, the author argues, it is essential that fundamental social rights are observed in relation to all citizens, including young persons in the EU’s workforce.