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- Area of Expertise
Already before the pandemic struck in 2020, a debate was beginning on the weakening of the so-called ‘social contract’. The EU economy’s ‘social floor’ and ‘environmental ceiling’ are riddled with gaps, producing social and environmental costs that someone must pay (something economists call ‘negative externalities’). The regulatory state, legitimised and directed via traditional democratic systems (some hundreds of years old, but many of which date back to the 1940s, or even the 1980s), seems unable to close these gaps, paving the way for social and environmental catastrophe.
There are gaps in the social floor: from weakening labour protections in the informal sector and ‘gig economy’, to years of wage stagnation – or persistently high unemployment in countries with higher wages – coupled with rising prices for energy, food, healthcare, education and housing. These gaps have particularly squeezed people in the middle- and lower-income range.
There are gaps in the environmental ceiling: scientists warn that we have almost missed the opportunity to prevent catastrophic climate change, prompting a discussion on what we owe future generations. Meanwhile, we continue to exceed our planetary boundaries in everything from food systems, to biodiversity loss, to resource extraction, to air, water, and soil quality.
Frustration and hopelessness have filtered into politics, with either high abstention rates or growing support for populist demagogues promising to tear down a system that many voters feel is not working for them.
In response, a growing number of policymakers, economists and institutions have been discussing ways to renew the social contract, both for Europe and globally, including in the European Commission, the European Central Bank, the United Nations, the International Monetary Fund and the World Bank.
What do policymakers mean by a ‘social contract’? The social contract is broadly understood as an implicit agreement setting out the roles and responsibilities we expect from individuals, families, communities, the state, private sector and international institutions over the course of our lives. Essentially, the social contract answers the questions: Who can I expect support from when I need it? What support am I expected to give others in return?
Broadly speaking, there have been two distinct ‘social contracts’ in liberal democracies since World War 2; a strong ‘New Deal’ social contract based on the state, and a more flexible ‘Neoliberal’ social contract based on markets. Writing in the Financial Times, Martin Wolf puts it like this: “For western liberal democracies, the era after the second world war can be divided into two sub-periods. The first, running roughly from 1945 to 1970 was the era of a ‘social democratic’ or, as Americans might say, a ‘New Deal’ consensus. The second, starting around 1980, was that of the ‘global free market’, or the ‘Thatcher-Reagan consensus’.”
At Friends of Europe, we do not believe we can return to the 1945 ‘New Deal’ consensus. The post-war social contract was designed to look after people leading very different lives in a very different era: less global mobility; fewer women in the labour market; less pressure from automation and globalisation; greater membership in trade unions, churches and political parties; and less pressure from climate change and biodiversity loss. It is not fit for purpose today, particularly as we seek to challenge inequalities and to adapt to the impacts of the climate emergency, pandemic, digitalisation and demographic change.
Nevertheless, the ‘Neoliberal consensus’ is unsustainable. An individual growing up in the 2020s – no longer automatically assumed to be a straight, white, cisgender man – is unlikely to have a job for life. They may find themselves working in the ‘gig economy’ with greater flexibility but uncertain labour rights. Their wages are unlikely to rise significantly over the course of their working lives. Healthcare systems struggling to provide care to ageing populations may be unable to meet expectations in terms of quality and speed of care.
As a result of rapid digitalisation, this person is likely to require a lifelong learning approach, with regular upskilling and retraining to keep abreast of technological developments. They are no longer guaranteed a comfortable retirement, and they may never be able to afford their own house. They are constantly reminded that their consumption of cheap consumer goods is killing the planet. They are unable to safely assume they will have a higher quality of life than their parents’ generation.
The COVID-19 pandemic and war in Ukraine have further redefined the relationship between individuals and society – practically overnight. The decisions to come – when to put an end to state support, how to achieve energy independence, when (and how) to pay off public debt – will either make or break Europe’s social contract.
Friends of Europe is committed to playing its part in defining a renewed social contract for Europe. Already in 2018, we published our #EuropeMatters report, arguing that Europe needs a renewed social contract in place by the year 2030. The next year, we published our Vision for Europe report, setting out a policy toolbox to help establish this renewed European social contract.
Looking ahead, we will bolster this approach, with our activities built around the need to define a renewed social contract for Europe. Looking through the lens of our strategic objectives, we are committed to challenge inequalities of opportunity (i.e. set a ‘social floor’), bolster a green transformation (i.e. set an ‘environmental ceiling’), promote new leadership and regenerate democracy (i.e. strengthen democratic mechanisms for deciding where and how these social and environmental boundaries should be set) and reframe Europe’s role in the world (i.e. promoting a global social contract based on human rights and environmental sustainability).
Friends of Europe’s wide-reaching programme of activities for 2022 allows us to take first steps towards building-up and defining our vision of a Renewed Social Contract for Europe.
The Renewed Social Contract is the fil rouge of Friends of Europe’s work from now through 2030. It is not a separate initiative, but rather the lens through which we present ourselves to the world – every activity we put together is in one way, shape or form connected to the ambition of designing a Renewed Social Contract for Europe.
Friends of Europe will only make progress towards designing a Renewed Social Contract by doing what it does best – acting as a facilitator and convener which brings together Europe’s best and brightest from across sectors, demographics and ideological lines.
Friends of Europe will work with our existing networks, trustees, European Young Leaders (EYL40), members, partners, citizen networks and more, to come together around key elements of this new way of thinking. We will engage in acts of deliberative democracy with our community.
Practically, this happens by ensuring that every one of our activities is designed with the Renewed Social Contract in mind and that our moderators, editors and facilitators push contributors to come up with innovative ideas and solutions. From there, we draw out the key lines of thought to engage in an iterative process which leads us to the Renewed Social Contract.
2022 has been planned as our ‘transition year’, for Friends of Europe to establish our thinking on the Renewed Social Contract and align internally as an organisation. Looking forward, we will move beyond our transition year and embed the Renewed Social Contract fully into our work. Over the course of 2022, we will be aligning staff and mapping the Renewed Social Contract’s implications for Friends of Europe more broadly – from the activities we deliver and the opportunities we offer to our members and partners, to how we engage our network and think about our external communications strategy.
As we design the 2023 agenda of activities, we will begin with the Renewed Social Contract in clear focus, with all areas of expertise fully contributing.
We will work towards a preparatory document, outlining a set of policy choices for a Renewed Social Contract for Europe to be presented and socialised amongst European and national institutions in the context of the 2024 European Parliament elections and the onset of a new European Commission mandate.
Taking on board input from those with whom we engage from 2023-2028, we engage in an iterative process to arrive at final recommendations for a Renewed Social Contract and have a further developed version ready ahead of the 2029 elections before concluding an overall stock-taking exercise to judge our impact in 2030.
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