02/03/2005 2:08:03 pm
Debate in Brussels. As I came to Brussels yesterday evening, I heard in the news that German unemployment has reached its highest level after World War II: 12,6 %. Ironically, the topic of my speech was "Is there a European Social Model and Can We Maintain It?". I pointed out that of course there are differences between the countries, but there is such a model - with high taxes, public monopolies and labour regulations:

"The other question is: Can we maintain this European Social Model? I have to say yes. We definitely can. Everything depends on what consequences you want. If you want or can accept consequences like low or negative growth, dependency on the state, few people working, deteriorating welfare services ? then we can keep the model. Otherwise not.

My main point is this: The European social model, with high taxes and big public spending, is not the solution to our problems with low growth and declining living standards. On the contrary, it is the main cause of our problems. ...

This Model is what makes Western Europe stick out economically in a global perspective. If it were a competitive model, why would we have all these problems? And why would we have all these reforms, which point in one direction: away from it. The steps may be small, but the German Agenda 2010, the Swedish pensions reform, the Blair welfare reforms, the Lisbon Agenda ? all point away from this model."

Ann Mettler, Director of the Lisbon Council, shared this view in her comments. She furthermore pointed out very strongly that it is a disgrace to call this model "social". How can something that creates unemployment, low growth, decreasing living standards and an ever darker future for Europe?s young, be called "social"?

Sven Svensson, head of the Swedish trade unions in Brussels, did not agree at all - to my limited surprise. He pointed out that this model is great and mentioned various analyses which he claimed show that our societies are the best in the world. Despite this, however, he still wanted reforms - without naming a single one. And most of the facts he talked about - "happiness research", the UNDP ranking, Swedish growth in recent years, etc - have been heavily criticised. Not to mention that all the problems every citizen faces in reality every day make quite a good reply to the image that we live in the best of worlds.