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The European economy’s recovery must be fair and inclusive!

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Re-Imagine Europa’s knowledge partner, the European Trade Union Confederation, just hosted the event “Rethinking our growth model to ensure a job-rich recovery” in a hybrid setting on September 7-8, 2021, in the beautiful town of Montepulciano (Italy). Re-Imagine Europa’s Chief Executive, Erika Widegren, contributed as a panellist on the session “A progressive narrative of growth and social progress”.

While the European GDP is in a growth phase and the economy just started recouping losses suffered due to the pandemic and related restrictions, the same cannot be said about disparities and inefficiencies in the common market, leading to increased inequality. Progress made in the last decade improving the employment quality and the inclusiveness of the labour market have been disrupted almost everywhere in Europe and the rest of the world.

As Romina Boarini, Director of OECD’s WISE Centre, explained in her speech, “The social dimension of the recovery phase is no less important than that concerning the green and digital transitions: for this reason, the OECD Framework for Policy Action on Inclusive Growth will focus, among other things, on supporting families and women’s participation in the labour market and providing upskilling and reskilling opportunities to support a fair green transition. Such an approach could ensure that opportunities translate into well-being outcomes for all segments of the population”.

The European Union and its Member States need to rethink their economic model, including taxation, to stimulate sustainable growth and ensure wealth redistribution effectively. The recurring financial crises that have occurred over the last few decades have clearly shown its limits. According to a survey presented by Matt Browne, Senior fellow at the Center for American Progress in Washington DC and founder of Global Progress, the citizens of some European countries, among which France (52%) and Italy (55%) stand out, have a pessimistic view of their future and the younger generations’ prospects.

Such pessimism is incompatible with a progressive vision of the future and risks undermining citizens’ trust in democratic institutions. The growing support for authoritarian regimes in Europe and beyond is a worrying symptom of the citizens’ increasingly passive attitude towards the radical changes currently underway. Taking the words of Matt Browne, “Most people think about this technological revolution as something that is just happening to them and not for them, not as an opportunity to change their lives for the good. Many European citizens are convinced that new technologies such as artificial intelligence will further destroy the labour market and that the social price for ecological transition is unfairly weighing on already disadvantaged sections of the population”.

While it is undeniable that the pandemic crisis has entered the wake of the pre-existing social and economic unease, wrecking citizens’ trust, it offers a unique opportunity to rethink socio-economic balances through innovative solutions. Therefore, these solutions must look beyond the immediate recovery from COVID and provide a new paradigm that considers economic and social well-being as the main measure of sustainable growth.

“If we want to preserve the values that have always united European citizens, we need to think differently about these issues to find innovative ideas. We must develop new narratives to explain to European citizens that returning to the past is no longer viable. The unsustainability of economic models has been the cause of the financial and social crises we have faced in the last few decades.”, confirmed Erika Widegren, Re-Imagine Europa’s Chief Executive, then adding, “Our tax systems are almost a century old. They need to be reformed to fit the reality of the 21st century. Austrian economist Joseph Schumpeter once stated that you could understand everything about a society by looking at its fiscal system. Fiscal systems are not just about taxation: they have a substantial influence on jobs, wealth redistribution, equality. They should ensure environmental protection and help fighting climate change”.

The work of RIE’s Task Force on Economy aims precisely to develop innovative and pioneering proposals to build a blueprint for an ideal fiscal system and a more competitive economic model for Europe in the 21st century. The new model should ensure a fair redistribution of wealth and guarantee adequate social protection for citizens while supporting competitiveness. There can be no progress without inclusion!