Professor at UCLouvain, Co-Chair of the International Panel of Experts on Sustainable Food Systems (IPES-Food) and former UN Special Rapporteur on the Right to Food (2008-2014), Olivier De Schutter will take up his new position on Friday 1 May as Special Rapporteur on Human Rights and Extreme Poverty. On this occasion, he held talks with EUROPE on the social impact of the Covid-19 pandemic and, more broadly, on the European Union’s action to deal with this unprecedented situation.
While the EU is already well behind its 2010 target of reducing the number of people at risk of poverty or social exclusion in Europe by at least 20 million by 2020 (a fall of only 4.4 million between 2008 and 2017), the current health crisis “is going make it even more difficult”, Mr De Schutter stressed from the outset.
Although it is still too early to assess the impact of Covid-19 on poverty in his opinion, so much will depend on the economic stimulus plans of the states, it is clear that there will be “a huge shock, because many companies will close, many independents will have to close down...”. He also recalled that “International Monetary Fund (IMF) forecasts a drop in GDP of around 7.5% in the euro area”.
Unemployment in France rose by 7% in March and by 11.6% in Germany in April, according to the latest estimates.
The situation is clear, continues Mr De Schutter, “the current crisis risks leading to a sharp rise in poverty figures in Europe, hitting first and foremost precarious workers, i.e., those with short-term or temporary contracts, the self-employed, workers with precarious statuses which have multiplied with the development of an uberised economy...”
In his view, the impact of Covid-19 on poverty in Europe is thus likely to be particularly marked in countries such as Greece, Portugal or Ireland, which have been encouraged to adopt labour market flexibility measures, in order to benefit from EU financial support under the European Stability Mechanism (ESM).
Faced with this unprecedented situation, he believes that European governments “have a responsibility to ensure that their economic recovery plans will not simply support businesses to avoid bankruptcy, but are genuinely geared towards reducing poverty and inequalities”.
Oriented aids
Asked about the EU’s action, Mr De Schutter welcomed some measures already taken, such as the activation of the general escape clause in the Stability and Growth Pact (see EUROPE 12451/1), which will allow Member States to invest on a massive scale.
Nevertheless, he calls on the States to set a framework in relation to the aid that they will provide to companies, amounting to almost €2,500 billion, in order to make this aid conditional on their contribution to the ecological and social transition. To this end, he recommends using the European taxonomy (see EUROPE 12468/30) to guide sustainable investment.
“However, we’re a long way from that right now. Denmark and Poland have announced that companies that have registered subsidiaries in tax havens will be excluded from aid, but this does not apply to tax havens within the EU. There should have been a European decision to exclude companies in sectors that are clearly unsustainable, notably fossil fuels, from exceptional crisis-related state aid”.
“I fear that we are missing a major opportunity to bring European economies closer to achieving the UN’s sustainable development goals (SDGs), by focusing on boosting GDP growth, regardless of the others SDGs”, Mr De Schutter told us.
He added, “EIB business loans, State Aid and the European Recovery Plan currently under negotiation are expected to total more than €4,000 billion, i.e., around a quarter of European GDP. Such state intervention in the economy has never been seen in peacetime. Let’s use this not just to save companies from bankruptcy, but to prepare a much more cohesive and ecologically transition-oriented society”.
According to him, “this crisis also teaches us that the search for efficiency at all costs, through the deepening of the international division of labour, the establishment of long supply chains and the search for just-in-time flows, is proving to be a source of fragility for our societies”. He therefore calls for “shifting the focus back to resilience, diversifying economic activity within each territory, which implies some relocation, some reterritorialisation”.
A permanent European mechanism for unemployment reinsurance
Concerning the European instrument for temporary support to mitigate the risks of unemployment in emergency situations (SURE – see EUROPE 12460/1), which could expire at the end of 2022 (see EUROPE 12472/4), Olivier De Schutter wishes to go further. He therefore calls on the EU to give serious thought to the implementation of a permanent European unemployment reinsurance mechanism (a Commission proposal to this effect is expected to be presented in 2021).
In his view, such a mechanism should ensure that Member States’ social security systems are protected from the risk of insolvency in the event of a crisis, thanks to solidarity between States. While governments have tended not to invest enough in social protection for fear of not being able to cope with a sudden economic downturn, this mechanism could alleviate their fears and thus lead them to strengthen their instruments for protecting workers’ rights, Mr De Schutter said.
Finally, on the subject of the European recovery plan currently in preparation, he defends the issue of a European debt, on the model of the ‘coronabonds’.
In his view, “the danger in the current debate is that short-term views, motivated by the concern not to offend the national electorate, for example in the Netherlands and Germany, may lead these countries to refuse European solidarity at the risk of provoking Euroscepticism in the south”.
Making an appeal not to underestimate the threat to European integration posed by the current crisis, he considers that “the prosperity of every Member State, including Germany and the Netherlands, depends on the continued prosperity of others”. (Original version in French by Damien Genicot)