Commission report shows social investments and reforms support competitiveness, economic growth and social inclusion

Social investments and reforms in key areas can boost employment, social inclusion, competitiveness and economic growth. This is the main finding of the Commission’s 2024 Employment and Social Developments in Europe (ESDE) report.

Reforms and financial support for early childhood education and care, skills development, lifelong learning, vocational training and certain job support schemes are particularly promising. The latest ESDE report shows that investments have had a positive effect on income, employment levels, social inclusion and the fight against poverty, helping to reduce social and economic gaps across the EU.

Social investments and reforms also contributed, between 2010 and 2021, to increasing median wealth in the euro area while decreasing differences between Member States. EU countries with previously weaker economic and social performance have caught up with stronger ones, partly thanks to these investments.

Despite overall economic and social progress, however, the report also finds that significant disparities persist both within and between countries.

Key findings from the 2024 ESDE report

• Increasing the supply of housing, and improving housing assistance, improves affordability, reduces poverty and can help people find better jobs. In 2022, housing allowances lowered the EU’s rate of people at risk of poverty by 1.4 percentage points. The report finds that social housing also contributes to fighting poverty and yet is critically under-supplied in many Member States. The report finds that the lack of affordable, good quality housing has several structural drivers, including low incentives, bottlenecks in planning and construction and investment gaps. In the new Commission, President von der Leyen appointed a Commissioner with direct responsibility for housing. She also announced in her Political Guidelines 2024–2029 that the Commission will put forward a first ever European Affordable Housing Plan, to look at all the drivers of the housing crisis and to help unlock the private and public investment needed.
• Social investments and reforms yield higher returns when focused on early stages of citizens’ lives. Investing in early childhood education and care helps parents, especially mothers, find and keep jobs, which reduces gender gaps in both employment and pay levels. It also reduces the risk of poverty and social exclusion. For children, social investments lead to better education and job prospects later on in their lives, which in turn boost economic growth. To meet the 2030 targets for early childhood education and care, the report finds that the EU should invest an additional €11 billion per year. In the next Commission, the Child Guarantee will be strengthened to prevent and fight social exclusion through education, healthcare and other essential public services. The Commission will also put forward a first-ever EU Anti-Poverty Strategy.
• Investing in active labour market policies helps people secure and maintain jobs. For instance, some EU funded training programmes in Greece and job creation schemes in Ireland have increased the likelihood of employment for younger workers by more than 15 percentage points and boosted earnings by €2,000 per year. The report also highlights that active labour market policies funded by the European Social Fund Plus (ESF+) can stimulate employment, foster long-term economic growth and help regions and countries catch up economically and socially. The new Commission will put forward a Quality Jobs Roadmap, developed together with the social partners. It will support fair wages, good working conditions, training and fair job transitions for workers and self-employed people.
• Public funding, particularly through the ESF+, has effectively increased employment by boosting skills development. This support helps keep more people in employment for at least 20 years after the initial investment, thereby more than offsetting the initial costs and increasing GDP. With more than €65 billion in EU funding dedicated to skills programmes, notably through the Recovery and Resilience Facility and the  ESF+, these EU initiatives are playing a crucial role in ensuring the transition towards a green and digital economy is fair. They support green sectors, facilitate job transitions, and help low and middle-income groups afford energy-efficient solutions in housing, transport and food. The new Commission will put forward a Union of Skills, focusing on investment, adult and lifelong learning, skill retention and the recognition of different types of training to enable people to work across our Union.

Background

The annual Employment and Social Developments in Europe review is the Commission’s flagship analytical report on employment and social affairs. It provides up-to-date economic analysis and related policy recommendations.

A recent survey shows strong public support among Europeans for social investment. When asked where the EU should focus to prepare the future, respondents highlighted health care, education, training and lifelong learning, and employment support. In addition, 78% of Europeans believe public spending on key social policies should increase.