European socio-economic model is an amalgamation of the wide-ranging welfare systems and powerfully politicized and institutionalized forms of the industrial relations (Grahl and Teague). It comprises of the social security, economic life, educational system and the methods for driving the formation of human capital and for creating and diffusing knowledge. There are several advantages as well as disadvantages of the European socio-economic model. Considering the advantages, the European model is not merely a social model; rather it influences employment, production, growth, objectives and goals of economic policy and the competitiveness (Aiginger and Guger). The European socio-economic model is a representation of the common idea and vision of the fact that how the society should planned and organized that is distinct from the other areas of the world. The model works on certain regulations such as there are organized labor relations that are based on the social dialogues, mutual agreements and labor laws. The business environment is also regulated, economic and administrative regulations exist in the product market. Furthermore, European socio-economic model is responsible as wider responsibility is present in the society for the welfare and betterment of the individuals. For example shelter is provided to the poor, support and assistance is given in the case of unemployment, disability, illness and benefits are provided in old age. Additionally, this model promotes redistribution i.e., financial support, social services and transfers are offered to all the groups. The income differences are limited by the redistributive transfers at financial level, and taxes on bequests and property.
However, the European socio-economic model has not only brought peace in the society, but also it has lead to social and economic progress. The central principle of this model is cohesion and solidarity that emphasize on achieving the economic growth that further boost the social wellbeing of the individuals, but not at the cost of any sector of the society, specifically the young people. This model is however based on the common values of equality, justice, freedom, respects for mankind and equality among the members of different states. The aim of the model is to make Europe inclusive and open for all. Another important aim of this model is to ensure continent’s sustainable growth and development. The vital objective of this system is to create an equal and just society where every individual can enjoy the freedom and spend his/her life with dignity. The major identifiable characteristics of this European socio-economic model are social rights that include non discrimination on the basis of sex, age, origin, disability and religion. Equal opportunities and fair working conditions. This model enables social protection, which is delivered via advanced universal system and the protection is also ensured with the measures of wealth redistribution, which include progressive taxation and minimum income. Moreover, this model is advantageous due to the fact that employment and social regulations are maintained, state is responsible for maintaining full employment level and quality jobs to the citizens and for making the provision of services possible. The European socio-economic model enables innovation, investment in research and development and promotes cooperation between the private and public actors, which are the major fact that differentiate EU model from the competitors in the global economy.
The disadvantages associated with the model are that the model is unable to manage the demographic changes in Europe. An integrated approach is required, in which policies, instruments and necessary players should be included. The major emphasis should be on the quality education that is accessible for all so that training and learning, negotiation of the working conditions adaptability and equal pay can be ensured. Moreover, migration is also a major demographic problem of European countries, so a more proactive and regulated migration policy is required that aims at managing the migration by getting support from the population of country, rather than preventing it. Furthermore, women in workforce are major actors in workforce, but unfortunately European model has not given much importance to them, so in this regard necessary measures should be developed for enabling them to work together with males and take the responsibilities of family. Furthermore, another drawback of European socio-economic model is that the young people of this region’s labor market are facing critical challenge. They are facing high unemployment level and instability in the market as this group is most susceptible in the labor market, this is resulting in the poor economic growth (Werner). This condition is badly influencing the daily lives of young population and is restricting their access to the housing and other social and economic protection systems. So, the model should be designed in a way that it find the methods for improving the fragile youth position and enable the integration of the young population in the labor market.
The European youth employment discussion is a crucial policy instrument in order to improve the prevailing condition of the society’s youth and it should be properly implemented by member states. However, there is also a need for adopting the change according to the latest trends for safeguarding the employment of salaried individuals and facilitating them to change their job and get the job of equal status or higher than the previous. All this requires proper anticipation, management and monitoring of the processes, the actors involved in all these processes should be active in order to ensure proper functioning of the system. Moreover, in there is no proper balance between the security and flexibility. The balance between the security and flexibility should be addressed in the model. The novel concept of flexibility, which represents the acceptability of the social balance between long term objective of social and human development and workplaces, should be promoted in the system. The flexibility of the labor market is also an issue in the European socio-economic model. Labor market dynamism and flexibility is vital for the workers as well as for the entire economy. It is a significant part of the growth and development of the economy, but the workers demand availability of more options in the labor market. In case the the flexibility is positive, it allows the workers to search new jobs and improve their living standards by making their careers.
In nut shell, the European socio-economic model is playing satisfactory role in social and economic sectors, such as prompting equitable and just society and regulating business environment etc, but at the same time it is lacking behind in some fields. The areas that need to be addressed are the youth unemployment, social protection, and promotion of positive flexibility in the model for building the confident of individuals living in the society. All these steps help to open new opportunities for the individuals, which ultimately assists in the smooth running of the whole system.
An ideal EU budget in the opinion of the commission is the one that improve the budgetary coordination, and this is achieved by introducing a general budgetary timeline for the area members of European countries. This is because, improvement in the coordination makes it easier for the European Commission to review and access the budgetary plans of nature before their adoption and implementation. Furthermore, the commission’s opinion an ideal budget is the one, which improve the financial and economic surveillance in the European region by creating a system, where a member state suffering from any difficulty whether socially or financially will be subject to the improved surveillance by the commission. The Commission has however also proposed Single Resolution Mechanism i.e., SRM for ensuring ideal budget, that will enjoy favor from the member states that will then work in collaboration with each other for finding common and regular position. The Commission has considered the EU’s resources and expenditures and in its opinion EU should be free from the national contributions, and this can be achieved by changing the revenue side so that EU becomes less dependent on the national contributions. The Commission’s opinion is that the new structures of governance should continue to be used for ensuring coordinated fiscal and economic policy within the euro zone. The two pack legislation is introduced for the ideal functioning of budget, according to which, the states members of euro area have to submit the draft indicating the plans of national budget to the Commissioner for scrutiny. Furthermore, the EU commission has recently introduced Single Market Act II for ensuring ideal budget. The Single Market Act II emphasize on the four basic elements, which are development of the integrated networks, increasing international mobility of the businesses as well as citizens, supporting the digitalization of economy and strengthening the confidence of consumers, and social entrepreneurship (Urquijo).
The European Union New Member States are of the opinion that ideal budget is the one that is according to the fiscal framework at nation level, which follow fiscal rules, budgetary coordination, medium term planning of budget, monitoring of budget and budgetary and macroeconomic projections. Further, the EU member states are of the opinion that it should set far reaching improvement steps that are required for the effectiveness of the fiscal frameworks at national level. According to the members, the budget should be in accordance to the fiscal policy due to the fact that fiscal rules are intended at the public budgets, government revenues and expenditures, and budget balance. Further, the fiscal policy ensures rules that are well defined and can encompass all the governmental levels, completely enforceable and strictly adhering and binding. Well defined targets of the fiscal policy are essential for the preparation and implementation of the budgets. This promotes budgetary cooperation, which further support the disciplinary effects of the fiscal rules. The member states favors linkage of budget with the fiscal policy because fiscal rules makes compliance easier, but the need is that the rules should be laid down in the national law or in the constitution of country. Furthermore, for achieving discipline in longer run it is important to observe the fiscal rules in the form of multi annual targets, most importantly in the context of the multi annually budgetary framework that possess binding nature. The euro area countries have focused on the stability plans for explaining the ideal budget, they have focused on the continuation of the medium term budgetary plans and policies for employment and growth of the euro zone. Focus is also paid on the improvement of the policy coordination at the EU level. Stability and Growth Pact is adopted by the euro area countries in order to ensure legal package on the economic governance (Seng, and Biesenbender). The legal package on the economic governance is also known as six-pack.
The European Parliament and the Council has introduced new methods of preventing and controlling the macroeconomic imbalances. The major objective of introducing such methods is to detect the underlying economy’s structural limitations and weaknesses, instead of the budgetary overruns that pave the way to the consistent divergences in EU. According to the euro area countries the ideal budget comprise o the cyclical revenues for example cooperate income tax and is utilized for financing the counter-cyclic spending such as unemployment benefits, which contribute to the macroeconomic stabilization in the euro area through automatic stabilizers that have intervention capability. This will cause the central debt that is backed by the budget to contribute more strongly to the euro area’s financial stability. However, the budget creation for euro area is a medium term project that can also facilitates political integration for ensuring democratic authenticity of new rights transferred to the EU level. These results in increased solidarity that can further strengthen the economic governance of euro area. Such kind of change can affect several areas in the economic, tax and social fields. In this way a central budget will be introduced that will considerably improve the institutional and economic workings of the euro areas and boost the growth potential of entire area.
In nut shell, there are varying views of The Commission, new Member States, Euro area courtiers about ideal EU budget, but all have emphasized on such budget that ensures economic growth. In order to ensure the economic growth through ideal budget, fiscal policy should be considered as a national responsibility. The economic cycles should be synchronized in euro area with the help of coordinated fiscal policy in order to achieve ideal EU budget. Internal adjustment mechanism should be sufficient for ensuring proper mobility of workers, and flexibility of wages and prices. it must be ensured that macroeconomic stabilization is achieved for the smooth performance of whole area. This also makes proper economic governance and inspection of the budgetary possible, which help to implement proper rules and regulations in the society for promoting equity, and this will ultimately helps in boosting the growth of the European countries.
Grahl, J, and P Teague. "Is the European Social Model Fragmenting?." New Political Economy. 2.3 (1997): 405-426. Print.
Werner, Welf. "Which Socio-economic Model for Europe?."Intereconomics. 10.1 (2006): 4-23. Print.
Urquijo, Laura Gomez. "European Commission Initiatives to Promote Social Concern on the Market: a Counterbalance to Fiscal Discipline? ." ROMANIAN JOURNAL OF EUROPEAN AFFAIRS. 14.1 (2014): 5-21. Print.
Seng, Kilian, and Jan Biesenbender. "Reforming the Stability and Growth Pact in Times of Crisis." Journal of Contemporary European Research. 8.4 (2012): n. page. Print.