European Association of Service Providers for Persons with Disabilities: IMF’s recent study calls for Social Investment to tackle inequalities
In June 2015, the International Monetary Fund issued a Staff Discussion Note named: “Causes and Consequences of Income Inequality: A Global perspective”. Whilst at first sight it may appear as not particularly linked to support services for persons with disabilities due to its focus on income inequality, the European Association of Service providers for Persons with Disabilities nonetheless believes that it leads to interesting conclusions for our sector, for instance that current EU fiscal and economic policies are failing to address the importance of investing in the human capital and skills of many Europeans.
Indeed, the study’s core claim is that “the poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels”. In more detail, it states that “an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth” than an increase in the income share of the top 20 percent.
The study continues by stating that “irrespective of the level of economic development, better access to education and health care and well-targeted social policies, while ensuring that labor market institutions do not excessively penalize the poor, can help raise the income share for the poor and the middle class” and consequently strengthen inclusive growth.
Although the authors of the study rightly argue that there is no one-size-fits all approach to tackling inequality, they still state that “in advanced economies, policies should focus on reforms to increase human capital and skills, coupled with making tax systems more progressive”.
Reforms to increase human capital and skills are strongly linked to investing in people, as defined by the European Commission in the Social Investment Package. Indeed, social Investment is about precisely this; investing in people, meaning policies designed to strengthen people’s skills and capacities and support them to participate fully in employment and social life.
Throughout Europe, it is without doubt that social service providers often play an essential role in providing this type of support; in particular for those in poverty and socially excluded.
Yet, social service providers are increasingly having to do more with less public money. As such, based on the study’s conclusions, it could be argued that the cuts to public expenditure in social care are decreasing investment into human capital and skills; therefore negatively affecting inequalities and economic growth.
What main conclusion should the European Union (EU) take from this Study?
According to this study, the EU’s current fiscal and economic policies –often leading to a reduction of public expenditure in social support and care- are failing to adequately address the importance of developing human capital and skills of its poor and middle-classes and therefore negatively affecting Europe’s efforts towards economic growth and tackling inequality.
Luk Zelderloo, Secretary General of EASPD, concludes by stating that “it is time for the European Union to re-evaluate its obsession with fiscal austerity and place more efforts on investing in people”. EASPD therefore calls on European policy-makers to assess the IMF’s study and take into account its conclusions in the development of the Union’s economic, fiscal and social policies; including most notably in the European Semester process.
