THE STATE OF THE EUROPEAN UNION Towards a new legislative term

THE STATE OF THE EUROPEAN UNION 82 is allocated. The focus was on investments by Member states for the ecological and digital twin transformation. Here, the EU has set quantitative minimum targets of 37 per cent for climate action and 20 per cent for digi- talisation in terms of expenditure per recipient country. However, even in the social sector, which had to manage without a quantitative target, it is evident that on aver- age 28 per cent of the allocated funds from the facility are spent on social issues in the broader sense in the 27 EU countries. This is quite a high figure, which must be ranked in relation to the expenditure projections of 40 per cent for climate protection and 26 per cent for digitalisation that have been achieved in total so far. The frontrunners are Hungary with 46 per cent and Por- tugal with 44 per cent of planned social spending, while Denmark (3 per cent) and the Netherlands (13 per cent) bring up the rear. The exact measures in the social sec- tor per country are difficult to record, as not all reforms can be precisely allocated by the Commission, or the Member states have set their own priorities and alloca- tions in their RRPs below the categories specified by the regulation. In addition, there is the breadth of the issues covered by the ESSR, which take into account not only the classic social policies, but also related sectors such as education or public services. According to the Com- mission’s calculations, almost half of the states spend more than a third of the funds they are entitled to from the ARF on social issues; only four states invest less than a fifth here. Following a regulation on reporting social expenditure, the Commission assigns this expenditure to four categories, which unfortunately do not correspond to the chapter structure of the ESSR. According to this, 20 per cent of social expenditure from the national ARPs in the sum of all 27 states is allocated to policies in the areas of employment and skills, 33 per cent each to education and childcare as well as healthcare and long-term care, and 14 per cent to other social measures (European Commission 2023d). Developments in the Social Scoreboard Looking at the three chapters of the EPSR separately and at the development of the EU averages of the 15 comparable social indicators between 2017 and the 2021 data published in 2022, a relatively positive picture of social development can be drawn (Hacker 2023). The four mappable social indicators from the first chapter of the EPSR (‘Equal opportunities and labour market access’) all show slight improvements between 2017 and 2021 in the unweighted average of all 27 EU countries. The share of early school leavers decreased by one percentage point, the NEET rate decreased by 0.75 percentage points, and the gender-related employment gap decreased by half a percentage point. The income quintile ratio, which uses the S80/S20 ratio to measure inequality in income distribution, remained relatively stable on average. Similarly, the four indicators of the second chapter of the EPSR (‘Fair working conditions’) show positive changes in the unweighted average of EU countries between 2017 and 2021. After the pandemic, which occurred during this period and was accompanied by job losses, the EU states were able to recover and increase employment rates by 2.6 percentage points on average. Unemployment (down 1.2 points) and long- term unemployment (down 1 point) fell accordingly. Disposable household income increased significantly during the crisis, among other things due to financial support programmes for workers or certain occupational groups, making a jump of almost 9 units. The third chap- ter of the EPSR (‘Social Protection and Social Inclusion’) also shows positive changes in all seven social indica- tors on average across all 27 EU Member states. The rates of risk of poverty or social exclusion, especially those for children, were reduced: however, they remain on average at a relatively high level of over 20 per cent in 2021. Social transfers (other than pensions) reduce the risk of poverty by almost 37 per cent on average in the EU – an increase of 2.6 percentage points since 2017. The disability-specific employment gap is slightly declining but remains very high at 24 per cent on aver- age. Housing-related expenditure of over 40 per cent of disposable income applies to over 7 per cent of the EU citizens on average in 2021: again, a decrease of almost 2 percentage points. There is an increase of 2.8 percent- age points in the proportion of children under three in childcare, which now stands at 35 per cent. Only slightly more than 2 per cent of the EU population on average complains about a lack of medical care due to money constraints, waiting lists or geographical distance.