Only jobs and growth can draw people out of poverty

The EU must help member states foster an employment-friendly environment, writes Helga Stevens.

Helga Stevens | Photo credit: Natalie Hill

By Helga Stevens

22 Sep 2017


Inequality harms us all. This is why helping to lift people out of poverty should be a priority for the European Union. Inequality stifles economic growth and employment. As we consider how to face this challenge, we first need to recognise that there are huge disparities across and within member states in terms of living standards and the number of people living in poverty. 

Social policy is primarily the responsibility of member states, such as providing basic welfare payments and housing, and while it provides an important safety net, it is not how people will be lifted out the poverty trap they so often find themselves in. 

Only long-term and sustainable economic growth will provide people with the job opportunities to lift themselves out of poverty permanently. It is of course easier said than done. 


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Since 2008 too many policymakers have cried out for ‘jobs and growth’ as if the slogan itself is the silver bullet to solving Europe’s competitiveness crisis. There isn’t a single answer in a single place.

The EU should leave member states and their regions to set their own policies for job creation, tailored to their own needs and desires. 

At the EU level there should be focus on the different and specific actions that can be taken to help drive an employment-friendly climate that encourages entrepreneurship and cuts unnecessary red tape. 

We need to make sure the legislation we adopt is fit for purpose. Too often we adopt rules that, while made with good intentions, have negative effects on our economies. When drafting legislation, this should include whether a policy could inhibit growth and have an adverse effect on the labour market. 

My group in the European Parliament, the ECR, believe that we should include a competitiveness test in our draft legislation, and an innovation principle that sits alongside the precautionary principle to consider the impact a new law could have on innovation.

We should also step away in Europe from the negative atmosphere around flexible labour contracts and a perception driven from the left that they lock people into in-work poverty. Flexible work is not a synonym for exploitation. Of course, exploitation must be combatted and we should be careful not to create ‘working poor’. 

However, flexible and part-time work is valued by many individuals, such as students and parents, and helps them to participate in labour markets where they wouldn’t be able to under traditional contracts.

There is also the added complication of whether an employer would offer a position if they weren’t able to offer it on a flexible basis. This wouldn’t help anyone.

High unemployment locks people into poverty. And high unemployment puts even more pressure on both companies and those already in work who end up paying more in taxes to support the large number of recipients of welfare.

I believe that taxation is necessary to support basic welfare, but the two in combination should encourage them to work rather than lock them into benefits. High taxation in individuals limits their spending power and removes their entrepreneurial spirit - the more they work the more they pay, so why work more? 

In companies it limits their growth, the number of people they hire and their investment in the wider economy. 

The knock-on effect is that jobs that could be created aren’t, simply because policymakers fail to see the bigger picture that low taxation can actually mean more revenue for governments.

Of course, in a time when the economy is being more and more affected by the emergence of robotics, we are presented with the challenge of helping people to adjust to huge changes in the demands of the labour market. 

But rather than seeing robotics as a threat, we should map which industries are likely to be affected and when - this will give policymakers, employers and employees time to adjust to the new realities. 

As robotics continue to move forward, we need to focus policy on both education and training, as well as research and innovation to make sure we stay at the forefront of developments. 

As Europe has moved away from traditional sources of employment, developing and strengthening the right mix of skills and competencies has become essential in the now fast-changing labour market. 

Opportunities for lifelong learning should further increase the skills level and tackle skills shortages, contributing to improved labour market flexibility and productivity.

Finally, we need to mention trade policy. With the protests surrounding CETA and TTIP in mind, we, as policymakers, have more to do to convince those that feel left behind by globalisation that trade actually helps to create jobs. It has lifted more people out of poverty around the world over the past century than any other policy. 

While others abandon trade, the EU must seize the opportunity to further trade opportunities around the world and continue to remind detractors of the positive effect it has had on global poverty.

 

Read the most recent articles written by Helga Stevens - Refugee crisis: EU needs 'strict but fair' migration policy

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