Introduction

In the 1990s a new approach to economic, employment and social policy emerged in the EU in the wake of the Economic and Monetary Union (EMU), to respond to low growth, to increase global competitiveness and to meet the challenges of ageing populations and new family patterns. An important component of this new approach was the European Employment Strategy (EES) formalised in 1997, in order to encourage member states to develop comprehensive, high-quality labour market policies to upskill workers’ competencies. The means included shifting expenditure from passive to active labour market policies and increasing employment rates, which should in turn nurture economic growth (Goetschy, 1999). The EES became an important pillar of the Lisbon Strategy that was launched in 2000 to make the European Union ‘the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion’. The new approach envisioned positive synergies between economic, labour market and social policies. Social policy was seen as ‘productive’, supporting economic growth and paving the way towards full employment, while minimising negative social consequences of the economic integration process. Investment in education and lifelong learning were identified as important features for increasing labour productivity, mobility and thus flexibility. Investments in child care were conceived as a crucial condition for increasing activity rates by allowing more women to work (see Chapter Six).

This chapter focuses on the ‘social investment’ dimension of the EES. According to the social investment perspective, labour market policy should be focused on investing in people in order to equip the labour force with the necessary skills to face change and on providing supportive services in order to reach full employment. The ‘social investment’ approach, in general, is focused on investing in people in order to meet the needs of future generations. It entails that public expenditure should be made in the form of investment rather than compensation, that is, be designed as to ‘pay off ‘ later on (see Chapter Three). The aim is to increase social inclusion through work and education and to ensure that the population is well prepared for changing requirements on the labour market, such as specific skills and higher educational requirements (see Chapter Three).