'Diversifying' social investment : European welfare states and immigrant integration in the wake of the COVID-19 crisis

Abstract

The COVID-19 pandemic has strengthened awareness of the importance of robust, well‑functioning welfare states in helping individuals, families, and communities weather external and unpredictable threats to their lives and livelihoods. In Europe, the initial response to the pandemic and the associated economic fallout was much more vigorous at both the EU and Member State level than responses to other economic shocks in the past 15 years, such as the Great Recession and the European debt crisis. Since the onset of the pandemic in early 2020, European governments have invested in extraordinary (and extraordinarily costly) emergency measures—from cash transfers to support households’ and companies’ liquidity, to massive short-time work schemes to save jobs, to sizeable public investments to rekindle economies. Pandemic-related fiscal support by Member States in 2020 amounted to around 8 per cent of GDP— significantly more than what was provided in 2008–09 during the early stages of the Great Recession. Meanwhile, EU institutions and Member States agreed on the largest stimulus package ever financed by the bloc, amounting to 1.8 trillion euros in funding and including NextGenerationEU, a temporary recovery instrument of 750 billion euros. While these responses have signalled a departure from the austerity politics of the past ten to 12 years, they have been mostly temporary, aimed at minimising the immediate social and economic damage of lockdowns and at kickstarting recovery. Therefore, it is too early to exclude another ‘austerity reflex’ at later stages of crisis management. Yet there is a case for using this moment of reckoning to catalyse a more permanent rethinking of European welfare states: both to avoid the potentially durable scars of the crisis, especially for the most vulnerable groups in society, and to protect individuals, households, and communities from future shocks—including those resulting from economic, technological, demographic, and environmental change. Even as the pandemic’s grip on Europe eases, its long-term effects risk being felt for years to come. The crisis has also shed light on how inequalities within European societies are accumulated along a variety of (often, intersecting) lines—for example, with job losses hitting low-educated and low-wage, young, female, and immigrant jobseekers and workers disproportionately hard. And the accelerated pace of change in industries and labour markets may marginalise groups lacking the skills and resources to navigate this transformation.