Welfare resilience in Europe : contours of a post-COVID social compass for the EU

The Covid-19 existential crisis has brought social protection and the welfare state back into the limelight. Whereas in good times welfare support mostly operates in the background, in hard times it comes to the surface. Like the Great Recession, the pandemic also exposed fault lines. Fragmented welfare states with a poor safety nets and largely privatized health care were not up to the task. Ongoing failures to adapt welfare regimes to the new realities of demographic ageing and the knowledge economy also involve major costs. Decisive, swift, and generous EU COVID-19 crisis management surely built on the lessons learned from the policy mistake of the austerity reflex that prevailed over the long decade of the Great Recession. National recovery and resilience plans show a growing attention to social investment policies aiming to bolster labour supply and improve the quality of human capital, while easing work-life balance reconciliation. Now, the focus should turn to ensuring that reforms address the persistent scars of the crisis for vulnerable groups, capacitating individuals, households, and communities to better confront the challenges of digitalization and climate change. As part and parcel of the post-COVID social compass, EU member states should exempt social investment expenditures on human capital 'stock' from renegotiated debt and deficit rules. This would foster immediate gains, notably in early childhood education and care and female employment, and therefore enhance long-term fiscal and social returns in countries that need a social investment impetus the most.