The role of the social protection as economic stabiliser: Lessons from the current crisis

Social protection, in particular unemployment benefits, minimum income support and progressive taxation, have significantly contributed to reducing the depth and the duration of the current recession in EU Member States and to stabilising labour markets and consumption. Not only does social protection provide a safety net for those groups which have been hit hardest by the crisis, it has also a stabilising effect on the overall demand for goods and services produced in the economy. Discretionary action in the field of social and labour market policy, pursued in most European economies, has included a broad range of measures, such as employment incentives, higher benefits and increased transfers to low-income households. Further action, however, is needed to overcome inequalities in access to social protection faced by non-standard workers, and in designing a suitable exit strategy from discretionary stimulus in order to limit the fiscal constraints generated by anti-crisis policies. The study included case studies from Germany, Austria, Denmark and Italy.