 Welcome back. We're going to get underway and head you toward lunch. So that is an attempt to impress on the panelists and those of you who will have questions and comments later on to be as brief as possible, but as complete as possible. I'm Jim Hoagland from the aforesaid Washington Post. And we have a panel today that is well-qualified to talk about whether the European social model in a time of globalization, in a time when competitiveness and the export model seem to dominate the world scene. Unfortunately, we are missing one of our panelists, Mona Salin, who is the former deputy prime minister of Sweden was not able to be with us today because of family reasons. As an American, I regret this very much because she has quite a very interesting set of quotes on wiki quotes, which you can all go and look up. But one that caught my eye that I wanted to talk to her about was the quote where Mona says, for me, tax is the finest example of what politics really is and that paying taxes is cool. You can imagine that in the Congress of the United States these words might be seen as heresy. I want to get started with the conversation right away and we'll ask, first of all, for comments from Joaquin Almunia, who is vice president and the commissioner for competition at the European Commission. Joaquin. Thank you very much. Well, this question about the future of the European social model is not new, has not been provoked by the crisis. This question was on the front of many debates before the crisis, even during the 19s and probably during the 80s. We have in Europe, in some of the European member states, mainly northern member states, the best examples of what the welfare state is, a social model, is what the social policies can deliver to the citizens, how to protect and to ensure social rights for citizens, and at the same time we have in the European Union, in particular after the last enlargement in 2004, 2007, we have member states, countries, that never knew what a social model is in European terms. So we have, on the one hand, the need to strengthen the basis, the grounds of the possibilities of building a social model or reinforcing the present social models in Europe. This means growth, and we badly need growth. This means productivity and employment. This means flexibility to adapt the social services, the social policies to the new challenges and to the new features of our societies that are not the same, are very different than the ones we knew in the past. We need to face aging, we need to tackle the immigration, we need to recognize the fact that the family structure has changed. We need to be fully aware about the new inequalities that are growing in our societies. But the question, and this will be my second and last remark in this first intervention, many of these decisions should be adopted at the national level. The European institutions, we don't have the possibility to organize the adequate strategy for improvements in the educational sector, in the health sector, this belongs and will continue to belong to the national level of decisions, but at the same time without a good functioning of our economic and monetary union, without a more efficient strategy to ensure sustainable growth in Europe, our member states will not be able to do what they say they want to do. And one of the very difficult elements of this discussion and is one of the links that needs to be improved between the national level and the EU level is the tax issue. Single member states in Europe, within a single market in a global economy with free movement of capital is not sovereign to decide whatever they like. And tax issues and at the same time at the EU level, every tax decision requires unanimity so one single member state can bloke and can veto. Improvements in the way we can organize our tax systems in a way consistent with growth and at the same time able to fund the welfare state, the social policies and the social model. So we have a lot of challenges, but the question again is not the new one. Joaquin, let me refer again to the American experience and ask you the leading question on your last point. Where would the leadership come from for a tax reform, a tax revision on a European level? I think the European Council, the head of the state and government, yesterday we had here in the dinner the President of the European Council, the 28th head of the state and government and in particular within the 18 leaders of the Euro area and the European Parliament, they need to discuss seriously what needs to be done in a single market, in an economic and monetary union to get a more efficient tax system consistent with our growth strategies and at the same time able to fund our needs from the expenditure side of our budgets because we need to recognize that since many years and in particular this has been accelerated since 2008, since the beginning of this crisis, the tax levels are not enough to finance the expenditures and debt levels have increased, have accelerated in their increased strength since 2007, 2008 and in some of our member states, this path is really unsustainable. So we need to deliver it, we need to reduce the indefinance level but it's not political, it's not socially possible to cut in a very, very sharp way the expenditure side in the social policies that represents more than 50% of the total public expenditure in most of our member states and this required a very serious discussion on what are the taxes that can be adopted without raising barriers in our internal market and in a consistent way with growth. It's not an easy debate, it is a very essential one. Let's pass this hot potato along to Eve Lutterm who is Deputy Secretary General of the OECD, former Belgian Prime Minister. Eve as a Christian Democrat leader in Europe, are you, do you sense an eagerness for debate about tax policies? And secondly, I wonder if in your remarks you could reflect on what it means to be European in the social model sense, what is distinctive about that and how that can be maintained in the era of globalization. Thank you very much to put it a little bit provocative, I think you can turn in fact the central question of this part of the debate the other way around. Personally I think you could just ask how will emerging economies, how will they build up a social security system, comprehensive social security system to render their economic development sustainable? I think with our knowledge we have today we can say that social cohesion, that investing in all talents, having all people on board is I think a precondition to have sustainable development and so to say I think we approach the whole of the question in a very defensive way, I think you really can put it the other way around and the main part of the problem seen from a global point of view in terms of the human beings is more at the side of the emerging economies which are sometimes confronted with very huge aging population problems like China for instance and the question is how, will they build up systems like we already have once again because to my opinion a good social cohesion and a system that provides this is really a precondition for sustainable development, economic prosperity in the long run. Secondly I think when we talk about European welfare states we have to be well aware of the fact that there is not such a thing like the European social model. In fact we have a coexistence of at least three to four different models. I want to elaborate on the characteristics which is very clear that this Scandinavian model that the Rhineland model with Germany, Austria, Belgium, Luxembourg and so on and then France and I would say the Anglo-Saxon model, the UK and then the et cetera model of some countries in the southern part of Europe and then some central and eastern European countries that have built it up and completed it more and adapted more recently this is quite different. I think it's better and I come to the third point to put it in terms of what is the burden social cohesion and solidarity puts on the economy and there on average the 34 OECD countries which are globally spoken the most developed industrial countries in the world we see that 22% of GDP on average is dedicated social policy with some countries with a very low part of their GDP like Chile, some other countries which are still building up this social welfare state and at the top we have countries like let me give two very different examples France and Sweden which are countries that are performing in an economic point of view very differently with different success with 30% of the GDP dedicated to the social welfare state. So I think it's a better figure to measure what kind of burden you put on the economy I would add that the distinction we make between a social, comprehensive social security system of which the initiatives come from the public authority and on the other hand in your country for instance the so-called private, privately organized the private provision of social services which well the results are not so convincing always I mean this antagony between the two is a little bit artificial because for instance in the European system we tax social loins and you give lots of tax deductions to encourage people through computers or not to sign in on social security, health, insurance systems and so on. Last but not least I think we really need reforms but some of the reforms have already been put in place partly but it's of course longer careers the aging of the population when you add 15 to 20 years of life expectancy where you have to draw the consequences and you have to have longer careers. I think in terms of health insurance you have to have more selectivity and in the whole of the social security schemes it's very obvious that especially in Europe there's a need for more efficiency and more effectiveness and I would add and that I refer to the PISA results of the PISA review I think it was two or three weeks ago we presented them. I think especially Europe has to be aware of the fact that skills or the currency of the 21st century at least and maybe of the future more globally spoken and so invest more in resilience than in security is really very important for Europe. Social resiliency and individual resiliency becomes more important as a concept than security and it means giving people the tools, investing of the tools, the capacities of the people when they are unemployed, when they have problems to react themselves there must be more responsibility put on the person themselves, the citizen themselves. Do you think that the economic crisis that Europe has just been through seems to be recovering from now has created the political will to bring about the reforms you've suggested or will we need further crisis, further developments? Well first of all like the commissioner said it's in terms of competencies it's not the competence of the European Union until now to act very actively in the field of social security but I think to have been one of them I think that all political leaders in Europe are well aware of the fact that in terms of competitiveness things have to change. But also there let's be realistic. You know the highest tax wedge in European Union for the moment is I think it's the German. In Germany you have the most important tax wedge and you see that nevertheless this economy is very well performing because in terms of other field domains the way companies are organized, innovation the labour cost as a whole they have done a lot of efforts. But to answer your question I think the European leaders know that there is a very important task to render the European economy more competitive but it is really a broader problem than only the problem of the labour cost. It's certainly a problem of the labour cost and we have to have a shift from financing our social security schemes for instance based on the labour on the cost of labour and taxing labour to other ways of taxing and having the money for the schemes but it's only a part of the big problem of the competitiveness of the European Union that would lead us much more further than the five minutes but we can come back on this issue later. Yes, we'll have a chance to. Jean Pissani-Ferry is known to many of you from his work at Brugale in Brussels. He is now, as I gather it, the eminence gris of the group of eminence grises that the French K-Dorsey has assembled in the policy planning staff. You've heard two of our panelists say that in fact Europe doesn't function at the European level, there is not a social model. Is that the problem? Thank you, let me first correct. I don't belong to K-Dorsey, I'm responsible for policy planning reporting to the Prime Minister. Yes, I think it's not... There is this perception of a European social model. Mrs Merkel famously said that we represent 7% of all GDP and 25% of all population and 25% of all GDP but 50% of social spending. So there must be an issue there. And I think that's factually correct, obviously. That's striking, but that's a bit misleading for the reason you gave, actually. So I think we have a common set of preferences with very different institutions. The national institutions are different. You have very different pension system. You have labor markets institutions are different. So anything that is about reform immediately goes to the national level. Now there are some common issues. I would emphasize first what you said. Normally you don't put education as one of the pillars of the social model. I think we should. Europe started with universal education. That's how we built our prosperity and we are under-investing in education. I mean, we're bad in the ranking of the PISA rankings. The first European country is number eight. There are seven Asian countries or cities above. Sweden, we consider Sweden one of the generals of the European social model. It's dismal in terms of the PISA ranking. We are pretty mediocre in France. I think we are definitely under-investing. And that's having prosperity without having education. That's basically rent seeking. And there are not many rents we can draw on. There are still rents. That's why we are prosperous. But if we continue under-investing in education, the prosperity is not going to stay because the rents are going to go. So really that's one of the pillars. And that's very much coherent with a modern approach to social policies. I'm referring to a Mattias Sen and people who say it's really building capabilities. And building capabilities starts at school and even starts at the primary school. And that's where we are feeling. So I would say that about the school. Now let me take another example on pension. I think, again, I agree with you, we shouldn't confuse aging and pensions. I mean, aging is, I mean, we are head in terms of aging, well, we're behind Japan, that we're head of a number of other countries, but aging is a universal phenomenon, and it's good. And so we have a problem with our pension system. But it's not the fact that it's a public pension system, the fact that there's aging behind it, there's little growth. So what should we do? First of all, there's issue of diversification. Basically everything is invested in sort of a single asset, which is gross of the national economy with the pay-as-you-go systems. So the problem is that this diversification should have started earlier. It hasn't started in some countries. So we are invested, the wealth of the income of the future pension is invested in the single asset, which is the domestic economy. What can be done is to try to make the adjustment between pensions and the gross rate more automatic. And that's the spirit of the reform that was introduced in Sweden with the notional accounts. So that instead of having to bet on a future gross rate and to tell people you're going to get that, that provided gross is what we expect it to be, it should be recognized that the ability to provide pension is linked to the performance of the economy. And so there should be more automatic adjustment and that's the system of notional accounts that was put in place in some countries. So that's the direction of reform, I think, for us. And now we turn to Didier Rindeers, who's deputy prime minister and foreign affairs minister of Belgium. He represents the mouvement reformatel, which I believe is a liberal in the European sense party. So I would bring my tax question back to you, but also ask you to sketch for us what is the center-right version of the European social model? I don't know if it's possible to have a center-right vision for the entire Europe because we don't have all the same approach, maybe in the different member states, because first of all, the social issue, it's a national one. If you look to the situation now, the social security systems and all those systems also in education are first of all at the national level. But it's possible to see some elements at the open level or so. Of course, we need to sustain girls. We had the capacity in the last year to resist, again, the financial crisis, and that's maybe the first way to sustain a social model in the open level. But I'm sure that from my point of view and for many liberals in Europe, we had many discussions in the last years about that. We need to do more at the open level. It will be maybe interesting to see the evolution in Germany now. After many years, it's possible due to a new coalition to discuss about a minimum wage. And I'm sure that if you look to the situation in Europe, we have a federal approach just for the monetary policy with one currency for next month's 18 member states and with only one central bank. But we are still with the different member states acting for the budget and also for the tax policy and of course for the social policy. Is it possible to think about, as a liberal person, as two, three elements? First, to have some common approaches for minimum rules, two examples. We have for the moment such a discussion in Germany about the minimum wage. Why not the same discussion at the open level? Maybe not with the same level, but a minimum. In Belgium for the moment, we have a minimum wage between 10 and maybe 11 euro for one hour at work. In Germany, they are discussing about 8.75, something like that. But we have for the moment, people coming from the south of Europe or the eastern part at work in Belgium with some fields with less than three euros for one hour. Is it possible to discuss at the open level about the minimum? I don't know if it's possible to have a minimum like in Belgium from 10 or 11, but maybe to start, I don't know, with five, four or six and then to increase and to have such a capacity to avoid social dumping. And I'm sure that to do that, we need to organize the same kind of federal approach for the budgetary policy. We are trying to do that with the banking union, but maybe with some reference in the tax systems and in the social system. The same issue for the posting of workers. We have for the moment many, many competition about different companies with workers coming from different parts of Europe. I don't want to avoid that, but maybe to have some minimum rules. And is it possible to do that with all the member states? I'm not sure. If the term was saying that there are different social models in Europe. And of course, I'm sure that it's needed maybe to start with the members of the eurozone. That's the core of the European Union. Maybe I saw with those countries who want to be members later of the eurozone, but if there are orders, it doesn't want, it's not a reason to go further. And so I'm sure that we need to have some minimum rules in the tax systems, also in the social issues at the open level. And that's maybe the way to sing in the near future because just to say the last word, in my mind, all model in comparison with orders in other parts of the world. I don't speak about China or Russia, but also about the US. It's to say that we are fighting against poverty. And normally in Europe, and maybe in the northern part of Europe, if you have a job, you need to go out of the poverty. And now there is a debate to get an exam in Germany. Is it possible to have a job and to stay in the poverty? Normally in all social security model, if you have a job, you are going out. And you receive, maybe if you don't have a job, a lot of help to don't go to the poverty. And that's the reason why I'm sure that we need to fix a lot of minimum rules in the entire Europe. Of course to do that, there are other investment and we'll come back maybe on that later in education. It's true, as I've said, that is quite important. And maybe we need to agree with some mobility in Europe. And we have seen that if you look to the situation in Portugal, in Spain, in other countries for the moment, in Italy since the beginning of this year, it's a lot of people, maybe 200,000 people going out of Italy to search a job in another part of Europe. So mobility is maybe also a part of the issue, but at least with minimum rules. And so I don't hesitate to speak about a federal model. That doesn't mean the United States of Europe. It's not the US model for the social issue. But some kind of minimum rules at the open level. That's the real goal for the next years. I think that's a very useful clarification. I mean, I think there is at the European level a greater degree of social cohesion and concern about one's fellow citizens. And there are in other parts of the world, including the United States. You used a phrase that I think might help us understand a little more that I would like to ask you to clarify. Social dumping, it's important to avoid social dumping. What do you mean? But like in the tax issues, it's the same. To give an example in taxation, because I was in charge for 12 years for the finance department in Belgium. We have tried to help before the crisis, before 2008. During many years with the structural funds in Europe, we have tried to help some new member states or some member states to reach the average of development in Europe. And just an example, in Ireland, we have spent a lot of money coming from the structural funds. But due to that, it was possible to have a corporate taxation in Ireland with 12.5% as a rate. And come by reason with an average of maybe more than 25 in the rest of Europe. Is it acceptable to spend a lot of money coming from the European level to help different regional countries and then to see such a reaction? On social side, it's the same. The social dumping for the moment, it's due to two facts. Or we have some companies coming from one country in the European Union working in another one. But with not an application of the national social security system of the country where they are working, but their own social security, to give an example, not to speak all the time about the construction or building sector or transport on the ground. But in the aviation sector, we have some companies in the low cost coming in different parts of Europe and working there with their own social security model and not the social security model of the country where they are working. But it's the same now for the moment we are confronting in Belgium, in other countries. I spoke about the posting of workers. We have Belgium companies having now a subsidiary in Portugal or in Poland to apply in Belgium. No more the social model of Belgium but the social model of Portugal or Poland. And in the economic crisis, of course, there is a stress on that. And is it possible to go further with that? I'm not sure. Result, I said, some minimum rules. Not to ask to the entire Europe to apply the same rules in Belgium, but at least to have some minimum standards in the entire European Union. And if we are not able to do that, we will have more and more reactions against the European model. And we will see that. But for the next elections, I don't want to be in a difficult way in the next weeks of having seen that, but I'm afraid to have maybe one-third of the next European Parliament with your skeptics and with populists. So with many people against the European Union, if we don't can take care on that also with some approach at the European level on social side, we will have more and more difficulties. So to be concrete, I'm sure that we need not to politicize the European debate, not just to add in many countries, people in favor of different process and your skeptics. We need to speak about employment, labor market, labor policy, tax issues, social issues with a real political debate from left side, from right side, from the liberal, the socialist and others, but we need to have a real political debate on that. Eve, we need to politicize the European question. I think I will be very brief. I won't stand in the next European elections, but I would like to underline the truth of what Didier is saying. I think it's really crucial for the Commission, for the European Council to have a message for these people. I give you two examples, recent examples from my former constituency. I went to see a company that produce vegetables in frozen form. Well, people there are replaced now by Romanian workers that are so to say employed in Romania, but that are doing the job for a lower salary. And in Zebrugge, which is one of the main ports in Belgium, the container traffic, the modal shift is organized with truckers that are in fact employed so to say by Romanian company and that are competing with, and in terms of salary, it puts competing with Flemish people, Belgian truck drivers. And for ordinary citizens in Europe, Europe is perceived, as Didier says, not only as your in favor of Europe, of your against Europe, it's an institution like all other political institutions and it is worth being part of the debate when it delivers for its citizens. And for the moment, lots of ordinary people are perceiving Europe as a part of the problem instead of a part of solution. I know it's very easy, what I do now to say this, it's more difficult to put solutions forward, but I really would not underestimate this effect in the outcome of the next European elections. Solutions are what John's supposed to give us, that's part of his job. Can you talk a little bit about these problems that have been uncovered, but also give us a sense, for those of us in the rest of the world, I will now insert the journalistic so what question, why should we care about the success or failure of the European social model? Well, let me give you one reason, as we said, I mean there is a lot of resistance now in various countries about this development that are perceived as being unfair. One particular reaction that didn't get so much noticed was David Cameron's change of view on immigration. The UK, at the time of the first European enlargement, was the first country to say welcome, welcome to these workers from the Eastern European countries. Now they have completely changed course, and he says their minions and the Bulgarians, because the other ones have a right to come, they're not welcome. And that's a result of the reaction of public opinion in the UK. So if we see a situation where, for all these reasons, we're putting breaks more and more on mobility, on the integration of services markets, they were resisted also at the time of the services directive, we may well end up in a situation where we have still one currency, but a very fragmented economy, and that wouldn't work. We can't have a single currency, we're at the same time putting barrier, putting borders between those economies. One of the reason we had the euro crisis was that we had a euro economy that was not integrated enough, and for that reason we could have very large divergence in inflation rates for a very long time, and that led to the crisis. So the answer to this problem should be more integration, but this does not go without conditions that make it acceptable for the people. So I think Didier Anders is very coherent. I mean, he's been one of those fighting for the survival of the euro, and he says also that we need to enlarge the compact of social rights that are considered common and necessary for those participating in integration. Joaquin, what do you think is the biggest single social problem that the European Union, therefore the commission faces, and what do you intend to do about it? Well, during these years, indeed, the problem number one is unemployment that is not evenly distributed within the different member states. You have Germany and some other countries around Germany that have even lower unemployment rates now that the day before the crisis started, whereas Greece or my own country, Spain, have a 26% of unemployment, more than 50% of youth unemployment, and the lack of possibilities to use the human resources they have that is one of the most important assets these countries have. How to deal with these unemployment problems requires different actions. Of course, we have some macroeconomic problems that are not being solved within the EU, and in particular within the Economic and Monetary Union. The fact that the periphery of the euro area is undergoing a very serious adjustment, not only fiscal adjustment, the current account adjustment is impressive in countries such as Greece or Portugal or Spain or others, whereas the surplus countries are not investing the excess savings that they have, and this creates problems from the demand side that are not helpful to open possibilities for the countries that needs to absorb unemployment and to create opportunities for their people. And at the same time, we have another very important social problem that apparently is a paradox, but is taking place at the second time, immigration, because part of our countries in Europe needs labor force from abroad, in some cases from other member states of the union, with the political tensions and the social tensions that were discussed by Didier and Jean, and when we project our labor force evolution and the needs in the future, we realize that it's not only about immigrants coming from other parts of Europe, but immigrants coming from abroad. But our societies are not prepared for this, and the rise of populism and the rise of eurosceptics that is a real difficulty for the next European elections in five months' time is partly based on this immigration tensions and this feeling that those who come from abroad will hijack our public services, our social policies, and all this. And this requires a huge political effort, and no one can deal with these challenges in Europe in an individual basis. The European solutions are more efficient to tackle these big challenges, but at the same time, the defensive attitudes of the national political leaders and the national political forces tends to embrace protectionist attitudes, nationalistic trends, defensive positions, and we are there in a very difficult situation where the solutions that are needed and that needs to be discussed and put in place gradually, but without waiting for any other moment, we will not have good moments to discuss these issues, are there, and at the same time, the political trends are defensive, our protectionists are nationalistic, and the very European idea that was very helpful for many reasons in Europe during the last 15 years at this moment is in a very difficult situation. Is it possible to establish a relationship between immigration flows and competitiveness and the national case? Well, I think for a country to be competitive, a lot of things needs to be done, a modern industrial policy, improving financial flows, the adequate institutional framework, but of course, if you want to be competitive, you need to have skilled labor force, and if you don't have national labor force because aging and because the lower fertility rates, you need to open the doors unless you will decide to reduce your potential growth and to base only your possibilities to growth on productivity, but nobody can imagine that all the countries at the same time can be the number one in productivity terms to be more competitive. Now we'll take questions from the audience, right here in the front row. If you could have a microphone. Let's see, they're on their way. Thank you very much. A very essential part of the European social model was the existence and the success of social dialogue, meaning that social partners were in constant contact and allowing not only the development but also reform of the European social model. And I'm missing in this debate the question of what importance would the social dialogue should have in the future, particularly if it's necessary to develop various forms of the European social dialogue. Take one question over here. Well, I believe I was first. You don't see me and I'm in dark. I'll take you next, sir. Actually, I was calling on the gentleman here. Hello, I'm an old Algerian minister of social protection. And the peculiarity is that as a researcher, I was involved in a work on marginality on the cities in the Algerian periphery. And so at the time, I had developed a new approach to reducing poverty, which was adopted by a certain multilateral institution and adopted by a certain number of countries. Obviously, it gave me an experience and it gave me the ability to take a different look and to raise a certain number of important concerns that I'm going to share with you, especially when I look at it because I'm often often asked by my European friends to bring an external look, especially when we are also concerned by the historical flows of immigration of the population or recent immigration. So, the feeling, first, I'm going to proceed pedagogically with a slight provocation. The feeling is that countries that have a great capacity for expertise, that have an old age in management and the fluidity of the public service, are made in the same way as recent countries underdeveloped with governance problems. In one, the Bidens-Villes-Prolifères and in the other, there is great difficulty in managing the suburbs. And so the feeling, a little bit, is the question open? Is the social system, at the moment, in the political issues, is the question of financing not polarised and the debate on the one hand abusively? Secondly, is a large part of the problem not escaped? And I explain to myself, is the social security system, which is essential and around the presentation, which is essential around the world of work, the unemployment, the loss of work, the gain of work, the wrongdoings? Is the whole party linked to the new European social cartography, to the new population, the exclusion part, the marginality part, which poses among other issues of citizenship, which poses among other issues of communication, which poses among other issues of compatibility in terms of culture? In fact, invent new societies because it will be necessary for my European friends to realise that they are no longer the same, they are different? So, do they have to raise the challenge of the future by saying how this present which is already going to announce the future, how should I manage it? And moreover, you mentioned it, it is a part of national management, I am talking about European nationalities which may escape my efforts of development, we are looking for development, I need innovation, I need audacity, and it is not obvious that these marginalized people are unable to get involved in inventiveness, in audacity, etc. And so, should this great question not be inserted? Should the old mechanic who only cares about the performance, the health reimbursement, should it not be already obsolete? Shouldn't it come back to a fundamental concern how the social system should also have a dimension of responsibility on cohesion, on unity, on the performance of society, its future and its ability to innovate? Thank you. We'll take one more question over there before we begin answers. I'm Hans von Weizsäcker, I used to be a Member of Parliament. And at Parliament, I was Chairman of the Environment Committee and before that of the Globalisation Committee in which we also looked at the history of the European social model, finding, not surprisingly, that it was a child of the Cold War. It was necessary for the West to prove that the free market economy was better for the masses, not only for the rich than communism. This was the way of proving to Europeans and others that the free market economy can be good for all. This was actually coming from America. George Marshall, Dwight Eisenhower, or before Harry Truman, clearly said, we have to prove that the free market economy is good for all, not only for the rich. Well, and then, of course, as you know, in 1990 or so, communism collapsed under the conviction that the free market economy was better. And we found out that in the languages of the world, the term globalization emerged after 1990. And what did it mean? It meant the demise of the state, the weakening of the state, resulting in part, or mostly, by a competition for lower taxation in all countries. So that countries had no money any longer to finance justice, equity, social inclusion and all that. And now, our result in the commission was, if we want to maintain the high credibility of the free market economy, we better make it inclusive again. And give the money that is needed for that to the state because the free markets won't do it. Jean, I saw you nodding at several points during the question, so I'll let you start and then we'll see if there are others to chime in on that. Okay. On the social dialogue, let's be frank, it does not exist at European level. The commission is not very interested. Business Europe is a business lobby and unions are weak and divided and therefore, there's not really anything serious happening. So maybe it may change, but that's the situation now. Listening to you, I was also thinking, countries are extremely different in this respect. And even in countries where there is social dialogue, you can have very different roles. In Germany, you have a very defined responsibility for social dialogue. You have certain areas in which the government does not intervene. In my country in France, you have a confusion, an overlap of the role of the state and the role of social dialogue. So it's hard to move that to European level, although there were institutions put in place at the time of Jacques Delors, and they haven't been used for quite some time. I wanted to answer you too on the new risks. I am totally agree. We have left, we have built a system that was based on professionals and we tried to move the holes and then to deal with the risks that were badly dealt with by the professional approach. But we deal with them badly today. That is to say, there are both there are populations or individual paths that are badly dealt with by these risks that are not covered, or simply people do not accept the rights to which they have rights. In France, there are 8 billion rights that in principle should be translated by performance and not translated by performance because those who have rights do not demand it. So we have absolutely the problem that you are saying. And we have a concept of our system which is a too rigid concept, too inherited from a time when everything was built on a professional basis and we were in a full-fledged economy with a difficulty reaching the objectives. I think it's one of the great issues of social policies. Knowing that the policies that are specifically for the poor are also policies that are not necessarily effective because there is an effect of stigmatization that makes the poor turn or that it has negative effects. And in addition, they are poorly accepted by a middle class who like the state of Providence when it is the first beneficiary of the state of Providence. So a very, very difficult problem for all of us. Eve, you had some comments. I was struck by the analysis of Mr. Von Weitzsäcker that the welfare system was a child of the Cold War. The title of this session is wither the welfare system, the European model. We used to have the question often of wither NATO. Does the European, does the social welfare system have a future without the Cold War? And the line and answer to the questions, also the question from the Algerian colleague that we're discussing now the social European social welfare state here this morning in Monaco because of the crisis. But I think we have to be aware of the fact that Mr. Von Weitzsäcker made reference to the period when the system was built up and started, that even in times of quite important economic growth, even in times and countries where there is a substantive economic growth, also security systems since 25 to 30 years doesn't produce equality like it was meant to redistribute and produce equality, equality in income or even equality in chances. We issued not so long ago a report divided we stand about equality and the development in terms of income and in terms of the distribution of GDP per capita. And there you can see that even in terms of very important economic growth, economic success, progress and even in countries which have a egalitarian tradition like Sweden since 20, 25 years, in fact, there is a growing inequality. And I think there elements which have been put forward by the, par la collègue algérien sont très important. C'est, nous avons bâti un système de sécurité sociale les trois quatre piliers traditionnels avec un financement, je dirais, préconçu. But society has developed, has changed. And once again, I think we underestimate the element of the resilience, empowerment, asking people to take their own responsibility in terms of upscaling their skills, preparedness to go back to the labor market, have longer careers and so on. And so I think it's a question also of resilience and we have to even if there would in the next years be more economic growth and the problem of financing our social security system would be kind of resolved so to say even then we will have to look very carefully and very closely at the element of equality improving of the social security schemes which once again during the last 20, 25 years was in fact decreasing. I have to say we have quite a dynamic panel here where you can actually see people wrestling with the questions they're being asked. I commend you for that. Joaquin, you had a remark. Yes, a couple of quick remarks. First of all, regarding the social dialogue at the European level. I remember during the 80s, 90s, during the Delor period there was a process of social dialogue at the European level. At the moment when not only the attitude regarding European integration was more positive than now but also at the moment when the EU institutions were able to adopt some kind of rules at the EU level on the social issues. This moment disappeared during the past decade and given that now it's practically impossible that the European Council and the Parliament will agree on common rules following the legislative decision making process, the social partners at the EU level don't find useful, interesting, don't find that this is a priority to really discuss new issues apart the different positions and the different priorities of business Europe on the one hand and the European Confederation of Trade Unions on the other. I think it's very unfortunate because, and I linked with the second part what I wanted to comment on the two other interventions, the welfare state or social models requires a lot of changes because the society has changed completely. The exclusion, 25% of the EU population is at the risk of exclusion according to figures that were released few days ago by Eurostat. This means that our social policies, our social budgets, our social policy instruments are not at all efficient. If you look at the percentage of social expenditure in the GDP of Europe, 29% is higher than the one existed before the crisis. Also released recently by Eurostat but inequalities have grown and exclusion is at very high levels. Even poverty levels in some of our member states are extremely high, very different within Europe but very high. So the welfare state, our social models regardless the differences between different countries are not as efficient as they were in the past and these require changes. These require new instruments, new approaches, new policy instruments to avoid exclusion, to avoid the lack of social mobility for one part of our population, to avoid these awful life conditions and working conditions in most of our industrialized areas or big urban agglomerations and all this. And this is not being discussed because during the last 15, 20 years until the crisis we were in a different approach. We were in an approach of light touch, no regulations, let the market go and this was the consequence of what happened at the end of the 80s with the end of the Cold War or with the end of the communist systems at the other side of the world. But now the financial crisis has changed again the way we are analyzing our societies but the policy discussion has not yet emerged. We are dealing with how to repair the financial system, how to solve the urgent awful consequences of the crisis but this discussion of what we need not to repeat the past mistakes and to have a sustainable, not only sustainable growth, sustainable society is not yet there and I think this is in my view an urgent discussion if we want to protect our citizens and if we want to have good arguments to protect our democracies because at the end is the democratic system that is at risk in the situation we are living now. Can I get a microphone over here to the distinguished gentleman in the front row Carl Kaiser and while the mic is coming I'll say I think one of the interesting aspects of this conversation has been the identification of the question, is it possible now to have a job and still live in poverty? It's a question we're beginning to debate in the United States as well, Carl. I would like to ask the panel whether the time hasn't come to make a courageous and in my opinion needed effort to deal with a growing problem namely the question of the pension system in Europe where I see a danger that the whole European model can get into real trouble. We know when it was said the age grows, that's a good thing but the working age should also rise, the pension age should rise but that's not happening. It's happening in some countries, other countries politicians have great problems in resisting the pressure to stay where we are. Now the signals are going in the opposite direction of what should be done. It started in France with the measures by President Hollande. The Grand Coalition in Berlin which we'll probably vote it in today with the referendum of the Social Democrats is giving another signal taking back the reforms of Gerhard Schröder lowering the age to 63. So my question is, isn't this a problem where we could do something at the European level to help the politicians to deal with the problem otherwise the system becomes unfinancible? And could you pass the mic back, Karl? I have a mic on French MP in charge of the UMP platform. In France we pay a lot of money for our social system and nonetheless it's rather inefficient with what we call the French preference towards unemployment. In that way part of the discussion, the start of the discussion was more or less on paying more as I got at the same time as some of us in France put the question of the new foundation of our social system. The discussion does not go on the question of harmonization or new European directions on the social system but the shared analysis of what does not work. There are things which obviously do not work particularly in our country. So the debate about spending more maybe because there's been the crisis is not ours. The question of more harmony in the social system in Europe may be one but it does not erase the fact that the fundamentals of our system in France do not work. And when we put the question as fundamentally as refoundation of the system, it looks very far from what you were talking about. For all those outsiders we do not help. The discussion of spending more money may be of interest but if we keep on the lines we've been keeping for so long they'll still be outsiders. And one more point. I know that when we speak about investment some academics will say education is part of investment. When we speak about social system academics may say education is part of the social system. I do acknowledge that the lot of money has to be spent on education and that it's sound and reasonable but I do not believe that extending all difficult issues to education does really help solve neither the education issue nor the social issue. Unless I see a hand with a burning question that we need to add, is it burning, sir? All right. And this will wrap it up. And if you could be succinct you'd earn my thanks and the thanks of everybody who wants to get to lunch. The issues you all have been talking about are not unusual in the United States. Washington State has a Boeing facility that might move to South Carolina. Our pension funds are at varying levels of insolvency and most of our states are welfare programs, attract or repel people around the country. All of them sound like they're probably an adventure in the European situation but in the United States I think we have found that the competition among the states on the type of rules they envision has created some degree of experimentation. Indiana has moved to solve their, or at least alleviate their pension fund problems. Illinois decided to go bankrupt as far as I can see. To what extent are you underrating the value of having individual nation states experiment with solving these various problems rather than trying to elevate it to the European situation? Didier, maybe you can wrap this up and talk about it. Maybe three short remarks. First, about pensions in general tempos, maybe more for the social issues. You don't have a misunderstanding. I fully agree that we need to go further with the social dialogue to have some minimum rules at the European level, I said. Also for the pensions, due to what? Because we need to go further with the single market. We need to do more with open trade with other parts of the world but to have the support of the population, we need to organize some minimum rules at the European level because except that we will have more and more protectionist approaches. So it's not a contradiction. We need some rules on social issues to be able to have a real single market. We are not so far in energy in other fields. We need to do more and also to have a real open trade with other parts of the world. The second element for pensions, we need to take the financing of the pension on board in the analysis of the sustainability of the public finances. For the moment, we are looking to the deficit, to the debt ratio, but we need to do more is beginning about the quality of the public finances and the quality of the public finances is also to see what kind of financing for the pensions. And of course, everywhere in Europe, we have the same discussions. How long is it needed to work? 65 as a good idea, maybe in the second world war because this was the life expectancy. So we didn't need to pay the pensions. The people had a good idea to die just at 65. But if you have now an expectancy for more than 80s, you need to find a way to another world. And so what kind of contributions were you on live? So there are a lot of discussions, but with maybe also some minimum rules at the open level. And the third remark, I just want to just come back to the question of our Algerian colleague because I don't understand and I'm not going to repeat what has been said about the inclusive character for those who today don't even have access to the minimum rights because they don't ask them. But behind the European approach, we are talking a lot in all of our innovation strategies. For a part of the population, it will obviously be the solution. But there is a part of the population that will not have the level of qualification to enter into these jobs, innovations and these new jobs. And so I really believe, and Jean was saying, education, but especially professional training is a major element in all of our societies. If we want a part of the population, and especially young people, and access to the work market, not in the new technologies, but in jobs, especially manual for which, for the moment, some countries, maybe the case in Germany, there are a lot of good activities, very good relations among the enterprises and the education system. But in my country, in Belgium, we are not doing enough about that. We need to go further to have a real qualification for part of the population without any access to the high-tech new jobs. So that's it. But again, some minimum rules in different social issues and also in pensions, it's quite important at the upper level, maybe some guidelines, some references. If we want to attract the population to support the open process, except that we will have more and more protectionist approaches. So it's lunchtime. Je vous remercie, monsieur, pour discussion très aimable. Très poc uton. Nous allons maintenant procéder à une déjuné, débat, et en reprends ici à 15 heures. Et là. On verra.