10 Social Policy: Is the EU Doing Enough to Tackle Inequalities? AMANDINE CRESPY 10.1 Introduction The objective of social policy is to limit inequalities in resource distribution within societies. On the one hand, it consists in regulating markets and working conditions; on the other, it uses redistributive mechanisms (i.e. cash transfers and services) to offset contrast in income distribution and tackle poverty. The EU exhibits the lowest level of inequalities compared to countries around the globe, including the United States. However, recent studies also show that, in some respects, the EU falls short of its promise of welfare and social cohesion for all. While general levels of income have been rising continuously over the past decades, inequalities among individuals have only declined slowly. When looking at the Gini coefficient, the most common indica- tor for measuring inequalities, it appears that the decrease of inequalities has come to a stalemate in the EU-27, with the euro area even displaying an increase of the index since 2008 (while the US has known a sharper increase of inequalities, starting from a significantly higher level). Moreover, the catch-up process of the poorest regions in terms of living standards has not taken place to the expected extent. In some regions of Southern and Eastern Europe or the Baltic countries, the recession has meant a severe degradation of welfare for many people. Today, the EU still exhibits a clear contrast between a wealthy core of Continental and Northern countries versus the poorest peripheries in the south and east of the continent (see chapter 17). It is argued in this chapter that the weak and fragmented governance applying to social policy at a European scale has done little to help tackle social inequalities. Today, the EU runs the risk of seeming too intrusive by prescribing welfare state reforms which, more often than not, lead to retrenchment while, at the same time, remaining powerless and ineffective in the face of persisting stark inequalities. The absence of political will to match the strong monetary and economic interdepend- ence within the euro area with adequate social policy instruments is particularly problematic. What is often called ‘social Europe’ takes the form of a patchwork made of various policy areas, 1 modes of governance 2 and diverse national welfare state 1 Free circulation, labour law, employment and training, struggle against discrimination, healthcare, fight against poverty and social exclusion. 2 Essentially the Community method and soft coordination. The intergovernmental method has been rather marginal in the field of social policy. 9781108482264c10_p196-216.indd 196 02/03/20 7:14 AM