Lisbon promises kept

Only a few countries can be said to have developed a social investment policy repertoire in a comprehensive fashion. The countries that come closest are the

Nordic welfare states. But we can also observe social policy recalibration in a social investment direction, in countries such as the United Kingdom, Ireland, the Netherlands, Germany, Belgium, and France (Morel, Palier, and Palme, 2012). The European Employment Strategy, embodied in the Lisbon strategy, helped to redefine the European employment problem away from managing unemployment toward the promotion of employment, fostering the diffusion and acceptance of a new mental framework for active employment policies. Up to the financial crisis, moreover, employment rates increased, unemployment rates fell, and wage pressures abated, all factors that speak of the important accomplishments of the Lisbon Agenda. On the other hand, the Lisbon Strategy failed to address rising poverty and inequality. In the course of the 1990s, social assistance benefits lost ground in many mature welfare states. On the other hand, some countries, such as Ireland, the UK, Germany, and Belgium, achieved some success in raising social minimum incomes relative to average wages.

Critics have accused social investment advocacy of being a sheep in wolf's clothing, that is, feigning a commitment to a social agenda in the name of further neoliberal reform. Another view questions whether all social groups benefit equally from social investment policies and contends that social investment is only truly available to the middle classes. Bea Cantillon has voiced an important critique on social investment for failing to give proper attention to social inclusion and poverty alleviation in comparison to activation (Cantillon, 2010; see also Hudson and Kuehner, 2009; Vandenbroucke and Vleminckx, 2011). An additional criticism that could be made against social investment has to do with its limited implementation, biased towards a strong emphasis on activation, marking a continuation of neoliberal 'workfare' measures, rather than a real shift towards up-skilling and up-scaling quality employment (Bonoli, 2011). According to Streeck and Mertens (2011), productive social investments, as relatively soft spending items in public budgets, are under continuous pressure in times of austerity and economic crisis (see also Wolf and Zohlnhoefer, 2009).

As the OECD witnessed a U-turn in the development of inequality, declining in the post-war period until roughly the late 1970s, and since then continuing to increase (OECD, 2008), it is indeed tempting to put the blame for rising inequality on the transformation of the welfare state. More flexible labour markets tend to increase wage differentials, and activation policy is designed for the employable or to raise employability. To be sure, the logic of social investment is focused on maximizing the chances of earning an income on the labour market, which tends to generate inequalities and risks. But to the extent that the social investment strategy remains coupled with minimum wages, education, training, and skills upgrading, one could envision an increase in the equality of opportunity and a decrease in income inequality.

Comparative research by Maria Vaalavuo suggests that the shift towards social investment, in terms of spending, seems not disturbed by the redistributive character of the welfare state (Vaalavuo, 2011), indicating that social investment services, childcare, and educational benefits smooth the gap in income distribution. The question whether the social investment paradigm is to blame for disappointing poverty trends will be examined more closely in Chapter 7. For now it is important to stress that European leaders never fully committed their policy adjustment strategies to the original conception of the Lisbon Agenda, which placed economic and social goals on an equal footing. This policy principle was abandoned with the 2005 refocusing of the Lisbon Agenda on growth and jobs on the basis of the Kok report of 2004. As a consequence, EU social and economic policy thinking remained rather fragmentary, as we will see in more detail in Chapter 8. While the Lisbon Agenda represented an important attempt to break through the lopsided economic thinking of the 1980s, it failed to achieve full cognitive and normative policy hegemony over the past decade.