Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Consumer policy after Covid-19—fostering social cohesion

Christian Kastrop 22nd October 2020

The pandemic has highlighted the need for a new EU consumer policy, fit for a more digitalised and sustainable world.

consumer policy
Christian Kastrop

European Union governments have been showing strong and decisive action to tackle the Covid-19 pandemic. Besides numerous measures to uphold public health, policy-makers have focused on supporting firms to prevent large-scale insolvencies. The European Central Bank’s monetary policy as well as the EU recovery fund will add to macroeconomic stability in the crisis. 

Yet, besides firms and production, Covid-19 has brought massive disruption to everyday life and hit one group particularly hard—consumers. Many are suffering from straitened budgets—stemming from unemployment or short-time work schemes—and are struggling to meet credit charges or pay rents. EU member states have taken several measures to mitigate the consequences of the pandemic, such as reductions in value-added tax or prosecution of consumer infractions (unfair competition, for instance).

But with case numbers climbing in the second wave, the pandemic will likely persist well into 2021. Consumers will need even more protection in these trying times, for at least three reasons.

Confidence key

First, consumer confidence will be key to a swift recovery: only with rising consumer trust will firms and the overall economy be able to recover promptly. Figure 1 indicates that consumer confidence has not yet returned from its low point after the outbreak of the pandemic and remains well below its long-term average.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

Figure 1: net consumer confidence (%)

consumer policy
Source: European Commission Services

Secondly, consumers are a not a monolith. Some have been hit particularly hard: single-parents, artists and those living in the worst-affected countries or who work in services such as tourism. So generous support for consumers will be important to keep already-rising inequality at bay. 

Thirdly, the Covid-19 crisis will accelerate the pickup of digital services. This can turn out to work well for many consumers, especially during the pandemic when physical shopping should be avoided. But it also requires stronger consumer and data protection in the digital economy—where platforms with already staggering market power have become even more dominant and successful with the coronavirus.

Indeed, Figure 2 suggests that most consumers around the world will shift consumption patterns to the online arena—which is likely to strengthen online platforms. Apart from digital data protection we also need to enhance transparency and the digital literacy of consumers, especially when it comes to the—often opaque—use of data in digital services.

Figure 2: anticipated growth (blue) or reduction (pink) in online purchases after Covid-19 (%)

consumer policy
Source: McKinsey & Company

Against this background, consumers must be a top policy priority in Europe. Happily, the European Commission will shortly be presenting its ‘Consumer Agenda’, an update to the overall strategic framework of EU consumer policy. It will outline a multiannual framework for consumer policy, to address digitalisation and the rising importance of sustainable consumption and production. Crucially, it will outline measures to protect vulnerable consumer groups. 

Joint paper

As a timely addition to this process, the trio of the presidency of the Council of the EU presented a joint paper, ‘Lessons Learned from the Covid-19 pandemic’, on October 16th. Signed by the three state secretaries, Simon Zajc (Slovenia), João Torres (Portugal) and myself (for Germany), it highlights important areas in which consumer policy requires immediate action. 

The recommendations pick up on the focal points of the Consumer Agenda. They include: 

Improvement of consumer protection within financial services—The review and improved rules of the Consumer Credit Directive (2008/48/EC) should be adjusted to the digital era while ensuring a high level of consumer protection. The review should also examine the risks of over-indebtedness in the time of crisis.

Addressing consumer vulnerability—Many consumers in the European Union lost their jobs or faced a considerable reduction of their income. As a consequence, consumers are facing difficulties in complying with credit / financial obligations, and many find themselves in a vulnerable situation and are experiencing indebtedness. This problem needs to be addressed in order to share best practices and information, and to find a common solution for European consumers. Possible approaches could include promoting inclusion, empowering consumers regarding their rights through consumer-supporting awareness campaigns, and developing common tools that improve consumer experiences. Studies by the European Commission on consumer vulnerability should be taken into account in the process of designing these measures. We intend to support research on the differences in quality of life for consumers across European regions and the welfare effects of EU Regional Policy.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

Consumer protection on platforms—Due to the considerable increase in fraudulent, misleading and legally non-compliant offers in e-commerce and on online sales platforms and ‘fake shops’, such platforms should assume greater responsibility to tackle legally non-compliant offers. The Trio considers it therefore of central importance that the Digital Services Act announced by the Commission will introduce a higher level of responsibility in particular for large online platforms. In addition to these regulatory measures, an expansion of quality-based information and educational offers for consumers could be useful. Furthermore, administrative and regulatory measures to strengthen competition between platforms so that consumers also have freedom of choice should be considered. However, the responsibility of platforms and sellers should remain clearly distinguishable.

Promoting sustainable consumption—Some consumers changed their lifestyle and consumption patterns in the face of the crisis – often with environmentally friendly effects. Beyond times of crisis, consumers should be encouraged to become actors in the green transition. This requires innovative solutions, an adequate legal framework promoting long product lifespans and reparability, appropriate information and consumer education. Sustainable consumption should not be dependent on income, but should be accessible for everyone.

Travel and passenger rights—In the past, consumers have repeatedly endured painful experiences with corporate bankruptcies and inadequate bankruptcy protection. Thus, it should be examined whether and how insolvency protection could be improved in the area of transport, especially for air carriers.

Review of the Directive on General Product Safety—The review of the Directive on General Product Safety (2001/95/EC) should be conducted with a view to the challenges brought by new technologies and online sales to ensure the safety of non-food consumer products, better enforcement and more efficient market surveillance.

The full list of areas identified by the trio presidency also includes joint research on vulnerable consumer groups, which might be conducted at the ‘NUTS2’ regional level, and the monitoring of consumers’ rights during the Covid-19 crisis.

Empowering consumers

Overall, the Consumer Agenda of the commission entails devising a strategy helping to determine how well consumers—and so all of us—make it out of the crisis. In a broader sense, it will thus also determine EU citizens’ sentiments post-pandemic—in particular, whether they feel that policy-makers balance the interests of consumers and businesses. Hence, consumer policy is a matter of social cohesion in the EU. 

On a wider horizon, the focus of consumer policy should be on empowering consumers for a much more digitalised and sustainable environment in the aftermath of Covid-19. With the right strategy, the ‘new normal’ could be most beneficial to consumers—and the overall economy.

Christian Kastrop

Christian Kastrop is state secretary at the German Federal Ministry of Justice and Consumer Protection, responsible for consumer policy and the digital society. He previously served as director of the 'Europe’s Future' programme at the Bertelsmann Stiftung and as director of the policy studies branch of the Economics Department at the Organisation for Economic Co-operation and Development in Paris. He was also chair of the Economic Policy Committee of European Finance Ministers (ECO-FIN-EPC) and served as head of the directorates for Fiscal Policy, Europe and International Issues at the German Federal Ministry of Finance.

You are here: Home / Economy / Consumer policy after Covid-19—fostering social cohesion

Most Popular Posts

Visentini,ITUC,Qatar,Fight Impunity,50,000 Visentini, ‘Fight Impunity’, the ITUC and QatarFrank Hoffer
Russian soldiers' mothers,war,Ukraine The Ukraine war and Russian soldiers’ mothersJennifer Mathers and Natasha Danilova
IGU,documents,International Gas Union,lobby,lobbying,sustainable finance taxonomy,green gas,EU,COP ‘Gaslighting’ Europe on fossil fuelsFaye Holder
Schengen,Fortress Europe,Romania,Bulgaria Romania and Bulgaria stuck in EU’s second tierMagdalena Ulceluse
income inequality,inequality,Gini,1 per cent,elephant chart,elephant Global income inequality: time to revise the elephantBranko Milanovic

Most Recent Posts

transition,deindustrialisation,degradation,environment Europe’s industry and the ecological transitionCharlotte Bez and Lorenzo Feltrin
central and eastern Europe,unions,recognition Social dialogue in central and eastern EuropeMartin Myant
women soldiers,Ukraine Ukraine war: attitudes changing to women soldiersJennifer Mathers and Anna Kvit
military secrets,World Trade Organization,WTO,NATO,intellectual-property rights Military secrets and the World Trade OrganizationUgo Pagano
energy transition,Europe,wind and solar Europe’s energy transition starts to speed upDave Jones

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Eurofound advertisement

Eurofound webinar: Making telework work for everyone

Since 2020 more European workers and managers have enjoyed greater flexibility and autonomy in work and are reporting their preference for hybrid working. Also driven by technological developments and structural changes in employment, organisations are now integrating telework more permanently into their workplace.

To reflect on these shifts, on 6 December Eurofound researchers Oscar Vargas and John Hurley explored the challenges and opportunities of the surge in telework, as well as the overall growth of telework and teleworkable jobs in the EU and what this means for workers, managers, companies and policymakers.


WATCH THE WEBINAR HERE

Foundation for European Progressive Studies Advertisement

Discover the new FEPS Progressive Yearbook and what 2023 has in store for us!

The Progressive Yearbook focuses on transversal European issues that have left a mark on 2022, delivering insightful future-oriented analysis for the new year. It counts on renowned authors' contributions, including academics, politicians and analysts. This fourth edition is published in a time of war and, therefore, it mostly looks at the conflict itself, the actors involved and the implications for Europe.


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

Social policy in the European Union: state of play 2022

Since 2000, the annual Bilan social volume has been analysing the state of play of social policy in the European Union during the preceding year, the better to forecast developments in the new one. Co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), the new edition is no exception. In the context of multiple crises, the authors find that social policies gained in ambition in 2022. At the same time, the new EU economic framework, expected for 2023, should be made compatible with achieving the EU’s social and ‘green’ objectives. Finally, they raise the question whether the EU Social Imbalances Procedure and Open Strategic Autonomy paradigm could provide windows of opportunity to sustain the EU’s social ambition in the long run.


DOWNLOAD HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube