‘Social Europe’ has followed a very bumpy road since the inception of the European Community. This is not only a consequence of the lack of competences at the European level, or the lack of ‘political will’ at the level of Heads of State and Governments, but also and mainly of the ideological tendencies that have permeated all policies for the past six decades.
Since the Treaty of Maastricht in 1992, most social movements in Europe have been demanding a ‘social and democratic’ Europe. However, never has it been clarified what this could or should mean. Even today, there are no clear demands on what precisely the European Union should do or not do. This article is meant to shed some light on the past, the present and the possible future of ‘social Europe’.
The current twenty-eight Member-States of the European Union all have more or less well developed welfare states. While the social protection systems of the six founding members in 1958 were more or less comparable – based on social citizenship and basic human (but not income) equality – the States that adhered later on, from the Anglo-Saxon and Scandinavian systems to the Mediterranean ones and Central Europe – introduced more diversity. But all systems are based on a principle of organic solidarity and insurance plus redistribution paid for by taxes and/or social contributions. These common characteristics make for a ‘European social model’, different from what exists in the United States – based on needs – and from the former socialist countries where markets were eliminated.
The Treaty of Rome of 1958 had a chapter on ‘social policies’ for workers, speaking of the promotion of employment and the improvement of living and working conditions ‘so as to make possible their harmonization while their improvement is being maintained’. This development will ‘ensue not only from the functioning of the common market which will favour the harmonisation of social systems, but also from the procedures provided for in this Treaty…’
The European Community was an economic undertaking. The assumption was that economic growth would be a consequence of the elimination of borders which would lead to social progress, as was mentioned in the Ohlin report of the ILO. In the long term, it was thought that both would make possible a political union. The idea was to develop a progressive cooperation which would make regression impossible.
These two conceptions, the consequences of the market on the one hand, and the legal procedures on the other hand, have created some ambiguity which can explain the difficult progress in social matters over the past 60 years. Anyway, all major social matters remained in de hands of national governments, the European Community only taking some responsibility for workers.
Nevertheless, in these first years of European integration, some important achievements were made, such as equality of men and women, social security for migrant workers, the preservation of rights when companies are transferred, etc. The European Social Fund was there to help with the reconversion of workers from the declining coal sector.
The first changes in social thinking emerged in the 1970s, a period of crisis with huge unemployment. Governments were concerned about the financial sustainability of their welfare states. The European Commission which had, in the first decade of its existence, pleaded for more social competences, began to stress the importance of keeping health care affordable and of avoiding negative consequences on employment. In the 1980s, it published two memoranda on social security wishing to discuss its funding, the expected ageing of the population and the exclusion of more and more people. It started to play with the idea of a partial privatisation of pensions.
The Single Act of 1987 was meant to find solutions for these problems. It would allow for completing the stalled internal market and extending the possibilities for working on social matters. Not only does the text refer to the European Social Charter, it also makes qualified majority voting possible for all legislation on the harmonisation of rules. For social matters, the improvement of working conditions (health and safety), can be voted by qualified majority, whereas a new article is introduced to promote the social dialogue at the European level. Both points are once again the result of difficult compromises, though they clearly mark progress and open the door for more social legislation, as well as for fiscal concerns and early privatizations.
The internal market
The efforts to complete the internal market were useful for completing the social dimension of the European Union. Commission President Jacques Delors repeated time and again that economic and social progress necessarily had to go hand in hand. In order to avoid a downwards harmonisation he tried to introduce social basic rights in a social charter. In the European Parliament members asked for a harmonisation of social security systems. The European trade unions asked for a ‘social floor’ with the major ILO conventions and the social Charter of the Council of Europe. And ‘since there was no job for all’ the ILO promoted the introduction of a guaranteed minimum income.
However, the European Council did not agree. The ‘Iron Lady’ in the United Kingdom blocked every discussion on social matters since ‘new jobs cannot be created with new rules’. Employers also strongly opposed social Europe and declared it would be a ‘serious error’. Delors lost, not only on his social charter, but also on his economic dimension of the monetary union. To-day, twenty-five years later, we see the consequences of this flawed Union.
Nevertheless, in 1989, a social charter with the rights of workers was adopted. Due to Thatcher’s opposition, it was nothing more than a ‘solemn declaration’ and it was not enforceable. But it did speak of ‘fairly remunerated employment’, ‘improvement of living and working conditions’, ‘a right to adequate social protection’ and ‘an adequate level of social security’, the ‘right to association’, ‘collective agreements’ and ‘the right to strike’. Comparing this text to the Charter of fundamental rights which was added to the Treaty of Lisbon in 2004, the difference is compelling. Nevertheless, trade unions were very disappointed about the non-enforceability of the charter, and the fact it only speaks of workers’ rights, not social rights in general.
With the Treaty of Maastricht, this social charter became a ‘Protocol’ (without the United Kingdom). It was decided that all matters concerning health and safety of workers could be decided by qualified majority voting, whereas social security remained subject to unanimity votes. The mechanism for the social dialogue was improved, one of the demands of Commission president Delors.
But Maastricht had shown that Thatcher was far from alone in her new philosophy. The introduction of the Euro forced all member states to respect fiscal rules and debt limits, the so-called ‘convergence criteria’ that had to be achieved in order to have access to the new single currency. Calls for an ‘Economic security council’ or a ‘social convergence’ were not listened to anymore. A Commission white paper on Growth, Competitiveness and Employment received only a halfhearted response in the Council.
In 1991 the European Commission published two recommendations which were adopted by the Council, one on the convergence of objectives and policies of social protection, and one on common criteria concerning sufficient resources and social assistance in social protection systems. The Commission notes that ‘at this moment’ social protection systems cannot be harmonised. But it also notes that they have a direct impact on the internal market and that divergences should be avoided as much as possible. ‘Social devaluations should not substitute the monetary devaluations’. A progressive approximation is therefore desirable. The objective of social protection, according to the Commission in 1991, is guaranteeing a minimum income, access to health care, social and economic integration and assistance in case of unemployment. It recommends the Member States to introduce systems of a guaranteed minimum income and to provide social protection to all persons with insufficient resources. The Council confirms and demands ‘to recognize the basic right of a person to sufficient resources and social assistance, to live in a manner compatible with human dignity …’. It recommends the Member States ‘to fix the amount of resources considered sufficient to cover essential needs with regard to respect for human dignity and … to guarantee these resources and benefits within the framework of social protection arrangements’.
In 2016, these recommendations remain to be implemented.
In 1993 the European Court of Justice also questioned the legality of a series of Community programmes whose legal basis was in dispute. A first Poverty Action Plan had been introduced at the end of the 1970s. But the ‘Poverty3’ programme was held up in the Council by Germany, for reasons of subsidiarity. The Council of Justice confirmed.
The Treaty of Amsterdam of 1999 and the Treaty of Nice of 2003 have introduced the fight against social exclusion in the competences of the European Union and the integration of people excluded from the labour market amongst the topics which can be decided on with qualified majority votes. Employment policies have become a matter of ‘common interest’. The Treaty of Nice adds the ‘modernisation of social protection’.
It should be stressed that poverty reduction is not referred to in any European Treaty. However, the ‘Lisbon strategy’, a policy document adopted in 2000 and aiming to make ‘the European Union the most competitive and dynamic knowledge economy in the world’ does speak in its § 32 of the fact that it is unacceptable that so many people continue to live below the poverty line as victims of social exclusion. Measures should be taken, so it is said, to take ‘decisive actions in order to eradicate poverty’. Following the Treaty of Nice is also adopted a ‘Social Agenda’ which mentions the promotion of employment, the modernisation of social protection and the fight against poverty and social exclusion as its priorities.
But no new legislation is adopted. Poverty reduction (and now also social inclusion, sustainable pensions and health care) is debated within the context of an ‘Open method of coordination’, a coordination process of the Member States leading to ‘soft law’ but no binding measures. The method has not led to any tangible results, except at the level of measurements and indicators. Some authors think however this can have an added value and operate as a catalyst for a reform strategy.
In 2000 a Charter of Fundamental Rights has been adopted but was not integrated into the Treaty of Nice. Neither could it be integrated into the (failed) Constitutional Treaty. It is very modest and contains very few social rights. The right to work became a right to engage in work (art. 15), a right to housing became a right to housing assistance, the right to social security became ‘entitlement to social security benefits’. It creates new rights such as a right to good administration, the right to conduct a business, protection of intellectual property, etc. The Charter does not give new competences to the European Union and cannot influence national legislation. Member States are committed to respect this Charter when they act within the competences of the European Union.
It is important to note though that the working-party on the social dimension of the Constitutional Treaty did not arrive at hard conclusions. Attempts to arrive at a better integration of social and economic policies failed. Also failed the attempts to guarantee access to public services and guarantees for the role of social partners.
The Lisbon Treaty does have a ‘horizontal social clause’ stating that “In defining and implementing its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health” (article 9).
The difficulties of making any serious progress at the social level as from the beginning of the new century show how the social paradigm was changing. The impossibility to include the integration of social and economic policies, the duties of states to guarantee full employment and public services, the role of social partners, the re-wording of social rights: it all points to a social regression and an erosion of social citizenship.
Most of the fundamental changes were mentioned – indirectly – in the Lisbon strategy, which talks of the liberalization of public services and the ‘employability’ of workers. The Commission proposals for the ‘modernisation of social protection’ progressively introduced other major changes. Social protection becomes a tool at the service of growth and employment, benefits should go in the first place to people excluded from the labour market, people should be ‘activated’ and encouraged to participate in the labour market, health care and pensions reformed. In its proposal of 1999 four new objectives of social protection are mentioned: to make work pay, to guarantee pensions, to promote social integration and to guarantee sustainable health care.
Social protection has become a factor of production which has to favour competitiveness. People need ‘incentives’ – less income guarantees – so that they go and look for jobs, which points to a distrust in people’s willingness to seek for jobs.
It is this changing paradigm which can explain the ‘Bolkestein’ directive on the liberalisation of services, the directive on the posting of workers, the race to the bottom and social dumping in the framework of globalisation. Proposals were made on ‘flexicurity’ and on the ‘modernization of labour law’, all involving a deregulation of labour law. Finally four arrests of the Court of Justice have to be mentioned which had disastrous consequences for the trade unions. The ‘Viking’, ‘Laval, ‘Rüffert’ and ‘Luxemburg’ cases limited the right to strike and the possibilities for public authorities to condition the attribution of public works. What we witnessed at the beginning of this century was a de facto downward social harmonisation with social rights being subordinated to economic freedoms.
One major though partial exception though has to be mentioned. In 2003 the EU adopted a ‘working time directive’, giving workers the right to four weeks of paid holidays a year, restricting excessive night work and a limit to working time of 48 hours a week. Attempts to further improve the directive in the following years did not succeed anymore.
Moreover, in 2004, the accession of eight countries of Central Europe, with huge income gaps compared to the older Member States, make every effort for upward harmonisation irrelevant.
Social policies are now subordinated to the economy. Notions such as ‘solidarity’, ‘redistribution’ and ‘inequality’ still have their place in some documents, but they are no longer at the heart of social policies and the protection of incomes. People are no longer protected against markets, but are now stimulated to participate in markets. The renewed social agenda of 2008 re-defines ‘solidarity’: it is no longer a mechanism of redistribution in order to have the whole society benefiting from progress, but only in favour of those who are ‘excluded’. Instead of a strengthened cooperation and integration, there is more competition between countries as well as between workers.
The beginning of the 21st century thus introduced a new social paradigm which subordinates the social to the economy and tries to generalize competitiveness at all levels.
The crisis of 2008
The final blow to the ‘European social model’ was given with the current financial crisis. Major banks had to be saved as from 2008 which led to huge debt ratios for most Member States. The Stability and Growth Pact was no longer respected and financial markets started to challenge the survival of the Euro. Greece was the first victim of speculative attacks, followed by Ireland and Portugal.
Discussions on the economic governance started again and what had been difficult to impose by internal market policies in the past, was now de facto imposed by financial markets. Member States have to reduce their public expenditures, because their fiscal deficit and their debt ratios are too high. In order to save the Euro, the Commission and the Council took drastic steps which are now changing inevitably and maybe definitely the social margins which were left.
The ‘European Semester’, the ‘Euro+ Pact’, the ‘six pack’ and the ‘two-pack’ on economic governance, a new ‘Treaty on Stability, Coordination and Governance’: they all try to impose austerity measures in the same way as was done in third world countries after the debt crisis of the 1980s.
Key is the ‘European Semester’ which launches the annual cycle with the publication by the European Commission of the ‘Annual Growth Survey’ (AGS), followed by an opinion on the draft budgetary plans of Member States. The AGS sets out the general economic principles for the EU and provides Member States with policy guidance for the following year. After bilateral meetings with the Member States and their presentation of ‘National Reform Programmes’ (NRP), the Commission will publish its ‘Country Specific Recommendations’ (CSR) with an analysis of Member States’ economic and social policies. The ‘semester’ ends with the formal adoption of these CSRs in July.
Up to 40 % of CSRs refer to social policies and mainly concern the indexation of wages, wage-setting mechanisms, promoting labour market participation, reducing early retirement and better targeting of social assistance as well as a shift away from tax (social contributions) on labour. However, the extent to which the recommendations are respected vary enormously and ranges from 10-20 % to 80 %. It also has to be noted that the European Parliament plays no role in this semester process.
Whereas in the pre-crisis period, the Commission tackled the national social competences of Member States via its internal market and competition policies, today, it has a direct influence on social policies via the mechanisms of the ‘economic governance’. The Treaties however have not been changed and exclude major social competences from the Union’s field. It can however, with the agreement of Member States, take action to coordinate their policies. In this way, the lines between European Union and national competences become blurred. In the Euro Plus Pact, Heads of States and Governments recognize that ‘this Pact focuses primarily on areas that fall under national competence’. Nevertheless, they say that ‘following reforms will be given particular attention’: review of wage setting arrangements, indexation mechanisms, further opening of sheltered sectors, improving the regulatory frameworks, etc.
Member States are losing – willingly or unwillingly – huge parts of their sovereign rights, more particularly regarding their budgets. Simultaneously, democratic rights are being eroded, even if the New Treaty on Stability states in its article 13 that the European Parliament and national parliaments can cooperate ‘in order to discuss budgetary policies and other issues covered by this Treaty’. Different EU institutions play a role in these developments. The dominant discourse is that if welfare states have to be saved, they will have to be modernised. However, this is a clear political choice and is not a consequence of the crisis. As the European Commission’s Social Protection Committee noted in its 2013 report: the pressure on social protection systems is important and unprecedented policy reforms are being implemented.
In the follow-up to the Lisbon strategy, a new programme ‘EU2020’ was adopted for smart and inclusive growth and poverty reduction is again one of its priorities. But although the European Commission proposed to reduce the number of Europeans living below the national poverty lines with 25 %, lifting over 20 million people out of poverty, the Council forgot the percentage and only speaks of the absolute numbers. This is a lowering of the ambitions, and, with the high rate of poverty growth in the EU at this moment, it could mean that 2020 shows a higher number of poor people than 2010.
European policies, at whatever level, do not develop in isolation. Global trends mostly confirm and reinforce each other. In the same way, European policies cannot be disconnected from what happens at the national level of Member States. While the semester mecanisms clearly put pressure on national social protection systems, many governments are eager to change their labour laws and to ‘modernise’ their protection system and do not wait for European recommendations. Neoliberalism is dominant at almost all political levels.
At the global level, the World Bank had introduced a ‘poverty reduction agenda’ as from 1990. The results of the 1995 UN World Summit on Social Development were eclipsed by the OECD proposal of 1996 to focus on some ‘international development goals. These, in turn, became the Millennium Development Goals in 2000. It was a radical watering down of the broad development agenda which came out of the many UN world summits of the 1990s.
Interestingly, in focusing on poverty, the World Bank dismissed all public policies and attempts to develop a system of social insurances. These, according to Bretton Woods institutions, were not a task for governments and could be bought on the market. However, soon after, the World Bank developed its theoretical framework for ‘social protection’. It introduced a new social paradigm based on ‘risk management’ and was mainly geared towards ‘mitigating’ negative social consequences of ‘shocks’ as well as towards measures to help the poor to ‘cope with’ these consequences. Preventing shocks was not really feasible and not desirable, according to the World Bank. In fact, it broadened the social protection agenda, by adding child labour, migration, the selling of assets, amongst others, to the different possibilities people have when faced with economic shocks, natural catastrophes or epidemics.
This approach was useful in so far as many UN organisations soon began to criticize the poverty agenda for failing to reach its objectives. In the first years of this century, many voices were heard to signal the inefficiencies of poverty reduction policies, the growing inequalities, the unaffordable ‘user fees’ introduced for social services through the structural adjustment programmes, the failing health care, etc. At the ILO, different steps were taken to re-affirm the importance of social justice in general and labour standards, decent work and social protection more particularly.
The trends that emerged for this global thinking were also visible in Europe. They were clearly present in the Lisbon strategy (see above) and were even more pronounced in the ‘active inclusion’ approach, ‘Social Investment Package’ and the ‘social innovation initiative. What these are about is not to offer protection to vulnerable people or to protect from market vagaries, but to stimulate people to participate in markets, to invest in their human capital so as to facilitate this participation and to involve citizens in the provision of basic social services themselves.
This is what the Commission means by ‘active inclusion’: “ (i) a link to the labour market through job opportunities or vocational training; (ii) income support at a level that is sufficient for people to have a dignified life; and (iii) better access to services that may help remove some of the hurdles encountered by some individuals and their families in entering mainstream society, thereby supporting their re-insertion into employment (through, for instance, counselling, healthcare, child-care, lifelong learning to remedy educational disadvantages, ICT training to help would-be workers, including people with disabilities, take advantage of new technologies and more flexible work arrangements, psychological and social rehabilitation). Such an approach may be termed active inclusion”.
‘Social innovation’ is a brilliant idea that comes from progressive social forces working at the local level and trying to enhance solidarity between community members. It wants citizens to take responsibility for the services they need or want, such as child care, caring for the elderly, for disabled persons, for car sharing, for exchanging second hand articles, etc. There are indeed a lot of activities citizens can do without relying on the market or on pubic authorities. These actions will in most cases also help for empowering people and they can change the social relationships in a community.
There are some caveats however. Since most of these tasks belong to the care sector, it is more than probable that the volunteering work will be done by women, thus creating once again a serious gender bias. Secondly, communities are collectivities of people, with their inevitable power relations, with friends and foes, with good helping people and free-riders. It means that rules will have to be established in order to not discriminate. Furthermore, some of these activities directly touch on welfare state dimensions, based on rights. And this means that governments will have to clearly regulate and monitor, in order to guarantee these rights and to avoid distortions.
When adopted by the European Commission however, one sees that other elements can pop in. Taking on board grassroots initiatives, a clear link is made with austerity policies and a hope that some citizens’ initiatives will substitute for welfare state rights and public social services will make way for markets: “By encouraging social innovation, policy-makers strive to pursue a triple triumph: a triumph for society and individuals by providing services that are of high quality, beneficial and affordable to users and add value to their daily lives; a triumph for governments by making the provision of those services more sustainable in the long term; and a triumph for industry by creating new business opportunities and new entrepreneurship”.
A third element that has to be looked at, directly linked to the existing welfare states, is ‘social investment’.
The sources of inspiration for ‘social investment’ are the ideas on human capital. The idea is that human capital has to be developed in order to better adapt to the requirements of a knowledge-based economy, to take into account the new social risks, and the more precarious forms of contracts, especially for people with low or obsolete skills. Fundamentally, so the story goes, it is more about ‘preparing’ than ‘repairing’ , it is a shift away from passive welfare states where people get compensation for the losses they suffered, towards active welfare states where people get incentives to bounce back and return to the labour market.
While some of the ideas in ‘social investment’ can certainly be interesting and valuable, they also imply the risk that social protection rights which are not directly useful for the market, are being ignored.
According to Esping-Andersen, social investment is not a substitute for social protection. ‘Social promotion’ and ‘social protection’ should be understood as the indispensable twin pillars of the new social investment welfare edifice. That is why social investment cannot come cheap and cannot be the answer to the shrinking public budget.
Welfare states have three functions, according to the European Commission. To-day, they are defined as social investment, social protection and the stability of the economy. Which means that social protection is only one of the objectives and that the economy is directly integrated into ‘welfare states’. The social protection dimension even gets a semi-economic colour: it should help to preserve human capital. This is a major change compared to the past, when, up till the 1990s ‘guaranteeing incomes’ was the first objective, after which it became ‘making work pay’. Even if the European Commission states that the three functions have to be combined, this is a serious weakening of the protection element of welfare states.
Many other points in the document seem to indicate that social investment is not meant for everyone, it is not a universal welfare state, it more looks like poverty reduction policies. ‘Support should be better targeted to those in need at the time they need it’. This sounds like the promotion of selective policies. ‘Some cash benefits and social services are poorly targeted and do not reach the people in need of assistance’. ‘Universalism and selectivity need to be used in an intelligent way’.
This doubt seems to be confirmed by the many references to Roma people, homelessness and the focus on children, in order to ‘break the cycle of disadvantage’.
There is a very clear attempt to privatise as many social services that remain in the European Union. Here, all references to social innovation, social business and social entrepreneurs, corporate social responsibility as well as micro-finances are repeated. And it is also clear this has but one objective: to lessen the burden on public budgets. ‘Available resources have to be used more efficiently and effectively, through simplifying, better targeting and considering conditionality’.
In fact, the document does not talk of social protection and of social security. It briefly refers to pensions and health care and to other initiatives taken at the European level, which are all oriented to privatization and ‘cost-efficiency’.
Social investment, according to this document is mainly concerned with poverty and social services. ‘Support’ and ‘cash benefits’ will become selective and conditional. Compared to the academic writing on social investment, this is a very poor translation of the original concept. It is far beneath ‘social democratic’ and even ‘third way’ thinking on social protection. This proposal confirms a trend that was noted earlier and was introduced by the World Bank in 1990: away from social protection, which can be delivered by the market, to poverty reduction, which is now also provided by ‘social entrepreneurs’.
The social dimension of the Economic and monetary union
‘At their meeting 13-14 December 2012 the European Council agreed on a roadmap for the completion of the Economic and Monetary Union, based on deeper integration and reinforced solidarity. This process will begin with the completion, strengthening and implementation of the new enhanced economic governance … A number of other important issues will be further examined by the June 2013 European Council, concerning the coordination of national reforms, the social dimension of EMU, the feasibility and modalities of mutually agreed contracts for competitiveness and growth and solidarity mechanisms and measures to promote the deepening of the Single Market and to protect its integrity. Throughout this process, democratic legitimacy and accountability will be ensured.’
In its chapter on ‘economic policy’, the Council talks of ‘a) coordination of national reforms: the participating Member States will be invited to ensure, in line with Article 11 of the TSCG, that all major economic policy reforms that they plan to undertake will be discussed ex ante and, where appropriate, coordinated among themselves. Such coordination shall involve the institutions of the EU as required by EU law to this end. The Commission has announced its intention to make a proposal for a framework for ex ante coordination of major economic policy reforms in the context of the European Semester; b) the social dimension of the EMU, including social dialogue; c) the feasibility and modalities of mutually agreed contracts for competitiveness and growth: individual arrangements of a contractual nature with EU institutions could enhance ownership and effectiveness. Such arrangements should be differentiated depending on Member States' specific situations. This would engage all euro area Member States, but non euro Member States may also choose to enter into similar
arrangements; d) solidarity mechanisms that can enhance the efforts made by the Member States that enter into such contractual arrangements for competitiveness and growth’.
To understand what this text means, we have to look back to the ‘Four presidents report’ and the Commission’s ‘Blueprint’. Both documents mention the contractual arrangements as well as shock absorption measures in the form of unemployment benefits. In both documents the stated objective is to come to a full economic and monetary union and to develop fiscal capacity for the EU.
The Commission’s ‘Blueprint’ is an ambitious document on how to arrive at the final destination of a fully achieved EMU. As a final destination, it would involve a political union with adequate pooling of sovereignty with a central budget as its own fiscal capacity and a means of imposing budgetary and economic decisions on its members, under specific and well-defined circumstances (p. 32). It not only envisages a banking union and closer coordination of economic policies but it also proposes a strong link between structural funds and respect for CSR’s and necessary structural reforms in NRP’s. This is where the ‘partnership contracts/agreements’ come in (p. 19). The coordination and surveillance of employment and social policy should be reinforced within EMU governance and form the basis for developing a proper fiscal capacity. The Commission also speaks of a stabilisation fund to stabilize asymmetric shocks. In this framework payments could be earmarked for defined purposes, and the example is given of US unemployment benefits. It also warns for ‘permanent transfers’ (p. 32). Some of the proposed reforms will require treaty changes and more democratic legitimacy will have to be taken care of: the European Parliament will have to be involved and a better cooperation with national parliaments will have to be put in place. The Commission justifies its proposals with a reference to the crisis and the gaps that have been made clear, most of all the lack of supranational institutions as well as a fundamental crisis of confidence.
At its European Council meeting of June 2013 the Heads of State and governments call for the strengthening of the ‘social dimension of the EU’, a call which is answered by the Commission with a communication on this specific issue. It proposes once again reinforced surveillance of employment and social challenges as well as policy coordination: Enhanced solidarity and action on employment and labour mobility and the strengthening of the social dialogue in order to ensure stronger coordination of employment and social policies within the European semester. The Commission notes this will need a common analysis of key factors and this will lead to a scoreboard of indicators.
Interestingly, in the ‘Five presidents report’ of 2015  (the president of the Parliament has been added), there is no mention of any ‘contractual arrangement’ nor of ‘unemployment benefits’ anymore. There is a proposal for a stabilisation fund that should only be a tool for crisis management but that should never become an instrument for permanent transfers or for equalizing incomes. The document focuses mainly on convergence and the fact that there can be no one-size-for-all policy.
This change in focus might have been influenced by the results of the European elections of 2014: these saw an important rise of Eurosceptic and right-wing populist parties, such as UKIP (the Independence Party in the UK of Nigel Farage) and a further decline of the participation rate.
The new Commission that came to power in January 2015, under the chairmanship of the former president of the Eurogroup, Jean-Claude Juncker, raised some small hope. In his statement for the European Parliament in October 2014, Juncker said: ‘There is much talk about triple-A ratings. Everyone loves a triple-A rating. In the euro zone, two countries still have a triple-A rating: Germany and Luxembourg. Germany has a good chance of retaining it, while for Luxembourg that still remains to be seen. But I want the European Union to regain and achieve another triple A. What I want is for Europe to have a social triple-A rating: that is just as important as an economic and financial triple-A rating’.
As for the new Commissioner for Employment and Social Affairs, Mrs Thyssen, she declared she wanted ‘to put social and employment issues on an equal footing with the economic dimension of the European semester’.
However, more crises were emerging. In January 2015 a new left-wing government was elected in Greece and new negotiations started on the agreements the country had made with ‘the troika’ of the European Central Bank, the European Commission and the International Monetary Fund. The institutions emphasized that new elections and new governments could not changer what had already been accepted. In July 2015 and in spite of a referendum giving support to the government, it finally gave in due to the heavy pressure mainly from the Eurogroup and German Finance Minister Schäuble. Public opinion all over Europe interpreted this as particularly unfair, since the Greek population was already suffering for many years. Nevertheless, more austerity was imposed on the country and new privatisation programmes were put into place. Solidarity actions were launched in many countries of Western Europe but this event definitely meant a further and serious blow to the legitimacy for the EU.
Six months later a refugee crisis further worsened the coherence in the EU. Hundreds of thousands of people – from Syria, Iraq, Afghanistan but also Africa - came from Turkey to Greece and through the Balkans to Germany. Chancellor Merkel took a moral high ground stating ‘wir schaffen das’ (we can manage), but massive sexual assaults some months later undermined the self-confidence of the nation. It is clear that it is not possible for one single country to accept all the refugees. The Commission proposed a plan for distributing around 160.000 refugees over different Member States, but some countries of Central Europe flatly refused in the name of ‘christian’ and ‘European’ values. Hungary even rejected the proposal in an (invalid) referendum. This is a serious moral problem for Europe since thousands of people are drowning in the Mediterranean in their attempts to reach Greece or Italy.
Add to this the ‘Brexit’ vote of June 2016 when citizens of the UK decided they wanted to leave the European Union. Central in the debates and the motivation of voters was the so-called ‘social dumping’ of Central European workers in Britain.
This is where we are today. In the past decade, very few social measures have been taken:
- In 2006, a ‘European Globalisation Adjustment Fund’ has been set up. It gives support to people losing their jobs as a result of major structural changes in world trade patterns due to globalisation. It has a very limited budget.
- In 2013 a ‘Youth guarantee’ was agreed on in the Council: It is a new approach to tackle youth unemployment which ensures that all young people under 25 – whether registered with employment services or not – get a good-quality, concrete offer within four months of them leaving formal education or becoming unemployed. This can be a job, apprenticeship, traineeship, or continued education and has to be adapted to each individual need and situation.
- In 2014 a ‘Fund for European Aid to the Most Deprived’ (FEAD) was set up. It provides non- financial assistance to some of the most vulnerable, such as food, clothing and other essentials, accompanied by advice, counselling or other help to re-integrate into society. The budgeted amount for 2014-2020 is 3,8 billion from EU budget and 674 million from Member-States.
- A new proposal for improving the directive on the posting of workers was made in March 2016. Posting of workers occurs when services are provided across borders within the Single Market. A posted worker is employed in one EU Member State, but sent by his employer on a temporary basis to carry out work in another Member State. This revision aims at ensuring fair wage conditions and a level playing field between posting and local companies in the host country. The proposal was rejected by the Member-States of Central Europe and by Denmark. Nevertheless, the Commission has re-introduced it.
- In September 2015 Commission president Juncker announced an initiative as ‘part of a deeper and fairer Economic and Monetary Union’. The aim is to build a highly competitive social market economy. In March 2016 the Commission published its communication on a ‘pillar of social rights’. Welfare state systems, according to the text, are key for sound public finance. In Europe, the point is not the recognition of rights, but their take-up and implementation. The pillar is built on the social ‘acquis’ and contains the essential principles to support fair labour-markets. It can serve as a reference framework to screen employment and social performance of Member States. It should help to modernise, broaden and deepen social rights. It implies twenty policy domains around three main chapters: equal opportunity and access to labour-markets, fair working conditions with a reliable balance of rights and obligations between workers and employers, and adequate and sustainable social protection.
The ’pillar’ was presented for consultation and it will be decided on in 2017. But a first analysis already shows many of its shortcomings.
First, it is meant for the Eurozone and not for the whole of the EU. If one wonders why, the answer, again, is that social rights are meant to serve the economic and monetary policies, instead of the reverse. The whole text breathes concerns around labour markets and sustainability: unemployment benefits should not be given for long periods, minimum incomes should not be a disincentive, etc.
As noted in the legal analysis of Lörcher and Schömann the ‘pillar’ looks more like a technical approach to rights than as a description of basic values of the EU. Furthermore, it is linked to the ‘REFIT’ programme for better regulation, which is essentially meant for deregulation. It seems as if the Commission is looking for benchmarking social policies, instead of building a rights-based approach to labour markets and social protection.
The proposed ‘pillar of social rights’ certainly contains many good proposals, but many problems are not mentioned, such as inequality, migration or tax justice. One wonders what the added value of this text can be? Its objective is to complete the EMU, not to build a ‘social Europe’.
It is very clear then the EU fully embraces and shapes the new social paradigm: social protection is at the service of EMU, at the service of economic policies. One may welcome the focus on social issues in the ‘semester’ approach, but it is clear this will only serve to streamline and cut social expenditures. It is only for countries where social policies are insufficient that it may serve to improve them. The pillar of social rights lacks ambition and will not contribute to achieve a ‘social triple A’.
The question is however, what to do? Are there any better proposals coming from academia or from civil society? Or should the whole ‘social dimension’ just be left to Member States?
Many books and articles have been written on ‘social Europe’, yet there are only few concrete proposals about what should be done, how competences should be shared and what concrete actions can be undertaken by the EU.
It also is a very difficult debate because of Euroscepticism within academia and civil society and paradoxically also because of a certain disinterest for social issues. Sometimes a demand for debate or a simple proposal for working at ‘social convergence’ is vehemently rejected …
Looking at the existing literature on European social issues, one also notes that proposals for alternatives mainly emerge within the social-democrat family and from trade unions, with the exception of labour market policies which are also of concern within the radical left.
This is strange, because for two decades there have been calls for a ‘social and democratic Europe’, but never has it been made concrete.
In this section I want to briefly mention the very few and main points for which alternative proposals have been made by progressive authors:
- A guaranteed minimum income. This proposal comes from the two Council recommendations of 1992, since then repeatedly mentioned by the European Commission. Several studies have been published on the issue.
- A minimum wage throughout the EU, possibly expressed as a percentage of the median wage in each country
- Unemployment benefits: first mentioned as an element of ‘stabilization’ by the European Commission (see above), it also is mentioned by others as an element of solidarity and in order to create a direct benefit provided for by the European Union; it is a very limited proposal and not an element of harmonization of welfare states.
These three proposals are more or less in line with ideas already mentioned by the European Commission and even by the European Council.
Other more innovative ideas concern:
- A European dividend, a kind of modest basic income to be paid to all EU citizens (around 200 euros a month), to be paid by VAT. At around 200 euros a month, this would amount to 10 % of the EU’s GDP.
- A creation of a solidarity fund through the financial interests collected by the ECB, so as to set up a joint social fund at EU-level.
- A European wealth tax levied with the 3,1 million ‘high net worth individuals’ Europe counted in 2013.
- A European pension union.
Proposals have also been made to have a specific European social budget.
All these proposals are very modest, especially when we compare them to what was being envisaged in the 1980s. At the same time, they are very ambitious and it is not likely that any of these ideas will rapidly be adopted at the level of the European Council.
A cautious proposal for a ‘social Union’ by Belgium’s former Minister for Social Affairs, VandenBroucke has never been seriously discussed at the Commission level, precisely because it is considered to be too ambitious… Nevertheless, VandenBroucke explains why a currency union cannot survive without a significant degree of social convergence. His social Union is not even a European policy but nothing more than a systematic support structure at EU level for national welfare state sustainability.
The so-called ‘European social model’ has been seriously weakened in the past decades and especially since the monetary crisis of 2008. It should be noted that the crisis is not the cause of the cuts in expenditure, but that it has been used as an opportunity for imposing an ideology-based agenda. End of the 1950s the European Community started with a Keynesian agenda but slowly switched to neoliberalism as from the 1980s. One might say there is now a new ‘European social model’ in the making, at a lower level and totally compatible with current neoliberal policies.
The economic and social situation in the EU has certainly not improved. In March 2016 almost every fourth person in the EU was at risk of poverty or social exclusion. These are around 125 million people. More than 30 % of young people aged 18 to 24 and 27,8 % of children aged less than 18 were at risk of poverty in 2014. Of all groups examined, the unemployed faced the greatest risk of poverty of social exclusion, at 66,7 % in 2014. Almost 50 % of all single parents were also at risk.
The EU employment rate has returned to pre-crisis levels. Unemployment continues to gradually decrease but is still above its 2008 levels. Unemployment is a fact for 8,7 % of people in the EU, that is 21,2 million people or 5,01 million more than in March 2008. The situation is very different from country to country. Unemployment is only 4,1 % in the Czech republic and 4,2 % in Germany, but 24,1 % in Greece and 20,1 % on Spain. Almost half of the unemployed have been so for more than one year. Youth unemployment is particularly high in Greece (around 50 %) and in Spain (44,8 %).
Beginning of the 21st century, the EU realised 24 % of world GDP, but it had 40 % of public social expenditure. In the EU public social expenditure amounts to 25 % of GDP, while it amounts to only 19 % in OECD countries and 15 % worldwide.
The developments described above, the worsening situation today and the public social expenditures in the EU paradoxically show us that there are indeed reasons to consider the EU as a ‘social paradise’! It is certainly not a coincidence that so many migrants want to come and live in Europe, where, compared to the rest of the world, health care is available to all, child care and pensions are being paid.
This being said, the crisis is real and the question we are faced with concerns the future. Will the EU be able to survive or will is disintegrate further? And if it survives, should it be more active at the social level? Or are we on the way to convergence with OECD and world levels?
The real existential crisis of the EU started in 2005, with the rejection in France and Holland of the draft constitutional treaty. It continued and worsened throughout the years with the financial crisis of 2008 and the flaws in the Euro-construction this brought to light, with the debacle in Greece, with the refugees and the Brexit vote. Today, not much is left of coherence and confidence between Member States. The growing success of Eurosceptic parties is worrying and there are reasons to fear the elections in 2017 in Germany, France and Holland. The risk of final disintegration is real.
If the EU has to re-create its legitimacy, it is clear this can only happen through more democracy and more social standards, so that people can see they have a right to participate and that the EU is there to protect them. Till now, nothing is happening in this direction.
In his State of the Union in September 2016, Commission President Juncker mentioned in his introduction five points to be developed, of which the first was to build ‘a Europe which protects’. In his following speech however, he started with the second point ‘to preserve the European way of life’ and did not mention any protection anymore. At the informal European Council meeting in Bratislava three days later, the Heads of State and governments stated that their meeting takes place at a critical juncture. ‘ The EU is not perfect but it is the best instrument we have for addressing the new challenges we are facing. We need the EU not only to guarantee peace and democracy but also the security of our people. We need the EU to serve better their needs and wishes to live, study, work, move and prosper freely across our continent and benefit from the rich European cultural heritage.’ However, the only possible new initiatives they announce concern full control of external borders, fighting terrorism, more cooperation on external security and defence and building a promising economic future for all.
As has already been noted, this lack of any social ambition at the EU level does not mean that everything remains unchanged. All Member States have been very busy these past decades in reforming their welfare systems, sometimes on demand of the EU but very often at their own ‘free will’ (though mostly not of that of trade unions and people). The EU certainly has become more intrusive in shaping national welfare state reforms and there are even arguments to state that some of the imposed reforms are in violation of basic human rights or are contradictory to the European Charter of fundamental rights.
However, in its review of labour law reforms, ETUI clearly shows that many countries and many reforms have nothing to do with any EU-imposition. Recognizing the greater role of the EU, Anton Hemerijck also shows that welfare states are far from reform-resistant. In all Member States there has been a shift from social protection to social promotion, from repairing to preparing, from compensation to prevention. Progressive political forces are rarely involved in this work.
In other words, neoliberalism is at work at all levels, globally, regionally and nationally. What is happening in Europe is totally compatible with the new social paradigm.
The current proposals of the EU for ‘socializing the semester’ or the EMU have nothing to do with improving people’s protection, but everything with supporting economic and monetary policies. Social rights are at the service of the economy, nowhere is this clearer than in the current EU proposal for a ‘social pillar’. Its objective is not to make a ‘social Europe’, but to have benchmarks for assessing and streamlining Member States policies.
‘The European semester has never been more social’ writes Vanhercke, which will certainly be true, but this does not mean we have a more social Europe, let alone that the old ‘European social model’ is being preserved. The conclusion of 2013 can be maintained: small steps for integrating some social rights into European policies can be welcomed, but if, at the same time, these social rights are being subordinated to austerity and economic policies and are dismantled at the national level, there is no progress.
It seems clear to me that if the EU is to be saved with genuine democratic and social legitimacy, it will need a fundamental reform with a new macro-economic model. This will imply the definition of strong and coherent binding social principles in order to offer basic protection and avoid social dumping. A broad conception of social justice will imply tax justice and it will imply solidarity – redistribution - between and within Member States. This lacking – and today refusal of – solidarity is the most blatant evidence of the failure of the European project. No political project can survive without taking into account its people, without caring for their livelihoods, without caring for each other. Social justice should be high on the agenda if the EU is to survive.
One has to deeply regret that civil society has not been able as yet to build a strong movement in favour of social justice in support of and strengthening the trade unions. Varoufakis’ DiEM25 offers some hope, but confusion around its objectives are worrying. Social movements are as divided as at the time of the Maastricht Treaty and this does not bode well. Whatever happens with the European Union, progressive forces will not have played their role in the developments.
Francine Mestrum, PhD
Global Social Justice (www.globalsocialjustice.eu)
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