EU enlargement, the clash of capitalisms and the European social dimension

Paul Copeland

• Publisher: Manchester University Press
• Year: 2015
• Print ISBN: 9780719088254
• eBook ISBN: 9781526102409
• Edition: 1
• Topic: Literature
• Subtopic: Medieval & Early Modern Literary Criticism
• Index: Literature

Analyses the impact of the 2004 and 2007 enlargements upon the politics of European integration within EU employment and social policy

1

The political economy of European integration and the challenge of the 2004 and 2007 EU enlargements

In the fields of political economy and EU politics the process of European integration is widely acknowledged to be a predominantly market-making process. According to Scharpf (2002: 645) the EU suffers from a ‘constitutional asymmetry between policies promoting market efficiencies [which dominate] and policies promoting social protection and equality’. The EU has often been criticised for developing a relatively weak competence in social policy that is an ‘add-on’ or ‘after-thought’ to market integration. There is no transnational European welfare state that either complements or supersedes the social policies of its members. The EU has developed more powers to regulate and coordinate social policy than the redistributive policies found at the national level (Annesley, 2003; Leibfried, 2010; Leibfried and Pierson, 1995). Of the handful of directives that concern EU social policy, the majority have resulted from concerns about preventing a distortion of competition within the Single European Market (SEM) and relate to the protection of workers and not the broader social concerns of all EU citizens. When attempts to establish a more comprehensive EU social policy have been made, they have primarily featured legally non-binding agreements that have a limited impact in terms of Member State convergence and harmonisation (Copeland, 2013).

Whether such developments within EU employment and social policy represent an emerging European social model, that is the existence of an EU social policy which Member States converged upon with delegation of authority/responsibility at the regional level, remains disputed (Hantrais, 2007; Jepsen and Serrano Pasual, 2005; Leibfried, 2010; ter Haar and Copeland, 2010; Wincott, 2003). A number of scholars have pointed to the variety of governance instruments utilised within the EU to promote integration within social policy, and combined with a comparison of the USA, it is argued that the EU promotes a unique quantitative and qualitative type of welfare state both in terms of its scope and content (e.g. Annesley, 2003; Hantrais, 2007; Vaughan-Whitehead, 2003). However, the existence of a European social model is somewhat overstated. Comparing EU social policy to the SEM, the EU’s case study par excellence in terms of integration, it becomes obvious that a ‘model’ on a par with the Single Market does not exist. EU accession preparations for the 2004 and 2007 enlargements serve to illustrate this point further: of the 31 chapters or areas of policy that the accession countries were required to transpose and implement prior to full EU membership, only one concerned employment and social policy. In short, while the concept of a European social model is something which social actors – particularly within institutions and organisations such as the Directorate General for Employment and Social Affairs and the European Trade Union Confederation – can aspire to, in its current form EU governance surrounding employment and social policy falls short of a model.

The purpose of this chapter is to analyse the political economy of European integration and to examine the EU’s competence within employment and social policy. It argues that the EU’s involvement in social policy and labour can best be understood as a European social dimension (ESD) – that is, although there is considerable political activity at EU level in terms of employment and social policy, unlike the SEM or Monetary Union, integration within the field is a work in progress. Its current and future developments are therefore very much dependent upon the EU’s political constellations. The first part of the chapter provides a historical overview of the political economy of European integration to highlight the EU’s competence in employment and social policy. Second, the chapter analyses the difficulty in referring to such a competence as a European social model and argues that the EU has a social dimension, rather than a model. The final section of the chapter highlights the potential challenged posed by the 2004 and 2007 EU enlargements upon the future development of the ESD.

The political economy of European integration in context

The 1970s witnessed turmoil in both the international and European political economies. Following the collapse of the Bretton Woods system of stable exchange rates, the post-war boom that had followed the ending of the Second World War came to an end. The Bretton Woods system of pegging major currencies to the US dollar and the enforcement of capital controls gave rise to an international system of stable exchange rates. In turn this created a stable trading order and relatively closed economies which enabled the ‘Keynesian compromise’ between capitalist production and the socialist state (Strange, 1998: 188). From 1971 onwards, western states proceeded to lift capital controls and promote financial market liberalisation/deregulation – effectively undermining the macro-economic tools of Keynesian demand management (Helleiner, 2000: 165). Keynesian demand management, i.e. generating employment and economic growth through domestic reflationary policies (such as increasing the money supply or reducing taxation), presupposes a relatively closed economy. Reflation in an open economy can simply boost the demand for imports, rather than increasing domestic production (Mishra, 1999).

The demise of Keynesianism corresponded with a turbulent decade for the international political economy in which stagflation, i.e. low growth and high inflation, became the key characteristic of the day, although the USA and Japan appeared to weather the 1970s more successfully than the major European economies (Sandholtz and Zysman, 1989: 109–110). The abandonment of Keynesianism was, however, an uneven process in which the consequences of the collapse of Bretton Woods took over a decade to be realised by national governments of varing political persuasions. Nowhere was this more pronounced than in France. France had blamed international conditions for the domestic economic crisis of the 1970s and in 1981 François Mitterrand was elected President on a platform to revitalise the French economy via Keynesian policies. The policies of the socialist government (nationalisation, increases in public spending and increases in the higher rates of taxation) resulted in capital flight, speculative attacks on the Franc, inflation and a worsening of the economic situation. As a result, in 1983 Mitterrand announced the famous French socialist u-turn calling an end to socialism in France, the prioritisation of controlling inflation and the subsequent introduction of monetarist policies (Helleiner, 1995; Schmidt, 1996). Against this backdrop the process of European integration stalled, as governments attempted to grapple with the international economic conditions at the domestic level. Furthermore, decision-making gridlock in the European Council and an ineffectual coordinated response to the 1973 oil crisis all seemingly combined to undermine the purpose of European integration (Keohane and Hoffman, 1991: 8). As Armstrong and Bulmer (1998: 15–16) put it, ‘the ensuing “dark ages” period was characterised by only limited progress in the deepening of European integration’ and ‘of muddling through’. Europe was often viewed as politically and economically stagnant with the term ‘Eurosclerosis’ used to describe its then current state (Keohane and Hoffman, 1991: 6).

By the early 1980s progress towards European Community (EC) market integration had not only lost momentum, but in some respects was reversing. The turn of the decade scarcely gave much indication that Eurosclerosis would give way to the qualitative shift in the character and momentum of integration that appeared in the latter half of the decade. The customs union, established in 1968, had removed tariffs and quotas on intra-EC trade and created a Common External Tariff, but there had been limited progress in other areas, such as the harmonisation of standards. For instance, attempts to harmonise product standards were limited because behind apparent technical discussions were major entrenched national interests. Furthermore, as technology and production had advanced in the 1970s, national governments set legal requirements and technological standards in isolation from each other – the result was that the common market had becoming increasingly fragmented (Armstrong and Bulmer, 1998: 16).

A renewed momentum in European integration

By 1986 the Single European Act (SEA) had been signed, coming into effect from July 1987, and signified the beginning of a new momentum for the European integration project. According to Nugent (1999: 49) the SEA was something of a ‘mixed’ bag in that it contained tidying-up provisions, provisions designed to give the Community a new impetus and provisions that altered the Community’s decision-making system. Firstly, the completion of the SEM by 1992 was added to the Treaty of the European Economic Community (EEC). This built upon the Milan agreement reached by governments in 1985 and endorsed the Commission’s White Paper which contained some 300 proposals (later reduced to 282) and centred on the removal of physical, technical and fiscal barriers (Armstrong and Bulmer, 1998: 23). The 1992 deadline and its addition to the Treaty ensured that the completion of the SEM was legally binding, thereby providing an added incentive for the Member States to adhere to the legislative programme. Secondly, the SEA introduced qualified majority voting (QMV) in the Council of Ministers in several policy areas, effectively speeding up decision-making. The introduction of QMV offered a more rapid legislative route than unanimous voting in the Council which was considered to be one of the root causes of Eurosclerosis (Armstrong and Bulmer, 1998: 23). Thirdly, the role of the European Parliament was strengthened with the introduction of the Cooperation Procedure. This gave the Parliament a voice within the negotiations relating to the Internal Market and working environment. In conjunction, the Commission’s mediatory powers were increased, enabling disagreements between the Council and the Parliament to be more easily resolved. Finally, linked to the institutional reforms were a series of substantive changes to specific policy goals in the areas of social policy, environmental policy, research and technology, and cohesion policy (see Armstrong and Bulmer, 1998: 27–28).

For Young (2005: 100), the SEA represented ‘a strategic policy change and institutional reform [that] were linked symbiotically and symbolically’. In fact, the SEA represents a seismic shift within the process of European integration, as both the EC’s institutional structure and policy goals were substantively reoriented to deeper and much faster integration. Although the contents of the SEA were somewhat narrow, according to Armstrong and Bulmer (1998: 2) it ‘triggered policy activism in a range of policy areas beyond the SEA itself’. The SEA greatly boosted integration in many EU sectoral policies with transport, telecommunications, energy and services among the policy areas that were essentially a spill-over from the SEA. The Single European Market, as it became known, was therefore created by the dynamic spill-over effect of the SEA into a number of (predominantly) market-making policy areas (Armstrong and Bulmer, 1998; Schmidt, 2002).

For Majone (1994, 1996) the creation of a pan-European market has transformed the post-war Keynesian state. The liberalisation and deregulation of national economies has been accompanied by their re-regulation at the European level, which Majone terms the ‘regulatory state’. Financial constraints have ensured that the EU has more powers to regulate than to use other forms of public policy (McGowan and Wallace, 1996: 365). Whether traditional state power has been diminished by the transformation is open to debate. McGowan and Wallace (1996: 563) argue that regulation and intervention (associated with Keynesianism) are not necessarily antithetical; what counts is rather how the government intervenes and for what purpose. In most cases, however, the regulatory state is likely to intervene to underpin rather than replace markets, as it is concerned with making markets work better and thus compensating or substituting where markets fail.

A spillover into EU employment and social policy?

From the signing of the Treaty of Rome (1957) until the SEA (1986) there had been little progress in the area of social policy. The Treaty of Rome (1957) set up a ‘modest, cautious and narrowly focused social policy’ in which only 12 of the 248 articles in the Treaty related to social policy (Hantrias, 2007: 2–3). The Commission was given the responsibility of promoting close cooperation between Member States in matters relating to training, employment, labour law and working conditions, social security and collective bargaining, but without specifying the form such cooperation should take. Directives were also allowed in order to eliminate laws and practices that were considered to be distorting competition and, importantly, to secure the free movement of workers between the Member States. Provision was also made for gender equality in pay, as well as to prevent discrimination on the grounds of nationality. Finally, the Structural Funds were established (one of the few redistributive EU policies) to provide financial assistance to areas affected by deindustrialisation and high levels of unemployment.

Despite progress in the areas of health and safety and social security rights for workers, the political momentum of the 1970s amounted to very little progress within EU employment and social policy. The SEA signified a new momentum within EU social policy. Fearing that the SEM would primarily benefit employers, French President François Mitterrand put forward the idea of an espace social in which workers’ rights were enshrined in law and social benefits were provided on a Europe-wide basis. The Commission exploited this opportunity and the proposal was subsequently taken up by the then Commission President Jacques Delors. Delors aimed to develop a social dimension as a means of strengthening economic cohesion and to counter-balance the EU’s market-making project. The limited EU budget meant that the only way for the Commission to expand its scope was through the regulation of industry and labour. The Commission’s strategy of policy expansion increased the publicity and reputation of the Directorate General for Employment, Social Affairs and Inclusion (DG EMPL; then DGV) in an attempt to give the DG a greater role in EU policy. Delors also sought to initiate EU-level social dialogue with the 1985 ‘Val Duchesse’ discussions between the social partners. The discussions broke down as the Union of Industries of the European Communities (UNICE – now known as BusinessEurope) failed to agree upon the scale and scope of the resultant agreements. The Commission decided to finance the internal activities of the European Trade Union Confederation (ETUC), and although such contributions were small in absolute terms, they allowed the ETUC to pay for new personnel and to build a larger, more autonomous organisation. The Commission also nourished privileged networks of communication between itself and the ETUC (Martin and Ross, 1999). The relationship encouraged the internal restructuring of the Confederation in that it became an organisation consisting of cross-national sectoral bodies rather than just national confederations. However, by the signing of the SEA, EU-level social dialogue had yet to be established.

In 1989 the governments of the Member States, with the exception of Britain, adopted the Community Charter of Fundamental Social Rights of Workers, heralded as the social dimension of the SEA. The objective was to create a level playing field in the area of social policy (in a similar manner to the SEM), but disagreement remained as to whether the levelling should be one of an increase or decrease in standards. As such, the Community Charter did not have the force of law and decisions concerning its implementation were lef...

Table of contents

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Acknowledgements
• List of abbreviations
• Introduction
• 1 The political economy of European integration and the challenge of the 2004 and 2007 EU enlargements
• 2 Governance and the clash of capitalisms
• 3 The negotiation of the Services Directive
• 4 The negotiation of the revision of the Working Time Directive
• 5 The negotiation of the Europe 2020 poverty target
• 6 Conclusion: the European social dimension and the clash of capitalisms in a post-2004 EU
• References
• Index