Stockholm University Department of Sociology Course: Welfare States in a Changing Europe

Author: Chiara Garelli March 2010

EUROPEAN SOCIAL MODEL

SUMMARY
Introduction.pag.3 Historical Overview of the European Social Model .pag.4 European Social Model and Enlargementpag.7 - Historical Path of European Integrationpag.7 - ESM: the Challenge of the Differentpag.9 - The Future Perspective.....pag.11

INTRODUCTION
The purpose of this paper is to analyze the origin and the development of the European Social Model within the member countries of the European Union. Among national systems persist differences that are based on different economic, social and cultural standards; this situation is relevant considering the widening process of the European Community. The process of the enlargement is examined since the early period of the creation of the Union and all the progresses made to strengthen its social dimension are taken into account. The creation of a shared Social Model is important to favor a closer integration among Members and it is necessary to respond to the challenges of the integrated Market which ca not more be developed without a common social system.

HISTORICAL OVERVIEW OF THE EUROPEAN SOCIAL MODEL

The creation of a social model in Europe, alongside the economic and political one, is an essential target in enabling the European Union to meet the challenges of this century: unemployment, technological change, migration from the Third World, etc However, the implementation of a social Europe is extremely complex because it is difficult to balance common rules against the national specificities of different traditions. The treaty establishing the European Steal and Coat Community (ESCC), signed in Paris in the 1951 by France, Germany, Italy and the Benelux countries is the origin of the institutions as we know them today. As it is written in Article 2, the mission of the European Coal and Steel Community is to contribute to economic expansion, development of employment and improvement of the standard of living in the participating countries through the institution, in harmony with the general economy of the member States and of a common market. The treaty has provided a series of social measures, including those to promote the harmonization of wages (Article 68), the freedom of movement of labor (Article 69), initiatives for the promotion of hygiene and safety in the workplace and financial aid to support training programs for workers (Article 46). The Treaty also provided that the institutions of the European

Community pursued the general goals related to economic expansion, employment and a rising standard of living in the member States. To reach this goal the High Authority was supposed to supervise and intervene in case of situations of wages under the minimum level or the arbitrary reduction of salaries. It is also important to say that the Labor Union took part in the drafting of the Treaty and in appointing the position of Vice President of the High Authority to one of the leaders, Paul Finet1. A second step towards a supranational Europe was the Treaty of Rome; signed in the 1957, this has seen the foundation of the European Economic Community (EEC) providing for the establishment of a common market, a customs union and common policies; Articles 2 and 3 of the Treaty directly address these three issues. They state that the Community's primary mission is to create a common market and specify the measures that it must undertake in order to achieve this objective. In this perspective the development of a social model is desirable only in order to be functional to the unification of the markets and to the free
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Lorenzo Mechi, Una vocazione sociale? Lazione dellAlta Autorit della CECA a favore dei lavoratori sotto le presidenze di Jean Monnet e Ren Mayer, in Storia delle relazioni internazionali, X-XI, giugno, 1994-1995/2, pagg. 147-183.

movement of persons, services, goods and capital (Article 117). In fact, the duties of welfare are left to the member states and the institutions of the Community cannot exceed a promotion of a close collaboration among participating countries in different matters. The European Commission has primarily a monitoring role and acts by means of studies, comparisons, issuing of opinions and organization of consultations (Article 118). A key element of the European strategy for Growth and Job at the time of the Treaty of Rome was the creation of an European Social Fund, set up to reduce differences and produce prosperity in living standards among EU Member States and regions, and therefore promoting social and economic cohesion. In the early stage the Fund was used to improve job opportunities by promoting employment and increasing the geographical and occupational mobility of workers (Article 123). Yet by the end of the 1970s, when youth unemployment had substantially increased, tackling it became a priority for the ESF. Those who benefit from the Fund is extensive and plays a fundamental role in helping disabled and older workers (aged +50). The fund amount to 10% of the EUs total budget and Commission and State define priorities deciding together how to allocate the funds. After these first crucial steps made by the Treaty of the ESCC and the Treaty of Rome, it has been in the seventies that European social policy has begun to have an increasing importance. The Council of Paris in 1972 gave momentum for new development in the field of social policy and thus issued a Social Action Program in order to improve living and working conditions and to achieve a high level of employment. Despite this improvement a huge obstacle to new developments nevertheless remains. The voting system in the European Council requires the unanimity of votes from the Member States, causing when even only one Country disagrees a delay in the implementation of a series of measures in the social field. Due to this, the beginning of the eighties have been remembered as a euro-sclerosis period. Things changed in the second half of the eighties thanks to Jacques Delors, who presided over the European Commission over three terms, giving real momentum to the creation of a social dimension of the European Community. During his presidency the first major amends to the Treaty establishing the European Economic Community were approved in Luxemburg in 1986. Although the Treaty, entered into force on 1 July 1987, it did not led to huge changes of the community competence in the social field within the European Community, however, introduced some important modifications.

The first big revision is about the voting system within the European Council, the Article 118A allows to adopt directives, referring to the working environment and the health and safety of the workers, pushed through with a qualified majority of votes in spite of the previous unanimity. Another key point is in the Article 118B that refers to the necessity to involve social actors and Trade Unions in order to achieve the goal of European integration. The idea is that social integration should continue as an independent field of development but, at the same time, economic integration should not be advanced without a common system of social rights. Despite the intention of creating a social constitution to be integrated in the legal order of the Community, little has been done in this direction. A step that deserve to be mentioned is the implementation of a Common Chart of Social Fundamental Rights of Workers. This document has been signed, in Strasburg, in 1989 by all members States with the exception of the United Kingdom who refused to acquiesce to a binding act in the social field. Thus this paper has remained at the level of a solemn declaration but it has given the impetus for further initiatives by the Community. In 1993 the Treaty of Maastricht was approved with an attached Protocol on Social Policy that was inspired by the previous Chart of Strasburg. This protocol determines procedures with a qualified majority in the social field but with an efficacy limited to the signatory states and this is the big limit that inhibits the homogeneity of community law. With the Labor government of Tony Blair, the UK has now removed the previous veto and the Treaty of Amsterdam (1997) could incorporate the Protocol on Social Policy. At the end of this historical overview, we can then analyze the contribution produced by the Treaty of Lisbon or Treaty on functioning of the European Union, which entered into force the 1 December 2009, initially known as the Reform Treaty. The drafting of the Treaty started from the awareness of the European Unions social deficit and promise to raise new politics in order to fill this gap. Article 1 bis highlights values of extreme importance in the social field (The Union is funded on the values of the respect for human dignity, freedom, democracy, equality, the rule of law and the respect for human rights, including the rights of persons belonging to minorities) and are common to all member states. Moreover, in Article 6, par.1, the Community grants to the Charter of Fundamental Rights of the European Union the same value as the Treaties. Although the Charter was drafted and proclaimed in 2000, its legal status was uncertain and it has been the Treaty of Lisbon which gave the Charter full legal effect.
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Article 2C TFUE explains that the Union shall share duties with the Member States in the related areas of social policy. The principle of subsidiarity, which is still valid, established within the E.U. by the Treaty of Maastricht says that in areas which do not fall within its exclusive competence, the Community shall take action only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community. The horizontal logic of subsidiarity refers to the contribution of every social actor, as civil society, Trade Unions, NGOs and so on to the creation of European law. In this perspective, European law has so many different origins that it is common to talk of juridical sources pluralism. In Conclusion, we can examine Article 5 bis (TFEU) which introduce a social clause which states that all the policies and actions of the Union shall take into account a social dimension. What it is not completely clear is the value of this statement, is merely political or has a nature of justiciability? In the first case, it would give assistance to the Court of Justice and to the other institutions of the Union in the interpretation of the law, or in the other case, the law would have a binding value. It is considered that the Treaty gives an effective value to the social clause but, at the same time, restricts its area of application2.

EUROPEAN SOCIAL MODEL AND ENLARGEMENT

Historical path of the European integration.

The process of enlargement began with Six Members, who founded the European Coal and Steel Community in 1952; since then, the EU's membership has grown to twenty-seven countries. The Community requires candidates to respect certain criteria (Copenhagen criteria) that were established in June 1993 by the European Council. To join the Union a state have to achieve stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the Union; the ability to
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G.Bronzini, Il modello sociale Europeo, pubblicato in Le nuove istituzioni europee. Commento al Trattato di Lisbona, Il Mulino, 2008 G. Bronzini, The european social model and the constitutional Treaty of the European Union, in The economy as a polity, a cura di C. Joerges, B. Strth e P. Wagner, London, UCL Press, 2005

take on the obligations of membership, including adherence to the aims of political, economic and monetary union3. Since its origin, the European Union has been expanded through five rounds and generally it has been considered one of the most successful foreign policies of the EU4. However at the same time, this phenomenon has been opposed and many talk about socalled enlargement fatigue. Difficulties in the process of acceptance are as old as the first enlargement; one only needs to look to the first attempts of enlargement which saw the Frances two vetoes on Britain accession5. When the Community is considering to extend the number of members there are a lot of aspects to be considered. Referring to the second enlargement of the Community, toward the Southern of Europe, different factors weighed heavily in the negotiations and delayed their conclusion. Before Greece, in 1981, Spain and Portugal, in 1986, it had been accepted within the Union that fear dominated their accession and it was recommended to proceed in the integration process with an interim step6. These countries were emerging from a period of dictatorship and with an intermediate level of development; the reason for applying was that they wanted to ensure their new democratic system and the EEC wanted the same thing. Thus the process of integration required the countriess economy and institutions to adapt quickly to prevailing EEC norms. Portugal was a small country with a weak economy; two domestic important factors can explain why the accession negotiations were so complex: first of all, the economic measures that had been taken during the revolutionary period like the nationalization of important economic sectors and, secondly, continuing governmental instability and the political and constitutional nature of the Portuguese regime7. Spain had a much larger economy than Portugal and joining the Community meant the end a period of relative isolation from its closest neighbor. Greece, at the time when applying for the first time for entering into the community in 1975, had a agricultural sector which suffered from basic structural weakness, the agricultural level of productivity was particularly low due to a suboptimal combination of productive factors 8. The
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Conclusions of the European Council, Copenhagen, Denmark, June 1993. V.Piket, EU Enlargement and Neighborhood Policy, Institute for Strategic Studies Finally the EU added Britain, Ireland and Denmark in 1973. F. Mitterand, discourse reported by Nouvel Observateur, 1977. Antonio Costa Pinto, Portugal and European integration An introduction, 2002 Xenophon Zolotas, Greece in the European Community, Athens: Bank of Greece, 1976, pp. 9-45.

Southern expansion of the European Union through the accession of Spain, Portugal and Greece has important economic and political implication for Europe and the rest of the World. At the same time, this process certainly brings changes in new members' economic and institutional framework affecting a number of different spheres of social life, from politics to economics to labor relations. Continuing with the historical enlargement we have to mention the third, the Post Cold War enlargement that see Austria, Finland and Sweden becoming part of the Community in 1995. These Countries were wealthy and culturally aligned with the existing Members, thus this expansion did not cause problems or tensions. It has been with the last two enlargements in 2004 and 2007 that talking about enlargement fatigue has become again zeitgeist . In 2004 the European Union opened its boundaries to eight Central and Eastern Countries (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia), plus the Mediterranean islands of Malta and Cyprus have been admitted; in 2007 Romania and also Bulgaria became Members of the Community. This enlargement was long debated and long awaited, many of these countries were part of the communist bloc leading to doubts about their ability to compete efficiently in the EU Market. For these reasons the EU initially placed some restrictions on Eastern citizens rights of working and travelling to the other member States.

The European social model: the Challenge of the Different

European integration has created a constitutional asymmetry between policies promoting economic efficiencies and promoting social protection and equality9. In this paper we discuss how the widening process of the Community can - and could - affect the European Social Model. It has been observed that the enlargement is a potential complicating factor to the gradual emergence and stabilization of such a model10. A communitarian social dimension can be the result of a progressive fusion of all national social systems and this perspective suggests

Scharp Fritz W., The European Social Model: the challenge of coping with the different, 2002

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Scharpf 2002; Vaughan-Whitehead 2003 in Draxler, Juraj and Van Vliet, Olaf(2010) 'European Social Model: No Convergence from the East', Journal of European Integration, 32: 1, 115 135

that the inclusion of new Members means that the dominant social model has to cope with different identities that every new group of States brings into the EU11. The dispute about the development of a common social model has to consider two variables: the GDP of each member states and its interest to develop it. Among Members the differences in GDP are huge; at the end of 1990s the GDP in purchasing power parties was about twice high as in Denmark as it was in Greece and, with the exception of Slovenia, three to six times higher than in Central and Eastern European countries12. Moreover the choice of one social policy rather than another, depends on exogenous reasons like Europeanization and globalization; and on endogenous causes such as policy transfer mechanism, stakeholders preferences, capacity of reform, balances of power, etc. Yet the EUs legislation has posed a safety net of minimum standards to which each Member Country is obliged to obey. The way in which these obligations are achieved differ from one State to another. Northern Countries generally reach better results while Eastern Countries are expected fall short of the EU standards. In particular, we can analyze the changes taking place in the Post-Communist new Members States as a result of EU dimension influence. The path of these countries to European integration has seen positive trends and persisting problems: on one hand, thanks to the access to the Community, the economic growth has accelerated and labor market patterns in the new and the old Member States of EU are converging, fixed-term contracts are increasing and the employment legislation has been further liberalized to reach OECD level. Yet conversely youth unemployment has worsened and safety at the workplace has decreased, protection of workers through collective bargaining has weakened as a result of declining unionization and the Employment levels remain below those of the old EU Member States thus increasing the number of migrants to other regions13. Continuing the analysis of the adoption of an European Social Model by the Eastern Countries, we can refer to a research reported this year in the Journal of European Integration that has shown that little convergence exists between the new group of member states and the ESM. In fact, the Members of the EU are divided into two clusters based on the level of generosity and on the policy configurations of social protection system. The old Members group, including the
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Draxler, Juraj and Van Vliet, Olaf(2010) 'European Social Model: No Convergence from the East', Journal of European Integration, 32: 1, 115 135
12

Kittel B., EMU, EU Enlargement, and the European Social Model: Trends, Challenges, and Questions, 2002 Source: ILO, April 2007

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Continental Welfare States and the Northern Countries, plus Cyprus, has a social protection level higher than the New Member cluster. The analysis then provides a deeper division among new Members, showing a clear dichotomy between the Three Balkans Countries (Estonia, Lithuania and Latvia) and the others States. If some change in the level of social expenditure has been observed, this does not reflect a policy change but may only mean a modification in the number of beneficiaries. In this analysis it seems that the ESM has not influenced the new Members except for what has been adopted as part of the acquis communaitire; these Countries have implemented their social dimension giving priority to what the hard law recommends. The obstacle is clear to be saw, although progress made by the Treaties since the origin, the EU social policy is still conducted for big part by the Open Method of Coordination (OMC). The OMC14 is an intergovernmental mechanism between the Community and the Member States for the achievement of common objectives in the fields of social policy; member governments present annual reports of national plans and on this base they will be evaluated by the Commission and by a permanent committee of senior civil servants. The difficulties in the attempt to harmonize and promote a social dimension of the Union have led to shift within of the OMC. The open method of coordination takes place in areas which fall within the jurisdiction of the countries, such as employment, social protection, social inclusion, education, youth and training. The efficacy of the OMC is in the willingness of those national actors who are in fact in control by choosing to get themselves involved in the process of European coordination15.

The Future Perspectives

The widening process has had a big influence on the development of the Union and further enlargement will continue to affect its evolution; so far the European Community has grown and now has reached 457 million people and a GDP of 10200 billion of Euros. In this perspective, the process of enlargement is going to continue? And until what limit?

14

Source: Definition from European Union Glossary, updated to the Treaty of Lisbon.

15

Coron and Palier, 2002; Jacobsson and Schmid, 2002 in Scharp Fritz W., The European Social Model: the challenge of coping with the different, 2002

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Considering the question under an economic point of view, we can analyze the costs (C) and benefits (B) of the accession to new Members.

Costs and benefits of the enlargement

5.00 4.50

Costs and benefits

4.00

3.50

3.00

2.50

C B

2.00

1.50

1.00

0.50

0.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00

Number of members states

When the number of Members States is quite low (on the left side of the intersection between costs and benefits), the benefits are bigger than the costs for the accession of new Members, thus for the Countries that are already Members it is convenient to enlarge the number of participant Countries; on the other hand, when the number of the Members is quite high (on the right side of the intersection), the situation is not as beneficial as before because the costs for every new Member are higher than the benefits. This analysis could explain one of the reason why the citizens of the recent members have been perhaps reluctant about the opportunity to join the EU. Examples of this phenomenon have happened in Austria at the end of 1990s and, more recently, in Slovenia where surveys have shown that there is a growing dissatisfaction toward communitarian policies. The feeling of the enlargement fatigue has become again current in the wake of the last twelve Countries becoming part of the European Community. In November 2006, the European Commission released a Strategy on Enlargement, this Strategy called for the EU to continue enlargement but to take into account the Unions integration capacity, which refers both to applying rigorous conditionality with respect to candidate countries and to completing institutional reforms and financing arrangements to sustain the EUs ability to function.

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Finally, there can be little doubt that despite the developments analyzed, the EU is not constituted as a social union, even though the processes of social integration, convergence and judicial cooperation have laid the foundations of what could be seen as a future EU society.

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