In this blog post Dr. Konstantinos Kougias (Panteion University) investigates the need for a more robust social dimension of the EU. Although the Commission has acknowledged the contribution that well-designed social policies can make to economic growth, the EU has not endowed itself with a meaningful social dimension. He argues that Brexit and Macron’s vision for ‘renaissance’ in Europe present an opportunity to relaunch a reform agenda with the view to strengthening the EU’s social model. This agenda should place social principles at the heart of all economic policies.
The year 2019 is likely to be crucial in determining the direction in which further European integration will proceed. Two events may act as catalysts for this process: Brexit and the European Parliament (EP) elections. While the UK withdrawal from the European Union (EU) has enhanced the view that change is needed in the way the EU has functioned until now, the latter will be something more than the genuine reflection of democratic will of European citizens: they will define the on-going discussion about the future of Europe.
The recent economic and financial crisis lead many to question whether current EU instruments are sufficient for safeguarding social progress. Almost ten years after the Great Recession, the crisis has left deep scars in the social fabric of many EU member states. The economic recovery is not yet benefitting all citizens and countries in the same manner. Inequality is on the rise and more precarious forms of work are expanding (44 million Europeans work part time and 22 million hold temporary job contracts compared to 33 million and 18.5 million, ten years ago). Although unemployment has returned to its pre-crisis level, it remains high in a number of Member States (Greece 20.1%, Spain 14.1%), while the rates of youth and low-skilled employment are still below pre-crisis levels. At the same time, working life is being radically transformed by the combined effect of technological progress, globalization and the growth of the services sector. The new world of work raises questions about the quality of jobs in the future in terms of earnings, job security and working conditions.
Together with the perception of citizens across many member states that the European project is suffering from a real “social deficit”, these developments are threatening the legitimacy and the sustainability of European integration. A political leap is necessary to mobilize member states and their citizens. Europe’s social dimension needs to be structurally reformed and this should rest on a proper balance between economic goals and social concerns.
Europe’s capacity to deliver prosperity and equal opportunities is associated with the concept of the European Social Model (ESM). Even though the concept of the ESM remains both unclear and a contested territory, at the Nice European Council summit in 2000, it was suggested that the ESM derived from a “common core of values” relating to the provision of a high degree of social protection, the recognition of the importance of dialogue between social partners and the necessity to promote social cohesion as essential elements within the process of European integration. This conception of social protection advances the idea that it is possible to have both equity and efficiency at the same time, and, the former can enhance efficiency through reducing poverty, thereby reducing constraints upon participation in economic activity. Stemming from the perception of the existence of a permanent tension within the market-expanding logic of EU “negative integration” and the market-correcting functions in national policy arrangements, the EU complements its “market making” policies with “market correcting” policies (“positive integration”). The latter include interventions in the social area, be it in the form of legislation, coordination processes (e.g. European Employment Strategy) or financial support (via the structural funds e.g. ESF).
To a large extent, these interventions are governed by the principle of subsidiarity which means that the EU has not endowed itself with a meaningful social dimension. However, the crisis has demonstrated that no individual Member State is able to deal effectively with the challenges of the international environment alone.
The continued absence of a comprehensive social dimension strategy would entail a number of risks. First, it would further increase economic and social divergences thus making the eurozone particularly fragile. Social Europe is needed to balance the effects of the completion of the single market. Intensified intra-EU competition creates the risk of a “race to the bottom” and such development goes against the founding principle of ensuring social progress in the EU. Second, it would further fuel citizens’ anger towards the EU. In Hungary, Poland, Austria, the Czech Republic, and Italy an openly Europhobic nationalism has emerged and the growing immigration cannot be the primary explanation for the surge in right-wing populism. In other countries such as Greece, the swing in public opinion developed far earlier and indeed in the face of the Great Recession and the controversial policy for overcoming a sovereign debt crisis brought on by the crisis in the banking sector. All these would allow nationalist parties forming, exploiting popular fears over an uncertain future, and further embolden Eurosceptic movements. Third, it would leave the EU, and the eurozone in particular, vulnerable in the next major financial crisis which may come sooner than we think.
The adoption of the European Pillar of Social Rights (EPSR) at the end of 2017, and the implementation of the social scoreboard are clear steps towards progress but inefficient on their own. The EPSR contains 20 principles, formulated mainly as rights. It broadly covers three areas: (i) equal opportunities and access to the labour market, (ii) fair working conditions and (iii) social protection and inclusion. Nevertheless, the Pillars neither have binding legal force nor provide for any sanctioning mechanism. This adds concerns about the asymmetry between the economic and social dimensions in the EU, and the speed at which we are likely to see progress.
Three months before the European elections, Emmanuel Macron called for a more united EU, laying out a series of proposals for a “European renaissance”. Building on his integrationist speech at the Sorbonne university in Paris in September 2017, he proposed that reform should occur in three broad areas, under the titles of freedom, protection and progress. Although Macron’s latest Europe initiative sends a clear signal that there is time for change, what is not mentioned is also important: economic-policy co-ordination and eurozone reform. The absence of any proposal which enhances a real monetary union is explained by the fact that earlier Macron’s grand plan for a eurozone budget had been accepted with varying degrees of enthusiasm by other European leaders. The hard reality of diplomacy in Europe lends Macron’s proposals a certain superficiality, nevertheless, Europe could only benefit from the French president’s initiative as it further helps establishing a European public sphere, mobilizing pro-EU momentum and shaping the European Parliament for the future. As a mechanism to push for change, Macron called for a “conference for Europe” by the end of 2019 to discuss “with an open mind, even to amending the treaties”.
Now there could be momentum in the debate to discuss the necessity to endow the EMU architecture with a strong social dimension ‘that would enhance upward social convergence and improve the stability and efficiency of national welfare systems’. Placing social principles at the heart of all economic policies and promoting both equity and efficiency – not as a trade-off, but as complementary objective should be a key priority for European politicians.
To that end, a concrete action plan should be established including a better definition of the EMU’s social dimension, instruments and governance. Rebalancing economic and social policies in the EMU and putting economic and social issues on equal footing in the EU, requires a clear European roadmap that ensures: (i) relaunching of investment which would boost internal demand; (ii) a minimum level of social protection for all; (iii), a stronger focus on investing in human capital in the EU budget (iv) and, a set of reforms to align EMU governance with social governance.
The extension of universal, comprehensive welfare state provision to cover all EU citizens, and thereby create a minimum safety net for European citizens across the entire single integrated market will not only be socially and functionally meaningful as it would absorb asymmetric shocks, but also politically profitable. Habermas rightly notices that anti-European feelings not only mirror the present kind of xenophobic nationalism. These attitudes have roots which are associated with the failure of the European process of integration itself; euroscepticism can appeal to the perception that the currency union no longer represents a ‘win-win’ for all members.
The rise of Eurosceptic groups is generating fears that EU decision-making will be deadlocked, obstructing the EP’s capacity to take decisions. That would undermine the role of the EU budget as a main vehicle to achieve EU social objectives; increase the negative impact of the monetary union on welfare states; and weaken the upward convergence in social performance through EU policy tools. The social gap between euro area periphery and the rest of the euro area countries that has emerged during the crisis will further widen, and with it the gap between citizens and the EU.
If the EU proves to be incapable of meeting people’s expectations and taking the wind out of populists’ sails, it is very likely that the 2024 parliamentary elections will be held in a very different EU as we know it today.
Konstantinos Kougias is a Postdoctoral researcher at the Department of International, European and Regional Studies, Panteion University.
Photo credit: European Commission