Future of Europe: social dimension

In the European Commission’s so called (so called, because it did not contain concrete proposals) White Paper on the Future of Europe: Reflections and scenarios for the EU27 by 2025; Brussels, 1.3.2017 COM(2017) 2025 final, the proto-executive promised to contribute to the discussion by publishing five reflection papers:

• developing the social dimension of Europe;
• deepening the Economic and Monetary Union, on the basis of the Five Presidents' Report of June 2015;
• harnessing globalisation;
• the future of Europe’s defence;
• the future of EU finances.

You can follow the discussion or participate under the Twitter hashtag #FutureOfEurope.

Social dimension: official documents  

We turn to the first Reflection paper in the series, accompanied by two short annexes, all available in 23 official EU languages:

Reflection paper on the social dimension of Europe; Brussels, 26.4.2017 COM(2017) 206 final (33 pages)

Annex to the Reflection paper; Brussels, 26.4.2017 COM(2017) 206 final ANNEX 1 (2 pages)

Annex to the Reflection paper; Brussels, 26.4.2017 COM(2017) 206 final ANNEX 2 (2 pages)

Social Europe reading

In February and March, before the Reflection paper was published,  I wrote a number of blog posts related to the theme and compiled in the entry EU social market economy and social pillar.

A few days ago I posted two blog articles in Finnish, Pohdinta-asiakirja Euroopan sosiaalisesta ulottuvuudesta and Euroopan sosiaalisten oikeuksien pilarin perustaminen, followed by two Swedish entries, Europeisk pelare för sociala rättigheter and Proklamation av europeiska pelaren för sociala rättigheter.  

My latest posts, in English, have presented the Social Pillar package, also launched on 26 April 2017: Consultation report on European Pillar of Social Rights and Establishing a European Pillar of Social Rights plus Companion to European Pillar of Social Rights.

Legal context

There is a short overview of UN, ILO and European international conventions in the Commission staff working document, which accompanied the consultation communication: The EU social acquis SWD(2016) 50, page 17. Usually they bind the EU member states, mostly without the union as a party to the conventions.

Here, I am just going to offer a reminder of the main EU provisions.

One of the main objectives of the European Union is “a highly competitive social market economy, aiming at full employment and social progress”, found in Article 3(3) TEU.

Among the horizontal provisions (having general application), we have the social clause Article 9 TFEU, flanked by Article 8 on gender equality and Article 10 on combatting discrimination. Article 18 TFEU prohibits discrimination on grounds of nationality.

Title X Social Policy (Articles 151-161 TFEU) spells out the more operational EU powers and their considerable limitations.  

The Charter of Fundamental Rights of the European Union compiles social rights and principles, applicable to the EU, but to the member states only when they implement union law.

Political context   

We should bear in mind the United Nations’ 2015 sustainable development goals (SDGs) and the SDG agenda until 2030, not forgetting the mirror effect of the New European Consensus on Development.

Under the fifth of the Juncker Commission’s ten priorities, A deeper and fairer economic and monetary union -  #deepeningEMU - we find the policy area a European Pillar of Social Rights - #SocialRights on Twitter.

The approaching  Social Summit for Fair Jobs and Growth on 17 November 2017 -  #SocialSummit17 on Twitter - and the ongoing discussion about the future of the European project keep both short and long term issues of social policy at the forefront.

A Tripartite Social Summit with the social partners is scheduled for 18 October, and the European Council convenes 19-20 October 2017. After the Tallinn Digital Summit the EUCO president Donald Tusk promised to consult with all the member states and to present a “Leaders Agenda 2017/18” regarding the future of Europe issues.

Social dimension reflection    

The really short route is the Commission web page on the social dimension, which sketches three scenarios: only free movement (cross-border issues), willing countries (euro area) doing more, or the whole EU27 doing more together.

The press release IP/17/1008 offers a brief introduction to the reflection on the social dimension of the European Union by 2025.

The Commission hopes that the debate would clarify two questions: What challenges should our countries tackle together? What added value can EU level instruments provide?   

Back to the official Reflection paper on the social dimension of Europe COM(2017) 206, which does not take long to refer to the 25 March 2017 Rome declaration by the leaders of 27 of the EU member states. Social Europe is sandwiched in as paragraph 3 among the four aims they called the Rome Agenda: a safe and secure Europe, a prosperous and sustainable Europe, a social Europe, and a stronger Europe on the global scene:

A social Europe: a Union which, based on sustainable growth, promotes economic and social progress as well as cohesion and convergence, while upholding the integrity of the internal market; a Union taking into account the diversity of national systems and the key role of social partners; a Union which promotes equality between women and men as well as rights and equal opportunities for all; a Union which fights unemployment, discrimination, social exclusion and poverty; a Union where young people receive the best education and training and can study and find jobs across the continent; a Union which preserves our cultural heritage and promotes cultural diversity.

Despite the differences between the EU member states, the global and European  trends and challenges described are worth reading. At a minimum, the profound - even disruptive - changes should stimulate the interest of the EU countries to learn from each other, pointing to the need for the union to monitor and to coordinate policies.

Besides the human aspects, the need for (upward) euro area convergence and resilience weigh in favour of further steps at the European level.  

It is good to keep in mind that only 0.3% of total public social spending takes place through the EU budget, and the tools of the union are limited in the areas of legislation, funding, guidance and cooperation (pages 24-25).

The discussion continues about the future options for social Europe: limiting the social dimension to free movement, avant-garde groups doing more in the social field, or the EU27 deepening the social dimension together (from page 26). A healthy reminder of the stakes:

The political option chosen will have implications beyond the social field, stretching to the competitiveness of Europe, its capacity to harness and shape globalisation, the stability of the Economic and Monetary Union, cohesion within the Union and solidarity between its people. Any political option should also be seen in the light of the identified challenges, asking where the EU level can provide an added value. As each of the three options suggests a number of concrete proposals for action, also the choice among the possible instruments must be made in light of the challenges. Most of the examples given for the second option are also valid for the third and vice versa.

Dear reader, I leave you with the two questions about the EU’s social dimension mentioned earlier:

What challenges should our countries tackle together?

What added value can EU level instruments provide in this struggle?

Ralf Grahn

Companion to European Pillar of Social Rights

Under the fifth of the Juncker Commission’s ten priorities, A deeper and fairer economic and monetary union -  #deepeningEMU - we find the policy area a European Pillar of Social Rights - #SocialRights on Twitter.

With the Social Summit for Fair Jobs and Growth on 17 November 2017 approaching, #SocialSummit17 on Twitter, we already looked at the Consultation Report on European Pillar of Social Rights and Establishing a European Pillar of Social Rights, where I promised to look at the accompanying detailed Commission staff working document.

The companion SWD(2017) 201

Although I wondered why the Commission made so little hay out of the guiding principles, namely the social aims of Article 3(3) TEU and Article 9 TFEU, the communication COM(2017) 250 is a lucid summary of the Social Pillar. However, for detail people with a professional interest can turn to the accompanying staff working document SWD(2017) 201.  

Even if we have to limit our comments to a few remarks, in this blog post we are going to look at the detailed staff working document, but let us begin by recalling the almost full coordinates of the official document:

SWD accompanying the communication Establishing a European Pillar of Social Rights; Brussels, 26.4.2017 SWD(2017) 201 final (77 pages)

Twenty principles

The SWD(2017) 201 is the companion publication to the communication COM(2017) 250, best read in parallel as a detailed commentary, or used as a reference tool for each of the twenty principles and rights, which constitute the core of the Social Pillar (page 2):

This document follows the structure of the three chapters of the European Pillar of Social Rights detailing the contents of each principle or right. Each one of these is presented in three main sections, covering the existing social acquis, an explanation of its content and scope, and suggestions with regard to its implementation.  

Here are the principles and rights, and at the same time the main structure of the staff working document, with a few pages dedicated to each principle in a systematic manner:

Chapter I Equal opportunities and access to the labour market  

1. Education, training and life-long learning
2. Gender equality
3. Equal opportunities
4. Active support to employment  

Chapter II Fair working conditions

5. Secure and adaptable employment

6. Wages

7. Information about employment conditions and protection in case of dismissals

8. Social dialogue and involvement of workers

9. Work-life balance

10. Healthy, safe and well-adapted work environment and data protection

Chapter III Social protection and inclusion

11. Childcare and support to children

12. Social protection

13. Unemployment benefits

14. Minimum income

15. Old age income and pensions

16. Health care

17. Inclusion of people with disabilities

18. Long-term care

19. Housing and assistance for the homeless

20. Access to essential services   

Comment  

In this document the European Commission provides a useful full house of detailed provisions of the Charter of Fundamental Rights and the Treaty on the Functioning of the European Union (TFEU), acts and recommendations, plus recent and promised initiatives at an operational level.

Where new forms of employment, including self-employment, or groups outside the scope of current provisions appear, the Commission wants to upgrade the EU acquis. The principles also indicate what national authorities and social partners can do, in processes where the member states can learn from each other.

The systematic character of the staff working document invites use as a reference by people in (national) administrations or teaching EU social policy.

However, as in the other Social Pillar documents, the Commission hardly mentions  the strategic level main guiding aims and principles - the North Star of the EU Treaties - namely Article 3(3) TEU (EU objectives) and Article 9 TFEU (horizontal social clause).

Social Pillar progress

Readers interested in Social Pillar progress can turn to the Commission staff working document on the Social Scoreboard SWD(2017) 200 monitoring tool, benchmarking performances of EU member states in twelve areas of societal progress. The Social Scoreboard web page offers a first harvest of findings.

An update on concrete proposals is offered by the flyer Social dimension of Europe - overview of initiatives, which lists proposals from November 2014 to October 2017, offering links and current status.

Ralf Grahn

The EU social acquis

Trying to understand the European Union objective of a highly competitive market economy, aiming at full employment and social progress, it feels natural to take a look at the existing body of EU law (acquis) in the area of social policy.

The Commission staff working document (SWD) accompanying the communication on launching the consultation on a European pillar of social rights COM(2016) 127 final and the first preliminary outline of the pillar COM(2016) 127 final ANNEX 1 provides and overview:

The EU social acquis; Strasbourg, 8.3.2016 SWD(2016) 50 final (17 pages; available only in English)

The paper starts with the following introduction (page 3):

EU primary law, consisting of the Treaty on European Union (TEU), the Treaty on the Functioning of the European Union (TFEU) and the Charter of Fundamental Rights (EU Charter), bestows a social mission and mandate on the EU. This social mandate is the result of a long and gradual development. Social policy in the broad sense began as a means of securing market integration, and has developed into a method to deliver social policies. This paper focuses on this "acquis", in a legal sense.

The introduction is followed by a clear summary of the main primary law provisions in the social policy area (pages 4-6), followed by an overview of social rights and principles in EU secondary law (from page 6), soft law (from page 12) and  international law (page 17).

Fernandes and Rinaldi

There is a genuine “Social Europe” today, but it is not sufficient to address the challenges currently facing the EU, say the authors Sofia Fernandes and David Rinaldi in:

Is there such a thing as “Social Europe”? Notre Europe - Jacques Delors Institute (6 September 2016; 6 pages)

The authors are convinced that the European Pillar of Social Rights alone will not suffice to earn the EU a “social triple-A”. It  comes down to implementing a clause introduced in the Treaty of Lisbon, which has so far been ignored: the “horizontal social clause” under Article 9 of the TFEU, which stipulates that all EU policies and activities must be defined taking 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.

According to Fernandes and Rinaldi, the initiatives need to focus on three priorities (page 3):

1) establishing an EU and EMU architecture that ensures socio-economic convergence;

2) laying the ground for a genuine European labour market that fosters fair mobility;

3) supporting social investment and investment in human capital to build a society that is both more productive and inclusive.

Ralf Grahn

Key trends behind a European pillar of social rights

Since we are trying to understand the European Union objective of a highly competitive market economy, aiming at full employment and social progress, it feels natural to take a look at the thinking behind a European pillar of social rights.

Together with the communication launching the consultation on a European pillar of social rights COM(2016) 127 final and the first preliminary outline of the pillar COM(2016) 127 final ANNEX 1, the European Commission published a Commission staff working document (SWD):

Key economic, employment and social trends behind a European Pillar of Social Rights; Strasbourg, 8.3.2016 SWD(2016) 51 final (37 pages; available only in English)

The pillar is directed at the euro area, but open to participation by other member states. Some of the reasons are presented like this (page 4):

As highlighted in the Five Presidents' Report on Completing Europe's Economic and Monetary Union, in a single currency area, there is a need to build up the shock absorption capacity and labour market adjustment mechanisms of Member States. Enhancing convergence towards robust labour market institutions and social infrastructure can facilitate resilience, social cohesion and macroeconomic adjustment within the euro area and beyond.

The table of contents offers a quick view of the trends and challenges discussed in the different chapters of the working document:

1. Introduction
2. Welfare in Europe: an overview
3. Long-term trends, societal transformations and changing needs
4. The impact of the crisis: a halt to convergence
5. The new world of work, jobs and skills
6. Specific challenges and requirements of the euro area

Ralf Grahn

Difficult European social market economy

Legal, political and economic scholars have encountered difficulties, when dealing with the treaty based aim of the European Union as a highly competitive social market economy.

Negative integration in order to remove or to lessen obstacles in the internal market and external trade can be promoted by harmonisation and the Court of Justice of the European Union, flanked by rules to ensure fair competition.

However, despite the kind words the Treaty on the Functioning of the European Union (TFEU) offers on social policy - Title X - the real powers lie with the member states, as illustrated by Article 153. The powers for positive integration (harmonisation) are weak in the EU we have today:

Article 153 TFEU

(ex Article 137 TEC)

1. With a view to achieving the objectives of Article 151, the Union shall support and complement the activities of the Member States in the following fields:

(a) improvement in particular of the working environment to protect workers' health and safety;

(b) working conditions;

(c) social security and social protection of workers;

(d) protection of workers where their employment contract is terminated;

(e) the information and consultation of workers;

(f) representation and collective defence of the interests of workers and employers, including codetermination, subject to paragraph 5;

(g) conditions of employment for third-country nationals legally residing in Union territory;

(h) the integration of persons excluded from the labour market, without prejudice to Article 166;

(i) equality between men and women with regard to labour market opportunities and treatment at work;

(j) the combating of social exclusion;

(k) the modernisation of social protection systems without prejudice to point (c).

2. To this end, the European Parliament and the Council:

(a) may adopt measures designed to encourage cooperation between Member States through initiatives aimed at improving knowledge, developing exchanges of information and best practices, promoting innovative approaches and evaluating experiences, excluding any harmonisation of the laws and regulations of the Member States;

(b) may adopt, in the fields referred to in paragraph 1(a) to (i), by means of directives, minimum requirements for gradual implementation, having regard to the conditions and technical rules obtaining in each of the Member States. Such directives shall avoid imposing administrative, financial and legal constraints in a way which would hold back the creation and development of small and medium-sized undertakings.

The European Parliament and the Council shall act in accordance with the ordinary legislative procedure after consulting the Economic and Social Committee and the Committee of the Regions.

In the fields referred to in paragraph 1(c), (d), (f) and (g), the Council shall act unanimously, in accordance with a special legislative procedure, after consulting the European Parliament and the said Committees.

The Council, acting unanimously on a proposal from the Commission, after consulting the European Parliament, may decide to render the ordinary legislative procedure applicable to paragraph 1(d), (f) and (g).

3. A Member State may entrust management and labour, at their joint request, with the implementation of directives adopted pursuant to paragraph 2, or, where appropriate, with the implementation of a Council decision adopted in accordance with Article 155.

In this case, it shall ensure that, no later than the date on which a directive or a decision must be transposed or implemented, management and labour have introduced the necessary measures by agreement, the Member State concerned being required to take any necessary measure enabling it at any time to be in a position to guarantee the results imposed by that directive or that decision.

4. The provisions adopted pursuant to this Article:

— shall not affect the right of Member States to define the fundamental principles of their social security systems and must not significantly affect the financial equilibrium thereof,

— shall not prevent any Member State from maintaining or introducing more stringent protective measures compatible with the Treaties.

5. The provisions of this Article shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs.

European social market economy reading

Already at the time of the Treaty Establishing a Constitution for Europe,

Christian Joerges and Florian Rödl discussed the social deficit of the EU, the genesis of the social market economy at the national (Germany) and the Europena level, as well as the limits of EU competences in the social field, in  “Social Market Economy” as Europe’s Social Model? EUI Working Paper LAW No. 2004/8 (25 pages).  

Klaus Dieter John discussed various forms of economic liberalism in the article The German Social Market Economy – (Still) a Model for the European Union? (8 pages)

In a December 2011 publication, the Swedish Institute for European Policy Studies (Sieps) let four authors discuss the lack of EU powers and the necessity (risk) to move towards a federal state, if Europeans want a social market economy: Giuseppe Bertola, Jörgen Hettne, Fritz W. Scharpf och Daniel Tarschys: Är EU en social marknadsekonomi? Sociala Europa – en antologi; SIEPS 2011:2op (88 pages).

Two of the contributions had been published earlier in English and are still available:

Scharpf, The Socio-Economic Asymmetries of European Integration (2010:10epa) och Bertola, Social and Employment Policy in the EU and in the Great Recession (2010:11epa).

Václav Šmejkal, Stanislav Šaroch: EU As a Highly Competitive Social Market Economy – Goal, Options, and Reality; Review of Economic Perspectives Vol. 14, Issue 4, 2014 (18 pages), another example:  

The paper is a combination of economic and legal -political analysis through which the authors try to answer three main questions: What is the contemporary meaning of the term “social market economy” in the both economic and EU-law academic theory? Can the EU within the powers conferred to it positively fulfill such an objective, or can it just approach it by weakening the still prevailing tendency towards liberalization and deregulation brought about by the construction of the EU internal market and by the promotion of its freedoms?

To round off the reading part, a few random excerpts from Floris de Witte, in The Architecture of a Social Market Economy; LSE Law, Society and Economy Working Papers 13/2015 (24 pages):  

This paper traces the evolution of the nature of the EU’s internal market, from its origin in the 1950s to its current redesign in the aftermath of the Euro-crisis. It suggests that the relationship between ‘the market’ and ‘the social’ has shifted multiple times throughout the Union’s history.  

In doing so, however, they overlook a number of institutional asymmetries, normative biases and legal implications, which mean that any attempt to create a ‘social market economy’ – as Article 3 (3) TEU commits the EU to do – is bound to be distinctively light on ‘social’ and heavy on ‘market’.

The third phase has started since the outbreak of the Euro-crisis. Increasingly, Union institutions are pushing towards social policy coordination and even harmonisation in the EU. The purpose of EU social policy here, again, is very different from the previous two phases. Social policy is now considered as an auxiliary instrument for the stabilisation of monetary and economic policy across the Eurozone. Diversity and national autonomy, on this view, are problematic.

Social policy differentiation throughout the EU, to put it as simply as possible, disrupts both the operation of the internal market and the operation of the economic and monetary union. (page 17)

In blunt terms, the current architecture of the EU simply cannot support a ‘social market economy’ – which comes with far-reaching implications for the stability of the Union’s market and polity.  (page 18)

The legitimacy of their answer presupposes that it is answered through a representative and democratic process. Allowing apolitical institutions to answer such questions will almost inevitably lead to these being answered as if they are regulatory questions.  (page 19)

In the absence of a sufficiently thick political sphere on the European level, any attempt at socialising the EU’s market will be doomed.  (page 21)

A ‘social market economy’ may simply be beyond the capacity of EU law to produce.   (page 22)

Despite the talk about the future of Europe, do we see the EU institutions forging the powers for these representative and democratic processes at the European level?

European social market economy questions

After looking at the asymmetries, I want to finish this blog post by referring to the intelligent questions posed by Stefan Collignon in the web journal Social Europe: How To Create A Real European Social Market Economy; Social Europe 3 February 2015:  

The single most important contribution to revive Europe would be starting a wide debate about who are the winners and losers in the single market; who are the extractive elites that resist a fair distribution of advantages and privileges? How is the idea of sovereignty (mis)used as an instrument to protect these elites? What mechanisms must be designed to create a fair system of distributing the net gains from integration? How can one overcome the veto power and “agency capture” of national governments by local pressure groups? The European social market economy – with new institutions – must emerge from these debates. Without them, it will fail.

Ralf Grahn