EurWORK European Observatory of Working Life

Single European Market

The objective of a Single European Market (SEM), proposed by the 1992 Single European Market Programme, had serious implications for employment and industrial relations in the EU. In particular, the SEM posed a threat in the form of competition between enterprises in different Member States faced with different direct and indirect labour costs and different systems of social and labour regulation (‘social dumping’ and ‘social regime competition’). The result was a fierce and protracted battle between the European social partners over the political and legal strategies to be adopted with respect to the SEM.

The strategy of the trade unions at European level has been characterised as dictated by a ‘political-distributive’ logic. This recognised the dangers posed by social dumping in the single market, but also acknowledged the advantages to be reaped by enterprises free to compete without national hindrance. The aim was to achieve a balance between the costs of the social protection necessary to offset the risk of social dumping, and the losses to enterprises entailed by this necessary degree of regulation. The strategy, therefore, was one of political regulation at European level to secure the fair distribution of the benefits of the Single Market, requiring attention to questions of labour and social standards and implementation mechanisms.

The strategy of employer organisations has been characterised as dictated by an ‘economic-productive’ logic. The social dimension of the single market was to aim at achieving the maximum productive and competitive efficiency. For firms in the European Community, the principal competitive challenge came from outside the EC – mainly the USA and Japan. Enterprises in those countries benefited from significantly lower social and labour standards, a competitive advantage which hindered enterprises in Europe. The social policy of the EC in the new Single European Market should, therefore, aim at reducing this competitive advantage by eliminating that social and labour regulation which was such a burden on European enterprises.

Each of these social policy strategies for the Single European Market had an accompanying legal strategy. The deregulation strategy put forward by the employer organisations was based on the assumption that there were to be no common social and labour standards imposed through EC measures. This had the advantage that it would reduce the need for a central regulatory bureaucracy – not required, given the non-interventionist policy. It had the corollary benefits of operating to inhibit social regulation initiatives at national level, for fear of burdening Member State enterprises. Finally, it allowed for regulatory social regime competition in which Member States would compete against each other to lower indirect social and labour costs.

The debate continues on whether competition over labour and social costs should be encouraged in the single European market, whether social dumping constitutes a real threat, and which legal and regulatory strategies should be adopted.

See also: harmonisation; Single European Act; social competences; social objectives.

Please note: the European industrial relations dictionary is updated annually. If errors are brought to our attention, we will try to correct them.
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