The European Pillar of Social Rights is a first and essential step towards a new start for social Europe
When EU Heads of State or Government gather in Gothenburg this week to debate fair jobs and growth, it will be the first such ‘social summit’ in 20 years. At the heart of the agenda of this high-level gathering will be the formal proclamation of the European Pillar of Social Rights – 20 principles and rights focused on equal opportunities and access to the labour market, fair working conditions and social protection and inclusion.
The Pillar is to serve as a ‘compass for a renewed process of convergence towards better working and living conditions among Member States’ taking account of the changing realities of Europe’s societies and the world of work.
So far, so laudable.
But let us remind ourselves exactly where we are. This is a time when the United Kingdom’s somewhat shambolic exit grabs headlines in Ireland and across Europe. It is a time when populist and anti-EU sentiment is present in many Member States, and nationalist efforts to break away play out across different parts of the Union. A time also when many are questioning the benefits of an EU which had at its core the promise that we would all advance together towards better quality of life and work. Why then, at this critical juncture - as it battles to respond effectively to the complex new economic and political parameters – does the European Union focus on what could be perceived as ‘feel-good’ phrases in a pillar of social rights?
The answer surely lies in the increasingly manifest need for a stronger link between economic and social developments. For the story of the European Union is in fact the story of upward economic and social convergence of the soon-to-be 27 Member States - in a way that sees all benefit.
The reality is that the social model has always differentiated Europe from the rest of the world, explicitly trying to balance both economic and social needs. But populist sentiment perceives the EU as inherently unbalanced; as the vanguard for austerity, as facilitating unfettered migration and mobility and as spawning over-zealous regulation in all aspects of life. The ensuing ills of society are placed firmly at the EU’s door.
In fact, offsetting inequalities within Member States is still largely the responsibility of national governments. The EU’s mandate in social affairs is limited, and both successes and failures result from responsibility shared with Member States.
From the European Economic Community through to the Single Market and Economic and Monetary Union, the economy has been the primary vector of the integration process. The Treaty of Rome harnessed the economy to stability and closer relations between the Member States, viewing the Community’s task as the promotion of ‘… a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it’. The logic was that rising prosperity and the intertwining of European economies, would make war ‘not merely unthinkable, but materially impossible.’
For most of its history, the story of European integration has involved the creation of pan- European markets. However, markets require rules and much of the social and employment legislation in the Union is related to this process of market-building. The concern to ensure a ‘fair playing field’ has motivated the significant European legislation on health and safety at the workplace, including the Working Time Directive. The concepts of equal treatment, not least as regards gender, led to some significant legislative initiatives for example, on work-life balance, on part-time and temporary agency work. Furthermore, as it was understood that market integration would lead to significant structural change, the Collective Redundancies Directive and other legislation concerning information and consultation of workers, provided a framework for how this should be enacted. Among other factors, these European laws have contributed to significant upward convergence in social and employment standards – not least among new member countries.
This is not to say that the market forces or market-building legislation has had an unambiguously positive impact on social standards and distributional outcomes. But evidence shows that every Member State’s economy has grown faster in the Single Market, with countries with the lowest average incomes growing faster than - catching up with - the others. Since the recession, however, the great ‘European convergence machine’ has stalled and in some cases, in Greece for example, has even gone into reverse.
But if market-building legislation has consistently had more impact to date on economic and social outcomes than social and employment legislation, the increasing prominence of economic and social cohesion as a European priority has also played a role. It acquired a Treaty basis with the 1986 Single European Act (which also gave formal recognition to the European social dialogue established by the Val Duchesse agreement in 1985). It has become the EU’s main investment policy via the various Structural Funds, and in recent times has accounted for over half of public investment in some countries. There can be little doubt that the policy has met considerable success - not least in Ireland. And it has been key to making a success of enlargement.
However, the strong growth during the period from the mid-1990s up to the onset of the recession in 2007 masked the fragility of various aspects of employment and social protection in many Member States. For example, the decades before the recession saw a large increase in the number of temporary contracts. The crisis saw them largely wiped out. In some Member States insurance schemes were ill-equipped to provide income support and as the recession deepened, cut-backs in social protection expenditures weakened safety nets further.
The economic crisis of 2008 was the catalyst that placed the current social convergence concept at the centre of European policy discourse. On the one hand, it signaled the interruption of a long-standing process of convergence of real standards of living among the Member States. On the other, the recession challenged the stability of the Euro, casting doubts on the existing system of financial governance. Through this, an understanding emerged that the stability of the single currency required convergence in more than just the agreed monetary and fiscal indicators. As Greece and other countries affected by fiscal consolidation battled to stay afloat against a background of deteriorating employment and living and working conditions, and as other Member States perceived the increased movement of workers, people and services as a growing threat to their standards of working conditions and social protection, there was a growing political consensus that ‘ever closer’ integration - and the stability of the euro - required a strengthened social dimension.
It was against this background that the European Pillar of Social Rights, after a wide consultation process, emerged from the European Commission in April of this year and was agreed unanimously by the Council of Ministers in October. It sets out agreed principles and rights to support fair and well-functioning labour markets and welfare systems. These address in a very direct manner the needs and aspirations of the peoples of Europe. The recession of 2008 has left scars in our diverging societies that populist movements have exploited without providing anything concrete to improve the living and working conditions on the ground. The Social Pillar makes it clear that economic and social progress are two sides of the same coin. Without social safety nets people do not take risks. Education and training, and other activation policies, are key ingredients to long-term competitive advantage and social protection plays a vital role in stabilizing economies in the Economic and Monetary Union.
So this is the significance of the Proclamation - it represents the inextricably linked political, economic and social integration of a continent. As all countries return to growth, this is surely the time to demonstrate that integration can deliver. The European Pillar of Social Rights is a first and essential step towards a new start for social Europe. Although it will be proclaimed at the highest level, by Heads of State and government and the Presidents of the European Institutions, its implementation will require action not only – or even mainly – at European level, but by Member States, social partners and governments at national and regional level.
This is the story of the European Union. A new chapter opens in Gothenburg this week. After that, it will be in Paris, Madrid, Prague… that the most important pages are penned.