Europe cannot ignore the social impact of economic “recovery”

Anastasia Poulou is Senior Research Fellow at the Max Planck Institute for Social Law and Social Policy

Nothing defines “British exceptionalism”, a recurrent theme of the UK’s European Union membership, like the decision to leave the Union. The implications of Brexit for the British healthcare sector, employment policies and social assistance schemes have been much discussed. But what about the impact on the other side of the negotiating table? Could the EU, liberated from its “reluctant partner”, proceed more rapidly towards a more social Europe – or will the EU’s social policy begin its disintegration?

Throughout the British referendum debate, depictions of the European impact on Britain’s welfare state were tainted by inaccuracies and outright lies. One was the assertion that immigrants abuse freedom of movement within the EU to scrounge off the UK’s generous benefits system. This simplistic view can easily be contested: the data has consistently suggested that, over time, European immigrants have paid more in taxes than they have received in benefits. Yet although not at all evidence-based, the argument shot to the top of the political agenda, with David Cameron proposing a four-year ban on EU migrants receiving inwork benefits and a ban on “exporting” benefits for children living outside the UK.

But what about the underlying assumption that social policy decisions – including the allocation of benefits – should be free from EU interference? The development of the welfare state has been linked historically with ideas of national identity and citizenship. Proponents of this rather old notion of a self-sufficient nation state consider EU membership, and the grounds it offers for the enjoyment of social benefits, as a threat to sovereignty. For the British, the repatriation of welfare policy was seen as the way to reclaim an important part of national sovereignty. Even though the EU has limited formal competence in the field of social policy, many British citizens felt left out of decisions affecting the UK’s welfare system. Alienation from the European project is not unique
to British people – so an important challenge for post-Brexit EU social policy is to reconsider ways in which EU citizens could meaningfully participate in and help make decisions that directly
or indirectly affect their social wellbeing.

Recent social policy changes in the UK have followed the general European trend – responding to the financial crisis by introducing austerity measures that entail cuts in social benefits and assistance. At the same time, industrial closures and job losses resulted in the casualisation of wages and working conditions. The real wages of the average British person have fallen by about 10% since 2007, with the burden of austerity felt most by vulnerable populations, multiplying the disadvantages to which they were already exposed. These developments were particularly decisive for the outcome of the UK referendum, as the areas with the biggest falls in average wages had the strongest anger towards the EU. In other words, the EU’s attempts at financial recovery alienated the very sections of the British population that might have been expected to support the European project. These people felt the EU didn’t live up to their expectations of it as a protector of social rights, which begs the question of what “Social Europe” really means, and how it can now ensure a minimum level of social protection for all EU citizens.

In the aftermath of Brexit it would be simplistic to expect that the EU, without its reluctant British member, could rapidly deepen social policy integration. The UK was by no means the only member state opposing integration initiatives, especially when it comes to EUwide transfers or solidarity mechanisms. To address member states’ reluctance to share the burdens of multiple economic and social crises across the continent, the EU has to listen seriously to their claims of national sovereignty over social welfare. Paying attention to concerns about sovereignty doesn’t mean pandering to them, but rather having the openness to rethink the ways in which the EU can guarantee member states’ real and equal participation in and co-determination of social policy decisions. Exclusive meetings of a limited number of leading states, like the one that took place immediately after the Brexit vote, are not the way forward. On the contrary – when it comes to the regulation of provision of public services such as social assistance or healthcare, the Union must ensure transparency and the level of consultation necessary for the genuine involvement of state officials, citizens and stakeholders in EU decision-making. Only by providing a democratic forum for discussion of social policy will the choice for membership be more attractive than the choice for exit.

For the EU to regain its lost legitimacy in the area of social policy, it can’t pretend its influence is restricted to its competences. The EU must openly address the knock-on effects of its economic
policies on the welfare state. This doesn’t mean that labour costs or pension schemes should be strictly separated from budgetary coordination, but that when confronted with an economic decision
that has direct or indirect consequences for social policy, the EU should accommodate concerns beyond efficiency. These include objectives such as equity, accessibility and quality of social
services for all citizens. The Union has to emphasise the qualitative difference between economic and social policy, and control the risk of the blind subordination of EU social policy to the market.

Initiatives such as the introduction of a European Pillar of Social Rights are definitely a positive sign, but rather than simply multiplying the existing regulatory framework of EU social policy, the Union should strive to specify and operationalise the existing elements of the European social constitution – for example, through the introduction of a basic, common unemployment insurance.
Through comprehensive and consistent secondary legislation and jurisprudence, the EU should clarify the set of social rights standards to be respected by all member states, serving as a real
guarantor of minimum social protection. Fostering the European social model with decent working and living standards for all EU citizens is the only way to fight inequalities and the downward spiral of Eurosceptic populism.