Social Europe is far from dead

As a student in the 1960s, holding generally left-wing views, my comrades and I viewed the then Common Market as a capitalist club, run for the benefit of multinational companies and farmers and to hell with the interests of working people. Europe seemed to us like America in the aftermath of its Civil War, a huge market in which the strong prospered and the weak went to the wall.

My views soon shifted towards a favourable stance on the EU, but there is a fundamental truth in that old communist view which I held in the 1960s that holds good today; there are still many in Europe who aim to minimise the social importance of the European Union so as to reduce labour costs and the cost of welfare and public services. They want to make the EU a cheaper place to produce goods and services. This is evident from the austerity packages being imposed on countries needing bail-outs as a consequence of the economic crisis of the past three years or so, and it is evident, too, in the de facto bloc bent on establishing new social measures. Above all, it is graphically demonstrated by the attitude of the current UK government to ‘social Europe’.

The hostility of the current UK government can also be taken as proof that social Europe is not dead. Why else would they still be trying to kill it, or at least seeking to extricate the UK from it? For those who do not follow the British debate closely, some explanation would be worthwhile. Under pressure from a large part of the Conservative party, and from the surge in support for the nationalist United Kingdom Independence Party (UKIP), prime minister David Cameron has announced that if the Conservatives were to win the next general election there will be an ‘in or out’ referendum on Britain’s membership of the EU. His plan is to negotiate a looser relationship with the EU in some important areas, then to claim that the UK can be comfortable with this relationship, and to encourage the nation to vote ‘Yes’.

Mr. Cameron has not yet been specific about what form of new relationship the UK should negotiate with the EU. But in one area – social and employment competences – the government’s intentions are already clear; they want an opt-out from EU employment rules. Whether this opt-out should be general, as was a previous one negotiated by the then Tory premier John Major at Maastricht in 1992, or whether it will relate to specific measures like the Working Time Directive or the Agency Workers’ Directive, is unclear.

Social and employment issues are thus at the heart of much of the UK’s troubled relationship with the EU. But for Europe’s trade unions, if the EU is to enjoy popular support it cannot just be a single market in which member states compete on social and labour standards. From the 1957 treaty of Rome onwards, this principle was conceded at least in part by all the member states.  And in the Single European Act which set out the ground rules for the single market, Europe’s leaders agreed that the single market should not allow competition based on any one country’s use of lower health and safety standards to gain an advantage.

Social Europe has now evolved through successive treaties over half a century or so. Its main landmarks have been, first, the Rome treaty’s provision for equal pay between men and women, and the rule that any social policy initiatives needed to be adopted by unanimity. Thirty years later, the Single European Act of 1987 included for the first time a provision for qualified majority voting on social policy when relating to health and safety. This also provided the detailed legal basis for free movement of labour among EU member states, along with similar freedom for capital, goods and services. Following that, the Maastricht treaty went further by including the Social Chapter whereby the social partners, meaning employers’ associations and trade unions could negotiate European-wide collective agreements. It also said that social provisions in some areas could be adopted by qualified majority voting among member states. And much more recently, in 2009 the Lisbon treaty incorporated the Charter of Fundamental Rights into the EU treaties, including key provisions on the right to collective bargaining and the right to strike.

Based on all these treaties, around 60 directives on social and labour market issues have been agreed by the Council of Ministers and the European Parliament.  These fall into five broad groupings: Health and safety, including the controversial Working Time Directive account for over 40 directives. Then there’s equality on gender, race, religion and sexual orientation. The third group consists of specific provisions on equal treatment for part-time workers, fixed-term workers and agency workers, plus maternity provisions and the right to parental leave. On top of these, there is a general framework on information and consultation of the workforce, as well as on mass redundancies, transfer of undertakings and European works councils. The last group is made up of miscellaneous laws – in particular the Posted Workers’ Directive which aims to extend entitlements to workers sent by their employer from one country to another, entitling them to at least the minimum conditions available in the host country.

It’s an impressive list, but many of the core issues of employment relations are dealt with at national level. This includes collective bargaining on pay, strikes, job security and employment protection, restructuring, pensions, sick pay, social security and dismissals and work discipline.

Against this background, the EU as a whole is beset to varying degrees with serious economic problems. Four countries – Greece, Ireland, Portugal and Cyprus – are currently in receipt of multi-billion euro support packages whose terms have been very tough. They are imposing austerity on the people of these countries through wage cuts, especially in the public sector, and minimal social security and public spending. Austerity has also included forced privatisations, and even for pro-Europeans the doctrinaire handling of the crisis by Europe’s leaders has been causing alarm and dismay.

Not only are austerity policies being imposed on Greece, Portugal, Ireland and Cyprus, they are also being enshrined in a new treaty covering all EU countries except the UK and the Czech Republic. Never was an EU treaty less needed.  There were already strict rules for eurozone countries covering levels of debt and deficits, but they were broken and in any case the scale of the economic crisis made them irrelevant. More rules are not the answer, especially as they are all designed to curb Europe’s labour and welfare costs.

Just when the EU needed to rise to the challenge of handling Europe’s worst economic crisis since 1945, it has adopted the misguided approach that U.S. President Herbert Hoover embraced, and which speeded the onset of the Great Depression in the early 1930s. EU policies have intensified austerity at a time of economic collapse; it’s as though John Maynard Keynes, the great economist of those times, had never analysed what went wrong, or that Franklin D. Roosevelt hadn’t tackled America’s crisis with the New Deal policies of public spending to stimulate growth and jobs.

If the lessons of the 1930s are being forgotten, so too are the lessons of post-war Europe in the late 1940s. Then, General George C. Marshall saw that Europe was broke and needed dollars to re-equip itself and start to grow. The U.S. stepped forward to help the countries of western Europe with a policy that was both generous, self-interested and far-sighted. Germany’s debts were wiped clean and defeated country allowed a fresh start.

The contrast with the years that followed World War I could not have been more stark. Then, heavy reparations were demanded, particularly by France and Belgium, and the burden of repayment made Germany’s economic and political recovery so slow and difficult that rampant inflation ultimately paved the way toward the rise of Hitler’s Third Reich. Today, Greece sometimes feels a bit like Germany did after 1919.

Recent actions by the European Central Bank have successfully calmed financial markets and stabilised the eurozone, and there are signs that the Commission, too, is relaxing its approach. But there are few signs of growth, or any convincing indications that in Europe the lessons of the 1930s and 1940s have been fully learned. Social Europe has been taking a hammering in many countries, with the crisis benefiting those who believe that Europe must become more free market, and that labour costs must fall if the EU is to compete with emerging economies like China. It is these free market fanatics – along with the eurosceptics and the nationalists – who have seized the initiative. UKIP is a very British development, but it has its eurosceptic and nationalist counterparts across the EU. Trade unionists should be their main opponents, and galvanise the currently ill-equipped centre left political parties to promote their responses to the current crisis of financial capitalism.

Of course, Social Europe had its difficulties before the crisis broke. In 2004, eight central and eastern European former communist countries with relatively low levels of GDP joined the club. This made the EU’s single market much larger than before, and in particular brought in its wake a surge of migrant workers moving from east to west.

The European Trade Union Confederation (ETUC) has long favoured the free movement of labour, but on the basis that the employment and other social standards applied should be those of the host country, not of the country of origin. Yet in a number of recent decisions the European Court of Justice (ECJ) has taken the view that applying host country labour standards is a barrier to free movement. In effect, the ECJ’s view is that it is acceptable that only minimum conditions need apply to posted workers, and perhaps to other categories of migrant labour such as seasonal workers and intra-corporate transfers. These judgements are having the effect of undercutting the terms of collective agreements, and are certainly producing an increase of protectionist sentiment among workers in some sectors.

The ETUC is trying to address these problems by calling for a Social Progress Protocol to the EU treaties, as well as for a revised Posted Workers’ Directive based on equal, not minimum, pay, and a regulation in the proposed new Single Market Act which would emphasise that the single market does not overrule such fundamental rights as the right to strike. But if this debate becomes poisoned by nationalists, the risk is that there will be stronger actions against free movement of labour and migrant workers. Clearly, this must not be allowed to happen.

More fundamentally still, Social Europe must continue to develop. If the Council of Ministers, the Brussels Commission and the ECJ are forming detailed views on the unit labour and welfare costs of eurozone members, can they impose these views and then sustain them without consultation and negotiation with the European social partners? I don’t think so; the pressure will be to expand the existing tripartite social summit and macroeconomic dialogue, and to develop social dialogue on these social topics. That will not be easy, but it would be a positive sign for the future of Social Europe.

Social Europe isn’t short of powerful enemies, and it stalled during the years when deregulation, flexibility and neo-liberal ideas were in the ascendancy. But the economic crisis has made a difference, and the EU will only enjoy popular support if it has a social dimension. Otherwise, nationalist reactions could be overwhelming. From my own perspective, if you aren’t a supporter of Social Europe, you’re de facto an enemy of the EU project as a whole.