Why we need a European Social Union

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Reflets et Perspectives, LII, 2013/2-3 — 97 Why we need a European Social Union Frank Vandenbroucke 1 Abstract – Arguments on “social Europe” to give an unequivocal answer questions of why, what, and how. With regard the question I argue that, whereas ten years ago quest for operational description social model might have been dismissed as interesting but not strictly necessary, today it is no less than existential conundrum Union. EMU must be complemented with genuine Union, sustainable in long term. A means that EU would guide substantive development national welfare states, via general standards objectives, leaving ways policy Member States. That presupposes sufficient degree consensus goals policy. It also requires pan-European solidarity based reciprocity relationships between briefly sketch some elements ensuing agenda, focus notion investment. identify urgencies respect how, particularly restore unity economic policy, short long-term how this relate ‘contractual approach’ proposed by President Council, Herman Van Rompuy. JEL: Europe, solidarity, open coordination, investment Résumé Le débat sur l’« Europe sociale » besoin de réponses sans équivoque aux suivantes : le pourquoi d’une sociale, la sa subs‑ tance celle méthode à utiliser pour y parvenir. En ce qui concerne pourquoi, je défends thèse suivante si, voici dix ans, quête opérationnelle du modèle européen pouvait encore être considérée comme un exercice utile mais pas vraiment indispensable, elle est devenue aujourd’hui une réellement existentielle l’Union. Pour que l’Union monétaire puisse survivre, il faut compléter réelle européenne. Une européenne signifie développement en substance des États-providence nationaux, par biais objectifs sociaux généraux, 1. professor at KULeuven. Frank.vandenbroucke@econ.kuleuven.ac.be. He holds Den Uyl Chair University Amsterdam Deleeck Uni‑ versity Antwerpen. Cette contribution version abrégée d’un article publié dans l’Italian Journal Public Policy « Union: We Need It, What Means », Rivista Italiana di Politiche Pubbliche, 2/13, pp. 221‑247. DOI: 10.3917/rpve.522.0097 Document téléchargé depuis www.cairn.info – Universiteit van 05/04/2016 12h31. © De Boeck Supérieur 98 tout laissant les moyens instruments États membres. Cela présuppose base propos politique sociale. requiert aussi solidarité pan-européenne, basé réciprocité entre substance, j’esquisse brièvement quelques éléments devraient figurer l’agenda découle cette analyse, me focalisant l’investissement social. J’identifie quelques-unes urgences relatives savoir nécessité restaurer l’unité économique court terme comment cela pourrait inspirer l’approche contractuelle proposée Président Conseil européen, INTRODUCTION For over fifty debating whether active dimension. The number publications describing weaknesses now beyond counting. All too often, these writings are merely inconsequential lamentations unreachable. ongoing crisis may present opportunity put firmly agenda. Rather lamen‑ tation, what needed coherent conception reasons behind, agenda for, governance In short, Eu‑ rope” needs presenting list concrete proposals, paper focuses why-ques‑ tion. “the model” basic required meaning dimension Europe’s citizens role play it. Such cover issue States’ mutual obligations, i.e. countries demand from one another. thus arises can incorporated into institutional States, same way within each State separately reci‑ procity individuals. last section paper, in‑ vestment. “contractual approach” 2 THE SOCIAL DIMENSION OF EUROPEAN MONETARY UNION incorrect assert has today. technical coordination security rights mobile workers, health safety workplace, directives regulating workers’ 99 procedural issues labour markets… constitute non-trivial acquis piecemeal progress. Starting principles non-discrimination grounds nationality equal pay work men women, created solid legal foundation enforcing nondiscrimination fields gender, age, ethnicity, etc. Seen light, reformulated follows: why does require goes on-going dyna‑ mics its anti-discrimination principles? Or, formulate more precisely: should states so‑ cial Mem‑ ber States basis definition model”? first argument refers sustainability Monetary (EMU): “Excessive imbalances” threaten monetary union much “excessive imbalances”; preventing fighting excessive im‑ balances pursue. will discuss “imbalances” argument, then add other arguments invoked favour compelling, entails complex discus‑ sions, both soli‑ darity called for. 2.1 Excessive imbalances Eurozone adopted Macro-economic Imbalance Procedure (MIP) prevent correct macro-economic imbalances. relies alert system uses scoreboard indicators in-depth country studies, strict rules form enforcement financial sanctions euro area do follow up recommenda‑ tions. analytically, imbalance” applies specific parameters characterizing members. This say identical concept apply domain, or MIP-type procedures developed domain (in fact, MIP provides toolbox itself debatable separate discussion). However, expression adequately describes set problems affect member very differently (thus creating “imbalances”). These imba‑ lances simply “similar problems” subset poorly performing states: they matter common concern all Youth unemployment child poverty two examples. po‑ litical (social divergence threatens political Union) (long-term convergence). case, subsequently about consequences unification. 100 Since start project, increasing cohesion across mem‑ crucially important objective. During successive waves enlargement, promise growing was vindicated. World Bank dubbed veritable “convergence machine” (Gill Raiser, 2012). performance upward convergence documented convincingly Lefebvre Pestieau (2012). witness divergence, notably youth unemployment, living verty anchored time (Vandenbroucke al., 2013). If deepening casu creation currency, accompanied further rather legiti‑ macy project stake. Euro source divergence: combination domestic failures play. But if continues, actual steadily undermine credibility project. Both “failing” “successful” members, public opinion become increasingly dissatisfied observation divergence. Reasoning terms “us” “them” South” versus North” inevitably gain legitimacy, while lose legitimacy. North, divide framed efficiency”: members disap‑ pointing record seen socially inefficient economically uncompetitive, entirely responsible remedy situation without fur‑ ther ado. make difficult take steps necessary consolidate longer term, such collective action part sovereign debt, stabilizing fiscal transfers, let alone fullyfledged (see Grauwe, 2013, necessity union). know hard sustain entities lack trust other’s internal fabric: Belgium, north-south divide, telling example. seems even harder create new transfers parties agree their efficiency. erodes legitimacy Euro‑ pean cooperation exists today, damages trust-based perform better future. subjective: continue, cannot prejudge certainty impact support EU. sufficiently plausible impor‑ tant assign label disparity to, instance, “anchored” Eurozone. countries, given proper weight joint endeavour understand extent dif‑ ferences indeed linked real inefficiencies, factors play, done it, level. Next problem creates (to case) 101 signaling objective sustai‑ nability comparatively high level synony‑ mous deficit cause effect vicious circle underperforming markets education systems. Today, huge market outcomes, formal educational achievements outcomes measured OECD’s PISA programme. get trapped sys‑ tems, “bad equilibrium” symmetry among union. essentially assessed current account balances, export shares, exchange rates, unit costs, government private housing prices, para‑ meters properly attuned union; converge direction ensures sustainability. related question, which rarely discussed explicitly, convergence. answered negatively premise different tems functionally equivalent relevant out‑ comes produce. times crisis, flexibility generated quite arrangements: temporary shorter working hours (such Germany), worker mobility relatively unre‑ gulated another country, so forth. Financially pension systems employment rates older workers generous pensions secure finan‑ lower pensions. words, regional diversity architecture compatible supranational symmetry. possibility “functionally equivalent” legitimize principle subsidiarity there seem limits accommodated (2012) discusses policy: economy practice, divergences reti‑ rement pose assertion true, case parame‑ ters pursue domestically. “if” preceding sentence “if”: proofs matters. remains unproven tuning strategies certainly hypothesis. Returning example poverty, show underlying fabrics “func‑ tionally view But, then, “symmetry” neutral: envisaged choice direction. 102 2.2 No sketched previous fits broader discussion currency confronted trade-off flexibility. eco‑ nomic textbooks explaining trade-off, defined purely econo‑ mic terms, argued section, sustaining run imply Flexibility relates wage interregional international mobility, determine country’s “internal” adjustment capacity asymmetric shock. Less necessitates flexibility, according theory “optimal areas”: single cur‑ rency area, greater adaptability order beneficial. There moreover second trade-off: absorbing shocks through budgetary reduced (De Stabilisation cyclical. By example: mecha‑ nism co-funding benefits during initial period excluding activated when short-term rises above certain could function interstate insurance device. Neither nor symmetry, neutral choices. processes painful, like direct nominal cuts (rather erosion depre‑ ciation inflation), cost, massive migration job-seekers. Budget aimed primarily tempo‑ rary stabilisation, explained paragraph, practice stabilising purpose expenditure redis‑ tributive purposes. Obviously, neutral. Hence, trade-offs implied unification force upon participating serve. sure, analysis lead normative conclusions kind ought develop. does, however, inevitability encompassing cognitive well elements: • Cognitive: conver‑ gence? Which degrees freedom exist retirement achievements, poverty…? Normative: gence domains, benchmarks tar‑ gets organising 2. addition described trade-offs, conditions mone‑ tary One topical moment: banking As shall dwell burning obviously term presents before 103 Cognitive normative: our panEuropean transfers? purport only survive meets require‑ ments justice define My claim limited: broad-based, tie common. past, often stressed diverse impossible accurately model. Nonetheless, however reality minimal common, normatively charged objectives Subsequently, dealing developments arises. greatly benefit “burden-sharing” well-rehearsed argument. Jean Pisani-Ferry explains adjustments economies Sou‑ thern treated one-sided process. successful adjust‑ ment process serves interest, prepared contribute part. Germany accept slightly higher inflation allow wages prices Spain (given price stability whole guaranteed assuming takes implement structural reforms). reasoning field (the governments Northern must, PisaniFerry, avoid “overkill”) relation increases observed decade euro). “Reciprocity”, particular example, you share responsibility problem, clear agreements concerted efforts. implies burden e.g. restoring competitiveness placed shoulders partner. turned rational burden-sharing embedded shared darity. German philosopher Jürgen Habermas argues enlightened self-interest motivate organize solidarity. recent lecture KULeuven Democracy, Solidarity Crisis, he stake, relating dis‑ tinguishing existing pre-political communities family), concludes “If wants preserve enough, economies, provide loans over-indebted improve own requi‑ red instead, cooperative effort perspective promote growth zone whole. several shortand medium-term negative redistribution effects longer-term self-in‑ terest classic solidarity.” (Habermas, emphasis text). 104 Whether ‘enlightened self-interest’ develop here. fragility points absence “deep variable”, Grauwe “a sense purpose”, apparent carried reunification: “(T)his deep variable made possible Germany. Put differently, were endogenous variables driven force. exis‑ tence inconceivable star‑ ted having centralized budget capable making large regions, unified system. weakly Level” 2009, p. 113). any look progress actions When launched Open Method Coordination 2000, method gradually vague my view, policies had 1999, 2002a, 2002b). functionalist seemed somewhat superfluous debate essential light Therefore, difficulties encountered worrisome five (not just relative weakness delivery, most salience EU). conceptualizing (ESU) involves philo‑ sophical, practical challenges. stop us starting chapter EMU, ESU. happenstance Rompuy December 2012 suggested contractual approach combine reform (European Section 3, return idea. additional 3 DUMPING AND NATIONAL SOVEREIGNTY Discussions refer prevention dumping preservation sovereignty hand. premised far-reaching integration harmonisation induces downward pressure advanced already subject 1956 Ohlin report, together Spaak 105 report laid foundations establishment Econo‑ Community. assumed differences costs concerned closely productivity free trade wages. did em‑ phatically assume subsequent evolution corrected (International Labour Organisation, 1956). Given context, clearly caveat. Prima facie, history proven wrong. parallel integration, expanded, sometimes spectacularly so. Successive enlargements Community invariably resulted references Gill Pestieau, supra). Now contravention doctrine coupled high-level areas, 1980s 90s workplace. noted “upward” “downward” nature depends context: widespread unemploy‑ ment, upper hand, due overall weaker position unions. So here qualified warrants. functional dumping, strong sectors, problem; infra minimum inspires discussions concerns states. line re‑ search Fritz Scharpf, Stephan Leibfried, Maurizio Ferrera others. intrinsic conflict imperatives of, trans-border services, and, other, nationally conceived duties. latter presuppose borders membership circles; former extend circles. fundamental logic “opening” “closure”, paraphrase Ferrera. Bulgarian Belgium enjoy right assistance Belgian national, attaching excessively country-specific conditions; under earned adherence obligations conceptions integration. Taking Dutch shop freely Bel‑ gium care services covered insurers, though jeopardize Belgium’s planning rate agreements. dictates authorities provisions neither free, 3. sharp articulation pessimism, see Scharpf (2009). (2005) optimistic. 106 foreigners. point (2009), particular, ham‑ mers home exist, systematically decided expense community. Leibfried (2010) treaties legislation distinction pure “state action” (or “solidarity action”) hand “economic (a jurisprudence Court Justice), dividing realms far extensive grey where mechanisms operate concurrently. occurs grand scale in, care. analyses inspired propose “horizontal clause”, emphasising strongly significance solida‑ rity ordering clearer guidance institutions, including Justice (Vandenbroucke, 2002c). Anne Lancker progressive representatives non-govern‑ mental organisations campaigned Convention. Via IGC, adapted text found Article 9 TFEU. Although find issue, unlike believe leads irresistibly liberalisation unchecked (moreover, perhaps Art9 TFEU will, time, towards balance respect). 4 room initiative correction mar‑ ket sovereignty: receptive politics deterministic suggests. from, things, Services Directive, Parlia‑ amended Bolkestein. transpires drafting 2011 Directive Parliament Council sought strike appropriate patients’ cross-border control either seek granting requirements; surrounding implementation foundations. 5 disagree who nonetheless intellectual heroes constitution economy. irrelevant. critical interaction sove‑ reignty An posted workers. Are applicable 4. Art. TFEU, Charter Protocol General Inte‑ rest. elements, Rhodes (2010), Armstrong Lenaerts (2011). 5. See brief summary viewpoint Justice. plementation determining factor mobility. mind pseudo “self-employed” persons entering live off benefits. 107 State, statutory wage? And unions feel regulations concerning violated posting workers? Notorious judgments (Viking, Laval) ques‑ tion unions’ scope matters prece‑ dence liberal movement. thought cases merits nuanced debate, diminish legislative change framework use. 6 regulation, tackled level: universal wages, decent (national) average wages; pos‑ ting bargaining, instance COHESION PAN-EUROPEAN COHESION: TWO PERSPECTIVES ON “SOLIDARITY” sections, unification, sovereignty, directions, coherently applied mutually exclusive. idea content luxury, necessity. designed supranationally policymaking happens neatly separated arenas naive. ap‑ plication undifferentiated Nor incompatible retain areas (e.g. legislating bargaining organisation care): able effectively responsibilities bear. is, turn, mini‑ mum standards, applicability every State. How go, organise democratically, stringent be, outside simple fact effective legitimate socio-economic urgent ever before. 6. Mario Monti raised his market, March Com‑ mission took adapt area; ended impasse. nuance assessment Court’s Armstong (2010). Bruun Bücker Commission’s proposal, arguing inadequate go enough. 108 foregoing shows entertain pers‑ pectives ‘solidarity Europe’: solidarity; motivated value Elsewhere, perspectives “evaluative dualism”, duality reduce one, goal. Historically speaking, always pursued enhancing natio‑ nal latter, so-called On Europe”, tended situated supposedly stake safeguarding impro‑ vement levels cohesion. virtuous pan-Euro‑ primary Europe. next illustrate implies. INVESTMENT AGENDA whereby enhanced? “pact” setting spirit reciprocity, investment, Anton Hemerijck, Bruno Palier myself. So‑ emerged 1990s response changes societies. “prepare” individuals, families societies various transforma‑ tions, changing career patterns conditions, emergence risks population ageing, generating res‑ ponses “repairing” damage caused failure, misfortune, poor prevailing inadequacies. new, societal trends necessitated ago, because adverse demography. reform-oriented dynamic sector Hemerijck Palier, 2011). high-quality childcare; training schooling, education; paid family life; later flexible retirement, accordance life expectancy; seizing oppor‑ tunities presented migration, things market; income protection capacitating service provision. Adding “minimum protec‑ tion” superfluous: pro‑ tection complementary pillars: replace resisted Vleminckx, 2011; February 2013 Commission Investment Package Commission, 2013), marks turn 109 thinking (at least of) Commission. package encompasses bundle initiatives, essence urging (including compre‑ hensive Recommendation “Investing Children”). addition, announces efforts increase Funds, linking stricter conditionality. Semes‑ ter (notably Country-Specific Recommendation, CSR) vehicle promotes. round CSR litmus test respect. At moment writing, unclear deliver underestimate resistance against introducing objec‑ tives adoption constitutes opportunity, challenge consolidation naive think resolve crisis. investments supportive sustainable, improved governance. balanced itself, close link schedule revised zero-growth prospects seeking quality spending administration (Tillhaye, approach, Rompuy, serve goal, constructive situation. drive procity. themselves. level, interest well-performing straightforward: lot evidence, science trump deliberation removed top-down, ‘one size all’ policy-making (i) manoeuver opt strategy (ii) constraining well-defined exploration learning achieve those Whatever weaknesses, persist operational. process, accountability gene‑ ral systems, protection. Minimum (for application floors, protection) 110 ideally introduced legislation. absent legislation, route enriching guide‑ lines standards. Children” good soft initiative, children’s rights. processes, Eurozone, enhanced regular meetings Affairs Employment Ministers Area “Euro Group Ministers” (M.J. Rodrigues, forthcoming). CONCLUSION: DEVELOPING THAT IS NO LONGER LUXURY, BUT NECESSITY Sections 2, outlined Europe”. Those carrying greatest weight, predicament rozone: ESU, deve‑ lopment organized relationship licy requirements them. core limited scope: variety shapes, depending attached engen‑ der broad support, adhere contradict summarily me‑ dium-term ved clear: reformist gives cherish credible cohe‑ sion carry highest 111 REFERENCES Armstrong, K. Governing Inclusion. Europeanization Coordination. Oxford: Oxford Press. Bowles, S., collaboration Fong, C., Gintis, H., Jayadev, A., Pagano, U. Essays New Economics Inequality Redistribution. Cambridge: Cambridge Bruun, N., Bücker, A. Critical II regulation courage strength imbalances, ETUI Brief No. 4/2012. P. Managing Fragile CESifo Forum, 12 (2), 40-45. (2009, (2013). 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