The Route to a Social Europe: A European Renaissance Founded on Solidarity
Introduction
Europe has voted. Whether the next few years see progress towards a solidarity-based Europe depends in the first place substantially upon the political leadership and initiatives of the new European Commission. It alone has the right to initiate legislation at EU level. Of course, that does not mean that it can do whatever it wants in a vacuum. But there can be no doubt about its power to set the agenda. Second, much will depend upon whether and to what extent the Council of Ministers is willing and able to make significant changes to its current policies. And, not least, as regards relations between the institutions, the issue is the role the newly-elected Parliament lays claim to and whether a (new) pro-European coalition can be found to rein in the strengthened right-wing.
Europe under fire – greater democracy is right response
Looking back over the last few years one sees a variety of crises that marked the period of the Juncker Commission. When he took office in 2014 large swaths of the EU were in the midst of the greatest economic and financial crisis for decades. Then came the refugee crisis, Brexit and the trade conflict with the USA. Towards the end of Juncker’s Presidency one could at least believe that the fundamental, existential crisis of the EU – the United Kingdom’s departure from the EU – had been settled. Yet the orderly completion of Brexit did not happen under Juncker. The spectacle that unfolded around the ratification of the withdrawal agreement in the UK Parliament defies description. All the same, we do now know what it means to have to unravel membership of the EU. Even among proponents and opponents of, say, DEXIT, FREXIT, or ITALEXIT the chaos and/or the negative reaction of large swaths of the European population brought about at least a strategic rethink. The Leave vote prompts several general lessons for the future of the EU and/or the new Commission’s tasks. The Brexit decision has exposed mistakes and inadequacies on the part of 'pro-European forces' in recent years. Rather than pursuing a 'positive narrative', opponents of Brexit opted for a negative campaign in favor of Remain. The main argument of Remain protagonists – 'it’ll only get worse without the EU' – failed to exert any significant influence on the decision in the sense of changing the minds of Leave supporters or mobilizing greater backing for Remain. It is very clear that a lot more than the benefits of the single market is required to give legitimacy to the EU – and not just in times of crisis. The former Commission President Delors went before the European Parliament on 17 January 1989 and quoted the historian Fernand Braudel:
We would badly misjudge people if we simply placed before them these sober facts that pale before the enthusiasm, the utterly reasonable passions that the Europe of yesteryear or yesterday has provoked. Can a sense of being European be based simply on facts? Doesn’t it rather defy them and go way beyond them quite unpredictably?
The fact that one cannot fall in love with a 'great internal market' as Delors put it then holds all the more true as the European Union today stands as a cypher for the dark side of globalization. In everyday reality the EU equals for too many people competitive pressure, de-localisations, (re)distribution conflicts, wage dumping and untrammeled market forces to the detriment of working people. Individual benefits of the single market such as being able to live and work where one wants hardly play any role in the everyday lives of most people or in such a way that they become the decisive argument for actively approving European unification. It should give pause for thought when just about half of European men and women, according to Eurobarometer, feel their voice no longer counts for anything ‘in Europe’. If Europe is to have a future it must give people a hearing.
Decision-makers have had no answers in troubled times when all across Europe – for the most distinct reasons – there has been a general anxiety among all sectors of society. The message that should ring out from Brussels not least since these European elections must be: 'We’ve understood.' What Europe needs is more participation, more transparency and more of a say for all its citizens.
The decision-making processes at EU level must be democratized by strengthening the European Parliament, especially through the right to initiate in the legislative process and the election of Commissioners. But the decision-making processes within Parliament itself must also become more transparent. The way decisions are reached must revert to proper parliamentary scrutiny from being taken in back rooms behind closed doors.
The Commission is not just the protector of the treaties. As it alone has the right to initiate legislation at EU level, it cannot be treated as a neutral player. It alone sets the decisive political signals in core areas with legislative initiatives. As long as this remains the case the Commission must take on the obligation to react more responsively to initiatives from Parliamentarians, that is representatives elected by millions of European women and men. This does not need any treaty change. The only thing missing is political will.
Manage climate change: sustainable economies – industry’s scope for innovation
And we do need political will. If the EU is to serve as a model for the future, that depends quite specifically on whether it can succeed in resolving the urgent issue of sustainable economic development. The most pressing problem of the next few years and decades, climate change, is not negotiable but manageable. This will release transformative processes that will arouse fears among people. Managing this transformation must, therefore, be done socially, ecologically and democratically. This in turn requires swift investment in new technologies, in pan-European infrastructure and all in combination with a sound industrial policy.
Key here are measures that, using strict sustainability criteria, aim at higher public investments that are urgently required for financing the support programs and infrastructure necessary for the transition in energy, transport and heating. First and foremost, that puts the focus on fiscal regulations at EU level. The fiscal pact fundamentally deserves to be abolished. European rules on budget monitoring should be much more strongly geared towards a golden (or green where relevant) debt regulation, allowing for budget deficits if devoted to investments in sustainable infrastructure and climate change support programs. A further priority in any socio-ecological policy approach must be to ensure and expand decent work in manufacturing given the pending structural changes in industries that will be particularly affected by de-carbonization.
A central task then must be to take workers with us when it comes to managing the on-coming changes. The European Commission estimates that industry accounts for around a quarter of EU gross domestic product (GDP). According to findings from industriAll Europe it employs around 50 million. As many as 15 million jobs depend directly and indirectly on the auto industry, 2.5 million on the steel industry. That is, upon two segments that are particularly affected by EU climate change and environment policies and the resultant radical changes. Here, all too often in recent years, there were empty claims and ambitious goals and all too rarely discussion about which measures agreed at EU level might best achieve these goals taking into account the different starting points of individual countries. There is an urgent need for action here.
Only a social-ecological conversion of industry opens new growth potential and ensures the long-term sustainability of employment. In line with this, any European industrial strategy must be an ecological modernization strategy directed towards energy efficiency, reduction in resource usage and sustainable mobility. The whole of Europe requires a mobilization of forces in favor of expanding renewable fuels and innovative environmental technologies. In particular, efficient use of resources and eco-sustainability in material and energy contain prospects for productivity growth. This requires the private sector to switch its investments more decisively towards ecological conversion and reconstruction. Other priorities should be education, training, research and development along with infrastructure.
What’s urgently required is a financial boost to cohesion programs and structural funds and a re-orientation in the way support grants are bestowed – and these must be much more transparent and directed towards social and ecological sustainability. Financing this means reshaping the EU’s financial framework (MFF/Budget) and generating extra own resources, for example via an EU financial transactions tax (FTT) or the Europe-wide taxation of digital groups. Such an industrial strategy must embrace, what’s more, the protection of manufacturing jobs from any race-to-the-bottom competition for new industrial plants that increasingly takes place at the cost of work and environment.
Yet, given the trade conflicts with the USA and the increasingly important role of China in global competition, industrial policy at federal (German) level has gained a much sharper focus with Peter Altmaier’s so-called ‘national industrial strategy’ and the follow-up Franco-German manifesto. And the Council of Ministers urged the old and new Commission to draw up an industrial strategy. This is very welcome and corresponds to long-standing IG Metall demands. The Commission should focus its strategic direction on creating a social and ecologically sustainable consistency between industry, competition and trade policies. Ideologically motivated competition policy geared solely towards 'consumer interest' in the lowest possible price should not counteract industrial policy initiatives on retaining strategically important value-added chains.
Priority for social rights
Competition and market ideologies have also for too long pushed into the background the ‘social’ in the social market economy that on paper constitutes the EU since the Lisbon Treaty. The EU already disposes of a considerable acquis of fundamental social rights. This, coupled with internationally agreed obligations, including the Charter of Fundamental Rights that entered into mandatory force only on 1 December 2009, is not enough, however, to take proper account of and apply these fundamental rights. The reason for this is, along with the social deficit that was there at the birth of the EU, the 'crisis policy' of the last few years and the linked deregulation of member states’ welfare systems as regards EU fundamental rights. The European Court of Justice has always shown itself to be the driver of deregulation in favor of free market forces at the cost of the elementary rights of working men and women and their trade unions. But the Commission has also played an inglorious role.
Be that as it may, a legacy of Jean-Claude Juncker is that after many wasted years social policy is at least back on the European agenda. But to speak of a 'revival of social Europe' would be to go too far. If you examine the social situation in many member states today it’s pretty clear that there’s still a long stretch to a social Europe. All the more reason to make a start on the stages leading to a social Europe by harnessing all our strengths. If one is to create a social union then one must guarantee fundamental social rights take priority over economic freedoms. And that must first and foremost mean saying goodbye to policies and/or approaches that take the ground from under co-operative systems of social security. In a first step, a procedure against social imbalances might be instituted as the equivalent of the deficit procedure of the Stability & Growth Pact and Macroeconomic Imbalance Procedure. Simply pointing out that social policy is the preserve of the member states is often enough to serve as an alibi for opponents of a social Europe. Wherever cross-border negotiations must take place for the benefit of employees these must indeed actually happen.
The European Pillar of Social Rights (EPSR) does – despite justifiable criticism – offer a starting point for drawing up a pan-EU social policy. The trade unions placed a lot of hopes in the EPSR. First and foremost, that means giving fundamental social rights legal status. It’s true that the EPSR did not remove from the very start the constitutional asymmetry that favors single market freedoms rooted in primary law over social rights. Yet it did send an important political signal against the background of social policy distortions. Anchorage points are now on the one hand initiatives in secondary law and on the other the application of 20 principles within the European Semester. This primarily affects issues of equal opportunity and labor market access, fair working conditions along with social protection and social inclusion. The application and/or implementation of these principles in concrete policies – that’s a task for the next Commission.
The EU will only be able to become an inclusive growth and prosperity model if it comes with strong collective bargaining systems. In recent years the trend has been more and more towards a policy of state intervention in wages policy by disregarding free collective bargaining and destabilizing entire bargaining systems. A large share of that approach came from the EU, primarily via the mechanism of economic governance. Making social rights the guiding principle of political activity must mean first and foremost respecting national collective bargaining systems and wage determination mechanisms. The new Commission must agree to abide by this.
Co-determination in Europe – Europe as an economic democracy
Respecting the collective and individual rights of working men and women can also be demonstrated by democratizing the economy. It is a living democracy in which workers are willing and able to recognize their rights to contribute and take part whether these are on hand or are yet to be created. The social partners in the EU enjoy huge opportunities to influence the legislative framework and management of working life. By agreement they can help steer the legislative process and/or demand that agreements among social partners can, subject to certain conditions, be legally enshrined in regulations. In the past several important directives came to pass in this manner. This right should not be tampered with and the Commission should not take it upon itself the right to adopt substantive inspection rights (the so-called hairdressers’ agreement on occupational health & safety).
When we talk about a comprehensive Europeanization of co-determination as the interest group for working women and men at all levels, in all places of work and on issues that are of cross-border relevance then we must be guaranteed that national and European rights to information, consultation and co-determination are secure and strengthened.
The Commission must refrain from taking any initiatives, for example in the area of company law, that weaken the position of working women and men legally or practically within their company and unilaterally advantage the employers. On the contrary, what is really required is initiatives to create space and scope for co-determination rights. Legally binding improvements, for example, should be made to the EWC (European Works Council) directive by the prevention of any ban on circumvention. Concrete plans thereto are on the table. What’s more, a European framework directive is required setting high standards for information and consultation as well as ambitious minimum standards for company-level co-determination. The Commission must deliver here.
Fair trade globally – people at the heart of the matter
The new Commission must also deliver when it comes to trade policy which is being determined globally by a new dynamic. The trade war between the USA and China and the trade conflict between the EU and USA are immensely relevant for many employees around the world. Many sectors live on international trade and global value-added chains ensure in many a place decent jobs and prosperity. But these are now primarily threatened by protectionism and (social) dumping. Untrammeled free trade is not, however, the answer. Trade must serve human well-being and is not an end in itself. Trade requires rules that protect worker interests and set social and ecological frameworks. Demands for the retention of global employment and social standards clash with concepts of work as a commodity and of employees as factors of production.
In recent years people have been far too unaware that trade policy and industry policy are intertwined and/or that trade policy must be part of a sustained industry policy.
The multinational forum for regulating trade relations (WTO) has been stymied for years and is losing evermore significance. As a result the EU has been pursuing free trade agreements, as recently with Mercosur. Whether one regrets this or not, the key thing above all is that the EU must create mechanisms for respecting collective and individual labor rights. Model chapters on employee rights are available for the Commission to fall back upon in negotiations.
Multinational businesses bear a particular responsibility. Many of them with HQs in the EU account meanwhile for three quarters of entire world trade through their value-added chains. In recent years IG Metall, together with industriALL Global Union, has concluded so-called 'global framework agreements' with over 20 multinationals. They see to minimum levels of employee rights and participation around the world in multinational firms. But sticking to human rights remains primarily a regulatory task. So, a legal regulation is here of central importance for the so-called human rights duty of care in multinationals. It would oblige firms to comply with human rights in their supply chains and/or monitor and secure their compliance. With its regulation on the duty of care regarding ‘conflict minerals’, the EU has made an important first step but this can and should only be a first step. The issue now is to spread it to further sectors. For the textiles sector, preparatory work on a comparable regulation is already far advanced. The European Parliament above all has performed well here and earned praise for its substantive proposals. The new Commission must build upon this work and set out a draft version of a robust regulation on protecting employees in the sector at global level. If the Commission seriously wishes to (in its own words) ‚harness globalization' and create 'trade for all', then it must make the worldwide well-being of human beings the guiding principle of its trade policy.
EMU reform
As with trade policy the outgoing Commission is bequeathing work-in-progress when it comes to reforming the economic and monetary union (EMU). Past years have shown that ad hoc crisis management is highly dangerous for the stability of national economies and the political community. There should be no debate as to whether one should act purely reactively as up to now or the enactment of sustained reforms should be envisaged. The ECB’s policy for saving the euro 'whatever it costs' has demonstrated how to remove critical pressures from the eurozone. Even so, it remains the case that the advanced interplay of goods and financial markets requires more regulation within a political union.
The Stability & Growth Pact must, like monetary policy, be geared towards the target of sustainable growth and a high rate of employment. The issue here is that fiscal and monetary policies should promote demand in such a way that the conditions are created for higher growth and rising employment. In this context monitoring macroeconomic imbalances must be ascribed the same status as the Stability Pact and the latter, moreover, must be applied more flexibly so as to avoid pro-cyclical policies.
Draft reforms of EMU that envisage elements of cross-border liability in the event of crises are very welcome. For this to happen, the European Stability Mechanism (ESM) must be taken under community law and be changed into a European Monetary Fund (EMF). Here, too, completing banking union is imperative. In addition, a eurozone budget is sensible, one that evolves from a fiscal capability into a fund for financing infrastructure projects and that acts as an automatic stabilizer. This would bring about a distributional component with a comprehensive investment agenda alongside a stabilization component.
A eurozone Parliament must have sovereignty over a eurozone budget as, in the end, a central problem of Troika policy was the deliberate switch to direct international agreements without obeisance to any democratic decision-making and, in particular, control mechanisms. European economic governance must put an end to the one-sided fixation with public deficits and accumulated debts and be given the political mandate to co-ordinate macroeconomic decisions as well as employment and social policies. That way the eurozone could become the centerpiece of a more deeply integrated EU.
Here EU taxation policy takes on greater meaning. A fiscal capacity and/or a likely eurozone budget should be allocated with own resources, coming either from a financial transactions tax (FTT) or a proportion of the yield from harmonized corporation tax. In these specific tax questions, individual groups of member states ready for greater integration could set the pace. Harmonized corporation tax would, beyond that, be absolutely imperative when it comes to tax convergence.
Competition in cutting corporation tax must finally be brought to a halt. A uniform EU mimimum level of taxation based on a uniform assessment basis and one that, via certain defined channels, allows for differing starting points in individual countries, can achieve this.
Conclusion
A radical change of course is now even more urgent than ever but does not necessarily require treaty change. At the supposedly lower level, that is in secondary law, policies can be put together that pursue a solidarity-based renaissance of the EU. The European Commission here plays the key role. In the next few years the issue will be persuading the 'protector of the treaties' not just to keep a watchful eye on the basic freedoms of the internal market but, rather, take on the task of forging a social Europe and, thereby, a 'Europe with a future‘.