European Social Model (EN)

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Which European Social Model?

Proposals to guide the debate within Attac by Pierre Khalfa and Julien Lusson, members of Attac's Europe Commission

The European Union (EU) is the world's wealthy area. But despite its wealth these past two decades, the social situation has deteriorated considerably, particularly with respect to unemployment, poverty and social marginalization. Today in 15-member Europe alone, some 60 million people live below the poverty line [1]. At a 14,6 % unemployment rate in July 2003, the ten new member states find themselves in an even worse situation. Unemployment affects young people, women, people over 55 and people of immigrant descent most of all. In 15-member Europe, close to 3 million people are homeless and 15 million live in precarious conditions.

The creation of the EU, carrying the stamp of neoliberalism, is not without responsibility for this situation. The neoliberal model that emerged in the 80s sought efforts to integrate Europe by implementing a single market and the Monetary Union, and the highly diverse social and fiscal systems of the different countries of the Union were brought into direct competition with each other. The European Community had been characterized from the beginning by a fundamental asymmetry between policies of competitiveness, upheld by the Union, and social policies meant to correct harmful effects, which fell to the member states. Despite vague intentions to develop a social Europe - establishment of social dialogue, adoption of a qualified majority in health and workers' security, the declared objectives of social cohesion -, the push for integration accentuated this asymmetry. Successive expansion has exacerbated the problem.

Since 1997, the EU has been the setting of a coordinated employment strategy based on an "open method of coordination," that establishes guidelines to be implemented in the national action plans. With the "Lisbon Strategy" and the social agenda of 2000, this method included a "modernization of social protection systems," but economic criteria and the Broad Guidelines for Economic Policies (BGEP) were given priority. The European Council's decision in March 2005 to merge the BGEP-making process with that of the Guidelines for Employment Policies (GEP) and create a single process called Integrated Guidelines (IG) maintains the imperative of competitiveness with respect to social policies. The contents of the IGs will continue to guide national policy-making as part of National Reform Programmes (NRPs). Recent developments in retirement plans, health insurance and unemployment insurances in France are also observed in the rest of 25-member Europe. Meanwhile, public services have largely been liberalized or even privatized, and employment policies have not curbed unemployment.

Following the NO vote in France and the Netherlands, the European Council on June 16 and 17 was compelled to recognize the importance of the "social question," and affirm a will to reform the "European social model" in the framework of the new social agenda 2005-2010. However, the broad lines of these reforms remain imbued with neoliberal ideology, and the British Prime Minister in charge of the presidency of the European Council for the second semester 2005 proposed the organization this October of a "European Summit on the European Social Model," which we fear will be a pretext for promoting neoliberal solutions.

Nevertheless, this situation presents an opportunity for a democratic debate on the desired nature of the European project. The present document is intended to stimulate the debate within Attac about the "European social model," on the basis of the ABC plan and in the triple perspective of the European Summit on the European Social Model, the European Council at the end of the year with, in parallel, the European Attac Convention, and the Consultations of United Working Groups to be held during the European Social Forum in Athens in April 2006. At this stage it is a draft project and may still be enhanced by comments from all participants wishing to join in the debate between now and September.

The Debate on a "Social Europe"

Those who reject the neoliberal logic have long considered the debate to be over who is responsible for elaborating social policies: the nation-state or the community? For historical as well as pragmatic reasons, this debate was gradually left behind.

The nation-state, an inevitable entity?

Partisans of the nation-state, pointing out the obvious heterogeneity that increases each time a new member is added, opposed measures that "Europeanize norms," citing the lowering of standards in places where norms are the highest. They were accused of two things: a form of "egotism of the privileged," and a certain denial of reality. To not care about the situation of countries with weaker norms was to accept a multi-gear Europe. Above all, single market dynamics and capital globalization affect national policies of solidarity. How is it possible to claim that levels of social protection can be permanently maintained in some countries while they coexist in the same economic and social space with countries having much lower levels of social protection? How is it possible to contend with the practice of large groups who subcontract their activities in order to subject state social and fiscal systems to competition (socio-fiscal dumping) and in doing so gut national labor rights? In short, national social policies have not been exempt from criticism.

Towards European social legislation?

In response to the foregoing position, others advocate strong policies of economic and social regulation on the community level in order to fight efficiently the effects of fiscal and social dumping. However, the goal of harmonizing social policies from above and subordinating competition and economic policies with the respect of rights and with social goals, was in reality misguided. It is correct to affirm that this position is based on the objective convergence of interests between populations of different the Union members, but the disparity between social systems (particularly the distinction between a Bismarck insurance system and a Beveridge universal system) and the heterogeneity of levels of development and of public action representation, makes it difficult to elaborate common policies. Representatives of management were able to fully profit from the fragmentation of forces and political and social cultures.

To surmount these obstacles, a pragmatic course gradually emerged: the establishment of a converging process from above based on desired results in terms of social goals, within the framework of a clear rise in power of redistributive functions of the Union budget; designating territories according to both decisional processes and policy implementation.

The debate therefore focuses, case by case, on which goals to establish and which strategies to follow in the European framework. Among the goals, some deal with the architecture of Europe - whether to modify Union competencies, voting modalities, methods and tools of harmonization -, and others deal with policy contents - current or desired directives -, and still others with economic and social priorities. In terms of strategy, it is all about alliances on the European scale and the precise goals on which to build them.

Courses of action for redefining the European social model

The following courses of action originated mostly in the "alternative world" movement, where some were more widely appropriated than others. They do not include proposals to reword the Treaty and define solidarity as a fundamental Union norm and value (please see the documents "21 Demands of Attac" and "Proposal to Revise Title 1 of the Treaty"). However, they represent proposals already expressed by Attac. This debate should help enhance them [2].

A radical change of economic policies on the European level. Since neoliberal economic policies are not compatible with a high level of social protection, a radical reform of the architecture and the economic policy of the Union is necessary. Its aim should be to steer macroeconomic policies towards practices that help meet social needs:

• coordinating national economic policies and improving the policy-mix (the link between budgetary and monetary policies) applying them instead to the fight against unemployment by reducing work hours at the European level;
• a reform of the status and criteria of the European Central Bank (demands n° 9, 10 and 11) ;
• a reform of the Stability and Growth Pact, taking into account social and employment criteria ;
• requiring the Eurogroup to use its prerogatives regarding exchange policies ;
• using the European budget as a true instrument of economic policy, by making sure it has its own resources (a European tax on air travel and on non-renewable resource consumption) and through borrowing (demand n° 11) ;
• imposing a unified European taxation of capital income and reforming the taxation of corporate profits in order to combat fiscal dumping (demand n° 8) ;
• imposing a tax on exchange markets (demand n° 12) ;

Setting criteria of social convergence To move towards identical social rights in all Union countries in spite of vastly different levels of development, it is important to make an exact list of fundamental social rights (salaries, social minima, guaranteed minimum income, pensionsŠ) for which convergence norms could be established, to be defined case by case - the specifics could depend on the level of development of the country in question -, and to decide on a precise and binding calendar as in the case of the monetary criteria of Maastricht. A clause of non regression would help avoid any social reversal (demand n° 13). The same goes for a minimum salary: all countries should adopt the same minimum salary - giving the Union competency in the area of remuneration where it cannot currently intervene; the level would be based on the percentage per inhabitant of the GDP, and a schedule of payment would be set - and the non regression clause would protect the highest levels. The same system could exist for income compensations, social minima, retirements.

Defining the elements of European labor law This would strengthen the transnational rights of salary and wage earners:

• recognizing the European right to strike and prohibiting « lock-outs », giving jurisdiction to communities ;
• renegotiating the directive on European Work Councils (EWC) in view of granting them more power and creating the right to form « company governing bodies » with mandatory representation of salary and wage earners on company Boards of Administration;
• applying the notion of « economic and social unity » on the European level to make contractor companies responsible for the salary and wage earners of subcontracting companies and to guarantee the same rights to all employees ;
• renegotiating the directive 96/71/EC (labor law) and the bylaw 1408/71 on the coordination of social security schemes for contractual workers in order to reinforce the obligation to respect the host country's employment norms and break the bonds of dependence that exist between contractual workers and their employers caused when the right of residence is subject to the job contract. ;
• guaranteeing access to social rights and establishing legal recourse when they are violated.

Reinstating public services The introduction of a single market led to the liberalization of public industrial and commercial services, but the competitive model has also had an impact on the financing of non-commercial public services. Liberalization broke up public monopolies, and the management of public companies in charge of public service missions was brought in alignment with norms of private enterprise, generally resulting in their privatization. Public services must be recognized and reinstated (demand n° 4) and no longer subjected to laws of competition :

• by calling a moratorium on liberalization and carrying out a public, democratic and critical evaluation ;
• by rejecting the country of origin principle in all liberalization measures. Beyond this, is European legislation necessary? If yes, should legislation allow member states to organize their public services as they see fit, or should it stipulate the foundations of public services in Europe? In this matter, what is the appropriate level of subsidiarity and is it the same for all sectors? What should the role of public authorities be in this issue? Which mode of financing should be considered ? Who should proceed (and how) with the evaluation of service management?

Recognizing equal rights for all The status of Resident Citizen of Europe (demand n° 18) should be established so that tens of thousands of people living legally on European territory are guaranteed access to rights. This status should exclude reference to nationality or naturalization. It would be a legal instrument to counter discrimination.

Supporting the countries of the South with democratic ecodevelopment in mind The Union has a unique status in trade policy negotiations in that it represents all member states at the World Trade Organization (WTO) and has developed numerous "partner" and "cooperative" agreements with countries or groups of countries in the South, agreements that protect the interests of wealthy countries. We recommend :

• moving away from generalized free exchange (demand n° 5) and establishing conditions of fair trade relations, particularly by reinstating preferential and non-reciprocal terms and financial and technical cooperation ;
• that Union member countries reject the international financial institutions' conditions which grant financial aid to countries in exchange for open markets, and that they promote the establishment of international law governing debt that recognizes the co-responsibility of creditors and the right to appeal. Aid should be conditional to policies that fulfill peoples' fundamental needs and guarantee democratic freedoms ;
• reforming the Common Agricultural Policy based on the multifunctionality of agriculture and halting export subsidies ;
• calling a moratorium on international policies of trade liberalization and acknowledging all countries' right to food sovereignty in international negotiations.

Notes [1] The poverty line is calculated at less than half the average income in the country in question.

[2] The primary working tools are: European Treaties, secondary legislation (regulations, guidelines, sectorial directives), advisories by various institutions, contributions to the Convention, evaluations by specialized organizations. Among Attac's contributions: the book « Cette « Constitution » qui piège l'Europe » ; various commentaries of the referendum debate available on the website, contributions by the Scientific Council (Autre Europe. Autre mondialisation) ; works by Attac Belgium ; works by founding members of Attac. Return to the Alternatives' page