The revival of Social Europe: is this time different?

Introduction

The idea for this special issue on the future of Social Europe dates back to 2021, when it started to become apparent that we were witnessing a substantial reorientation of European social policy, and, possibly, a new expansive stage of Social Europe.

How different things had looked only 10 years earlier, when the EU’s reaction to the financial crisis had been to cut down on social policy and focus on market-making and austerity. The renewed move towards more social EU policies is another phase in the development of Social Europe that has been characterised by periods of great ambition and others of deadlock or even regression (Barbier, 2008; Crespy, 2022; Pochet, 2019). The latter was indeed the case with the ‘new’ economic and social governance during the financial crisis, while now we seem to be in a new construction phase.

Analysis of the social dimension of European integration has always had two aspects. One is analysis of the development of the social dimension strictly speaking, namely the articles of the Treaty concerning social policy and employment, the respective social and employment Directives, Recommendations and processes, as well as the social funds. The other concerns the extent to which social objectives have been subordinated to economic objectives. It analyses the impact of economic and monetary integration on the possibility of building a European social model, as well as the constraints that it imposes on the maintenance or strengthening of national welfare states, often articulated around Scharpf’s (1999) idea of a constitutional asymmetry between positive and negative integration.

A decade ago, these dimensions were addressed in three special issues of Transfer: one on ‘EU social and employment policy under the Europe 2020 strategy’ (Transfer, 2012/3), a second on ‘Labour markets and social policy after the crisis’ (Transfer, 2014/1), and a third on ‘The economic consequences of the European monetary union: social and democratic’ (Transfer, 2013/1). Because of the historical moment in which these issues were produced – the end of the Barroso years and the economic and financial crisis – they were critical and rather pessimistic concerning the development of Social Europe.

More recent issues and articles of Transfer, however, argue that the adoption of the European Pillar of Social Rights (EPSR), the COVID crisis (Transfer, 2022a/1), but also the climatic and technological transitions (Transfer, 2022b/3; Transfer, 2023/1) have opened up a new political window of opportunity to advance social themes. Moreover, the Conference on the Future of Europe has opened a discursive space in which to redefine the EU’s contours and priorities. And one can add a certain recognition by the European institutions of the failures of management of the financial crisis and the need to develop a different, more social approach to European integration (Plomien, 2018). Altogether, there seem to be new opportunities to strengthen Social Europe.

This introduction is structured as follows. The first section briefly recalls the period of the Barroso Commissions in which the social dimension of the EU and social policy in general were largely seen as a burden, in particular during the financial crisis.

The second section looks at the recent revival of Social Europe in the areas of the labour market, industrial relations, and social protection, and proposes a reading of this revival along three axes: (i) addressing the margins of the labour market; (ii) developing an integrated system of industrial relations; and (iii) new forms of financial support for Social Europe.

The third section analyses the extent to which we can observe a rebalancing of the EU’s economic and social dimensions in the sense of challenging the dominant economic model and the asymmetry in the Treaty.

We conclude with some speculations on possible future political support for a further expansion of Social Europe.

From the Open Method of Coordination to the end of the Barroso period

The period from the Amsterdam Treaty (1997) and the Lisbon European Council (2000) to the Kok (2003) report on ‘Jobs, jobs, jobs’ opened up new perspectives for Social Europe in terms of governance, objectives and actors. It was also a moment of extension of the social agenda to areas previously considered part of the national social contract, such as pensions and health care. From 2004 onwards, this momentum gradually dissipated, however, as José Manuel Barroso took over as President of the European Commission.

The period of the two Barroso Commissions (2004–2014), and in particular the management of the financial crisis, is remembered for a retrenchment of European social policy and the downscaling or deregulation of national social policies (Degryse et al., 2013). Priority was given to fiscal consolidation, austerity and market coordination. Social and employment policies were seen primarily as burdening budgets and impeding growth and innovation, while also collective labour relations were considered to be obstacles to market coordination. Economic goals were put before social goals, as illustrated by the 2011 Euro Plus Pact, which proposed, among other things, abandoning wage indexation mechanisms, decentralisation of collective bargaining, and wage moderation in the public sector (Bekker and Klosse, 2013; Keune, 2015). In countries requiring financial assistance because they had been hard hit by the financial crisis, the Troika (consisting of the Commission, the IMF and the ECB) made such assistance conditional on substantial reductions in pensions, minimum wages and public sector wages, as well as decentralisation of collective bargaining (Kennedy, 2016; Keune, 2015; Pavolini et al., 2015).

The Barroso years were also marked by major political changes at the national level in the EU Member States. There was a profound shift from centre-left domination from 1997 to 2004 to clear domination of the centre-right and the right from 2005 to 2013 (Pochet, 2019). This facilitated the politics of the Barroso Commission and strengthened its influence on the Member States.

The Barroso approach lost much of its appeal after the financial crisis, however, for at least three reasons. One was the failure of the strategy of austerity and market governance, and their negative social effects, which led many actors, and in particular international organisations, to re-evaluate and revise their set policy solutions. This can be considered a learning effect (Ladi and Tsarouhas, 2020). The second was Brexit, which substantially reduced the opposition to more social policy at EU level and put the social question back at the centre of debates. And the third was the rise of Euroscepticism and anti-European parties, which reinforced the fear of growing disaffection towards EU integration and revived the idea that the EU needs a strong social dimension.

The revival of Social Europe along three axes

Building on the disappointment with the Barroso period, the Juncker Commission (2014–2019) advocated a revival of the EU social dimension, proposing a ‘triple A’ Social Europe, a relaunch of social dialogue and the adoption of a floor of social rights. The von der Leyen Commission largely continued, and possibly even strengthened, the Junker approach, creating continuity (Copeland, 2022). Juncker’s main initiative was the European Pillar of Social Rights (EPSR) with its 20 principles across three main areas: equal opportunities and access to the labour market; fair working conditions; and social protection and inclusion (European Commission, 2017). The EPSR is most often seen as key to the revamping of Social Europe (Garben, 2019; Hermans et al., 2023; Plomien, 2018) and has been the starting point of a series of new Directives, Recommendations and other instruments in the social field (Dura, 2023; Kilpatrick, 2023). Confirming the Pillar’s continued importance, under von der Leyen the EPSR Action Plan was adopted in 2021, with the ambition of turning the EPSR principles into concrete actions and setting three targets to be achieved by 2030: at least 78 per cent of the population aged 20 to 64 should be in employment; at least 60 per cent of all adults should be participating in training every year; and the number of people at risk of poverty or social exclusion should be reduced by at least 15 million.

Apart from the EPSR and related social policies, the reorientation of existing social policies through, for example, the revised Posting of Workers Directive (European Commission, 2018) or the reinforced Youth Guarantee of 2020, as well as the COVID-19 related temporary Support to mitigate Unemployment Risks in an Emergency (SURE) fall in this new period. Indeed, there can be little doubt that, at least in terms of the introduction of new or revamped social policies, we are witnessing somewhat of a revival of Social Europe.

What is less clear, however, is how to characterise the multiple social policy innovations of the past decade. Is it ‘merely’ a process of bricolage (Copeland, 2022) or can it be seen as a more comprehensive and strategic project? Although there has indeed been a great variety of social policy measures in recent years, here we want to propose a reading along three structuring axes that articulate current developments in the social dimension and capture not all but most measures adopted.

Addressing the margins of the labour market

The first main group of measures is essentially aimed at people on the margins of the labour market who work and/or live in situations of possible precarity, whether related to their labour market position, type of employment contract or lack of social protection.

In the area of social protection, these are in particular the long-term unemployed (see the Recommendation on the integration of the long-term unemployed into the labour market, European Council, 2016) or those who do not have access to traditional social protection benefits (Recommendation on adequate minimum income ensuring active inclusion, European Commission, 2022b) and those (self-employed) workers who have restricted access to social protection (Recommendation on access to social protection for workers and the self-employed, European Council, 2019). Each of these recommendations in its own way underlines the need for social protection, while at the same time arguing that the best protection against poverty and exclusion is to be employed. The fact that all three are Recommendations, not Directives, underlines that poverty and social protection remain somewhat of a ‘third-order priority’, as argued by Copeland (2023). Also, we can expect that the implementation of these Recommendations will at best be uneven, given that this was the case for the two 1992 Recommendations on minimum income and convergence of social protection objectives and policies (European Council, 1992a, 1992b).

In terms of precarity in the labour market, this includes first of all the Directive on adequate minimum wages (European Commission, 2022a), which, among other things, aims to promote decent minimum wages and, through these, decent living and working conditions. A second is the Directive on Transparent and Predictable Working Conditions (European Commission, 2019), which aims to reduce the precarious nature of flexible, casual and atypical employment contracts by giving workers rights to comprehensive information on their work early and in writing, to limit probationary periods and to prevent the abuse of zero-hour contracts. A third is the (proposed) Directive on platform work (European Commission, 2021), which aims to make the boundaries between employment and self-employment clearer for platform workers and to give them more rights. Fourth, also the revised Posting of Workers Directive (European Commission, 2018) aims to give more rights and protection to posted workers who are often in precarious positions. Finally, the Guidelines on the application of Union competition law to collective agreements regarding the working conditions of solo self-employed persons (European Commission, 2022d) are intended to allow the solo self-employed to improve their working conditions through collective bargaining and clarify when solo self-employed have the right to engage in collective bargaining without breaching EU competition rules (Buendia Esteban, 2022).

Compared with the relatively weak Recommendations on social protection, precariousness in the labour market is regulated somewhat more strongly as it includes four Directives that provide more tangible rights to precarious workers.

A (better) integrated industrial relations system

For a long time, national and European developments of industrial relations were rather disconnected from each other. For example, the 1990s saw the development of social dialogue at the European level, while at the national level it marked the decline of trade union membership and collective bargaining coverage in general and a particularly low intensity of collective bargaining at the cross-industry and sectoral levels in Central and Eastern Europe (Keune, 2021). Therefore, the ‘autonomous’ social dialogue that developed at the European level in the 2000s, including a series of framework agreements that had to be implemented by social partners at the national level, suffered from strongly varied and often very weak implementation (Meardi et al., 2021). In addition, the financial crisis of 2008–2013 was used by the Troika and others to question the usefulness of national institutions of social consultation and collective bargaining, as well as the respective actors, in particular the trade unions (Degryse et al., 2013).

In recent years, however, we have seen attempts to revamp, strengthen and integrate the EU’s multi-level industrial relations system. This first involves increasing the coverage of collective bargaining. Paramount here again is the Directive on adequate minimum wages (European Commission, 2022a), which not only deals with the minimum wage but also requires Member States with a collective bargaining coverage below 80 per cent to establish an action plan to reach the 80 per cent target. Even if one may doubt the feasibility of this target in most Member States, it clearly underlines the EU’s commitment to collective bargaining as a regulatory mechanism for the labour market. This is complemented by the above-mentioned Guidelines on the application of Union competition law to collective agreements regarding the working conditions of solo self-employed persons (European Commission, 2022d), which aims to extend collective bargaining to this group of workers, which is currently largely not covered. Similarly, the also earlier mentioned revised Posting of Workers Directive (European Commission, 2018) extends the possibilities for posted workers to be covered by collective agreements.

Second, the proposed Recommendation on strengthening social dialogue in the European Union (European Commission, 2023) outlines a series of measures to support social dialogue at the national and EU levels. It also addresses the multi-level character of EU industrial relations through the aim of better articulating the European and national levels and achieving better implementation of European-level agreements at the national level.

And third, a number of new or proposed policies aim to strengthen social dialogue and workers’ voice in multinationals and to improve the latters’ treatment of workers in their value chains, as well as their social and environmental responsibilities. One important initiative here is the recent Resolution of the European Parliament calling for a revision of the European Works Council Directive to strengthen the information and consultation rights of EWCs (European Parliament, 2023). Another is the proposed Directive on corporate sustainability due diligence (European Commission, 2022c), which aims to foster respect for human rights and the environment of businesses operating in the single market, both in their own operations and throughout their value chains. Closely related is the Commission’s proposal for a regulation to prohibit products made using forced labour, including child labour, on the internal market (European Commission, 2022e). And finally, there is the Corporate Sustainability Reporting Directive (European Commission, 2022f) requiring companies to report in more detail on social and environmental issues.

Together, these three sets of policies make up quite a comprehensive attempt to establish a stronger multi-level industrial relations system in the EU.

Financing Social Europe

The revival of Social Europe also concerns its financing. The EU has traditionally been active in financially supporting social and employment policies in Member States, in particular through the European Social Fund (ESF), the Cohesion Fund and the European Regional Development Fund. In recent years, however, it has developed a series of new financing modalities that are (partially) oriented towards financing social policy (Bekker, 2022).

These innovations to an important extent originated in the COVID-19 crisis. Where the EU’s answer to the financial crisis was largely austerity and social policy cuts, its approach to the COVID-19 crisis was rather different. During the crisis, the limits on public expenditure defined by the criteria of the Stability and Growth Pact were temporarily suspended to allow Member States to tackle the economic and social costs of the crisis. Also, the temporary Support to mitigate Unemployment Risks in an Emergency (SURE) programme was set up, providing cheap loans of €98.4bn in total from the EU to Member States to finance the preservation of employment during the COVID-19 crisis.

Additionally, since 2020, the Recovery and Resilience Facility (RRF) has made €723bn available (roughly half of it in loans and half in grants) to Member States. According to the Commission, its goal is ‘to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities of the green and digital transitions’. ¹ The RRF is also a temporary instrument, running until the end of 2026, and supports reforms and investments by Member States in, among other things, social measures. It is financed by borrowing by the European Commission on the capital markets, a new and impactful feature of the EU’s activities. Corti and Vesan (2023) studied the implementation of the RRF in six Member States and show that they spend 24–30 per cent of RRF expenditure on social spending, with large shares being dedicated to health care, education and training, and social housing, but also with major differences between countries. The areas of intervention are quite diverse, but the focus is often on social investment-type expenditure, and much less on traditional cash transfer-based social protection policies (Corti and Vesan, 2023).

Then there are two recent funds related to climate change that also have a social dimension, as a ‘just transition’ should be an integral part of the EU climate policy framework (European Commission, 2020). The respective social and employment policy initiatives have limited resources, however, and are geographically fragmented (Crespy and Munta, 2023). The EU’s Just Transition Fund, part of the Just Transition Mechanism under the Green Deal, is dedicated mainly to social investment measures, in particular education and training, aiming to assist coal regions in managing the social effects of the coal phase-out. This is in itself very important but represents a small fraction of the EU’s population affected by the green transition.

The second fund, the Social Climate Fund, was provisionally agreed upon by the Council and the European Parliament and should start in 2026 with a budget of €86.7bn spread over seven years. It has a very specific objective, namely, to offset the negative impact on the most vulnerable individuals, not to mention small enterprises, of the extension of the existing market-based Emissions Trading Systems to the building and transport sectors by providing resources for the Member States to grant temporary direct financial income support and fund investment in energy efficiency-related building renovations and sustainable transport (Crespy and Munta, 2023). For both funds it is likely, however, that the available resources are vastly insufficient to properly address the social problems they are aimed at. Furthermore, their administration is likely to pose challenges to the institutional capacity of some Member States (Crespy and Munta, 2023).

Rebalancing the EU’s economic and social dimensions?

With the revival of Social Europe outlined above, the question remains whether there is a rebalancing of the economic and social dimensions of the EU and whether the EU’s economic model is changing (Pochet, 2022). As discussed in the previous section, a clear revival of Social Europe can be observed in terms of social Directives, Recommendations, and other forms of regulation, complemented by new types of financing for social policy. These regulations and forms of financing do not, however, substantially question or affect the market-based, growth-oriented and inequality-creating nature of the EU’s economic model. Therefore, they do not address the root causes of the negative social effects of this model. Rather, they aim to soften these effects stemming from the model in general and of economic restructuring processes, such as the green transition. What is more, the emphasis of the social measures is often on social investment and supply-side measures that cater to the needs of the economy, while income protection measures are often soft, temporary and/or underfunded.

In addition to the new social regulations and new types of financing of social policy, since the Juncker Commission came into office a series of measures have been taken to integrate social policy, social indicators and the EPSR into EU economic governance. Zeitlin and Vanhercke (2018) point to a partial but progressive socialisation of the Semester in 2011–2016, in particular through expansion of the social scope and ambition of the Country Specific Recommendations (CSRs), ‘even if the growing volume and coverage of these social CSRs was still counterbalanced by recommendations to many countries on fiscal consolidation and competitiveness’ (Zeitlin and Vanhercke, 2018: 167). More recently, ‘large governance architectures such as the Pillar, the Semester and the RRF have been tied together more firmly and in a deliberate way’ (Bekker, 2022: 13; also Corti and Vesan, 2023). For example, among the RRF’s objectives are implementation of the principles of the EPSR and contributing to addressing the national reform challenges laid down in the CSRs (Corti and Vesan, 2023). Also, the European Commission is supposed to monitor the implementation of the EPSR through the European Semester, among other things through the (revised) Social Scoreboard (Pochet, 2021).

These innovations increase attention to social policy and social objectives at both the EU and the national level and in that sense are likely to strengthen the EU’s social dimension. At the same time, similar to the new social regulations and new types of financing, they do not directly challenge the EU’s economic model and its primacy over the social dimension. This structural asymmetry remains largely in place, codified by the Treaty, and little change can be expected here also as the Conference on the Future of Europe has produced few concrete results.

There is one exception to the above, whose longer-term impact is as yet unknown. This is the temporary abandonment of the austerity paradigm and the fostering of public investment. With the suspension of the SGP criteria and the making available of extensive public investment funds under the SURE (already terminated), the RRF, the JTF and the SCF, the EU has U-turned on a key dimension of its traditional economic model. We should not overinterpret this, especially because these measures are in principle temporary. If these measures are considered a success by Member States they may indeed lead to new SGP rules which could confirm the EU’s role in financing public investment in Member States, among other things in social and green policies. If they are not considered a success there could be a return to the previous situation with only few changes. At the time of writing the proposal of the Commission is leaning more towards the second scenario.

In general terms, however, social policy is unlikely to become a ‘first order’ priority for the EU on an equal footing with its economic project, and it is bound to continue ‘essentially serving to enable – rather than counterbalance – transnational market-making and mostly lacking the necessary bite to effectively address the sheer level of social inequality within and between EU Member States’ (Crespy and Munta, 2023).

Conclusions: what about the future?

There is little doubt that since 2016 there has been a revival of Social Europe, initiated first and foremost with the European Pillar of Social Rights. The main dimensions of this revival in the areas of the labour market, labour relations and social protection are (i) a set of hard and soft laws addressing the margins of the labour market; (ii) attempts to foster a stronger and more integrated, multi-level EU industrial relations system; and (iii) a series of new forms of financing for Social Europe. In addition, we can observe a partial integration of social policy and social objectives in EU economic governance. This revival of the EU’s social dimension does not challenge the primacy or the characteristics of the EU’s economic model, with the possible exception of the (temporary) abandonment of austerity and the fostering of public investment. It fails therefore to address the root causes of the negative social effects of the economic model. It does, however, constitute a significant expansion of EU social policy, in stark contrast with the Barroso years, which significantly softens the social impact of the economic model.

Will this revival continue in the future or, as we have seen in the past, will this period of expansion of Social Europe be followed by a period of decline? This is to a large extent a political question. One of the remarkable features of the present revival is that it can count on broad political support in the European Parliament, far beyond the usual suspects who would vote in favour of such initiatives. Indeed, while the left-wing parties (Greens, GUE and S&D) together have less than 37 per cent of the votes in the current European Parliament, the majorities that adopted recent progressive and social proposals in the European Parliament were much larger. This was also the case for the vote on the EPSR in the previous European Parliament (Vesan and Corti, 2019), when more than 55 per cent of the centre-right EPP and more than 50 per cent of the ALDE liberals voted in favour. Also, during the Junker Commission the Work-life Balance Directive and the Directive on Transparent and Predictable Working Conditions were adopted by the European Parliament with large majorities. This has continued in recent years, with among others the adoption of the Directive on adequate minimum wages, with an almost 80 per cent vote in favour. Clearly, the revival of Social Europe is not (just) a leftist or social democratic project.

And what role will the Commission play in the future? For the moment, Commission President von der Leyen (centre-right) and Commissioner for Jobs and Social Rights Schmit (centre-left) seem strongly committed to the revival of Social Europe. Also, the upcoming EU presidencies of Spain and Belgium seem keen to further strengthen Social Europe. At the same time, Rainone (2022) notes that there is renewed emphasis on the sustainability of public finances and the macroeconomic situation of the countries in the 2022 Country Specific Recommendations, which suggests that the Commission (and the Council) may already be backtracking on the relaxed SGP criteria. What will happen after the mandate of the present Commission expires next year? Will the support for the expansion of Social Europe by much of the centre-left and centre-right continue in the future or will the traditional ideological divides return to the fore?

We can speculate that the centre-right and centre-left may continue to compromise on their support for the revival of Social Europe as a result of the lessons of the financial and COVID crises, but only as long as it does not substantially affect the underlying economic model. There hardly seems to be any room for ideological alternatives in the EU’s political space that go beyond the centre-left or centre-right vision of neoliberalism (Copeland, 2020; Elomäki and Gaweda, 2022). For the centre-right this compromise is then a way to continue the core economic project of market-making in the EU, while for the centre-left it gives this project a more social face. Also, the fact that part of the far-right political parties represents a more social agenda may well force the centre-right to socialise its neoliberal programme to some extent. For now this is speculation, however, and further research is needed to understand the present political moment and the possible futures it contains.