Escaping the Double Bind of Social Europe

The growing pains of a political union

In the wake of the global financial and economic crisis, the European Union finds itself at a critical juncture. With the deepening of the eurozone currency crisis, the EU has been transformed—practically overnight—into a highly contested political union. Since early 2010, the sovereign debt crisis, starting in Greece, has not only fed growing distrust among the national leaders of the seventeen eurozone nations, but has also caused dissent between important heads of government, most notably Angela Merkel and Nicolas Sarkozy, and the authorities of the European Commission. Even within leadership of the European Central Bank discord about ring-fencing the eurozone intensified. As the European economy enters a protracted period of sluggish growth with elusive job creation, political discontent will not easily subside. Because conservative governments, in power in most EU Member States after 2010, have practically all opted for painful austerity reforms, social conflict is on the rise. The incipient politicization of the EU is not, however, a product of the recent crisis. By the mid 2000s, the French and Dutch referenda over the rejected draft EU Constitutional Treaty in 2005 and the 2008 no-vote to the Lisbon Treaty in the Irish referendum, already confronted the EU with severe legitimacy problems. The no-vote, especially in France, was strongly influenced by the political uproar over the 'Bolkestein directive' on further services liberalization. French workers emblematically reframed the issue in terms of the 'plombier Polonais', suggesting that in the future service providers would only have to abide by domestic laws anywhere in the Union. Service firms would most likely relocate so as to operate from low-quality EU Member States (Nicolaides and Schmidt, 2007, 2010). These sentiments were reinforced by the biggest enlargement with twelve new members to the European Union in 2004 and 2007, bringing about an enormous increase in the economic, social, and institutional heterogeneity, thus making political agreement on binding resolutions of collective action problems, in line with traditional community legislation, ever more difficult to achieve. Popular feelings of discontent have not only threatened the legitimacy of the European project, but also negatively affected sentiments about the quality of national welfare provision. As European integration is increasingly viewed as the handmaiden of globalization, defensive domestic mobilizations around national welfare states have been triggered. In turn, this has curtailed the supranational political space for the development of decent employment and decent labour and social standards across the enlarged EU.

The national welfare state and the EU, perhaps the two most successful feats of institutional engineering of twentieth-century Europe in terms of peace, growth, and equity, have in recent decades become inevitably ever more intertwined. The establishment of the Single Market and the EMU, over a period of high unemployment, has progressively pushed employment and social policy concerns onto the European political agenda. Today, EU social policy is no longer the mere 'stepchild' of European integration. The incorporation of a separate Employment Chapter in the Treaty of Amsterdam in June 1997 marks a clear watershed in this respect. Claims about the emancipation of 'social Europe', on the other hand, should not be exaggerated. European employment and social policy initiatives, triggered by the 'spill-over' effects of intensified market integration, have added up to no more than the supplement of an institutional layer complementary to the European social order. But as we know from Wolfgang Streeck and Kathy Thelen (2005), the introduction of new procedures on top of or alongside established programmes, which they call institutional 'layering', often significantly alters the uses, functions, and purposes of existing political and economic structures.

This chapter examines the historical dynamic of the Europeanization (Borzel and Risse, 2000; Green Cowles et al., 2001; Guillen and Palier, 2004; Graziano and Vink, 2007; Graziano, 2011a) of employment and social policy; an adequate understanding can be achieved only through tracing the interactive co-evolution of European welfare regimes and the emergent employment and social policy properties of the EU, triggered, inadvertently, by progressive economic and monetary integration (Hemerijck, 2004, 2006b). Since the inception of the Treaty of Rome, the process of 'ever closer' European integration has created new constraints and opportunities for both domestic welfare state change and EU social and economic policy innovation. As we know from scholars in the research tradition on gradual but transformative change, seemingly settled institutions are more open and disjointed, containing many ambiguities and competing logics, than is generally recognized (see Chapter 4). If this is already true for straightforward national rule systems, than surely it applies even more to the more loosely coupled dynamic of the co-evolution of national welfare regimes and EU economic and political governance. With this caveat in mind, for the remainder of this chapter, I develop an argument about how national welfare states have become progressively 'nested', to use a term of Maurizio Ferrera (2005a), within the widening and deepening institutional architecture of the EU.

Before turning to the historical trajectory of the layered and interdependent process of institutional co-evolution of national welfare state and European integration, the chapter begins, in section 2, with a conceptual exposition of what I see as the inherent tension of the 'double bind' of social Europe, an institutional predicament or catch-22 that immediately follows from the twofold commitment to domestic social protection and European market integration. Fritz Scharpf has gone as far as to argue that this double bind adds up to an irresolvable contradiction between market-expanding 'negative integration' and market-correcting 'positive integration' (Scharpf, 1999, 2002, 2009b). I rather follow Ferrera's more nuanced lead, again in agreement with the core insights of the literature on gradual but transformative change, that the ambiguities of the double bind can also generate economic and political pressures, which in turn could lead to the emergence of a 'shared political space' (Crouch, 1993) in the area of social policy, between Europe's now semisovereign national welfare states and EU governance institutions, within the overall architecture of an enlarging European Union. Beyond the double bind, it should be pointed out that the idiosyncrasies of changing economic, social, demographic, and (geo)political conditions, emergent social problems and policy responses, and changing political ambitions, in interaction with path- dependent domestic social policy change, shape the emergent properties of 'social Europe'.

Sections 3 to 6 deal with the empirics of the interactive dynamic between national welfare states and EU employment and social policy, their tensions, constraints, and mutual opportunities, since the 1957 Treaty of Rome, founding the European Economic Community (EEC) in 1958 in three stages, roughly in line with the periodization already introduced in Ch. 5: from (1) the Golden Age of self-contained welfare state expansion in the shadow of the Treaty of Rome (1958); to (2) the neoliberal epoch, epitomized by the launch of the Single Market Act (1986) and the introduction of the EMU (1999); and, finally, (3) the more recent period when 'social investment' ideas were put in the centre of the European social agenda after the mid 1990s through the launch of the Lisbon Strategy of 2000. A separate section (6) is devoted to the most recent amendments in the framework of the 2009 Lisbon Treaty and 2010 Europe 2020 policy strategy. Throughout this long-term process, it is important to emphasize the extent of welfare regime diversity increased with each wave of enlargement. The concluding section 7 tries to assess the degree to which national welfare provision and EU social policy have become more aligned within the evolving economic governance framework of the EU through supranational 'nesting'

(Ferrera, 2005я) of economic and social policy in an emerging European polity (Hooghe and Marks, 1999; Marks, 2004).

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