The Lisbon Strategy and the Open Method of Coordination

The European Council at Lisbon on 23 and 24 March 2000 committed the Union to become the 'most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth and more and better jobs and greater social cohesion'. The Lisbon Summit put forward an integrated political agenda for the future of Europe, with equal weight given to full employment and social cohesion alongside economic growth and competitiveness, called the Lisbon Strategy. With respect to employment, the 2000 Lisbon Council set concrete targets: By 2010, 70 per cent of the EU population aged 15-64 should be in paid employment, with 60 per cent of women. The Stockholm summit of 2001 complemented these with intermediary targets for 2005 and added a target for older workers (aged 55-64), namely 50 per cent in 2010 (Goetschy, 1999, 2003). Under the Swedish Presidency, environmental sustainability was added as a core strategic objective of the Lisbon Strategy.

In June 2000, the Council established the Social Protection Committee, which was given a legal basis in the EC Treaty (new Art. 144). The Social Protection Committee developed a series of common objectives, which were endorsed by the European Council at Nice in December 2000 (revised in December 2002). Another important institutional feat was the decision of the European Council to meet every spring to address economic and social questions. The Spring Council was to develop into a key institutional kernel of social Europe, around which all the various processes and initiatives could effectively rotate. Inviting all the Member States to prepare each year—in view of this institutionalized deadline—a document illustrating their own social policy agenda (with indicators and targets) put social Europe on a more secure footing.

As a follow-up to Lisbon, the Nice European Council in December 2000 endorsed the crucial contribution of the 'European social model' to the knowledge-based economy through social investment:

People are Europe's main asset and should be the focal point of the Union's policies. Investing in people and developing an active and dynamic welfare state will be crucial to Europe's place in the knowledge economy and for ensuring that the emergence of this new economy does not compound the existing social problems of unemployment, social exclusion and poverty. (European Council, 2000b)

The Nice Council also witnessed the 'solemn declaration' of the Charter of Fundamental Rights, which gave social Europe more visibility. The Charter, however, was not given a formal legal status. The Belgian Presidency in 2001 forged a political agreement on quantitative indicators for monitoring progress with respect to social inclusion across Member States. It also endorsed, at the Laeken Council, in December 2001, common objectives for pension reform. Under the charismatic leadership of Frank Vandenbroucke, Minister for Social Affairs and Pensions, the Belgian presidency pressed the European Union to support the Member States in developing 'active welfare states'. At the 2002 Barcelona Council meeting, European targets related to the reconciliation of work and family life in the area of childcare were established—of 90 per cent for children between 3 years and school-age and of 33 per cent for children under 3 years by 2010. In the same year, the Work Programme of the European Social Partners for 2003-5, presented in November 2002, revealed a preference to develop 'a more autonomous social dialogue', indicating a desire to come out of from under the shadow of Community legislation. With the encouragement of the Commission, at the sectoral level some 27 sectoral social dialogue committees have been established.

In 2004, Regulation 1408/71 (now Reg. 883/2004) was revised once again. One of the more important changes in Article 4 now mandated social assistance to fall out of the jurisdiction of the Regulation. The political rationale for realigning social assistance to the nation state, on the insistence of Member States, was that tax-financed social assistance is different from employment- related social insurance and should therefore remain within the strict competences of the Member States (Martinsen and Falkner, 2011).

The remarkable extension of EU-level social policy engagement since the mid 1990s is not only reflected in the introduction of a new Treaty commitment, direct hard legislation, and more indirect soft policy coordination, but also in the expansion of new policy networks at the interface of domestic social policy circles and European institutions of policy institutions and committees, such as the Social Protection Committee, the Employment Committee, the Social Affairs and Labour Council, and the bipartite social dialogue that is now included in the Lisbon Treaty. Many of the participants in these forums are capable of making alliances with non-governmental actors, such as the ETUC and the European employers' organization UNICE in shaping European policy developments (Falkner, 1998; Ferrera, Hemerijck, and Rhodes, 2000; De la Porte and Pochet, 2001).

Building upon the EES, the Open Method of Coordination (OMC), based on iterative benchmarking of national progress towards Community objectives and organized mutual learning, rapidly spread from employment (1997) to social inclusion (2000), pensions (2001) and healthcare and long-term care (2004) (Zeitlin and Pochet, 2005; Heidenreich and Bischoff, 2008; Heiden- reich and Zeitlin, 2009). The OMC was hailed as a kind of 'third way' EU governance process in complex, domestically sensitive policy areas, where EU competences are relatively weak or regulation is infeasible and impracticable, but inaction is politically unacceptable (Zeitlin, 2005я, b). At the heart of the OMC lies a commitment to cross-national policy 'learning by monitoring' (Sabel and Zeitlin, 2010), based on iterative benchmarking of national progress towards common objectives (Zeitlin and Pochet, 2005; Heidenreich and Zeitlin, 2005). Since the Lisbon Strategy relaunch in 2005, employment objectives are laid down in National Reform Programmes (NRPs), allowing each Member State in principle to choose its own preferred approach to achieve these goals as a matter of national responsibility—in accordance with the principle of subsidiarity. The Commission plays a facilitating role by defining indicators, exchanging information, and producing comparative analyses, while the Council can make recommendations to Member States based on qualified majority voting. The employment performance of the Member States is monitored and assessed by annual multilateral peer reviews through which Member States evaluate each others' NRPs, as anchored in Article 128 EG of the Treaty. The Council is allowed to adjust guidelines on the basis of the insight and suggestions of the Commission. The ultimate purpose is to adjust national employment policy through checking against benchmarks and the comparison of good practices (De la Porte, Pochet, and Room, 2001; Zeitlin and Pochet, 2005; Barnard, 2005; Falkner etal., 2005; Nedergaard, 2006).

The OMC is particularly well suited to the heterogeneous settings of different welfare regimes across the EU. Jonathan Zeitlin argues that OMC transforms institutional diversity into an asset rather than an obstacle to closer integration (Zeitlin, 2011). In full respect of the principles of subsidiarity and proportionality, Member States conduct their own policies but they are required to expose their policy experiences to common analyses and peer- group evaluation. In the absence of binding sanctions, comparing best practices, monitoring progress with specific timetables and reporting mechanisms, together with peer pressure, in the light of common objectives, expose national policymakers to new definitions of social problems and appropriate policies. This positively affects both the ability and willingness of domestic actors to deploy information feedback about policy problems and lessondrawing from comparative performance generated by OMC processes (Sabel and Zeitlin, 2010). The central idea was to catalyse Member States in modernizing their welfare states and labour markets. Success achieved through OMC, in turn, was likely to enhance the legitimacy of the EU as a more 'Social Union', working towards a set of agreed employment and social policy objectives, while contributing to the establishment and proliferation of transnational learning networks, including non-state and sub-national actors, beyond the borders of national welfare states, which also offer governments incentives to gain influence in important EU policy initiatives (Vanden- broucke, 2002; De la Porte and Nanz, 2004; De la Porte and Jacobsson, 2012).

Based on extensive empirical research on the operation of the OMC, Jonathan Zeitlin evaluates it as a qualified success in three important dimensions: cognitive, political, and heuristic. In the first place, in terms of policy substance, OMC processes have helped raise the salience and ambition of national employment and social inclusion policies in many Member States, contributing to important changes in national policy thinking and reform agendas (cognitive shifts). At the level of the EU, the OMC processes together send out a clear message that economic, employment and social policies should be made mutually reinforcing. The identification of common challenges and promising policy approaches, including much improved statistics, incentivized Member States to rethink established policy approaches, resultant from the obligation to compare national performance against progress in meeting commonly agreed EU objectives. The social OMCs have exposed domestic policymakers to new approaches to avoiding early retirement and achieving active ageing, lifelong learning, and gender mainstreaming, balancing flexibility with security, and reconciling work and family life, with the effect of concrete policy change in areas such as activating social assistance, tax-benefits, old age pensions, education and training, childcare provision, and gender equality. In addition, long-established but increasingly counterproductive policies, such as early retirement, have become more subject to critical policy review. The EES helped to redefine the European employment issue away from managing unemployment and towards the promotion of employment, mentioned earlier, fostering the diffusion and acceptance of a new mental framework for employment policy redirection (rather than concrete policy recommendations). In turn, cognitive shifts contributed to changing national policy agendas (political shifts), exactly by putting new issues on reform agendas, such as improved childcare provision as important to reconciling work, family life, and gender equality. A third, more procedural, positive effect of the OMC is that the EES and the Social OMC have contributed in most Member States to better horizontal coordination and cross-sectoral integration of interdependent policy areas, together with enhanced vertical coordination between levels of governance, and improved consultation and involvement of non-state actors (heuristic shifts). OMC processes, Zeitlin concedes, also suffer from a number of problematic weaknesses. The OMC's greatest weakness was its lack of political visibility and commitment. Indicators and National Action Plans remained familiar to a rather narrow circle of EU and national-level policy officials. Against the hope of cross-national policy feedback triggering wider public resonance and political debate in national parliaments, OMC processes remained fairly muted (Zeitlin, 2005a, b, 2009, 2010; see also Frazer and Marlier, 2010; Marlier and Natali, 2010). Without political ownership and a sense of urgency, there is a danger that the OMC ends up merely dressing up existing policies (Ferrera, Matsaganis, and Sacchi, 2002).

With hindsight, however, the EES surely represents an important OMC success. Europe's employment ambitions have since 1997 become far more lofty and concrete than ever before. Over the Lisbon term from 2000 to 2010, employment rates in Europe have risen by an impressive 8 per cent, including a massive increase of female employment. To be sure, the level of success varied across the Member States (European Commission, 2009b). The proactive reorientation from managing unemployment to increasing labour market participation—on the basis of social investment priorities of activation, active ageing/avoidance of early retirement, part-time work, lifelong learning, parental leave, gender mainstreaming, flexicurity (i.e. balancing flexibility with security), and reconciling work and family life—has certainly been important to the overall improvement in the quality of employment and a significant decline in unemployment across most European countries over the decade (Bekker, 2011).