Employment policy and the Member States

1. Eureco: November 23, 2010 Peter Nedergaard – Department of Political Science, University of Copenhagen

2. Employment policy and the Member States Agenda: 1. Concepts concerning the EU’s Employment Policy 2. Treaty articles about the free movement of labour 3. The market for labour: impact on economic integration and wage structures 4. The development of the EU’s Employment Policy 5. Political forces arguing for more “hard law” 6. Political forces arguing for more “soft law” 7. Soft law: Open Method of Cooperation (OMC) in practice 8. What is policy learning? 9. OMC and its impact 10. The social dialogue 11. Models of capitalism and employment policy

3. Elections won and lost on employment policy

4. 1. Concepts concerning the EU’sEmployment Policy a) Social, employment and labour market Social Policy = includes employment policy and labour market policy PLUS social protection policy Employment policy = includes labour market policy PLUS certain economic policies of relevance to employment Labour market policy = includes wage earners rights, health and safety at work etc.

5. b) Negative and positive integration Negative integration = deregulatory national policies = elimination of regulations impeding the free movement of productive forces Positive integration = reregulatory policies at the EU level = new common EU policies

6. c) “Hard” and “soft” law “Hard law” = directives, regulations, and decisions adopted by EU institutions = traditional Community Method “Soft law” = recommendations based upon reports with indicators, bench-marking and best practices adopted by EU institutions = open method of coordination (OMC)

7. d) Federalism (supranationalism) and intergovernmentalism Federalism (supranationalism) = the EU is (and ought to be) a multi-level political organisation with its own democratic legitimacy = strong supranational institutions (Commission, European Parliament, Court of Justice) = there is a logic of closer European integration Intergovernmentalism = the Member States are (and ought to be) the most important political entities in the EU = integration is first and foremost a result of Member States’ interest = there is no logic of closer European integration

8. 2. Treaty articles about the free movement of labour Treaty articles: A basic pillar of European Union market integration: free movement of labour The economic rationale behind the treaty articles: = more optimal allocation of labour resources = better supply of labour = better exploitation of individual skills

9. Mutual advantages from free movement of labour An advantage for both immigration and emigration countries – if and when the immigrants do get a job: • Emigration countries: a) eases high unemployment pressures, b) improves the balance of payments through transfer of capital to the home country, c) improves the quality of the emigrant labour force as they acquire new skills 2) Immigration countries: • better exploitation of capital equipment, • avoidance of bottlenecks in the labour markets

10. An example: Polish construction workers in Denmark Between 2004 and 2009, the construction business in Denmark suffered from “overheating”. There was a risk of exploding wages and empty construction sites. Luckily, thousands of Polish and Lithuanian masons, carpenters and construction workers migrated to Denmark and the Danish construction sites. Without this influx of labour from Eastern Europe, the wages would have skyrocketed, and many construction firms would have gone bankrupt.

11. Impediments to the free movement of labour Current impediments to the free movement of labour within the European Union: 1) Lack of mutual recognition of diplomas and education – these problems can be solved 2) Cultural and linguistic impediments – these problems can only be ameliorated, but never completely solved.

12. 3. The market for labour. Impact on economic integration and wage structures The impact of the free movement of labour within the European Union; two theories: 1) Convergence theory: Economic integration = convergence of wages because no country can afford to uphold a divergent (i.e. higher) wage structure if it wants to be competitive - did this theory provide an explanation for the situation from 1960-1990? Here we saw a convergence as far as wages are concerned.

13. 2) Divergence theory: Economic integration = production cycle changes through outsourcing = non-sophisticated industrial production is gradually outsourced and replaced by more R & D intensive products The wage structures follow the production cycle - did this theory provide an explanation for the situation after 1990? Here we saw a divergence as far as wages are concerned. Due to increased globalisation and the implementation of the Internal Market?

14. 4. The development of the EU’s Employment Policy Two modes of cooperation in the EU: 1) “Hard law” – a decision-making process leading to directives, regulations, decisions etc. Free movement of labour. 2) “Soft law” – a decision-making process leading to mutual learning through benchmarking, best practice, indicators and recommendations. Employment policy/ labour market policy has never been an either-or but always a both-and. However, “soft law” has become much more dominant in recent years.

15. EU employment policy: from recommendations to ”hard law”and back to recommendations? 1952-1972 European Coal and Steel Community: recommendations concerning health and safety in the coal and steel industry The Treaty of Rome: free movement of labour, with exceptions, however, especially for certain positions in the public sector 1973-1979 Labour law directives on information and consultation of workers in case of “mass dismissals”, directives on equal pay etc.

16. 1979-1987 The UK (Thatcher) blocks all proposals for new labour legislation in the EU. Explanation: Unanimity voting in the Council of Ministers 1987-1997 European Single Act, Maastricht Treaty: Many new directives on health and safety at work adopted with qualified majority Social Charter on fundamental rights (including workers’ rights) Social Dialogue (Val Duchesse dialogue) (social partners become part of the decision-making process with regard to hard and soft law on employment policy in the EU)

17. 1997-2010 Amsterdam Treaty: The Luxembourg process. (the soft law on employment policy within the EU is now subject to a formula with yearly revisions, recommendations etc.)

18. 5. Political forces arguing for more “hard law” (The balance between hard law and soft law in the EU is a result of the forces behind hard law and soft law respectively) More hard law: • Federalists • France (Southern Europe) • Trade unions (ETUC – European Trade Union Congress) • The Commission

19. Arguments in favour of “hard law” in the labour market area: • The alternative to “hard law” labour market legislation is a “race to the bottom”. 2) “Hard law” labour market legislation shall off-balance “hard law” internal market and EMU legislation. 3) Supranational European cooperation means “hard law” legislation as only “hard law” can be brought before the Court of Justice – and only “hard law” has supremacy vis-à-vis national legislation and direct effect for citizens and companies.

20. 6. Political forces arguing for more “soft law” More soft law: • Intergovernmentalists • The UK, Northern Europe • Employer federations (Business Europe) • Many heads of state in the European Council

21. Arguments in favour of “soft law” in the labour market area • In tune with the liberalisation in other areas of EU integration. 2) “Soft law” accepts that new jobs can only be created through improved competitiveness. 3) ”Soft law” will generate more new jobs based on market conditions. 4) “Soft law” builds upon the fact that policy learning is playing a still more important role in the adoption of new reforms in new Member States.

22. 7. Soft law: Open Method of Coordination (OMC) in practice What is the OMC in practice in the labour market policy area? The same cycle year after year: 1) Yearly reporting to the Commission on national labour market policy based on indicators and statistics – e.g. people aged 55 to 64 in active employment, women in active employment, unemployment percentage for young people below 25 years of age). 2) Meetings between national civil servants, national social partners’ representatives etc. and Commission officials. Discussions. Explanations. 3) Recommendations from the Commission to national governments concerning their national labour market policies. 4) Peer reviews of the employment/labour market policies of three to four Member States each year.

23. How can one analyse the EU’s Open Method of Coordination (OMC)? The means of the OMC: • Mutual learning of the smaller and bigger political failures of each Member State • Which initiatives were successful? • What went wrong? Learning through certain policy logics of argumentations are accepted and become dominant

24. Important: What is policy learning? How to analyse policy learning Traditionally, two traditions have dominated policy learning: 1) A rationalist philosophical tradition 2) An empiricist philosophical tradition

25. The rationalist tradition • Learning = stems from internal mental events 2) This idea has its roots in the rationalist tradition 3) From René Descartes to today’s research into artificial intelligence

26. The Empiricist tradition • Learning = stems from external events • This idea has its offspring in the empiricist tradition • From John Locke to today’s logical positivism and behaviourism

27. What do the rationalist and empiricist traditions have in common? Answer: Learning is localised in the individuals. Possibly, both traditions reflect a dominant individualistic philosophy This is what Ludwig Wittgenstein’s criticism sets out in Philosophical Investigations: “Try not to think of understanding a ‘mental process’ at all.”

28. Gradually, political scientists have acknowledged that learning is not an individual phenomenon: From a naive individualistic concept of learning by Joseph Nye (leading International Relations researcher): “The extent and accuracy of learning depends upon the strength of the prior beliefs and the quantity and quality of new information.” Via Peter Haas who argues that epistemic communities are crucial channels of learning and who defines epistemic communities as a “network of professionals with recognized expertise and competence in a particular domain and an authoritative claim to policy-relevant knowledge within that domain or issue-are”.

29. To Jeffrey Checkel (researcher in European Integration): He defines social learning as “a process whereby actors, through interaction with broader institutional contexts (norms and discursive structures), acquire new interests and preferences.” My claim: A radical revolt against the individualistic concept of learning in political science is still lacking: As Wittgenstein wrote clearly: “When we think in language, there aren’t “meanings” going through my mind in addition to the verbal expressions: the language is itself the vehicle of thought.”

30. What is learning then? 1)When words and concepts are put together in new ways and contexts 2)When there is a change in the linguistic perspective 3)When interaction means that the social world is given a new meaning through concepts and categories 4)When you are able through new concepts to do something that you were not able to do before

31. What learning is not: • Filling minds up with facts • Like filling an empty can • Or transferring a piece of knowledge from one person to another

32. Power and learning • Learning is not free of power • Power is in the hands of the actor who has the power to define the situation • That is: to define the language in which problems are talked about and comprehended • In the EU, the Commission in cooperation with civil servants sometimes plays a problem-solving role when it comes to employment policy and the open method of coordination

33. 9. OMC and its impact Is the OMC a talking shop? What are the results of the OMC in the labour market area? Opinions are divided: Some point to many positive results: The evaluation of the Commission and some researchers claim: * that policy goals of the Member States’ labour market policies have shifted since the start of the Luxembourg process, and * that (in more concrete terms) the fight against unemployment as the primary labour market policy goal has been substituted with the goal to increase employment.

34. Criticism of the OMC Other researchers are much more critical vis-à-vis the results of the EU’s employment strategy: • According to interviews with participants in peer reviews, EU employment policy has no impact • The OMC is an exclusive (and not an inclusive) process with participants from a small number of experts. No spreading of learning processes

35. My own research: OMC and its impact I have tried to test the impact of the European employment policy in detail through a questionnaire: Four important committees under the OMC in the EU: a) Economic Policy Committee - EPC b) Employment Committee – EMCO c) Advisory Committee on Vocational Training – ACTV d) Social Protection Committee – SPC Two members from each EU Member State: normally civil servants and a few independent experts.

36. Results of my own research All members received a questionnaire. One of the questions asked which countries he or she had learned the most from. If the member mentioned another country, that country got one point. Overall results: Denmark, the UK and Sweden got the most points (more than 40 points). Then came Finland and the Netherlands (30-35 points). These five countries got 198 out of 286 points, i.e. approx. 70 per cent of all points given to Member States by members of OMC committees.

37. Figure. Tutors in the EU’s OMC committeesranked by points

38. Examples of learning Examples of policy learning from one Member State to another: 1)Early activating scheme (from Denmark). 2) Integration of immigrants (from the UK). 3) Private employment services (from the Netherlands).

39. Discursive learning I However, the most significant impact is a result of the changing discourses or new logic of argumentation of labour market policy issues over the last 5 to 10 years: * From fighting unemployment to the attempts to increase the labour supply. * It is now recognised that the labour market is a flexible entity, the size of which is a function of the competitiveness of firms.

40. Discursive learning II * Early activation is an important method of testing the willingness to take up a job. * Incentives are generally needed in the job creation process. * Long periods of dismissal are not in the general interests of wage earners. * Labour market policy is a multifunctional policy: integration, equal treatment, competitiveness.

41. OMC as an expansive method of cooperation Why OMC?: 1) The majority of Social Democratic governments in the 1990s wanted to put labour market policy high on the political agenda. Institutionalised in the Amsterdam Treaty. 2) Benchmarking had become a tested method in the 1990s when it was “imported” from business economics into the political arena. 3) The OECD had already put labour market policy high on the agenda in 1994 via its Job studies. The Lisbon Strategy in 2000.

42. 10. The social dialogue The social dialogue (Val Duchesse dialogue) since the mid-1980s involving trade unions and employers associations Social action plan: 47 directives and recommendations concerning equal treatment, part-time work, employment contracts, etc. Organised or not: huge differences among EU Member States

43. One problem is the huge difference as far as the affiliation percentages for trade unions are concerned (approx. figures): Denmark: 75 Finland: 75 Sweden: 75 Belgium: 65 Luxembourg: 40 Ireland: 50 Italy: 35 Austria: 35 The Netherlands: 25 Greece: 25 Germany: 20 The UK: 25 Spain: 20 Portugal: 20 France: 10 New Member States: 10-35

44. Conflict 1 concerning the social dialogue On-going conflicts between southern and northernEuropean Member States on the degree to which working conditions should be regulated at the European level. On-going conflict between the EU and the UK on whether or not the EU should adopt new labour market directives. In part, the conflict has been solved by the introduction of the open method of coordination (OMC) = an intensification of EU cooperation on labour market issues, but only based on soft law.

45. Conflict 2 concerning the social dialogue An on-going conflict concerns the possibility of implementing EU decisions on labour market issues through agreements between social partners. This has been possible since the Amsterdam Treaty.

46. 11. Models of capitalism and employmentstrategy According to the sociologist Esping-Andersen, we can identify three basic types of welfare capitalism: Social Democratic/ Nordic: a) Corporatism = tripartite negotiations concerning national legislation b) Centralised wage negotiations covering almost the whole labour market c) Wages and working conditions are mainly negotiated between social partners themselves at national level d) Trade unions are non-confrontational e) Universal welfare benefits at a fairly high level

47. Anglo-Saxon/ liberal: • No corporatism concerning national legislation b) Decentralised wage negotiations c) Wages and working conditions are mainly negotiated at the company level d) Trade unions are non-confrontational e) Universal benefits at a fairly low level plus private insurance

48. Continental European/ Conservative: a) Semi-corporatism concerning national legislation b) Centralised wage negotiations covering only parts of the labour market c) Wages and working conditions are negotiated between social partners themselves at national level – but huge segments of the labour market are left outside the agreements d) Trade unions are confrontational e) No universalism as far as social benefits are concerned

49. Towards a European social model? • Symbolic corporatism (social partners are invited, but they are not representative) • Non-centralised wage negotiations • Wages are negotiated at the company level • Trade unions become non-confrontational (alternatively members lose jobs) • Universal social benefits at a low level

50. Towards a European social model? • A mixture of the Anglo-Saxon and the continental European model • Already taken on by Eastern European Member States • Basic legislation as far as employment policy is concerned plus Open Method of Coordination will dominate in the future. Thank you for listening!