Social and economic equality: political tools and victims of the EU member statesicelds
The idea to create a socially and economically equal Europe and the creation of a European Welfare State are by no means new to the EU’s agenda. Proposals for a harmonized wealth redistribution system came almost simultaneously with the launch of the European free market in the late 1980s. Of course, a barrier-free market boosts international trade. However, it discloses and widens the differences in well-being and social standards between individual EU member states. These differences became even more apparent after the “largest” EU enlargement in May 2004.
The economic and social differences between the new EU members (mostly from central and eastern Europe) and the old ones opened new discussions focused on setting common social standards for each citizen across the Union. Scholars came with an idea of common European social policy, which, unlike the European Social Funds, would apply to every citizen individually and evenly. The realization of this project has often been marked as highly unrealistic due to several reasons. The most typical argument is that European Social Policy plan lacks mutual consent and harmonization of social policy laws between individual member states due to very diverse cultural and political climate which shaped different social standards and policies. A more recent argument by W. Streek is that the idea of Social Europe takes a back seat in the current general crisis in Europe; moreover, the concept of Social Europe is rather being subordinated to other policy challenges which seem to be more acute.
Nevertheless, devastating outcomes of the financial crisis and the bailout programs drafted to re-balance the situation in the countries most seriously affected by the 2009 global financial crisis brought the issue of European solidarity back to the table. The negative reaction of some European politicians towards the idea by several Eurozone countries to share the costs of the crisis and help indebted Greece and other countries was exaggerated by the media as if transnational European solidarity was non-existent. As sociologists argue, solidarity plays an essential role in the development of a nation-state and its welfare state policies. Moreover, as solidarity stems from the mutual feeling of belonging and reciprocity between a close circle of members, its expansion to the transnational level would mean cross-country wealth redistribution which many experts see as infeasible.
Lack of transnational solidarity between the EU citizens has often been used as an excuse for any political action aimed at further harmonization of the EU welfare policies. However, recent studies on the viability of a common European welfare system amongst the EU citizens prove quite the opposite. For instance, some experts came to the conclusion that the majority of the EU citizens support the transnational support of people at risk (i.e. unemployed, elderly, sick) and at the same time endorse the wealth redistribution between the poor and the rich across the EU member states. At the same time, the same study demonstrates that more than 70 percent of the respondents support the reduction of territorial inequality between the member states and the regions.
Moreover, similar positive attitudes were also detected in the study examining the support of universal unemployment risk sharing across the EU which would provide universal unemployment benefits to the EU citizens who became unemployed as a result of the crisis. The study stems from a European Commission’s proposal to launch the European universal benefit scheme as one of the tools to overcome the financial crisis. Finally, a Special Eurobarometer 467 survey entitled Future of Europe: Social Issues revealed that the issues of unemployment and social inequality are very important for the EU citizens who wish for more solidarity (62 ) over individualism within the EU (62 v 13 percent).
If public attitude strongly aligns with the idea of European Social Union, what are the actual shortcomings preventing the implementation of this project? Different cultural and historical background of the individual member states defining their own distinctive social policies is not the only obstacle towards greater harmonization of social rights. There are yet two other political and economic factors that affect its implementation. The economic inequality between Member states and different social conditions are consistently used in the populist political agenda which blames the EU for its “unfair” economic policy settings. Indeed, liberalization of trade and market integration within the EU do bolster economic competition between the countries with higher and lower wages. In some cases, this might lead to social dumping which is broadly defined as any competitive strategy which relies on the access to labour supplies that are cheaper due to looser regulatory frameworks or differences in wage levels and social protection which harms the citizens not only with lower but also with higher wages.
Social dumping within the EU labour market which can be used by some corporations and even states to take advantage of unequal labour markets and social security conditions between the EU member states also undermines the idea of Social Europe.
Although several legal steps towards greater regulation (including limiting from 24 months period to 12 months the contracts that allow companies to send employees from a country with lower wages to work in richer member states without compliance with all local labour laws) were recently made , countries such as Poland and Hungary ( both having a relatively high share of posted workers in the western MS) were strictly against the Commission Directive and appealed to the European Court of Justice.
On the one hand, greater regulation of cross-country labour market conditions tackling down the issues of social and economic inequality between EU citizens seems to be a sort of welcoming proposal from Brussels. However, the limitations of labour market rules have political consequences the countries with lower wages which for many years have been profiting from this comparative advantage, attracting foreign investors by offering them low wage labour force and mild corporate tax system. These countries perceive stricter labour market rules and greater EU involvement as a violation and disrespect towards their own economic rights which leads to the politicisation of this issue and fosters the domestic populist forces in these countries.
On the one hand, any regulation of labour market rules can evoke feelings of hostility towards the European Union in the countries with lower wages which took advantage of the unequal labour market conditions. On the other hand, de-regulation can have as much as the same outcomes when shifting the focus towards high-income member states. Offshoring or outsourcing of companies seeking for lower labour standards can result in rising of aversion among the citizens of western countries who might get an impression that the companies steal their jobs because the eastern and central European citizens are willing to work for lower wages under worse social and labour conditions. This was a very much case of the US manufacturer Whirpool which decided to partially outsource its plant in the French Amiens to Poland. This measure put 300 workers of the French plant in risk of joblessness.
The steps have not been unnoticed by the candidates at the 2017 presidential election in France, including Emmanuel Macron and Marine Le Pen. Whereas they both have harshly criticized Warsaw for creating unfair labour market conditions, Macron insisted on a stricter harmonisation of the European labour market. He also criticized Poland stressing that “one cannot have a country that is exploiting the fiscal and social gaps in the European Union and which is also infringing all the EU’s principles.”.. On the contrary, Le Pen’s rhetoric and assessment of the situation were focused on the criticism of the EU as a whole. This example shows that any harmonization or de-regulation of the labour market can have the same effect, i.e. both can be used as the arguments by the right-wing politicians.
Obviously, these different stances between western and eastern European countries derive from different economic and social conditions in these group of countries. The politicization and its radicalization as an unwelcome side effect of this issue might cause even greater inequality. The EU and its member states should tackle this issue by putting the social welfare agenda on a supranational policy level, providing equal and fair social rights and benefits to its, and balancing the free market principle and uncontrolled competition with a firm system of social stability.
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 EU ministers agree to tighten rules on migrant workers. Financial Times, 23.10.2017, https://www.ft.com/content/d091ab7e-b83b-11e7-8c12-5661783e5589.
 Hungary and Poland challenge new EU rules on posted workers. Labour Mobility Initiative, 30.10.2018, https://www.mobilelabour.eu/12680/hungary-and-poland-challenge-new-eu-rules-on-posted-workers/.
 Polish workers unfazed by French campaign fury over outsourcing. The Local France, 30.04.2017, https://www.thelocal.fr/20170430/polish-workers-unfazed-by-french-campaign-fury-over-outsourcing.
Image: Brussels – EC/Berlaymont, © European Union, 2015