T1-03: European governance

Rethinking the European Union’s new economic governance regime and labour politics

Jamie Jordan, De Montfort University, Leicester
Vincenzo  Maccarrone, University College Dublin
Roland Erne, University College Dublin

» Full paper: ilera-2019-paper-157-Jordan.pdf

One of the key responses from the European Union (EU) to the global financial and sovereign debt crises has been to overhaul its economic governance regime. The former Commission President, Jose Manuel Barroso, went even as far as to label the shift to the EU’s New Economic Governance (NEG) regime a ‘silent revolution’.  In this paper, we propose a new approach for the analysis of NEG and examine the question whether we are really witnessing a progressive socialisation of its policy content, as an emerging literature claims.

We do this through three key steps. The first step is to offer a new way of thinking about the institutional structure of the NEG regime, especially the so-called European Semester, which, thus far, has primarily reflected the EU’s own understanding of it across various academic literatures. The second step is to propose a methodological innovation in how to evaluate the policy orientations and prescriptions stemming from the NEG regime. Whereas most studies about the EU’s Country Specific Recommendations (CSRs) treat each prescription as equal, as if they exist in an institutional vacuum, we instead take into account the varying degrees of constraint that are attributable to NEG prescriptions as they relate to the broader institutional structure they are embedded within. Hence, the more precise and enforceable a NEG prescription is the more significant it becomes. Furthermore, our analysis also accounts for the location member states find themselves in across the uneven but deeply integrated European political economy, as otherwise similar NEG policy prescriptions can take on very different meanings from differentiated positions within this structured environment.

This allows us, in a third step, to apply our conceptual and methodological innovations to a contextualised analysis of close to 100 NEG document issued between 2010-2018 for the Eurozone as a whole, Germany, Italy, Ireland and Romania, i.e. for different locations of the EU’s uneven but deeply integrated political economy. Focusing on policy areas affecting labour politics, including wages, labour markets and collective bargaining, our findings demonstrate that there has not been a progressive socialisation of the Semester. Instead, a pro-business policy paradigm is still dominant over any social(ising) considerations, despite the more positive assessment of the NEG made by EU social policy think tanks, such as the Observatoire Social European, or the European Trade Union Confederation. We therefore conclude our paper with some reflections that problematise these dissonances and discuss possible future (research) orientations on the EU’s NEG regime and labour politics.

The new European labour market policy after the crisis and the impact of the national labour markets

Felix Syrovatka, University of Tübingen

» Full paper: ilera-2019-paper-7-Syrovatka.pdf

The architecture of the European Union has changed in the past years of crisis and its constitutional crisis management. The different bricks of the European austerity policy have built a European system of control to supervise the economic policy on the national level. In the centre of this system there is a new mechanism of labour market policy control and interventionism. I call this mechanism the New European Labour Market Policy because its based on the old instruments of the European employment policy but its more binding and stronger. Before the crisis, the European Labour market policy was only symbolic and equipped with “soft” instruments. After the crisis, the New European Labour Market Policy got binding instruments and “hard” recommendations. The implementation of crisis-constitutional measures created opportunities for direct european influence on the national labour markets. This influence is evidently not only an indirect intervention in the area of labour market regulation and wage policy, but also a way to indirectly- for example via the country specific recommendations (CSR) - initiate or request reforms in the member states. The influence of the EU institutions on national labour market regulations is ensured through two different methods that justify the different quality of interventionism. On the one hand, the influence via the CSR takes place within the framework of the European Semester, which has been given a new binding force by the introduction of financial sanctioning mechanisms. On the other hand, there is influence over the exchange of financial support for political reforms.

In this way, I see the New Labour Market policy as an interaction of formal and informal, institutionalized and non-institutionalized, economic and socio-political forms of regulation, surveillance and enforcement. The content frame of this instruments is the common focus on European competitiveness as a lever to solve the European crisis. Accordingly, the New European Labour Market Policy concentrates on a reduction of unit labour costs to boost European competitiveness. Therefore, a new leading concept of New European Labour Market Policy was created. The flexicurity-concept, the former leading concept, has been replaced by the resilience concept, which is embedded in a comprehensive strategy of the European Union. At the same time, the concept represents a neoliberal radicalization. In the area of labour market policy, the resilience-concept is aiming for marketisation and much more flexibilization whereas the security dimension of Flexicurity doesn’t exist anymore.

The presentation aims to show the transformation of New European Labour Market Policy in crisis and which changes in content were associated with it. At the same time, it will explain how the New European Labour market policy works and which different influences the European interventions have on the national labour market policies.

Original expectations and deficiencies of implementation, some political remedies and the lasting political stalemate

Berndt Keller, University of Konstanz
Sophie Rosenbohm, Institute for Work, Skills and Training, University of Duisburg-Essen

The paper deals with the widely neglected failures of the implementation of the European Company Statute (SE Regulation and SE Directive) and their far-reaching consequences. It intends to shed light on new forms and concepts of employment relations at European level. With its provisions on employee involvement, the European Company Statute was supposed to set new grounds for the development of European industrial relations and, thus, to constitute an integrated part of ‘social Europe’

Initially, it was planned to establish a unitary system of employee participation by means of binding legislation at EU level. These ambitious plans of ‘upward harmonization’ had to be changed towards expanding degrees of flexibility and the primacy of negotiated agreements at individual company level. The protection of national systems with established rights was, however, a core issue in the contested debate over the SE Directive. Facilitating deviations from well-established standards has been by no means an intended consequence.

In contrast to existing studies, originally unexpected outcomes and/or definitely non-intended consequences have occurred but so far received hardly any attention. Therefore, our special emphasis is on these rather extraordinary long-term developments. Based on most recent empirical data on SEs and a critical review of research results, we will discuss major unexpected results of transposition and implementation and their evident problems. Moreover, we will analyse why no political measures have been taken and discuss options for amendments and improvements.

Our research demonstrates that there are serious deficiencies at different levels, the SE Directive itself, transposition laws at national level as well as implementation procedures at company level. The original substance of the SE Directive that already represents the smallest common political denominator is watered down by unanticipated strategies that lead to non-intended outcomes. The preemptive escape from participation, that occurred in some companies, was definitely not intended by the SE Directive. A similar problem concerns the activation of non-operational shelf SEs. The SE Directive contains provisions only for the date of establishment but no unambiguous requirements for later developments although they may have negative repercussions. Thus, the current version of the ‘before and after’ principle, which was originally introduced to safeguard existing employee participation rights, can also have the opposite consequence.

If the existing deficiencies are not removed they have long lasting consequences, exert substantial impact at lower levels and put the initial objectives at risk. This poses a major threat for building a ‘social Europe’ with the capacity to provide sufficient information, consultation and participation rights for employees.

As discussed in the paper, the aim should be to close existing legal loopholes, avoid obvious inconsistencies and guarantee that the goals that are indicated in the SE Directive are to be actually reached. One major gap of the SE Directive is the fact that it does not provide specific rules for the possibility that higher numbers of employees are reached after the formation of the SE or for the activation of a shelf SE. Therefore, the Directive needs to be amended and adopted in some focal regards. It needs more dynamic concepts instead of the existing static ones. Our proposals for re-regulation intend to remedy existing deficiencies. We elaborate on the most urgent groups: Structural changes and their consequences as well as the activation of non-operational shelf SEs.

The solution is indeed that this principle should be extended by its explicit introduction into the Directive. Such provisions could also be negotiated at individual company level or prescribed in national transposition laws. However, these latter options occur only rarely and do not constitute functional equivalents of rules in the Directive that are generally valid. More recently no political initiative has been taken to amend the SE Directive and Regulation. The resulting problem is that the longer necessary amendments are not initiated the more originally unintended effects occur and not intended opportunities of pattern setting and pattern following are not only established but continued and even strengthened. Thus, for the time being, the only realistic alternative consists in adjustments at national level, i.e. in substantial amendments of national transposition laws.

A comparative analysis of recent EU interventions in Italy, Ireland and Switzerland

Vincenzo Maccarrone, University College Dublin
Roland Erne, University College Dublin

The literature about the effects of the European integration process on labour and labour relations can broadly be divided into two opposing camps. On the one side, there are those who associate the European integration process with an overarching, transnational liberalisation trajectory (Baccaro & Howell 2017). On the other side, there are those who are detecting diverging, country specific, trajectories at work. Pulignano (2018), for example, acknowledges a growing commodification of labour in the EU’s periphery, not least given the imposition of the “structural reforms” championed by the Eurozone’s New Economic Governance (NEG) regime. At the same time, however, she is also emphasising the relative stability of de-commodifying labour institutions in affluent North-Western European countries, notably Denmark, which is not subject to the constraints and conditionalities of the Eurozone’s NEG regime. In a similar vein, Afonso, Fontana and Papadopoulos (2010), for example, showed that in the case of Switzerland, further integration into the European single market led, until very recently, to an astonishing decommodification of Swiss labour market institutions. This assessment, however, might no longer be true.

In this paper we therefore conduct a comparative qualitative analysis of the strikingly similar labour market liberalisation requests of the European Commission in relation to the Irish, Italian and Swiss labour market institutions issued in very different institutional contexts. These include the Commission’s commodifying NEG prescriptions for Ireland and Italy (2010-2018), i.e. a large and a small Eurozone country, which are in the (semi-) periphery of the Eurozone. In addition, however, we are also analysing the Commission requests to liberalise the Swiss labour market institutions during the ongoing negotiations for an EU Switzerland “Institutional framework agreement”, which aims to cementing future ties between Switzerland and its biggest trading partner. This case selection is innovative as it allows us to assess if the Commission’s labour market liberalisation requests are linked predominately to Eurozone membership and the relative peripheral location of a country in European supply and production chains, or simply the EU’s new single market logic as expressed in the ECJ judgments in the Laval quartet.

• Afonso, A., Fontana, M. C., & Papadopoulos, Y. (2010). Does Europeanisation weaken the Left? Changing coalitions and veto power in Swiss decision-making processes. Policy & Politics, 38(4), 565-582.
• Baccaro, L., & Howell, C. (2017). Trajectories of Neoliberal Transformation: European Industrial Relations Since the 1970s. Cambridge University Press.
• Pulignano, V (2018), “Social Dialogue between Continuity and Discontinuity”. Presentation at the WSI Herbstforum 2018: Interessenvertretung der Zukunft. Berlin, 20 November 2018. https://www.youtube.com/watch?v=8BzsAmvZISs