EU debates European social model

At two important events, leaders of the EU and its member states will discuss the European model, focusing on whether successful models such as the Nordic one can be transferred to countries in distress.

There is widespread agreement that there is no such thing as one European social model, but rather a variety of models with some common features. As some of those models are evidently doing better than others in dealing with unemployment, poverty and the financing of healthcare, the question arises as to what lessons can be learnt from those more successful models. 

The recent study “Globalisation and the reform of the European social models” prepared by André Sapir for the think-tank Bruegel and presented at the ECOFIN Informal Meeting in Manchester on 9 September 2005 argued that there is not one European social model, but rather four – the Nordic, Anglo-Saxon, Mediterranean and the Continental.  

• The Nordic model (welfare state, high level of social protection, high level of taxation, extensive intervention in the labour market, mostly in the form of job-seeking incentives)

• The Anglo-Saxon system (more limited collective provision of social protection merely to cushion the impact of events that would lead to poverty)

• The continental model (provision of social assistance through public insurance-based systems; limited role of the market in the provision of social assistance)

• The Mediterranean social welfare system (high legal employment protection; lower levels of unemployment benefits; spending concentrated on pensions)

It has been argued that the social models of the EU-10, though transitory, must be added to this schema. Controversially, the Sapir study concludes that only the Nordic and the Anglo-Saxon models are sustainable.

The Assembly of European Regions’  Committee on Social Cohesion, Social Policy and Public Health has provided a set of common denominators which, in their entirety, define the European social model as “a set of principles and values, common to all European regions”, and it has declared these principles to be: 

a. Solidarity 

b. Social Justice 

c. Social Cohesion 

d. Equal access to employment, in particular for the young and the disabled 

e. Gender equality 

f. Equal access to health and social protection 

g. Universal access to education 

h. Universal access to health and social services 

i. Equal opportunities for everybody in society, in particular the elderly, the young, the disabled, the socially excluded and minority groups 

j. Universal access to, development of and implementation of knowledge in health and social services.

Ahead of  the Tripartite social summit, the European Trade Unions Congress (ETUC) issued a warning  against a stalemate on social Europe: "If Social Europe is ‘parked’, then the remaining popular support for Europe will shrink even further, ETUC chairman John Monks  argued, addressing journalists in Brussels on 20 October 2005. Mr. Monks attacked "those critics alleging that social Europe is outdated or does not exist; that the reality is 25 separate national systems (or, possibly, five categories of systems); and that social policy should therefore cease to matter at European level. 

These critics are missing one huge factor: there is now one single market covering 25 countries. In certain sectors like construction, hotels and catering and road transport, there is increasingly one single labour market. How can there be a single labour market without some common standards? For example, under what conditions and jurisdiction do mobile migrant workers operate? What is the status of collective agreements in the single market? Does single market law (European law) overrule the right to strike (national law)? If there are 25 separate systems, what scope have individual nations to protect the right to make collective agreements or the right to strike?"

Ernest-Antoine Seillière, president of the business association UNICE, and John Sunderland, president of the Confederation of British Industry, said in a joint statement: "Business is crying out for European leaders able to show the way and push forward vital reforms which will secure stronger economic growth and real social progress. We hope that the spirit of reform will be at the heart of all of the actions taken during the UK Presidency, and particularly at the October summit." 

Hans-Werner Müller, Secretary General to the small and medium business organisation UEAPMEsaid: "Europe’s political leaders must address the legitimate anxiety of citizens concerning their social models in order to win back support for the European integration project and the reforms needed to respond to the dual challenges of demographic change and globalisation. [...] The tendency of member state governments to shirk responsibility and blame their social and economic problems on the EU has taken its toll: public antipathy towards the European project has never been higher. The time for hiding behind the spectre of a distant EU must surely be over; national governments need to address the real fears of European citizens with regard to European integration, as well as encouraging confidence in the necessary reform process." 

Caspar Einem, the newly elected President of CEEP, said: "When speaking about the European social model, we identify two pillars. These pillars are social security for all and non-discriminatory access to services of general interest, what can be summed up with a single word: solidarity."

In an article for Die Zeit weekly, outgoing German Chancellor Gerhard Schröder argues: "Only when economic rationality and a sense of solidarity complement one another will we be able to maintain social peace in the long term. [...] People are ready to take the initiative on their own, but they don't want the state to cease to exist."

Financial Times'
 Wolfgang Munchau argues in an op-ed titled "Why social models are irrelevant", published on 23 October 2005: "These days, it is difficult to find a European think-tank that does not advocate adoption of the Scandinavian social model. But the notion that the social model in small, consensual, wealthy and ethnically homogenous northern European countries such as Sweden and Denmark should serve as a model for large economies with huge wealth and income differences and mass immigration such as Germany or Italy is surely bordering on insanity. 

Yet this is precisely the debate that European Union leaders will be having when they meet for their special summit at Hampton Court near London on Thursday. Instead of focusing on reforms of the social model, they should look at reforms of the EU's economic system. The latter refers to the regulation of markets and macroeconomic governance. The former relates to risk insurance and social transfer systems. In the European debate, we have been committing a big classification error by confusing these two systems."

At the Tripartite Social Summit for Growth and Employment, an annual event being held in London on 24 October 2005, the social partners - ETUC (Trade Unions), UNICE (private employers), UEAPME (small businesses) and CEEP (public employers) - will meet with the heads of government of the current and the two subsequent EU presidencies (the UK, Austria and Finland), and with the European Commission. In this meeting, Commission President José Manuel Barroso is expected to come under pressure after Internal Market Commissioner Charlie McCreevy's controversial comments in the so-called 'Vaxholm case'. During a visit to Stockholm, the commissioner had allegedly attacked the Swedish government's support for long-established Swedish collective agreement procedures. ETUC now expects a commitment from Mr. Barroso for the Commission's continued support for collective bargaining. 

The Informal Summit convened by the British EU Presidency for 27 October in Hampton Court Palace (Surrey) was initially themed around the sustainability of European social models. More recently, it has been re-labelled to deal with the less controversial challenges of globalisation. Critics say the new thematic priority was announced due to fears of the British Presidency that the UK social model would not look as good as some others in the light of newer figures, and that Britain might be forced to discuss the advantages of Scandinavian models, which rely on more social security. According to press reports, the main theme of the one-day Council meeting may be neither social systems nor globalisation, but the growing uncertainty on the EU's room for manoeuvre resulting from the stalled talks on the Union's mid-term budget planning. 

  • On 24 October 2005, EU leaders and social partners will meet in London to discuss questions of Europe's social models
  • On 25 October 2005, Mr. McCreevy and Mr. Barroso will address the European Parliament to answer questions on the Commissioner's controversial comments. 
  • On 26 October 2005, UK Prime minister Tony Blair will address the Parliament in Strasbourg to set out the discussion topics for the Hampton Court Council meeting. 
  • On 27 October 2005, EU heads of state and government will meet in Hampton Court to discuss, according to the UK Presidency, "how to maintain and strengthen social justice and competitiveness in the context of globalisation; Europe’s place in the world; and the security of our citizens". 

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