BEYOND THE MARKET

Beyond the Market: the European Union and National Social Policy examines
the impact of the European Union on the formation and content of national social
policy. The contributors explore the key issues, focusing on the four larger
member states:

• France
• Germany
• Italy
• the UK

The contributors use theory and empirical evidence to highlight the factors that
influence the formation and content of social policy and why some states have
been able to resist EU policy initiatives and maintain their autonomy.
David Hine is Official Student (i.e. Tutorial Fellow) at Christ Church,
University of Oxford. Hussein Kassim is Lecturer in Politics at Birkbeck
College, University of London.
 THE STATE AND THE EUROPEAN UNION
Edited by Anand Menon,
Oxford University, Centre for European Politics,
Economics and Society,
Hussein Kassim,
Birkbeck College, London
and David Hine,
Christ Church, Oxford

This new series presents books based on an ERSC-funded interdisciplinary

seminar series on the theme of state autonomy in the European Union. The series
considers the impact of the EU’s institutions, policy processes and laws on the
policies of member states. The series will consider the impact of the EU on the
autonomy of the member states. The primary focus is on France, Germany, Italy
and the United Kingdom.
THE EUROPEAN UNION AND NATIONAL INDUSTRIAL POLICY
Edited by Hussein Kassim and Anand Menon
THE EUROPEAN UNION AND NATIONAL DEFENCE POLICY
Edited by Jolyon Howorth and Anand Menon
THE EUROPEAN UNION AND NATIONAL MACROECONOMIC POLICY
Edited by Anand Menon and James Forder
BEYOND THE MARKET
The EU and national social policy

Edited by David Hine and Hussein Kassim

London and New York

 First published 1998
by Routledge
11 New Fetter Lane, London EC4P 4EE
This edition published in the Taylor & Francis e-Library, 2005.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection
of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
© 1998 David Hine and Hussein Kassim selection and editorial matter;
individual chapters, the contributors
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form of by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloguing in Publication Data
A catalogue record for this book has been requested

ISBN 0-203-98255-X Master e-book ISBN

ISBN 0-415-15238-0 (hbk)

ISBN 0-415-15239-9 (pbk)
 CONTENTS

Notes on Contributors vii

Preface viii
Acknowledgements ix

1 Introduction: the European Union, state autonomy and 1

national social policy
DAVID HINE
2 Understanding regulatory growth in the European 14
Community
GIANDOMENICO MAJONE
3 Defending the social contract: the EU between global 36
constraints and domestic imperatives
MARTIN RHODES
4 The impact of the European Union on unemployment and 61
unemployment policy
RICHARD JACKMAN
5 Social dumping within the EU 81
DAVID GOODHART
6 Putting the cart before the horse? Labour market challenges 93
ahead of monetary union in Europe
JENS BASTIAN
7 Social partnership at the EU level: initiatives, problems and 109
implications for member states
MICHAEL GOLD
8 The European Union and women’s rights: from the 136
Europeanisation of national agendas to the nationalisation of a
European agenda?
SONIA MAZEY
9 Training policy: steering between divergent national logics 159
SUSAN MILNER
vi

10 EC action and initiatives in environmental protection 182

DAVID FREESTONE AND AARON MCLOUGHLIN
11 Conclusion: the European Union, member states and social 217
policy
HUSSEIN KASSIM AND DAVID HINE

Index 231
 CONTRIBUTORS

Jens Bastian is DAAD Lecturer in German Political Economy at the European

Institute, London School of Economics and Political Science.
David Freestone is Legal Advisor, Environment and International Law,
Washington DC and Professor of International Law, Law School and Institute of
European Public Law, University of Hull.
Michael Gold is Lecturer in European Business and Employee Relations,
School of Management, Royal Holloway, University of London.
David Goodhart is the Editor of Prospect.
David Hine is an Official Student (i.e. Tutorial Fellow) in Politics at Christ
Church, Oxford.
Richard Jackman is in the Department of Economics, London School of
Economics and Political Science.
Hussein Kassim is Lecturer in Politics, Department of Politics and Sociology,
Birkbeck College, University of London.
Giandomenico Majone is External Professor of Political Science,
Department of Political and Social Sciences, European University Institute,
Florence.
Sonia Mazey is Tutor and Director of Studies in Social and Political Sciences,
Churchill College, Cambridge.
Aaron McLoughlin is Ph. D. candidate, Law School, University of Hull and
sometime political assistant to MEPs on the environment and formerly the
Research, Energy and Technology Committee, Office of Dr Gordon Adam, MEP.
Susan Milner is Senior Lecturer in European Studies, School of Modern
Languages and International Studies, University of Bath.
Martin Rhodes is Senior Research Fellow, Robert Schuman Centre, European
University Institute, Florence.
 PREFACE

This volume is based on a series of ESRC-funded research seminars entitled

‘State Autonomy in the European Community’, held in Oxford in the academic
year 1993–4. The seminars examined the impact of EC action on the content of
national policy and on the relationship between policy actors at the national
level, with the aim of assessing both the implications of EC policy for the
member states and the extent to which their autonomy has been circumscribed,
or indeed enhanced. The seminars, which were interdisciplinary, addressed
developments in the following areas: industrial, financial and service sectors;
social policy, environmental protection and consumer policy; macroeconomic
policy; and defence policy. The impact of EU membership on national
administrative systems was also the topic of a seminar.
Neither the Research Seminar Series nor this book would have been possible
without the support of ESRC Award No. A 451 264 400 248.
 ACKNOWLEDGEMENTS

We are grateful to the Governing Body of Christ Church, Oxford, which kindly
supported the seminar on which this volume is based at the college in January
1994.
We should like to thank all participants of the seminar on social,
environmental protection and consumer policy for making it such a stimulating
event. We should also like to express our appreciation to Anand Menon for
helping to organize the seminar and for his important role in turning the results
into an edited volume.
Our greatest debt of gratitude is owed to the contributors for their efforts and
patience in producing this volume.
 1
INTRODUCTION
The European Union, state autonomy and national social
policy

David Hine

The scope of this book

This book, like others in the series,1 examines the impact of the European Union
on the autonomy of its member states.2 Its focus is social policy—broadly
understood as the principles by which a government seeks to affect the
distribution of income, working conditions, and other social circumstances,
according to a politically defined criterion of need and desert, through tax and
benefits arrangements, labour-market regulation, health and safety regulation,
and special opportunities for vulnerable or underprivileged groups. Social policy
can be conceived broadly or narrowly. It could at EU level be said to cover a
wide range of activities, including regional aid policies, social intervention to
assist restructuring in sectors like steel or shipbuilding, or the Common
Agricultural Policy’s extensive intervention in agricultural markets, one essential
purpose of which is income support. Since the focus of the series as a whole is more
on the impact of EU action on the autonomy of the state, than on the content of
policy itself, the editors have opted here for a narrower definition concentrating
on the core areas of social policy, traditionally conceived, and focusing on labour
market policy, training, equal opportunities, and social partnership. The one
exception to this is the chapter on EU environmental policy. This has been
included not only because it involves intervention to mitigate market outcomes,
in terms of the broad social benefits it brings, but also because the style of EU
policy development in this sector offers interesting parallels with that in the
traditional areas of social policy.
In examining the impact of European Union action on member states, the
concept of state autonomy is in many respects preferable as an analytical tool to
its older and more juridically rooted counterpart state sovereignty (see Kassim
and Menon 1996). It captures the range of mechanisms by which member-state
governments are constrained to pursue particular policies even when, in formal-
legal terms, they are free to do otherwise. The distinction is certainly not a new
one, and in the twentieth century it has shed light on the ways in which, for
example, economic interdependence, transnational flows of information, and
massive differences in military power, have affected the capacity of states to
2 DAVID HINE

obtain objectives in pursuit of which, formally speaking, they retain de jure

independence. As the introduction to the first book in this series put it,
‘sovereignty identifies one attribute of the state, it does not capture all aspects of
its power’ (Kassim and Menon 1996:3)
The concept of autonomy is especially apt because, as most contemporary
commentators observe, policy making in the EU is pursued through multi-tiered
institutions, and through complex and often obscure processes, many of which
are informal. The actors involved often have multiple objectives and divided
loyalties, and the networks in which they become involved cross national
boundaries and operate in overlapping legal frameworks. Students of the modern
state, and its autonomy in relation to domestic political and economic interests,
have long recognised the significance of its inability unilaterally to determine its
own destiny. The modern liberal state is not ‘autonomous’ and those who control
the offices of government, albeit by democratic election, are not able to choose
policy goals freely or to implement their policy preferences as they desire. They
are constrained by the checks and balances of liberal institutions, and by the
social pluralism that creates the powerful interest-group actors with which they
must reckon. It would therefore have been surprising if the literature which has
developed on European institutions and policy making over the last two decades
had not developed a similar conventional wisdom about the impact of action and
policy development by the EEC/EC/EU on the autonomy of member states.
Looking at the system from the top down, it is possible to see the Union as a
political system with its own authority structure, an established identity and
legitimacy, and procedural rules and conventions (see Andersen and Eliassen
1993; Wessels 1997). However, it is clearly not a federal state like any other, and
even when a policy competence has been attributed to the Community by treaty,
its influence on the member states, and its ability to make policy and ensure its
implementation, depends not just, and indeed perhaps not primarily, on its legal
authority. The same may be said from the reverse perspective. Member states
retain formal control over policies in many areas, but in order to achieve
objectives in other areas they are periodically constrained to yield to pressures to
conform to centrally determined choices. Thus a member state may lose control
of the policy process not only when it is outvoted in majoritarian decision
procedures, but also, and more often, when it realises it must make compromises
with other member states to achieve some of its objectives; or when the
judgement of market forces constrains its government to adopt policies it would
prefer not to adopt; or when contacts and linkages with the European policy-
making environment change the attitudes and values of important interests, of
significant sectors of domestic public opinion, or even of key elements of the
administration of the member state itself.
 INTRODUCTION 3

EC social policy in the 1980s

The role of social policy at EC level has become a good deal better understood
in the last two decades than in the earlier years of the Community’s existence,
and the arguments surrounding it have been placed in sharper focus. Partly this is
because academic analysts have themselves developed a better grasp of the
processes involved and of the motives and justifications of the actors, as we shall
see below. Partly, it is because the passage of time has made clear how policies
adopted for one set of purposes have consequences in other directions. This
frequently generates new policy demands, and new policy initiatives. This
process, known in technical jargon as ‘spillover’, occurs inside national political
systems, as well as between them, and is present in any complex system of
government where policies have significant and often unforeseen side effects. Its
special significance with respect to the relationship between the EU and the
member states is that it generates arguments about the degree to which it is a one-
way process shifting the location of power from national capitals to Brussels. It
is not clear that any such migration is inevitable, as demonstrated by the debates
about subsidiarity in the 1990s; nor will policy leadership move inevitably into
the hands of the Commission. In fact, it may be difficult to identify any clear
central locus of power. But it does make it likely, for reasons described above, that
the policy autonomy of member states will be under greater threat, and that they
will, at the very least, face a new policy agenda and a new policy community.
The case of social policy provides a ready example of this. The European
Community—by far the most important dimension of integration in Western
Europe—was from its outset a market-driven process. It is true that its
predecessor, the Coal and Steel Community, involved a high degree of regulatory
intervention, and that a major political quid pro quo of the integration of industry
and services through the removal of tariff and non-tariff barriers to trade was the
interventionist Common Agricultural Policy. Nevertheless the creation of a
single market was informed above all by the philosophy of the market, and the
removal of barriers to free competition. In the 1980s, that process was
accelerated with the internal market programme, and was further challenged by
forces in the wider international economic order, notably the globalisation of
capital markets, enhanced competitive pressures from newly industrialising
economies, and major programmes of business restructuring which increased job
insecurity and exacerbated income differentials. When these developments
occurred, a policy reaction raising the issue of EC-led action to redress the
balance away from a purely market-driven process of integration was always
likely.
The counter-pressures of the 1980s, in the shape of demands for policy
initiatives at the Community level, that would safeguard the benefits of
traditional models of social protection, were therefore at least in part the result of
an accelerated drive towards market building. This is not to argue that Western
Europe had or has an homogenous and undifferentiated social model to defend.
4 DAVID HINE

On the contrary, as Martin Rhodes discusses in chapter 3, there are several

different models. However, in the face of a set of powerful, and largely
unidirectional economic changes, perceptions of a common threat arose in most
member states, and in this sense helped persuade at least some governments and
many other social actors to think in terms of common solutions where previously
they had been unwilling to do so.
The themes that emerged in this debate were complex, and not always
internally coherent. A major preoccupation was that growing economic
interdependence was exposing larger proportions of national labour forces to the
impact of the locational preferences of businesses and employers. The extent to
which this phenomenon—known pejoratively as ‘social dumping’—was a real
threat was much disputed (see Goodhart in chapter 5). Nevertheless it fitted into
the new and more sophisticated thinking that was taking place about market
building at least in so far as the mobility of capital seemed increasingly
responsive to variables such as labour market regulation and practice, welfare
costs, trade union strength, skill and productivity levels. What governments do to
influence those factors, so the argument ran, had always contributed to, or
detracted from, the level playing field on which European firms are supposed to
compete, and this had not hitherto been sufficiently recognised. The impact of
such policies on relative competitiveness was never going to be as immediate or
visible as, for example, rapid changes in exchange rates, state aids, or non-tariff
barriers, but, by the late 1980s, it was nevertheless an important and increasingly
discussed complication to the integration process. If the long-term implication
was that market building implied downward competitive pressures on social
provision at member-state level, with national governments ultimately losing
their freedom to define their own domestic social agenda, one solution was to
regain control at Community level. The prospect of monetary union, and the
pressures for budgetary convergence that accompanied it, further eroded
member-state control of social agendas, and thus served only to strengthen this
argument.
It was therefore difficult to exclude social issues from the EC agenda,
particularly in view of the prominence attributed to the social dimension by the
Commission President, Jacques Delors, and the French President, François
Mitterrand. A series of initiatives in the mid-1980s, not all of which were
successful, culminated in the 1989 Community Charter of the Fundamental
Social Rights of Workers, which was later enshrined, albeit ambiguously, in the
so-called ‘social chapter’ of the 1993 Treaty of European Union. At least at the
level of public utterances, therefore, the 1980s and 1990s brought the issue of
social policy much more squarely onto the EC policy agenda.

The antecedents: the struggle for citizenship

These initiatives were, of course, built on pre-existing foundations. Social policy
was enshrined as a legitimate area of EEC action in the Treaty of Rome, with
 INTRODUCTION 5

several articles touching on the issue, the most important of which are found
between articles 117 and 128. DG V, today covering employment, industrial
relations and social affairs, became the main vehicle within the Commission for
promoting policy in the sector, and over the years a variety of working groups,
networks and monitoring systems were set up alongside DG V to facilitate
the gathering and dissemination of information and to encourage mutual
understanding across the great range of national agencies and interest groups
involved in social policy.
However, the remit of the Community in social policy was always ambiguous,
both in terms of its constitutional foundation, and in terms of the political will
behind it. Social policy failed to take off as an important portfolio within the
Commission, or as one in which the Commission played a major role in policy
leadership or in the formal process of policy harmonisation. Its role was limited
by many factors: the dominance of the member states in policies involving direct
redistribution of income and the unanimity requirement in the Council of
Ministers; political fears that taxpayers would resist large interstate transfers for
welfare purposes (admittedly this happened through the CAP, but here it was
concealed as market intervention); the limited budgetary resources and weak
institutions of the EC itself, which would have had to have been enormously
expanded to distribute resources efficiently and fairly; and the significant
variations in the style and content of welfare support across the EC.
For these reasons, the particular conception given to social policy was
essentially one in which policies were justified by virtue of their contribution to
the building of markets, and in which policies were applied above all to
participants in those markets, namely, workers and employers, rather than on the
basis of universal citizenship rights. Hence article 119 dealt with the principle of
equal pay, and article 121 dealt with common social security arrangements for
migrant workers, while articles 123–8 (the European Social Fund) provided
minimum funding to encourage training and job mobility. Much the same
applied to the philosophy behind programmes of regional development
assistance that started in the 1970s. Such programmes undoubtedly entailed some
modest transfers of income, but they were justified in terms of aid to less
developed regions, to assist the long-term capacity of the economies of such areas
to compete in the wider European market. And they were never more than minor
adjuncts to the real exercise in redistribution and social regulation, which
remained anchored firmly at the level of the member states.
During the 1960s and 1970s, relatively little occurred to change this picture.
The Commission continued to proselytise, and in 1974, following a Council
resolution, DG V launched a Community social action programme concerned
with a range of issues linked to employment, the encouragement of social
dialogue, and the enhancement of working conditions. In subsequent years this
programme spawned several new agencies and initiatives, such as the advisory
committee on safety, hygiene and health protection at work, an action
programme in the field of education, and another on equal opportunities for
6 DAVID HINE

women. However, the possibility of further action or the launching of more far-
reaching initiatives was limited by the unwillingness of the member states to
commit themselves to any notion that social policy should be pursued at EC
level in virtue of the concept of Community-based universal citizenship rights.
Only in the 1980s, with the long battle to transform an economic community into
a political union, pursued through three successive treaty revisions, was this
question raised explicitly.
Even when it was finally raised, however, the question proved difficult to
resolve. The discussion preceding the 1989 Community Charter on
‘Fundamental Social Rights’ suggested that the drafters were now thinking in
universal citizenship terms, but in the event the final document not only included
the suffix ‘of Workers’ in the title, but subordinated almost all the rights it
identified to employment status (Hantrais 1995:197–9). The 1993 Treaty of
European Union eventually remedied this in the main body of its text, referring
for the first time to ‘citizenship’ of the European Union, though the rights
established were exclusively political. The Agreement on Social Policy—which
was detached from the main body of the treaty and appended to the TEU as a
Protocol at the insistence of the UK—was closely linked to concepts of social
partnership, but still focused almost exclusively on workers. And at a moment
when the debate on the newly fashionable concept of ‘social exclusion’ (Kennett
1994:23–9) was identifying the real needs of social policy as lying in the
direction of the various categories of non-worker (the unemployed, the old,
casual workers, immigrants, and new entrants to the job market), the Agreement
itself offered these categories little hope. Finally, in 1997, the most recent—and
unratified at the time of writing—round of constitutional revision again turned its
attention to social policy, this time against the background of even greater
concern about the effects of unemployment as the labour-market costs of the
long recession of the mid-1990s mounted. Yet, notwithstanding the insertion in
Section II, chapters 3–7 of the draft Amsterdam Treaty of a long chapter on
‘employment’ and other chapters on ‘social policy’, ‘the environment’,
‘consumer protection’ and ‘public health’ the wording, absence of compulsion
and restrictions on funding suggested to sceptics that the length of the
constitutional text was in inverse proportion to the real underlying commitment
and the probability of immediate action. As in 1991–2, the preparatory work of
the Comité des sages, which was charged by the IGC and the Commission with
reviewing the Social Charter in preparation for treaty reform, produced an
ambitious blueprint to incorporate a range of fundamental social citizenship
rights into the new Treaty, but these were set aside at the IGC itself in favour of
bland phrases and extensive qualifications about their meaning.

Neo-liberal economics and the constraints of the 1990s

The fundamental explanation of why the momentum built up in the 1980s proved
so difficult to translate into an effective EC-led social policy was, of course, that
 INTRODUCTION 7

that momentum arrived too late. By the time the universal citizenship issue and
the social exclusion problem were raised, other conditions had also changed. The
lack of resources to engage in widespread redistributive social programmes at the
European level had become starker than ever. Successive financial-perspective
planning exercises undertaken by the Community underlined that its resources
were to be capped at a level barely above one per cent of GDP throughout the
1990s, and ever-tightening domestic budgetary pressures simply reinforced this.
Meanwhile the concerns in the early 1990s at the growth of the ambitions of both
the Commission and the Court of Justice (the latter, as we shall see, as important
a player in EC social policy as the former) made several governments
increasingly restive about the attribution of new policy competencies. Most
important of all, however, was the changed climate in which economic issues
were now being discussed. The drive towards the market may have been
responsible for the explicit recognition that market-building policies implied a
levelling-down of social-policy provision, but those implications were being read
in very different ways: although on the one hand there were those who argued
for a full-blown European social policy, there was an equally powerful school of
thought which argued that it was the European system of social protection, in its
various national manifestations, which would have to change in order to enable
the EC as a whole to draw real benefit from its own economic integration.
‘Market optimist’ critics of an activist social policy at European level argued that
harmonisation should be left to the market, which would determine the most
appropriate form of national social policy stance, and which would gradually be
adopted by other governments as they perceived its superior qualities. No less
opposed to an EC-level social policy were ‘market-pessimist’ critics, who argued
that harmonisation would have perverse consequences since the structure of
labour markets across the EC was too diverse to make a uniform system of
regulation appropriate.
The events of the 1990s, with which this book is primarily concerned, reflect
the continuing tension between these two opposed philosophies. There is no
doubt that the perspectives of all actors in the social policy community have
altered during this period. The apparently inexorable rise of widespread
unemployment has broadened the focus of possible remedies. Thus, the social
chapter has brought new objectives (social protection, social dialogue and human
resource development), while majority voting has gradually been extended to
cover not just health and safety but also working conditions and equality
questions. The Commission itself has come to accept that, with unemployment
growing and the employment consequences of monetary union difficult to
predict if labour mobility remains low, minimal norms, rather than detailed top-
down harmonisation, are a more appropriate policy response, and are less likely
to conflict with the goals of a more flexible labour market. The action
programmes set by the Commission in 1994 and 1995 accordingly reflect a much
scaled-down set of ambitions from that of the 1980s.
8 DAVID HINE

Erosion of state autonomy without centralisation: the

influence of EU institutions
The chapters of this book do not, however, simply demonstrate that the EU’s
failure to implement an activist and universal system of social regulation,
superseding national differences, has left member states with complete autonomy
to determine their own social policy stances. This is so firstly, and most
obviously, because, while social policy is traditionally associated with measures
mitigating or modifying markets, state autonomy in the social policy field is
affected not just by an activist social policy at the supranational level, but also, in
so far as they have implications for social policy, by the economic liberalism of
market-building measures. Secondly, there are a number of ways in which,
through mechanisms other than the classic top-down EC directive, the autonomy
of member states has been very significantly curtailed. These include the didactic
activism of the Commission in its non-legislative and non-regulatory activities;
business practices and market forces that are only indirectly related to legal and
political aspects of the integration process; and the continuous, albeit often
unpredictable, intervention of the Court of Justice.
The activism of the Commission is documented in a number of ways in the
chapters of this book. In the field of social policy, it is a promoter and an impre-
sario, as much as a legislative leader. As analysis of the domain underlines, the
Commission has brought interests together, monitored developments,
commissioned studies, established agencies and promoted dialogue. The Council
of Ministers may remain the ultimate arbiter of legislation, but the Commission
has been able to set agendas and establish terms for discussion. It has done so in
the fields of unemployment, social partnership, vocational training, women’s
rights, the protection of children, assistance to the disabled, family policy, health
and safety at work and several other areas. Bringing together representatives of
national administrations, national interest groups, national monitoring agencies,
and others involved in the delivery of social policy, it has created at the European
level networks that have profoundly influenced the context in which social policy
is delivered. In this way it has helped shape the intellectual framework in which
even national governments think about social policy, gradually pushing out the
boundaries of what is seen as a legitimate area of concern and involvement for
the Community. None of this gives it authority, still less control, and every inch
of the ground it seeks to occupy has to be fought over, but it finds potential allies
in unusual quarters among governments, employers’ organisations and major
corporations, many of which, though unwilling to see a full-blooded transfer of
regulatory and distributive powers to the centre, are concerned, in the face of
impersonal market processes, that for many social issues there needs to be a
central forum which, at the very least, is seen as the legitimate arena in which
questions can be discussed. Most of these actors are unwilling for good reasons
to leave that forum role to the European Parliament, anxious though that body is
to play a major role in social policy. And they are aware that the Council of
 INTRODUCTION 9

Ministers itself is not always the best place for such activities, since it can
exacerbate national differences and tends to exclude the diversity of interests
represented in any one member state. The range of monitoring and consultative
agencies in the social field, assembled over the years by the Commission, has
therefore become an important magnet for those interested in maintaining
contact across national borders, co-ordinating responses, exchanging
information and engaging, if not in outright ‘social partnership’ at the very least
in a continuous social dialogue.
As far as the Court of Justice is concerned, its opportunity to influence social
policy unwinds over many years after a piece of legislation comes into force, and,
in so far as national social policy legislation can be annulled or constrained by
Court judgements linked to EC treaty or legislative objectives that are
themselves quite outside those in the social policy field, this can be a negative,
even unintended restraint, rather than a positive one. Once a piece of EC
legislation has been agreed, it cannot easily be removed, even long after the
national governments which agreed it have given way to others. A British
Conservative government found in 1994, for example, that an apparently modest
directive the so-called Acquired Rights Directive concerning employee rights
facing transfer of business ownership, agreed by a Labour government in 1977,
and implemented without much controversy into national law by a Conservative
government in 1981, could be interpreted by the ECJ in a completely unexpected
manner that affected UK domestic policy in regard to the contracting out of
public-sector services under rules requiring compulsory competitive tendering
(Adnett 1996:259). Even though, as with most such court-driven policy, the logic
which guides it emanates less from an integrated view of policy needs, as from
somewhat haphazard deductions about legal consistency, court-affected policy
has, as Leibfried and Pierson have argued (1995:51–65), and as several chapters
in this book confirm, had a key influence on the parameters in which national
social policy operates. The Court has delivered over 300 judgements affecting
policy in connection with the mobility of labour, access to and portability of
benefits, forms of discrimination against foreigners in areas such as professional
qualifications, education and health-service provision, and numerous other areas.

The contents of the book

These issues are explored in detail in the chapters which follow. The chapter
which follows this introduction, by Giandomenico Majone, examines the growth
of regulatory powers and agencies at EC level, of which the area of social policy
provides some striking examples. His explanation of this growth lies not only in
the entrepreneurialism of the Commission’s search for alternative mechanisms to
expand its power when its budgetary resources are tightly limited, but also in the
demand for regulation at the level of member states. The latter has expanded in a
fairly indiscriminate way as a response to problems of the low credibility, in an
integrated market, of a system of regulation based on pure
10 DAVID HINE

intergovernmentalism; member states do not trust one another to regulate fairly

and effectively, and can in any case through EC regulation delegate difficult but
necessary decisions, and the blame for them, up to a supranational level. This
growth in regulatory powers and agencies is then compounded by the dynamics
of delegation and control, which tend to work against effective control by
national governments, and which therefore facilitate the growth of policy
networks which follow substantive rather than national lines.
In the following chapter, Martin Rhodes reviews the development of EC
social policy over the last three decades, against the background of different
models of national social policy, and the current crisis in welfare state provision.
In what he identifies as ‘realist’ mode, he concludes that the EC neither can, nor
should, put in place a federal welfare state to substitute for the growing
difficulties at the national level, but that the EC can establish an important floor
of standards, and can assist in implementing best-practice policies to aid
processes of national social-policy adjustment.
Richard Jackman examines the causes of the long-term growth of EC
unemployment in chapter 4, asking whether EC policies have themselves
contributed to that growth, and what policy options are available to reverse the
trend. He concludes that the explanation lies both in global economic changes
and in the requirements of the internal market, that it is destined to worsen as the
EC’s economic ties with central and eastern Europe grow, that most EC member
states have failed to update their labour-market institutions effectively to cope
with these challenges, and have off-loaded a disproportionately large share of the
burden of providing a social safety net on employers.
Moving from the effects of policy uniformity to those of policy
differentiation, David Goodhart examines the vexed issue of ‘social dumping’ in
chapter 5. Goodhart seeks to assess how widespread the phenomenon is, and how
far the EC has attempted to act against it. He concludes that while social
dumping undoubtedly does exist, labour cost differences inside the EC are less
significant than they frequently seem, that the costs of moving production
location are generally very high, that anecdotal evidence from business supports
this view, and that even for the Commission the problem does not rank very highly
compared with other social-policy issues. Reducing standards of social
protection beyond a certain point, in fact, appears to produce sharply diminishing
returns. In any case most companies in high-quality sectors of the economy are
unaffected by minimum-standards legislation.
In chapter 6, Jens Bastian discusses how national governments and the EU
have sought to address the challenges posed by unemployment in western
Europe. He traces the way in which work-sharing emerged as a possible solution
to growing joblessness at the national level with the support of governments,
employers and some trade unions. He also considers the debates that have taken
place in and between EU institutions, highlighting the willingness of the member
states, with the notable exception of the United Kingdom, to develop a common
approach to labour market issues. As in other fields, so in this area, Bastian finds
 INTRODUCTION 11

that state autonomy has been constrained by action at the EU level. The
emergence of Brussels as a decision-making centre has enabled subnational
actors to fight, and often to win, domestic battles in supranational forums. Not
only have trade unions, for example, been able to find allies in EU institutions
and to build coalitions in order to advance positions that are at odds with the
approaches preferred by their national governments, but interventions by the
European Court of Justice have had important implications for national policy,
compelling states to abandon or modify existing practices, to recognise new
rights and obligations, and to introduce legislation that departs from traditional
orientations.
In chapter 7, Michael Gold explores the implications for member states of the
development of social partnership initiatives, particularly against the context of
practices which have developed since 1985, and which were encapsulated
formally in the so-called ‘social chapter’ of the Maastricht Treaty on European
Union. Drawing on the lessons of developments at both industry-wide and
sectoral levels, he concludes that to date constraints—especially concerning the
representational status of the parties involved, enduring differences in the social
and legal frameworks of industrial relations systems, and significant problems of
implementation and enforcement—have held back its impact on the development
of social and labour policies of the member states. However, the legal and
institutional framework is still very new, and although there will be no ‘big
bang’, there is now considerable potential for information disclosure,
consultation and negotiation to evolve into a set of shared values and practices,
led most notably by the multi nationals, and stimulated especially by the recent
Works Council Directive.
In her chapter, Sonia Mazey provides evidence of the somewhat mixed results
stemming from the efforts of EC institutions—the Commission and the Court of
Justice in particular—to force issues onto national political agendas and
progressively ‘Europeanise’ important, though in several member states much
neglected, areas of social rights. Mazey examines the way in which the EC, as
‘purposeful opportunist’, was a catalyst in extending national sex equality laws
in the workplace, and in providing women with a new means of legal redress in
cases of sex discrimination. There remain many shortcomings in the resulting
legislation, and implementation remains a problem, particularly when combined
with the rise of a neo-liberal economic agenda in the 1990s. However, in this
area, the development of formal institutional frameworks at both EU and
national level, providing arenas for discussion, information exchange, action
programmes, and monitoring, as well as implementation, have certainly
influenced the context in which national governments operate, and have tentatively
begun to extend the issue beyond the explicitly ‘social affairs’ arena, sensitising
policy makers in other policy sectors. Nevertheless, Mazey also underlines the
extensive margin for manoeuvre which national governments retain in this sector
and the extent to which national traditions and styles have effected the way in
which policy is implemented.
12 DAVID HINE

These limitations emerge even more clearly in chapter 9, by Susan Milner,

which examines the efforts of the EC to steer training policy between the very
divergent national styles which operate across the Community. Although there
has for some years been a consensus on skill enhancement in general, it
continues to mask radically different approaches between member states. These
differences are difficult to bridge, and Milner argues that the EC’s method of
working, which involves extensive compromise, is not well adapted where
there are sharp ideological differences at stake. Much of the convergence which
has taken place is therefore driven by global economic pressures, though the EC
has been able to act as a significant catalyst for change through its role as
facilitator, forum provider and menu setter.
Chapter 10 by David Freestone and Aaron McLoughlin, examines,
predominantly from a lawyer’s perspective, the impact of EC environmental
policy on members states, showing, as in the case of sex equality, a further
example of ‘Community opportunism.’ Environmental policy has gradually been
pushed up the EC policy agenda, from an almost non-existent starting point, to
become a significant limitation on state competence. However, the locus of
power cannot be defined with precision. Relationships are still evolving, and the
strength of particular actors varies according to political context and the
constellation of alliances, including, most notably, those between the
Commission and particular member states. As in other sectors, moreover, as the
nominal competence of the Community expands, problems of implementation
and enforcement are thrown into ever sharper relief.

Notes

1 Kassim, H. and Menon, A. (eds) (1996) The European Union and National
Industrial Policy, London: Routledge; Howorth, J. and Menon, A. (eds) (1997) The
European Union and National Defence Policy, London: Routledge, and Menon, A.
and Forder, J. (eds) (1998) The European Union and National Macroeconomic
Policy, London: Routledge.
2 Using the terms ‘European Union’ and ‘European Community’ with consistency
and accuracy, but without pedantic repetition, presents problems whenever the time
period or events under analysis straddle the ratification of the Maastricht Treaty of
European Union. By convention, the ‘European Community’ is coming to
represent the economic and social pillar of the European Union, and where only
that pillar is being referred to, or where the reference is to events completed before
the ratification of the Treaty of European Union, it is appropriate to use that term.
In other cases, particularly in a book concerned with social policy, it has been
considered appropriate to use the term ‘European Union’.

References

Adnett, N. (1996) European Labour Markets, London: Longman

 INTRODUCTION 13

Andersen, S.S. and Eliassen, K.A. (1993) Making Policy in Europe. The Europeification
of National Policy, London: Sage
Hantrais, L. (1995) Social Policy in the European Union, London: Macmillan
Howorth, J. and Menon, A. (eds) (1997) The European Union and National Defence
Policy, London: Routledge
Kassim, H. and Menon A. (1996) ‘The European Union and state autonomy’ in Kassim, H.
and Menon A. (eds) The European Union and National Industrial Policy, London:
Rout-ledge, 1–10
Kennet, P. (1994) ‘Exclusion, post-Fordism and the “new Europe”’, in Brown, P. and
Crompton, R. (eds) Economic Restructuring and Social Exclusion, London: UCL
Press, 14–32
Leibfried, S. and Pierson, P. (1995) ‘Semisovereign welfare states: social policy in
a multitiered Europe’, in Leibfried, S. and Pierson, P. (eds) European Social Policy:
Between Fragmentation and Integration, Washington DC: The Brookings Institution,
43–77
Menon, A. and Forder, J. (eds) (1998) The European Union and National Macroeconomic
Policy, London: Routledge
Wessels, W. (1997) ‘An ever closer fusion? A macropolitical view on integration
processes’, Journal of Common Market Studies, 35:2, June
 2
UNDERSTANDING REGULATORY
GROWTH IN THE EUROPEAN
COMMUNITY1
Giandomenico Majone

1
Introduction
The prominent place given to the principle of subsidiarity in the Maastricht
Treaty reveals widespread concerns about the accumulation of regulatory powers
in Brussels, but also raises several theoretically interesting questions. First, how
is over-regulation at the European level possible, given that national
governments are strongly represented at every stage of the policy-making
process? Again, member states strive to preserve the greatest possible degree of
sovereignty and policy-making autonomy, as shown for example by their
stubborn resistance to Community intervention in areas such as macroeconomic
policy and indirect taxation. Why, then, have they accepted many regulatory
measures not foreseen by the founding treaty and not strictly necessary for the
proper functioning of the common market? Finally, concerning the quality rather
than the quantity of Community regulations: how is innovation at all possible in
a system where the formal rights of initiative of the Commission, as well as its
executive functions, seem to be so tightly controlled?
There can be little doubt about the determination of the member states to limit
the Commission’s discretion at every stage of policy making. Political initiative
comes from the heads of state or government (European Council); political
mediation takes place in the framework of the Committee of Permanent
Representatives of the member states (COREPER); formal adoption is the
prerogative of the Council of Ministers; and implementation is in the hands of
the national administrations. Before final adoption by the Council, a Commission
proposal will typically have been discussed in a working group comprising for
the most part national officials; submitted to an advisory committee which
includes outside experts; transmitted to COREPER to be discussed in the
working group of national officials it sets up; reviewed by COREPER once more,
and finally placed before the Council for approval.
The Commission’s discretion in the execution of Council directives has
been tightly regulated by Council Decision 87/373/EEC of 13 July 1987 on the
‘comitology’ system. The system consists of a large number of committees
 GIANDOMENICO MAJONE 15

associated with the Commission in the exercise of its executive functions. Over
the years, the system has become increasingly complex, including both advisory
and oversight (so called ‘management’ and ‘regulatory’) committees. Regulatory
and to some extent also management committees can block a Commission
measure and transmit the case to the Council which can overrule the
Commission.
Not surprisingly, many students of European integration have concluded that
policy innovation in the EC is only possible when national preferences converge
toward some new approach. Intergovernmentalist writers, in particular, rely on a
model of least-common-denominator bargaining, a sort of Ricardian theory of
Community policy making. As in Ricardo’s theory of economic rent, the price of
a good is determined by the unit cost of the output produced by the marginal firm
so, according to intergovernmentalists, the quality of policy decisions in the EC
is determined by the preferences of the least forthcoming (or marginal)
government. Hence, barring special circumstances, the outcome will converge
toward a least-common-denominator position.
Also writers not belonging to the intergovernmentalist school have denied the
possibility of genuine policy innovation. According to these writers, the
Community can hope, at best, ‘to generalize and diffuse solutions adopted in one
or more member states by introducing them throughout the Community. The
solutions of these member states normally set the framework for the Community
solution’ (Rehbinder and Stewart 1985:213).
Not even neo-functionalists thought it necessary to offer a theory of policy
innovation. Ernst Haas explained the growth of European competences in terms
of the ‘expansive logic of sectoral integration’ (Haas 1958). He assumed a
process of functional ‘spillovers’ in which the initial decision of governments to
delegate policy-making powers in a certain sector to a supranational institution
inevitably creates pressures to expand the authority of that institution into
neighbouring policy areas. Economics and technology, rather than political
demands or policy entrepreneurship, would drive the result. Recent versions of
neo-functionalism show greater awareness of the growing importance of
innovation in the EC policy making system. Thus, the notion of ‘political
spillover’ (George 1993) emphasises the role of supranational institutions and
subnational actors in the process of functional spillover. Such empirical
observations are not developed, however, into an explanation grounded in
general theories of institutional behaviour.
In attempting to provide theoretical, rather than ad hoc, explanations for the
apparently unstoppable growth of European regulations, I have found it useful to
distinguish different dimensions of policy growth: quantitative growth; technical
complexity; task expansion; and policy innovation. The usefulness of this
analytic distinction is due to the fact that rather different causal factors operate
along the various dimensions.
The chapter is organised as follows. Section 2 presents some examples and
selected empirical evidence concerning the quantitative and qualitative growth
16 UNDERSTANDING REGULATORY GROWTH IN THE EC

of EC regulation in recent years. The crucial importance of regulation in EC

policy making is explained in section 3 by means of a model which has among
its main variables the limited size of the Community budget and the low
credibility of purely intergovernmental agreements in the field of regulation.
Section 4 discusses the dynamics of delegation and control, while section 5
reviews some recent theories of policy entrepreneurship. Section 6 derives a
number of positive and normative implications from the analysis developed in
the previous sections. The chapter concludes with some remarks on institutional
reform.

2
Some examples
Each of the three questions raised at the beginning of the introduction rests on a
body of empirical evidence which is too extensive to be reviewed here; only a
few suggestive examples will be presented. Concerning the phenomenon of over-
regulation, one can mention the almost exponential growth in the number of
directives and regulations produced, on average, each year: 25 directives and 600
regulations by 1970; 50 directives and 1,000 regulations by 1975; 80 directives
and 1,500 regulations per year since 1985.
To compare: in 1991 Brussels issued 1,564 directives and regulations as
against 1,417 pieces of legislation (laws, ordinances, decrees) issued by Paris, so
that by now the Community introduces into the corpus of French law more rules
than the national authorities. Moreover, according to some estimates, today only
20 to 25 per cent of the legal texts applicable in France are produced by the
parliament or the government in complete autonomy, that is, without any
previous consultation in Brussels (Conseil d’Etat 1992). It seems that Jacques
Delors’ often-quoted prediction that by 1998, 80 per cent of economic and social
legislation will be of Community origin, while perhaps politically imprudent, did
not lack solid empirical support.
Reporting such statistics, the French Conseil d’Etat speaks of normative drift
(derive normative) and luxuriating legislation (droit naturellement foisonnant),
doubting that any government could have foreseen, let alone wished, such a
development. It also points out, however, that the same member states that
deplore the furie régle-mentaire of the Brussels authorities, are among the major
causes of over-regulation—a point we shall examine more closely below.
Concerning the continuously expanding agenda of the Community, a
suggestive indicator is the number of specialised councils of ministers, which
went from fourteen in 1984 to twenty-one in 1993. In addition to the traditional
councils of the ministers of economics, finance, agriculture, trade and industry,
we now have regular meetings of the ministers of the environment (since 1974),
education (since 1974), research (since 1975), consumer affairs (since 1983),
culture (since 1984), tourism (since 1988), civil protection (since 1988) and
telecommunications (since 1988).
 GIANDOMENICO MAJONE 17

Of seven important areas of current policy development—regional policy,

research and technological development, environment, consumer
protection, education, cultural and audiovisual policy, and health and safety at
work—only the latter was mentioned in the Treaty of Rome, and then only as an
area where the Commission should promote close co-operation among the
member states (article 118, EEC). In the case of environmental protection, for
example, three Action programmes were approved before the Single European Act
(SEA) explic-itly recognised the competence of the Community in this area. If the
first Action Programme (1973–6) lacked definite proposals, concentrating
instead on general principles, subsequent documents became increasingly
specific. The second programme (1977–81) indicated four main areas of
intervention, while the third (1982–6) stressed the importance of environmental
impact assessments and of economic instruments for implementing the ‘polluter
pays’ principle. Concrete actions followed. The number of environmental
directives/decisions grew from ten in 1975, to thirteen in 1980, twenty in 1984,
twenty-five in 1985, and seventeen in the six months immediately preceding the
passage of the SEA.
Consider, finally, genuine policy innovation as distinct from mere quantitative
growth or task expansion. As already mentioned, many (perhaps most) students
of EC policy making hold that Community policies cannot move beyond least-
common-denominator solutions, unless the interests of the most important
member states favour some new approach. Thus, according to
intergovernmentalist accounts of the internal market programme, the emphasis of
the 1985 White Paper (COM(85)310, final) on mutual recognition reflects a
change in the preferences of the member states in the direction of less
interventionist economic policies and a corollary shift toward deregulatory
programmes (Keohane and Hoffman 1990:288). Starting from the same
assumption that the decisions of supranational institutions mirror the policy
preferences of the most powerful political and economic actors in Europe, other
authors have argued that the Cassis de Dijon ruling, which gave prominence to
the principle of mutual recognition, was based on the reading of the European
Court of Justice (ECJ) of the interest of the most influential member states
(Garrett 1992; Garrett and Weingast 1993).
A more careful analysis of the evidence reveals a rather different picture.
First, there is no indication that in justifying the Cassis decision the ECJ was
following anything but its own convictions. There is no mention of the idea of
mutual recognition either in the argument of the plaintiffs’ lawyers or in the
observations of the Commission and the conclusions of the Advocate General
(Dehousse 1994). Moreover, countries with a high level of health and safety
standards, such as France and Germany, realised that mutual recognition of such
standards would entail competition among national regulators. Regulatory
competition, it was feared, creates the conditions for ‘social dumping’ as each
country attempts to gain advantages for its own industry and to attract foreign
investments by lowering the level of regulatory constraints which firms must
18 UNDERSTANDING REGULATORY GROWTH IN THE EC

meet. Hence countries with advanced systems of social regulation tended to

support the traditional method of harmonising national standards rather than their
mutual recognition (Alter and Meunier-Aitsahalia 1993).
In fact, the Commission, rather than the member states, had a strong reason for
favouring reform of the traditional approach to harmonisation. By the early
1980s, if not earlier, it had become clear that the attempt to achieve an integrated
market by harmonising thousands of laws and regulations of six, nine, and finally
twelve countries at various levels of economic development and with vastly
different legal, administrative and cultural traditions, was bound to fail. A new
approach was clearly needed. Already in autumn 1979, the Internal Market
Commissioner suggested before the European Parliament that the harmonisation
policy should take a new direction, based on the Cassis judgement. In July 1980,
the Commission sent an ‘interpretative Communication’ to the member states,
the European Parliament and the Council, boldly stating that Cassis would serve
as the foundation for a new approach to harmonisation. The member states
reacted with concern to the broad policy implications drawn by the Commission,
in particular to the prospect of direct competition among national regulators. The
Legal Services of the Council delivered a counter-interpretation of the case,
arguing that the Commission’s generalisation of the Court’s argument was
excessive, and concluding that the Cassis ruling changed virtually nothing (Alter
and Meunier-Aitsahalia 1993). In the event, the Commission’s broad
interpretation prevailed. At the Milan meeting in June 1985, the member states
endorsed the White Paper and its mutual recognition strategy.
Even in the case of day-to-day policy making, the prevailing view seems to be
that the Commission can at best diffuse throughout the Community solutions
adopted in the most advanced member states. There are, it is admitted, some
examples of genuine policy innovation. Thus, the Polychlorinated Biphenyl
(PBC) Directive (76/769/EEC) ‘had no parallel in existing Member State
regulations’, while the Directive on sulphur dioxide limit values (80/779/EEC)
established, on a Community-wide basis, ambient quality standards, which most
member states did not previously employ as a control strategy (Rehbinder and
Stewart 1985: 214). However, lacking adequate theoretical explanations, such
examples tend to be dismissed as special cases of no general significance.
Such a cavalier attitude can no longer be maintained. The SEA, by introducing
qualified majority voting not only for internal-market legislation but also for
important areas of social regulation, has created suitable conditions for the
development of striking regulatory innovations. For example, the framework
Directive 89/391 on Health and Safety at Work goes beyond the regulatory
philosophy and practice even of a country like Germany (Feldhoff 1992). Among
the notable features of the directive are its scope (it applies to all sectors of
activity, both public and private, including service, educational, cultural and
leisure activities), the general obligations imposed on employers, the
requirements concerning worker information, and the emphasis on participation
and training.
 GIANDOMENICO MAJONE 19

Equally innovative are the Machinery Directive (89/392/EEC) and, in a more

limited sphere, Directive 90/270 on health and safety for work with display
screen equipment. Both directives rely on the concept of ‘working environment’,
which opens up the possibility of regulatory interventions in areas traditionally
considered to be outside the field of occupational safety, and consider
psychological factors like stress and fatigue as important factors to be considered
in a modern regulatory approach. It is difficult to find equally advanced
principles in the legislation of any major industrialised country, inside or outside
the EU.
In order to explain such policy outputs we need new, more analytical theories
of the policy process in the Community. Such theories should be capable of
explaining the qualitative deepening of EC regulation as well as its apparently
unstoppable growth.

3
A model of regulatory policy making
To understand policy making in the EC one must start from the basic fact that the
budget of the EC is quite small, even after the significant increases of recent
years. It represents less than 4 per cent of all the central government spending of
the member states and less than 1.3 per cent of the gross domestic product
(GDP) of the Union. By comparison, between 45 and 50 per cent of the wealth
produced in the member states is spent by the national governments. The
Community budget is not only small, but also rigid: almost 70 per cent of total
appropriations consists of compulsory expenditures for programmes such as the
Guarantee Section of the European Agricultural Guidance and Guarantee Fund
(EAGGF).
Second, it is important to distinguish between regulatory policies and policies
involving the direct expenditure of public funds. Examples of the latter type are
redistributive policies, which transfer resources from one group of individuals,
regions or countries to another group, and distributive policies, such as public
works or financial support for research and technological development, which
allocate public resources among different activities. Now, an important
characteristic of regulatory policy making is the limited influence of budgetary
limitations on the activities of regulators. The size of direct-expenditure
programmes is constrained by budgetary appropriations and, ultimately, by the
size of government tax revenues. In contrast, the real costs of most regulatory
programmes are borne directly by the firms and individuals that have to comply
with them. Compared with these costs, the resources needed to produce the
regulations are trivial. It is difficult to overstate the significance of this structural
difference between regulatory and direct-expenditure policies. The distinction is
especially important for the analysis of Community policy making since not only
the economic but also the political and administrative costs of implementing EC
regulations and directives are borne, directly or indirectly, by the member states.
20 UNDERSTANDING REGULATORY GROWTH IN THE EC

Third, I assume that the European Commission, like any other bureaucratic
organisation, attempts to maximise its influence, subject to budgetary, political
and legal constraints. The present discussion focuses on the budgetary
constraints. As already noted, the financial resources of the Community go, for
the most part, to the Common Agricultural Policy and to a handful of distributive
and redistributive programmes. The remaining resources are insufficient to
support large-scale initiatives in areas like industrial policy, energy, research or
technological innovation. Hence, the only way for the Commission to increase its
role is to expand the scope of regulatory activities, even beyond the functional
requirements of the common market.
As we saw in the preceding section, this strategy has been remarkably, some
would say too, successful, but the reasons for the success cannot be found only in
the preferences of the Commission. The EC policy-making system includes
many actors: industrialists, trade unions, public-interest groups, national and
subnational politicians and bureaucrats, independent experts, and so on. The
Commission plays a key role in the supply of Community regulation; we must
now consider the demand side. In order to simplify the exposition, I shall only
consider the most important actors on the demand side, the national governments
(for a more detailed analysis, see Majone 1992, 1994a).
It may seem illogical, if not plainly wrong, to discuss the role of the member
states in the development of Community regulation under the heading of demand.
After all, most legally binding acts have to be approved by the Council which
represents the interests of the national governments and is supposed to be the
real legislator in the EC system. Why not place the member states and the
Commission on the same side of the demand-and-supply equation, as ‘co-
producers’ of the regulatory outputs? Although this is the formally correct view,
several factors suggest that from a policy making point of view it is more useful
to consider that national governments demand, rather than supply, EC regulation.
To begin with, there is considerable evidence that many Commission
proposals are introduced at the suggestion of member states (as well as of other
actors such as the European Parliament, the Council of Ministers, the Economic
and Social Committee, and private interests). For example, the German and
Dutch governments played a key role in the initiation and drafting of EC
directives concerning vehicle emission control, while the British government
exerted considerable pressure on the Commission to liberalise the market for life
and non-life insurance where British insurers enjoy a comparative advantage
over their competitors on the continent. According to the report of the French
Conseil d’Etat cited above, of the last 500 proposals of regulations and directives
presented by the Commission as of 1991, only 6 per cent appear to be
‘spontaneous initiatives’, so that the overwhelming majority of proposals would
actually be produced on the demand of member states or other actors.
A second and theoretically more important factor has to do with the issue of
policy credibility. As noted in the introduction, it is not a priori obvious why
member states would be willing to delegate regulatory powers extending well
 GIANDOMENICO MAJONE 21

beyond the level required by the founding treaty or by the logic of functional
spillovers in an increasingly integrated market. As Ronald Coase (1960) has
shown in a famous article, the presence of negative externalities does not in itself
prevent effective co-ordination among independent actors.
A significant implication of Coase’s theorem is that the rationale for
supranational regulation is regulatory failure rather than market failure. Market
failures with international impacts, such as transboundary pollution, could be
managed in a co-operative (intergovernmental) fashion without the necessity of
delegating regulatory powers to a supranational body, provided that national
regulators were willing and able to take into account the international
repercussions of their choices; that they had sufficient knowledge of one
another’s intentions; that the (transaction) costs of organising and monitoring
policy co-operation were not too high; and especially that they could trust each
other to implement in good faith their joint decisions.
International regulatory failure occurs when one or more of these conditions
are not satisfied. For example, it is usually difficult to observe whether
intergovernmental regulatory agreements are kept or not. This is because much
economic and social regulation is discretionary. Because regulators lack
information that only regulated firms have, and because governments for political
reasons are reluctant to impose excessive cost on industry, bargaining is an
essential feature of the process of regulatory enforcement. Regardless of what the
law says, the process of regulation is not simply one where the regulators
command and the regulated obey. A ‘market’ is created over the precise
obligations of the latter (Peacock 1984). Since bargaining is so pervasive, it may
be impossible for an outside observer to determine whether or not an
international regulation has been, in fact, violated.
When it is difficult to observe whether governments are making an honest
effort to enforce a co-operative agreement, the agreement is not credible. One
solution is to delegate regulatory tasks to a supranational authority with powers
of monitoring and of imposing sanctions. Sometimes governments have
problems of credibility not just in the eyes of each other, but in the eyes of third
parties such as regulated firms. Thus, where pollution has international effects
and fines impose significant competitive disadvantages on firms that compete
internationally, firms are likely to believe that national regulators will be
unwilling to prosecute them as rigorously if they determine the level of
enforcement unilaterally rather than under supranational supervision. Hence the
transfer of regulatory powers to a supranational authority like the European
Commission, by making more stringent regulation credible, may improve the
behaviour of regulated firms (Gatsios and Seabright 1989). Also, because the
Commission is involved in the regulation of a large number of firms throughout
the European Union, it has much more to gain by being tough in any individual
case than a national regulator; weak enforcement would destroy its credibility in
the eyes of more firms. Thus it may be more willing to enforce sanctions than a
member state would be, even if its direct costs and benefits of doing so are no
22 UNDERSTANDING REGULATORY GROWTH IN THE EC

different (ibid.:50). The fact that the Commission is involved in the regulation of
a large number of firms throughout Europe also explains why it is less vulnerable
to the risk of ‘regulatory capture’ than national regulators.
Perhaps the greatest advantage of EC membership in a period of far-reaching
policy changes, is the possibility of delegating politically difficult decisions
(such as the elimination of state aid to industry, the enforcement of competition
rules, trade liberalisation and strict implementation of environmental regulations
during economic recession) to supranational non-majoritarian institutions
(Majone 1994b). By showing that their hands are tied by European rules,
member states can increase the international credibility of their policy
commitments and, at the same time, reduce the power of redistributive coalitions
at home. In sum, the low credibility of purely intergovernmental agreements,
together with the advantage of shifting politically difficult decisions to a non-
majoritarian institution, explains the willingness of member states to delegate
important regulatory powers to the Commission. In the next section, we explore
the consequences of this delegation.

4
The dynamics of delegation and control
The delegation of extensive powers of adjudication and policy making to
supranational institutions is what distinguishes the EC from more traditional
international regimes. Its implications are still poorly understood, however.
Neither neo-functionalists nor intergovernmentalists have seriously considered
the dynamics of delegation and control; the former because of their faith in the
automatism of functional spillovers, the latter because of their assumption that
supranational institutions simply provide a smooth, faithful translation of national
interests into policy. To analyse the consequences of the delegation of policy
making powers, and the possibilities of political control one must turn to the
literature on political—bureaucratic and principal—agent relations rather than to
traditional theories of European integration.
The thrust of much recent research on political-bureaucratic relations is that
bureaucracy has a substantial degree of autonomy, and that direct political control
is rather weak (Wilson 1980; Moe 1987, 1990; Majone 1994c). Oversight for
purposes of serious policy control is time consuming, costly, and difficult to do
well under conditions of uncertainty and complexity At any rate, legislators are
concerned more with satisfying voters to increase the probability of re-election
than with overseeing the bureaucracy. As a result, they do not typically invest
their scarce resources in general policy control. Instead, they prefer to intervene
quickly, inexpensively and in ad hoc ways to protect particular clients in
particular matters (Mayhew 1974). Hence legislative oversight is un-coordinated
and fragmented. Similarly, the literature on the budgetary process has cast doubts
on the budget as an effective tool of control. As Wildavsky (1964) discovered,
 GIANDOMENICO MAJONE 23

budgeting is decentralised and incremental, resulting in automatic increases that

further insulate the bureaucracy from political control.
New theories based on the principal-agent model give a somewhat more
positive assessment of the possibility of political control of the bureaucracy.
According to agency theory, political control is possible because elected
politicians create bureaucracies. They design administrative institutions with
incentive structures to facilitate control, and they monitor bureaucratic activities
to offset information asymmetries. Thus, agency theory, like recent versions of
intergovernmentalism (Moravcsik 1993), posits well-informed central decision
makers who systematically mould the preferences of bureaucratic agents and are
capable of exercising rational political control (Wood and Waterman 1991:803).
However, the process is considerably more complex than envisaged by these
theories. In the delegation phase, political principals do have the freedom to
select their agents and impose an incentive structure on their behaviour. Over time,
however, bureaucrats accumulate job-specific expertise, and this ‘asset
specificity’ (Williamson 1985) alters the original relationship. Now politicians
must deal with agents they once selected, and in these dealings the bureaucrats
have an advantage in technical and operational expertise. As a result, they are
increasingly able to pursue their objective of greater autonomy. As Terry Moe
(1990:143) writes:

Once an agency is created, the political world becomes a different place.

Agency bureaucrats are now political actors in their own right: they have
career and institutional interests that may not be entirely congruent with
their formal missions, and they have powerful resources—expertise and
delegated authority—that might be employed toward these ‘selfish’ ends.
They are now players whose interests and resources alter the political
game.

This recent research on political-bureaucratic relations throws considerable light

on the dynamics of delegation and control in the EC context. Also, for the
representatives of the member states in the Council of Ministers, oversight for
purposes of serious policy control is costly, time-consuming, and difficult to do
well. Hence their unwillingness to invest scarce resources in such activities. As
was mentioned in section 2, the ‘comitology’ system is an attempt to control the
Commission’s discretion in the execution of Council directives. Regulatory and
management committees created under this system can block a Commission
measure and transmit the case to the Council, which can overrule the
Commission. Even in the case of such committees, however, the Commission is
not only in the chair, but has a strong presumption in its favour (Ludlow 1991:
107). According to the more detailed empirical study of the comitology system to
date ‘Commission officials generally do not think that their committee
significantly reduced the Commission’s freedom and even less that it has been set
up to assure the Member State’s control’ (Institut für Europäische Politik 1989:
24 UNDERSTANDING REGULATORY GROWTH IN THE EC

9). According to the same study, the Council acts only rarely on the complex
technical matters dealt with by the comitology committees, but when it does, its
decisions mostly support the Commission’s original proposals (ibid.:123). In fact
the Commission has reported overwhelming (98 per cent) acceptance of its
proposals by the various regulatory committees (Eichener 1992).
The case of policy initiation, the formal procedure according to which
Commission proposals are discussed in a working group comprising national
experts, submitted to an advisory committee, and reviewed by COREPER, also
gives an impression of tight control that does not correspond with reality. What
is known about the modus operandi of the advisory committees and working
groups suggests that debates there follow substantive rather than national lines. A
good deal of ‘copinage technocratique’ develops between Commission officials
and national experts interested in discovering pragmatic solutions rather than
defending political positions (Eichener 1992). By the time a Commission
proposal reaches the Council of Ministers all the technical details have been
worked out and modifications usually leave the essentials untouched.
In part, this is because although the Council with its working groups can
monitor the activities of the Commission, it cannot complete with the expertise
at the disposal of the Commission and its Directorates (Peters 1992:119). The
offices of the Commission responsible for a particular policy area form the
central node of a vast ‘issue network’ that includes, in addition to the experts
from the national administrations, independent experts, academics,
environmental, consumer and other public-interest advocates, representatives of
economic interests, professional organisations and subnational governments.
Commission officials engage in extensive discussions with all these actors but
remain free to choose whose ideas and proposals to adopt. The variety of policy
positions, which is typically much greater than at the national level, increases the
freedom of choice of European officials. It may even happen that national
experts find the Commission a more receptive forum for new ideas than their
own administration. The important Machinery Directive (89/392EEC) mentioned
in section 2, offers a striking example of this. The crucially important technical
annex of the directive was drafted by a British labour expert who originally had
sought to reform the British approach to safety at the workplace. Having failed to
persuade the policy makers of his own country, he brought his innovative ideas
to Brussels, where they were welcomed by Commission officials and eventually
became European law (Eichener 1992:52).

5
Policy entrepreneurship
The existence of large margins of regulatory discretion is a necessary but not a
sufficient condition for genuine policy innovation. We must also consider the
capacity of Commission officials to play the role of policy entrepreneurs.
Kingdon (1984) describes policy entrepreneurs as constantly on the look-out for
 GIANDOMENICO MAJONE 25

windows of opportunity through which to push their preferred ideas. Policy

windows open on those relatively infrequent occasions when three usually
separate process streams—problems, politics and policy ideas—come together.
Policy entrepreneurs concerned about a particular problem search for solutions in
the stream of policy ideas to couple to their problem, then try to take advantage
of political receptivity at certain points in time to push the package of problem
and solution.
A successful policy entrepreneur possesses three basic qualities: first, he must
be taken seriously either as an expert, as a leader of a powerful interest group, or
as an authoritative decision maker; second, he must be known for his political
connections or negotiating skills; third, and probably most important, successful
entrepreneurs are persistent (Kingdon 1984:189–90). Because of the way they
are recruited, the structure of their career incentives, and the crucial role of
the Commission in policy initiation, Commission officials often display the
qualities of a successful policy entrepreneur to a degree unmatched by national
civil servants.
In particular, the Commission exhibits the virtue of persistence to an
extraordinary degree. Most important policy innovations in the EC have been
achieved after many years during which the Commission persisted in its attempts
to ‘soften up‘the opposition of the member states, while waiting for a window of
opportunity to open. A textbook example is the case of the Merger Control
Regulation approved by the Council on 21 December 1989, after more than twenty
years of political wrangling.
As far back as 1965, the Commission argued that the Treaty of Rome was
seriously deficient without the power to control mergers. The following year it
asked a group of experts to study the problem of concentrations in the common
market. The majority of the group held that article 85 of the Rome Treaty could
be applied to ‘monopolising’ mergers, but the Commission chose to follow the
contrary opinion of the minority. It did, however, accept the majority view
concerning the applicability of article 86 to mergers involving one company
already in a dominant position in the common market. The European Court of
Justice followed the Commission’s interpretation in the Continental Can case
(1973).
At the beginning of 1974 the European Parliament and the Economic and
Social Committee approved by large majorities a proposal for a merger control
regulation, but the member states were not yet prepared to grant the Commission
the powers it requested. A long period of inaction followed. The process was again
set in motion by the path-breaking Philip Morris Judgement of 17 November
1987 in which the Court of Justice held, against the then prevalent legal opinion,
that article 85 does apply to the acquisition by one company of an equity interest
in a competitor where the effect is to restrict or distort competition. The
Commission warmly endorsed the Court’s decision. It was clear that another
important step, after Continental Can, had been taken on the road toward the
control of merger activities with a ‘Community dimension’. In the meanwhile, the
26 UNDERSTANDING REGULATORY GROWTH IN THE EC

‘Europe 1992’ programme for the completion of the internal market had
stimulated waves of mergers. This development opened the window of
opportunity the Commission had been waiting for so long. Centralised merger
control of Community-wide mergers could now be presented as essential for
success in completing the internal market. Finally, the convergence of Kingdon’s
three streams of problems, politics, and policy ideas produced the 1989 Merger
Control Regulation.
This episode in the history of EC policy making provides a clear illustration of
the persistence and entrepreneurial skills of the Commission, but also supports a
more general point, namely that an adequate explanation of policy development
in the EC must be rooted in the dynamics of the entire system, and must pay
serious attention to the relationships of mutual dependence among European
institutions. Thus, in section 2 we mentioned the strategic significance of mutual
recognition for the Commission, rather than for the member states. Only through
this new approach to harmonisation could the objectives of the internal
market programme be achieved in time. In turn, the new approach was made
possible by the actions and decisions of both the Commission and the Court of
Justice. The relationship of mutual dependence of these two institutions has been
expressed very well by Alter and Meunier-Aitsahalia (1993:19) The Cassis
decision advanced the idea of mutual recognition, and the entrepreneurship of the
Commission put the issue on the table and forced a debate. Both the decision itself
and the Commission’s response were necessary to produce the new
harmonisation policy. The legal decision was needed to encourage the
Commission to issue its bold Communication…. The Commission’s
Communication, however, was also necessary in order to bring the legal decision
into the political arena.’
Combining concepts from public choice theory with historical case studies,
William Riker (1986) provides additional insights into the strategies used by
policy entrepreneurs to change existing political coalitions. He argues that
through agenda setting, strategic behaviour, and especially through the
introduction of new policy dimensions to political debate, the entrepreneur can
break up existing equilibria in order to create new and more profitable political
outcomes. The successful entrepreneur ‘probes until he finds some new
alternative, some new dimension that strikes a spark in the preferences of others’
(ibid.:64).
A good example of this strategy is the introduction by the Commission of the
concept of working environment into the Europe-wide debate on health and
safety at work. As was mentioned in section 2, this concept opens up the
possibility of regulatory interventions in areas such as ergonomics traditionally
considered to be outside the field of occupational safety. In view of the claims by
intergovernmentalists that Community policy making is under the control of the
most powerful member states, it should be pointed out that the important
Machinery Directive and other equally innovative directives in the area of
occupational safety (see section 2) were inspired by the regulatory philosophy of
 GIANDOMENICO MAJONE 27

two small countries—the Netherlands and Denmark, which first introduced the
concept of working environment into their legislation—and opposed by Germany
in order to preserve the power and traditional approach of its own regulatory
bodies (Feldhoff 1992; Eichener 1992).

6
Positive and normative implications
As was suggested in the introduction, in order to understand the development and
growth of regulatory policies in the EC it is important to distinguish between
different manifestations of the phenomenon: quantitative growth, regulatory
complexity, task expansion and ‘deepening’, that is, genuine policy innovation.
The theories discussed in the preceding pages suggest a number of observations
concerning these various dimensions of development and growth.
The model of demand and supply of EC regulation sketched in section 3 seeks
to explain regulatory origin rather than the ongoing regulatory process.
Nevertheless, the model has significant implications for the issues raised in this
chapter. It will be recalled that the main explanatory variables, in addition to
the Commission’s desire to increase its influence, are the budget constraint and
the low credibility of intergovernmental regulatory agreements.
Paradoxically, the attempt of the member states to limit the scope of
supranational policies by imposing a tight and rigid budget constraint on the
Commission, has favoured the development of a mode of policy making that is
largely immune from budgetary discipline. As an American student and
practitioner of regulation writes:

Budget and revenue figures are good summaries of what is happening in

welfare, defense, or tax policy, and can be used to communicate efficiently
with the general public over the fray of program-by-program interest-group
contention. In the world of regulation, however, where the government
commands but nearly all the rest takes place in the private economy, we
generally lack good aggregate numbers to describe what is being ‘taxed’
and ‘spent’ in pursuit of public policies. Instead we have lists—endless
lists of projects the government would like others to undertake.
(De Muth 1984:25)

Thus, continuous expansion is a structural feature of regulatory policy making,

and not only or even primarily the result of functional spillovers and the ‘expan-
sive logic of sectoral integration’ as neo-functionalists argued. Two additional
factors contribute to the seemingly unstoppable growth of European regulation.
First, it has already been mentioned that the great majority of recent EC
regulations and directives are not the result of ‘spontaneous initiatives’ of the
Commission, but rather of demands coming especially from individual member
states and the Council, but also from the European Parliament, the Economic and
28 UNDERSTANDING REGULATORY GROWTH IN THE EC

Social Committee, regional governments, and various private and public interest
groups. The possibility granted by the Maastricht Treaty to the European
Parliament to ask the Commission to submit legislative proposals can only
strengthen this trend.
While the responsiveness of the Commission to such requests may increase its
political legitimacy, uncontrolled and un-coordinated demands can produce a
number of negative consequences, of which legislative inflation is the most
obvious one. These consequences are aggravated by institutional factors.
Because the European Commission is a collegial body, central coordination of
the regulatory programmes of the different Directorates-General (DGs) is quite
difficult. Lack of central co-ordination leads to serious inconsistencies across and
within regulatory programmes, lack of rational procedures for selecting policy
priorities, and insufficient attention to the cost-effectiveness of individual rules.
One method of reducing over-regulation would be to create an institution with
the power to oversee the entire regulatory process and to discipline the activity
of the DGs by comparing the social benefits of proposed regulations with the costs
imposed on the European economy by the regulatory requirements. Such an
institution or ‘regulatory clearing house’ should be established at the highest
level of the Commission. DGs would be asked to submit draft regulatory
programmes to it annually for review. When disagreements or serious
inconsistencies arise, the President of the Commission or a ‘Working Committee
on regulation’ would be asked to intervene. This review process would help the
Commission to screen demands for EC regulations and to shape a consistent set
of regulatory measures to submit to the Council and the European Parliament.
The usefulness of the procedure could be enhanced by coordinating the
regulatory review with the normal budgetary review, thus linking the level of
budgetary appropriations to the cost-effectiveness of the different regulatory
programmes (Majone 1992).
Let us now consider the issue of regulatory complexity. Many students of EC
policy making have observed that EC directives exhibit a much greater level of
technical detail than comparable national legislation. The widespread opinion
that this level of complexity is due to the technical perfectionism of the
Commission lacks plausibility: the Commission is very small relative to its tasks,
has limited resources, and is largely composed of generalists, not of technical
experts. Rather, it is distrust of the member states which is largely responsible
for regulatory complexity. Doubting the commitment of other governments to
honest implementation of European rules, and being generally unfamiliar with
different national styles of administration, national representatives insist on
spelling out mutual obligations in the greatest possible detail, including at times
chemical, statistical or mathematical formulae.
Member states not only mistrust each other; they also mistrust the
Commission. As noted in section 4, in order to limit the discretion of the
Commission they have created a complex system of working groups and
advisory committees largely staffed by national experts. For the reasons given
 GIANDOMENICO MAJONE 29

above, the system is not very effective in reducing the freedom of choice of the
Commission, but it introduces a strong technical bias into the regulatory process.
This is because most national experts are narrow technical specialists more
interested in process and technical details than in cost-effective and easy-to-
implement solutions. This technical bias, combined with the reluctance of the
Council to engage in serious policy control and the lack of central oversight at
the Commission level, is probably another factor contributing to regulatory
complexity.
This hypothesis is supported by more general theoretical considerations. Some
economists have argued that an explanation of regulatory complexity does not
need to rest on peculiar interests of the regulators but on economic interests of
third parties, namely specialists in various aspects of regulation such as lawyers,
accountants, engineers or safety experts. Unlike other interest groups, these
experts care more about the process than the product of regulation. They have an
interest in regulatory complexity because complexity increases the value of their
expertise. Thus ‘red tape’ may not simply be evidence of bureaucratic
inefficiency or ineptness. Rather, in part, ‘red tape’ is a private interest that arises
because a complex regulatory environment allows for specialisation in rule
making and rule intermediation’ (Kearl 1983; Quandt 1983).
In 1985 the Commission introduced a new approach to technical regulation
with the explicit objective of reducing regulatory complexity (COM(85)310,
final). In essence, the new approach proposes a conceptual distinction between
matters where harmonisation of national regulations is essential, and those that
can be left to the sphere of voluntary technical norms (the principle of ‘reference
to standards’), or where it is sufficient that there be mutual recognition of the
requirements laid down by national laws. In practice, the new approach replaces
the multitude of specification standards (also called process or engineering
standards) by a few performance standards which a product must satisfy in order
to secure the right of free movement throughout the single European market.
The technical specifications formulated by European standardisation bodies
(such as the European Standardisation Committee, CEN, and the European
Standardisation Committee for Electrical Products, CENELEC) are not binding
and retain their character of voluntary standards. However, governments are
obliged to presume that products manufactured in accordance with European
standards (or, temporarily, with national standards when no European ones are
yet available) comply with the ‘fundamental requirements’ or performance
standards stipulated in the directive (Pelkmans 1987). The system is completed
by the mutual recognition of testing and certification procedures.
The new methodology is a highly innovative approach to supranational
regulation in general, and to the problem of regulatory complexity in particular,
but its success depends crucially on the level of mutual trust among the member
states. In the absence of mutual trust, national regulators may upset the delicate
balance between different and potentially conflicting objectives—satisfying
essential requirements of health and safety and preventing the creation of non-tariff
30 UNDERSTANDING REGULATORY GROWTH IN THE EC

barriers through regulation—on which mutual recognition rests. The experience

with the mutual recognition of approvals of new medical drugs provides a
graphic illustration of this point.
For more than two decades the Commission has attempted to harmonise
national regulations for new medical drugs by means of a set of harmonised
criteria for testing new products, and the mutual recognition of toxicological and
clinical trials conducted according to EC rules. Under the ‘multi-state drug
application procedure’ (MSAP) introduced in 1975, a company that has received
a marketing authorisation from the regulatory agency of a member state may ask
for the mutual recognition of that approval by at least five other countries. The
agencies of the countries nominated by the company must approve or raise
objections within 120 days. In the case of objections, the Committee for
Proprietary Medicinal Products (CPMP)—which includes national experts and
Commission representatives—has to be notified. The CPMP must express its
opinion within sixty days; within another thirty days it may be overruled by the
national agency that has raised objections.
Unfortunately, the procedure has not worked well: national regulators did not
appear to be bound either by decisions of other regulatory bodies, or by the
opinions of the CPMP. Even a new, simplified procedure introduced in 1983
did not succeed in streamlining the approval of process, since national regulators
continued to raise objections against each other almost routinely (Kaufer 1990).
These difficulties finally convinced the Commission to propose the
establishment of a European Agency for the Evaluation of Medicinal Products
and the creation of a new centralised Community procedure—compulsory for
biotechnology products and certain types of veterinary medicines, and available
on an optional basis for other products—leading to a Community authorisation
(Commission of the European Communities 1990).
As this example shows, a good deal of decentralisation would be possible if
only national regulators would trust each other more. Often mistrust reflects
insufficient appreciation of different regulatory philosophies and national styles
of policy making. However, in some cases regulators have low international
credibility because they lack, or are perceived as lacking, the scientific and
technical expertise, financial resources and policy infrastructure needed to deal
effectively with complex regulatory issues. In such cases, Community assistance
may be needed to ensure that all member states achieve a level of competence
sufficient to support mutual trust and make mutual recognition possible.
The gist of the argument presented so far is that national governments and
regulatory authorities bear a considerable share of the responsibility for the
volume and complexity of EC regulation. Hence, remedies should first be sought
at the level of the member states, although more centralised control of regulatory
programmes within the Commission would be helpful too. Where the policy
entrepreneurship of the Commission becomes important is in explaining the
progressive ‘deepening’ of EC regulations.
 GIANDOMENICO MAJONE 31

In sections 4 and 5 I have discussed in general terms the conditions which

make policy entrepreneurship possible, and the most important strategies
followed by successful entrepreneurs. Here I consider a particular, but
significant, aspect of ‘deepening’: the fact that some of the most striking
examples of policy innovation in the EC are in the area of social regulation (see
section 2). There is, of course, a straightforward explanation for this. Clearly, there
is limited scope for innovation when policies are either prescribed by treaty—the
case of competition, agriculture or trade policies—or represent a necessary
response to the functional needs of an increasingly integrated market—rules
concerning the free movement of goods, services, capital and people. At least since
the Single European Act, social regulation does not have to be justified in
functional terms, and thus offers greater scope for entrepreneurship and
innovation than traditional EC policies.
However, a more interesting explanation is suggested by James Q. Wilson’s
well-known taxonomy of regulatory policies according to the pattern of
distribution of benefits and costs (Wilson 1980:366–72). In this taxonomy,
entrepreneurial policies correspond to policies that confer general (though
perhaps small) benefits at a cost to be borne by a small segment of society. Most
social regulation falls into this category. The costs of cleaner air and water, safer
products and better working conditions are borne, at least initially, by particular
segments of industry. Since the incentive is strong for the opponents of the
policy but weak for beneficiaries, social regulatory measures can be passed only
if there is a policy entrepreneur who can mobilise public sentiment, put the
opponents of the measures on the defensive, and associate the proposed
regulation with widely shared values.
According to Wilson, the entrepreneur is vicarious representative of groups not
directly part of the legislative process. The observation helps us understand the
growing importance of social regulation, and hence of entrepreneurial politics, in
the EC. Historically, diffuse interests have been poorly represented in Europe
because traditional forms of state intervention tended to favour producers—
capitalists and unionised workers—at the expense of consumer interests. Also,
political systems characterised by strong party control of both the executive and
the legislature, and highly centralised public bureaucracies, impeded the
emergence of independent political entrepreneurs.
On the other hand, the insulation of the Commission, a non-majoritarian
institution, from partisan politics, the activism of the European Court of Justice,
and the efforts of the European Parliament to define its own distinctive role, are
all factors that explain why diffuse interests are often more effectively protected
at the European than at the national level. Critics of regulatory growth in the EC
should not forget than in most member states consumer-protection legislation
and even environmental policies were poorly developed, when not entirely
lacking, before national governments were forced to implement European
directives in these areas.
32 UNDERSTANDING REGULATORY GROWTH IN THE EC

7
Conclusion: toward institutional reform
There is a general agreement that a Community of sixteen, twenty or more
members could not function under present rules: institutional reform is urgently
needed. Although this chapter is not specifically concerned with this vast topic,
some of its findings may be relevant to the broader issue.
A first point of methodological interest is that one should not overemphasise
the sui generis nature of the Community, but rather attempt to distinguish
between idiosyncratic problems and those that can be more generally ascribed to
a mode of policy making or method of governance. Thus, over-regulation is a
general problem, though it may be aggravated by the particular institutional
arrangements and peculiar politics of the Community. It follows that reform
proposals should not be devised on an ad hoc basis, but should be inspired by
general principles.
This applies also to fundamental political issues like the ‘democratic deficit’
of Community institutions, in particular the Commission. As I have argued
elsewhere, a problem of democratic accountability arises whenever policy-
making powers are delegated to non-majoritarian institutions such as politically
independent central banks and regulatory commissions. To discuss the problem
exclusively in the context of EC institutions is to run the risk of neglecting
relevant experiences in favour of ad hoc and possibly flawed solutions.
Second, our discussions of over-regulation and regulatory complexity
suggest that it is unhelpful, as well as unfair, to blame the Commission for all the
dysfunc-tions of policy making at the European level. If it is true that the
member states have their share of responsibility then institutional reform should
begin at home. One of the central themes of this chapter is the overwhelming
importance of trust among the member states. We saw that mutual recognition
cannot succeed when national regulators do not trust each other. But similar
problems will arise in the practical applications of the principle of subsidiarity.
This is because national and subnational governments may be more attuned to
individual tastes, but they are unlikely to make a clean separation between
providing public goods for their citizens and engaging in policies designed to
advantage the country or region at the expense of its neighbours. For example,
local authorities have sometimes controlled air pollution by requiring extremely
tall smokestacks on industrial facilities. With tall stacks, by the time the
emissions descend to ground level they are usually in the next city, region or
country, and so of no concern to the jurisdiction where they were emitted. Until
regulators can trust each other to avoid such selfish strategies, centralisation of
regulatory authority is the only practical way of correcting transboundary
externalities, or preventing the local regulation of a local market failure from
becoming a trade barrier.
One final point about decision-making procedures. As already mentioned, the
regulatory activities of the Commission are supported by a dense network of
 GIANDOMENICO MAJONE 33

consultative, regulatory, and management committees. Moreover, at the end of

October 1993, decisions were taken by the member states concerning the
establishment of ten new administrative bodies. These include, in addition to the
forerunner of the European Central Bank, the European Monetary Institute
located in Frankfurt, the European Environmental Agency, the Office of
Veterinary and Phytosanitary Inspection and Control; the European Centre for
the Control of Drugs and Drug Addiction; the European Agency for the
Evaluation of Medicinal Products, and the Agency for Health and Safety at
Work.
The proliferation of technical committees and specialised agencies further
aggravates one of the most serious defects of the Community institutions: the
lack of transparency of their decision-making process. Because of the opacity of
the procedures, it is difficult for the citizens of the Union to identify the body
which is responsible for decisions that apply to them, and the legal remedies that
are available to them.
A similar situation arose in the United States at the time of the New Deal,
which saw a dramatic growth in government intervention. The establishment of
new specialised agencies, the functions of which were extremely complex and
varied, created a need for rules to ensure that they did not act arbitrarily or
unlawfully. In the absence of a true administrative law tradition, the rules
governing the federal administration had developed in a piecemeal fashion and
they have been worked out in response to ad hoc needs. However, such an
approach was deemed insufficient to cope with the changes under way. The
Administrative Procedures Act (APA), adopted by Congress in 1946, aimed to
legitimise the growth of federal bureaucracy by providing a single set of rules
explaining the procedures to be followed by federal agencies and providing for
judicial review of many of their decisions.
I submit that the Community could usefully draw on such a precedent. The
enactment of an EC Administrative Procedures Act would provide the
Community with a unique opportunity to decide what kind of rules are more
likely to rationalise decision making, to what extent interest groups should be
given access to regulatory process, or when judicial review is necessary. Even if
it were to limit itself to the writing of existing practices into the law, as the APA
largely did, the adoption of a single set of administrative rules would at least
provide for a hard core of provisions applicable to the developing regulatory
process. Such a move would bear witness to the willingness of the EC and its
member states to allow an unregulated growth of the Community’s
administrative functions.

Note

1 Following the terminology of the Maastricht Treaty, I use the expression European
Community (EC) to denote the economic and social ‘pillar’ of the European
34 UNDERSTANDING REGULATORY GROWTH IN THE EC

Union. This chapter does not deal with the other two pillars—the common foreign
and security policy, and co-operation in the fields of justice and home affairs.
‘European Union’ is used here only to refer to the collectivity of the member
states.

References

Alter, Karen J. and Sophie Meunier-Aitsahalia (1993) ‘Judicial Politics in the European
Community: European Integration and the Pathbreaking Cassis de Dijon Decision’,
Paper presented at the European Community Studies Association Conference,
Washington DC, May 27–29, 1993.
Coase, Ronald (1960) ‘The Problem of Social Cost’, The Journal of Law and Economics,
3, 1–44.
Commission of the European Communities (1985) Completing the Internal Market, COM
(85)310, final. Luxembourg: Office for Official Publications of the European
Communities.
——(1990) Future System for the Free Movement of Medicinal Drugs in the European
Community, COM(90)283, final, Luxembourg: Office for Official Publications of the
European Communities.
Conseil d’Etat (1992) Rapport Public 1992, Paris: La Documentation Française, Etudes et
Documents No. 44.
Dehousse, Renaud (1994) La Cour de Justice des Communautés Européennes, Paris:
Montchrétien.
De Muth, Christopher C. (1984) ‘A Strategy for Regulatory Reform’, Regulation, 25–30.
Eichener, Volkner (1992) Social Dumping or Innovative Regulation?, Florence: European
University Institute, Working Paper SPS No. 92/28.
Feldhoff, Kerstein (1992) ‘Grundzüge des Europäischen Arbeitsumweltrechts’, mimeo.,
Bochum: Ruhr Universität.
Garrett, Geoffrey (1992) ‘International Cooperation and Institutional Choice: The Euro-
pean Community’s Internal Market’, International Organization, 46, 533–560.
Garrett, Geoffrey and Barry Weingast (1993) ‘Ideas, Interests and Institutions:
Constructing the European Community’s Internal Market’, in J. Goldstein and R.
Keohane (eds) Ideas and Foreign Policy, Ithaca, NY: Cornell University Press.
Gatsios, Kristos and Paul Seabright (1989) ‘Regulation in the European Community’,
Oxford Review of Economic Policy, 5, no. 2, 37–60.
George, Stephen (1993) ‘Supranational Actors and Domestic Politics: Integration Theory
Reconsidered in the Light of the Single European Act and Maastricht’, Sheffield:
mimeo.
Haas, Ernst (1958) The Uniting of Europe: Political, Social and Economic Forces, 1950–
1957, Stan-ford, CA: Stanford University Press.
Institut für Europäsche Politik (1989) ‘Comitology’: Characteristics, Performance and
Options, Bonn: Preliminary Final Report.
Kaufer, Erich (1990) The Regulation of New Product Development in the Drug Industry’,
in G. Majone (ed.) Deregulation or Re-Regulation?, London: Pinter Publishers, 223–
51.
Kearl, John R. (1983) ‘Rules, Rule Intermediaries and the Complexity and Stability of
Regulation’, Journal of Public Economics, 22, 215–26.
 GIANDOMENICO MAJONE 35

Keohane, Robert and Stanley Hoffman (1990) ‘Community Policy and Institutional
Change’ in W. Wallace (ed.) The Dynamics of European Integration, London: Pinter
Publishers.
Kingdon, John W. (1984) Agendas, Alternatives and Public Policy, Boston: Little,
Brown.
Ludlow, Paul (1991) ‘The European Commission’, in R. Keohane and S. Hoffman (eds)
The New European Community: Decisionmaking and Institutional Change, Boulder,
CO: West-view Press, 85–132.
Majone, Giandomenico (1992) ‘Market Integration and Regulation: Europe after 1992’,
Metroeconomica, 1–2, 131–56.
——(1994a) ‘The Rise of the Regulatory State in Europe’, West European Politics, 17, 3,
78–102.
——(1994b) ‘Independence vs. Accountability? Non-Majoritarian Institutions and
Democratic Government in Europe’, in J.J. Hesse (ed.) The European Yearbook on
Comparative Government and Public Administration 1994, Oxford: Oxford
University Press.
——(1994c) ‘Controlling Regulatory Bureaucracies: Lessons from the American
Experience’, in H.U. Derlien, U. Gerhardt, F.W. Scharpf (eds) Systemrationalität
und Partialinteresse, Baden-Baden: Nomos, 291–314.
Mayhew, David R. (1974) Congress: The Electoral Connection, New Haven, CT: Yale
University Press.
Moe, Terry M. (1987) ‘Interests, Institutions and Positive Theory: The Politics of the
NLRB’, Studies in American Political Development, 2, 236–99.
——(1990) The Politics of Structural Choice: Toward a Theory of Public Bureaucracy’,
in O.E. Williamson (ed.) Organisation Theory from Chester Barnard to the Present,
Oxford: Oxford University Press, 116–53.
Moravcsik, Andrew (1993) ‘Preferences and Power in the European Community: A
Liberal Intergovernmentalist Approach’, Journal of Common Market Studies, 31, 4,
473–524.
Peacock, Alan (1984) The Regulation Game, Oxford: Basil Blackwell.
Pelkmans, Jacques (1987) ‘The New Approach to Technical Harmonization and Standard-
ization’, Journal of Common Market Studies, 25, 3, 249–69.
Peters, Guy, B. (1992) ‘Bureaucratic Politics and the Institutions of the European Commu-
nity’, in Alberta M. Sbragia (ed.), Europolitics, Washington DC: The Brookings
Institution.
Quandt, Richard E. (1983) ‘Complexity in Regulation’, Journal of Public Economics, 22,
199–214.
Rehbinder, Eckhardt and Richard Stewart (1985) Environmental Protection Policy, Berlin:
de Gruyter.
Riker, William (1986) The Art of Political Manipulation, New Haven, CT: Yale
University Press.
Wildavsky, Aaron (1964) The Budgetary Process, Boston: Little, Brown.
Williamson, Oliver E. (1985) The Economic Institutions of Capitalism, New York: The
Free Press.
Wilson, James Q. (1980) The Politics of Regulation, New York: Basic Books.
Wood, Dan B. and R.W. Waterman (1991) ‘The Dynamics of Political Control in the
Bureaucracy’, American Political Science Review, 85, 801–28.
 3
DEFENDING THE SOCIAL CONTRACT
The EU between global constraints and domestic
imperatives

Martin Rhodes

Introduction
In the space of a decade, the mood concerning the nature of Europe’s welfare
states and the role to be played by European integration in shaping and protecting
them has gone from cautiously optimistic to bleak. Europe’s ‘social contracts’—
the complex webs of relations linking governments with citizens and citizens
with each other in the EU’s member states—are unlikely to be defended against
global or domestic forces for change by a federal or even quasi-federal system.
Some would argue that this reflects a transition from unfounded idealism to a more
realistic assessment of the essentially limited contribution that pan-European
harmonization or convergence can make. Others lament the fact that the ‘great
European project’ has become primarily market driven, with social policy
consigned to the margins and notions of a federal welfare state abandoned. As
proof of their views, both would point to the shift in priorities from social
protection and standard raising to ‘competitiveness’ and ‘flexibility’.
Much has been written on the sclerotic development of the ‘European Social
Dimension’. Again, this literature is divided between the ‘cautious optimists’ and
the Euro-pessimists (Trubeck 1996). The optimists point to the autonomy and
purpose of key institutions in Europe’s ‘multilevel’ polity and the capacity of the
latter and the member states to create a regulatory order that bolsters Europe’s
national social contracts. Meanwhile, the pessimists argue that integration has
contributed to the ‘globalization’ of the European economy in breaking down the
borders of economic competition while contributing little to new institution—
building or preventing ‘social dumping’ and regime competition from eroding
social standards.
This chapter aims to explore these arguments by considering recent
developments in European welfare states and labour markets. It presents an
image of the EU as increasingly caught between global pressures and domestic
imperatives for change, a supranational actor with little capacity or, it should be
stressed, legitimacy for creating either a federal social policy system or direct
intervention in the ‘semi-sovereign’ affairs of its member states. And yet, the net
effect of achievements to date should not be discounted: the accretion of past
 MARTIN RHODES 37

pan-European policy initiatives has created a sphere of labour law and social
legislation that is ‘European’ in character and not simply the amalgam of
member states traditions; sovereignty in a number of important areas has been
surrendered, often unwittingly, to supranational institutions; and the decision-
making process no longer conforms entirely to the precepts of
intergovernmentalism: although interstate bargains have underpinned the
development of the ‘social dimension’, they have not been solely responsible for
shaping or advancing it.
Nevertheless, it is also clear that European policy making and intervention
cannot compensate for the loss of nation state steering capacity in an era of
globalization. As argued below, somewhat paradoxically, pan-European policy
initiatives were better suited in many respects to an era which is now rapidly
passing—one in which nations could still control their national boundaries and
when Fordism and all its attributes (traditional forms of economic organization,
the standard male breadwinner-based family and the conventional life—work
cycle) were still intact. Unfortunately, the window of opportunity for a European
social policy created by a coalition of certain member states and supranational
non-state actors from around 1987 to 1993 came at precisely the point when
Europe was entering a period of low growth and far reaching changes in patterns
of production, wealth creation and employment. These developments threaten to
undermine the priority given in the recent past to higher levels of European social
protection. In the late 1990s, both the future of European welfare states and the
role of the European Union are uncertain. What is clear is that while the former are
going through a period of change and even experimentation, this renewed focus
on national priorities makes EU intervention increasingly problematic.
In analyzing these developments and their implications, the following takes
neither the ‘Euro-optimist’ nor the ‘Euro-pessimist’ position. Unlike the ‘Euro-
optimist’ viewpoint, described by Wolfgang Streeck as a tendency ‘to minimize
the significance of the disappearance of the supranational state perspective’ and
‘rather than dwell on what is not happening…prefers to deal with what is’, the
argument below seeks to understand why a federal European social order has
failed to emerge and to consider the consequences of economic integration in the
absence of a parallel state-building process (Streeck 1997). But unlike Streeck’s
own ‘Euro-pessimist’ position, it does not attribute Europe’s present and
emerging welfare and citizenship problems to the failure to replace the
weakening national state with a supranational substitute (involving a tacit
assumption that it was ever feasible to do so). Nor does it claim that all is lost for
national policy in an economically integrated Europe without federal structures.
Instead it seeks to show that while significant advances have been made in
European social policy, there have always been and still are clear limits to the
role it can play: in the contemporary period of new domestic and international
challenges to welfare states, social policy adjustments must proceed through a
combination of national and European initiatives in which the former remain pre-
eminent.
38 DEFENDING THE SOCIAL CONTRACT

The EU and national social systems: what has been

achieved?

Why no federal welfare state?

As George Ross has commented, judging Community accomplishments against
aspirations for a federal European welfare state is quite unrealistic, ‘given that
the EC was constitutionally barred from most welfare-state areas, and it was not
a nation state, let alone an instrument for the social democratic rebalancing of the
international economy’ (Ross 1995:358). It is therefore inaccurate to assume or
argue that the absence of a strong, redistributive European welfare-state project
is the result of the victory of Margaret Thatcher’s conception of Europe as a ‘US-
aligned free-trade zone’ over Jacques Delors’ ‘supranational welfare-state
building project’ (Streeck 1996:301–2). The fact of the matter is that the
foundations for a federal welfare state were never put in place, nor, if they had
been, is it easy to see how they could have been built upon.
Laying the foundations for a federal welfare state would have required a
consensus on this matter from the early years of integration. But romantic
attachment to the notion aside, in the real world of European policy making, the
surrender of social policy sovereignty to supranational institutions has never
been deemed desirable—even by the strongest supporters of European social
policy such as the French. Although the latter came close to seeking the inclusion
of full upward harmonization clauses and extensive regulatory powers in the
Rome Treaty, this was due to self-interest rather than a commitment to European
federalism. In any case, its principle partner in the integration project, Germany,
was totally opposed. Indeed, the EEC Treaty reflects this basic Franco-German
conflict. The French wanted unambiguous decision-making powers in the Treaty
of Rome, believing that without some form of social security harmonization their
high social charges would create competitive disadvantage. In addition, gender
equality provisions in the French constitution would have to be transferred to the
Treaty. But the Germans - defending their distinctive post-war ‘ordo-liberal’
position—were opposed to any legal competence for the EEC in this area
(Rhodes 1998b). The result was an awkward Treaty compromise, providing a
section on social policy with no clear guidelines on the scope of its provisions or
the means for their implementation. The institutional prerequisites for
supranational welfare-state building have therefore never existed, and until the
relance of the ‘social dimension’ in the 1980s under the Mitterrand-Delors axis,
there was little or no enthusiasm for it. Even then, the most ardent advocates of
‘social Europe’ (including Jacques Delors) sought an extension of Europe’s
regulatory role via standard intergovernmental procedures—albeit bolstered by
greater majority voting—rather than ‘progress from inter-governmentalism to
supranationalism’ (cf. Streeck 1996:302).
Thus, the legal basis for a Community role in social and labour market policy
(set out in articles 117 to 123 of the Treaty of Rome) remained ambiguous, even
 MARTIN RHODES 39

after the revisions of the Single European Act, which brought health and safety
legislation under qualified majority voting (QMV) with article 118A. This
ambiguity has forced the Commission—which has always adopted a broad
interpretation of its powers—to forge alliances with member state governments
and, where possible, interest groups, to fill the gap between formal competence
and actual influence (Holloway 1981:11–39). The Commission has also had to
make a creative use of Treaty articles in order to push forward legislation, given
that the original article 118 gave the Commission the task of promoting close co-
operation between the member states in training, employment, working
conditions, social security and collective bargaining, but without specifying how.
Only article 119, which met the demands of the French in defining the equal pay
principle, article 121 on social security measures for migrant workers and
articles 123–8 on the European Social Fund were more explicit, explaining, in part,
the advances more readily made in these areas, especially gender equality where
article 119 made the Commission and the ECJ important actors (Holloway 1981;
Hantrais 1995).
But even had there been a consensus on the construction of a federal welfare
state, the task would have been a daunting one, encountering numerous structural
impediments, including the historical link between nationhood and welfare-state
building (and its absence in the European Community), the lack of societal
prerequisites, the national embeddedness of welfare states and the diversity of
social policy regimes.
Nationhood and welfare-state building Although many factors have been
important in building European welfare states—the fear of revolution and of the
classes dan-gereuses was certainly instrumental in many countries, beginning
with Bismarck’s Germany—the origins of the welfare state also reveal a strong
patriotic dimension and were linked to the consolidation and defence of
nationhood. Wars were often instrumental in developing a sense of trade-off
between the suffering that people had to endure during the conflict and their
potential entitlements in times of peace and renewed growth. Because
international conflicts imply a total dedication of the people to the objectives of
the national government, unity and solidarity became the catch words and the
key values. In the name of the defence of the nation, taxes were raised, women
put to work and men were sent to the front. After the war, it was felt both by
citizens and politicians that those who contributed to this collective effort had to
be compensated. Skocpol (1992) shows how decisive in the construction of a
nascent social policy was the financial contribution provided to the widows or
the pensions paid to the soldiers of the American war of seces-sion. Beveridge
based his ambitious reforms in Britain on the fundamental opposition between
the warfare states of the fascist and Nazi dictatorships and the welfare states of
the democratic regimes. The same is true of the history of the French welfare
state at the end of both the first and the second world wars. The claims were
more nationalistic in tone after 1918 and more class based in 1945–6 (Rhodes
and Mény 1998). But on both occasions, the idea of national solidarity was a key
40 DEFENDING THE SOCIAL CONTRACT

element in the rhetoric and the principles guiding reform and promoting the
‘Priority of Compatriots’—the fact that ‘the political borders of the state…
delineate a sphere of individuals whose interests ground special, though not
exclusive claims on their shared institutions’ (Frøllesdal 1997:145). The EU
clearly lacks the historical moments and myths that merged nationhood with
solidarity.
The national embeddedness of welfare states This is unsurprising given these
origins. For the diversity of European national welfare regimes is reflected not
only in large differences in social expenditure (although these are converging)
but, more impor-tantly, in embedded and historically shaped principles of
national organization. Policy space, as well as administrative/organizational and
fiscal space, is occupied by nation states, among which integration in the core
areas of welfare-state regimes—education, health care and retirement security,
not to mention forms of labour market organization—is consequently highly
unlikely. This ‘pre-emption of policy space’ is a major obstacle to
Europeanization beyond a loosely organized system of multi-tiered policy
development with limited supranational authority. At the same time, the strong
links between social policy development and political legitimacy, and the fact
that governments have already surrendered national autonomy across a wide
range of other policy areas, means that member states will resist a significant
transfer of decision making and fiscal capacity and remain protective of their
social policy authority (Pierson and Leibfried 1995; Majone 1996). Control of
labour markets and social costs is, after all, one of the few areas in which
member states can determine competitiveness in an integrated economy with a
single currency, although a deregulatory spiral is unlikely. Moreover, if it is
difficult to create solidarity between citizens with a common identity, the
development of citizenship rights at the European level is even more so. Given
the ‘Priority of Compatriots’ it may be quite utopian to imagine significant
financial redistribution across national boundaries—especially in the light of
German unification where the strains of such a policy have been severe. Hence,
in part, the failure of proposals from the poorer southern states for a form of
fiscal redistribution based on the German Finanzausgleich system.
The absence of societal prerequisites In most member states, the political
coalitions that built on the early welfare foundations have been dependent on the
incumbency of left-wing or social-market oriented Christian democracy, high
union membership density, and union as well as employer centralization. At the
European level, however, political movements are fragmented, union and
employer representation is weak and the EU’s ‘quasi-state’-like structures
provide none of the usual links between parliamentary representation and
executive power. Furthermore, the creation of a redistributive welfare state is not
only dependent on a political coalition supportive of such a project, but on a
redistributive capacity which the EU lacks. Of course, there is the Common
Agricultural Policy, but this provides a perverse and distorted form of
distribution rather than income support, while regional policy is a highly
 MARTIN RHODES 41

inefficient form of redistribution: its main effect, by transferring funds to regions

rather than people, is to benefit rich people in poor regions the most (Majone
1996). Finally, the establishment of any form of European welfare state would
require political structures whereby such major institutional innovations could be
translated into policy. However, under even the most optimistic projections of
‘sovereign-state’ European structures, the EU’s political institutions will
continue to fragment power and decision making.
Social policy regime diversity One of the objectives of European social policy
has been to overcome traditional rivalries among the various philosophies of
social protection, especially between the Bismarckian and Beveridgean schools,
and promote a ‘European model’ based on three fundamental aims of social
protection: a guarantee of a living standard consistent with human dignity and
access to health care; social and economic integration; and the maintenance of a
reasonable standard of living for those no longer able to work. But the
institutional diversity of Europe’s welfare regimes—the social democratic
Scandinavian, the liberal Anglo-Saxon (the UK and Ireland), the continental
corporatist (Germany and Benelux) and southern European types (Esping-
Andersen 1990; Ferrera 1996)—has been preserved throughout the postwar
period and a long period of economic growth. Their peculiar mixes of funding
arrangements (taxation or employment-linked social charges), entitlements and
benefits (employment-insurance-based or universal) and corresponding
industrial relations systems (with different combinations of law and collective
bargaining) have been far from conducive to spontaneous integration. Moreover,
as discussed below, they continue to generate quite different ‘solidarity
dilemmas’ and demands for reform. Convergence was actually greater in the
EFTA countries than in the EC of nine (1973–1981), because of the similar
constellations of political power in the former compared to the latter’s political
diversity (Montanari 1995). Enlargement has not simplified matters. While the
accession of Greece, then Spain and Portugal, added a group whose institutional
landscapes superficially resembled the continental corporatist model, their levels
of social spending and social protection were initially well below the EU average
and have only slowly crept towards it. And although Austrian membership
expands the earnings-based corporatist group, Sweden and Finland tip the
balance towards the tax-based Anglo-Saxon/Nordic group.

Policy making among ‘semi-sovereign’ welfare states

Even within the limited scope set by these parameters for a European ‘social
contract’, the regulatory politics have been highly problematic. If alliances with
interest groups and member states and the creative use of the Treaty have
occasionally allowed the Commission to make policy advances with ‘social
action programmes’ (the most ambitious after 1987), it has also heavily
constrained it and fuelled battles over the appropriate type, level and voting basis
of Community legislation (Rhodes 1995). Thus, from the very beginning, any
42 DEFENDING THE SOCIAL CONTRACT

attempt by the European Commission to set an agenda for the harmonization or

approximation of rules and regulations, or promote supranational decision
making, has provoked a two-way conceptual clash:

• between the competing philosophies of strongly and more moderately

regulated labour markets and welfare states;
• and between ‘solidarity’ and ‘subsidiarity’ in the framing of European
policies.

Neither of these clashes boils down to the pursuit of pure national interest: they are
shaped by national political traditions, patterns of economic organization and the
ideology of parties in power. It is important to appreciate the variety of positions
to which this two-way clash can give rise, for the struggle at the heart of Europe
has never been clearly between ‘a free trade and a supranational welfare-state
building project’ (cf. Streeck 1996:301ff), nor even today between clear-cut ‘neo-
liberal’ or ‘social/Christian democratic’ strategies (cf. Hooghe 1997). While the
pure ‘free trade/neo-liberal’ project has had relatively few adherents (even
among European employers) (Rhodes and van Apeldoorn 1997), a large-scale,
redistributive welfare project, with enforceable European rights and obligations,
has never been firmly placed on the Community agenda, even if in certain periods,
and in certain policies, there have been moves in that direction. From the late
1970s, it is true, there appeared to be a clear division between continental
countries supportive of, and a British government opposed to, the promotion of a
European system of citizenship rights, employment rules and industrial relations.
But in reality, as illustrated by early Franco-German differences, and subsequent
strains in that relationship (Rhodes 1998b), intergovernmental coalitions and
disputes have been much more complex. At the same time, there has also been a
clear clash of interests—and ideology—between Europe’s employers and trade
unions over forms and levels of regulation as well as the architecture of
European policy making.
This two-way clash—which became particularly acute after the 1987 Single
European Act (SEA)—has underpinned an ongoing debate and conflict of
interests within a heterogeneous and fragmented policy community. It has been
complicated still further by the diversity of Europe’s national labour market
regimes, among which there has been little hard evidence of convergence
(Rhodes 1992; 1995). The result has been a sporadic although increasingly
important process of European institution building and legislation, following two
broad paths:

• rule making and the establishment of minimum standards across a range of

areas, from health and safety standards, through equal opportunities,
entitlements in the workplace and, most recently, the establishment of rights
to consultation in transnational companies;
 MARTIN RHODES 43

• the creation of a process of bargaining at the European level through

the social dialogue, initially as a process of forging agreement on general
issues between still weakly organized European employers’ organisations and
trades unions.

Together, these twin pillars of the ‘social dimension’ provide neither a functional
equivalent to a European welfare state, nor the basis for a social-democratic
reconfiguration of Europe’s political economy. But their significance should not
be underestimated.
Despite the fragility of the alliance behind an expansion of the European
social dimension, the interaction of France, Germany and other member states
has created a European sphere of labour law and social legislation that is
‘European’ in character and not simply the amalgam of member-state traditions.
A loosely structured regime has been put in place with important substantive
elements (in the form of Community legislation and ECJ case law), procedural
rules and innovations (especially with the expansion of QMV and the social
partnership provisions of the Maastricht Social Protocol and Agreement) and
methods of enforcement (strengthened by Maastricht’s empowerment of the ECJ
to fine dila-tory member states) (Rhodes 1995). The result has been the creation
of a multi-tiered policy system and a transition from sovereign to semi-sovereign
welfare states (Leibfried and Pierson 1995). The resistance of nation states to the
transfer of greater authority to the European Union is evidence of what Streeck
(1995) has called the ‘nation-state paradox’—i.e., the fact that, while nation states
have progressively lost control of their economies, they have retained ‘external’
sovereignty in international relations. To date, European states have surrendered
much more sovereignty to the market than they have to supranational institutions
(Tsoukalis and Rhodes 1997). But the extent to which sovereignty has been
‘pooled’ in social policy should not be underestimated.
EU social policy making among semi-sovereign states displays the following
features:
Joint decision making driven by a complex combination of national interest,
ideology and practi-cability In contrast to the realist or intergovernmental
interpretation of these developments, they are not simply the sum of
compromises between the member states in pursuit of their own material
interests (the defence of domestic organized interests or of the short-term
electoral fortunes of government rather than ideological positions)(cf. Lange
1992; Moravscik 1993). Rich states do not always (or even often) seek to sustain
their competitive status by imposing their social standards on others: the Germans,
for example, have never attempted to ‘export’ their social costs to the rest of
Europe but have rather sought a more communautaire development of minimum
and flexible standards, often reining in the maximalist ambitions of the
Commission and the French (Rhodes 1998b). Nor do poorer states simply engage
in ‘cheap talk’ in backing higher social standards or accept them only because of
side-payments through the Structural Funds (Lange 1992; 1993): such
44 DEFENDING THE SOCIAL CONTRACT

interpretations misunderstand the extent of high regulation already in place in

these countries and their genuine ideological commitment to stronger welfare
states (Threlfall 1997).
The creation of a policy network above and beyond the nation state Also in
contrast to the liberal intergovernmental view (e.g. Moravcsik 1993), domestic
interests do not only lobby governments which then forge bargains at the
supranational level. They also strike alliances with supranational actors,
successfully bypassing the national sphere, and when these relationships are
institutionalized—as in the social dialogue provisions of the Maastricht Social
Agreement—introduce important elements of multi-level governance. The EU
has had an important impact on interest mobilization and representation in the
member states over the years, with the ETUC (the European Trade Union
Confederation), backed up by the powerful German labour movement, helping to
bolster union capacities at the EU level, overcome fragmentation (in spreading
support for integration among often hostile national unions) and institutionalize a
‘social dialogue’ with a reluctant European employers’ organization (UNICE).
Linked to the influence of other national union movements, such as the French
CFDT, this activity creates a network of interests and influence on legislation
and other policy developments that defies simple intergovernmental
interpretations.
The creation of a social policy regime no longer fully controlled by its member
states Not only are there sunk-costs and institutional lock-in effects once original
concessions have been made (see Pierson 1996); but the complexity of decision
making, the accommodation of diverse positions and attempts to resolve Treaty
anomalies create enormous potential for unintended consequences and strengthen
non-state actors, especially the Commission and the Court of Justice. In addition
to its important agenda setting and process management roles (see Pierson and
Leibfried 1995), the actual and potential influence of the Commission in the
legislative process was amply demonstrated in the late 1980s and early 1990s
when, in attempting to evade the British veto facilitated by unanimous voting, it
tried—sometimes successfully—to shift the Treaty base of a number of
directives to QMV (Rhodes 1995). The Court of Justice has played an extensive
role in interpreting EC law and, like the Commission, has been innovative in
expanding its own room for manoeuvre, although its role in building positive
social policy, including social citizenship rights, remains constrained. (Leibfried
and Pierson 1995; Ball 1996).
A reduction of the social policy autonomy of the member states through pan-
European regulations Despite a noticeable shift to what Streeck (1995) calls
‘neo-voluntarist regulation’ (e.g., the use of non-binding recommendations
instead of binding directives), a gamut of binding legislation (regulations and
directives) is now in place as a result of the ‘activist’ policy making of the
Commission and the Council of Ministers. These rules have set a floor under,
and have sometimes upgraded, national regulations in the richer member states,
while shaping the upward adaptation of social protection systems in the poorer
 MARTIN RHODES 45

ones. Although its implementation and enforcement remain problematic,

European health and safety legislation has proliferated, especially since the
adoption of QMV for health and safety under article 118A of the Single
European Act, including the 1989 framework directive and the June 1991
directive on health and safety for atypical work, requiring important changes to
the regulatory systems of member states (James 1993; Majone 1996). Equal
treatment and opportunity directives, and ECJ case law deriving from them, has
extended a binding set of rights across member states, forcing even ‘paragons of
European integration’ like Germany to upgrade national legislation (Cox 1993;
Ostner and Lewis 1995:186ff). Binding directives and ECJ decisions in
employment protection have governed collective redundancies, the transfer of
businesses and the rights of employees of insolvent employers since the
mid-1970s, while under the 1989 social action programme, directives have been
passed enforcing health and safety rights for atypical workers, special treatment
of pregnant women in the workplace, protection for young workers, ‘core’ terms
and conditions for posted workers, proof of employment contracts, working time
and rights to workers’ consultation in multinationals.
A reduction of member state social policy autonomy via market compatibility
requirements The market compatibility requirements (largely relating to freedom
of movement) of the Treaty of Rome have resulted in an ECJ-led process of
regulatory innovation which has begun to break down the borders of welfare-
state development. The implications of this process, as set out by Leibfried and
Pierson (1995) are that member states may no longer limit social benefits to their
own citizens; they may no longer insist that their benefits are only consumed on
their own territories (except in the case of unemployment benefits which are
exportable for only three months); and, in a limited number of instances, they are
losing control of how people living within their borders should be protected (e.g.
controlling entitlement to disability and invalidity benefits established by an
authority in another member state).
In sum, member states are now subject to a web of enforceable regulations
resulting from EU legislation, and this will help shape if not determine their
approaches to welfare-state reform. For even if these systems remain nationally
specific and under the control of national authorities, critical areas of policy now
fall outside the domain of unilateral member-state action. Although, as discussed
below, the principal site for welfare-state adjustment and adaptation remains the
nation state, the scope, scale and nature of reform is increasingly constrained or
influenced by supranational regulation.
Much, on the other hand, has not been achieved and, as already indicated, even
those areas of innovation in European social policy have failed to meet the
expectations of many. Although many pieces of health and safety and equal
opportunities legislation have ratcheted up standards across member states,
especially those of the 1988–93 health and safety action programme -with the
help of QMV under article 118A of the Single European Act—in other areas,
intergovernmental bargaining has diluted major directives, notably the European
46 DEFENDING THE SOCIAL CONTRACT

Works Council Directive which, far from spreading the German co-
determination system to the rest of Europe (the intention of its unsuccessful
predecessor, the 1970s Vredeling Directive), has put in place minimal
requirements for the consultation of workers in transnational companies (see
Streeck 1997). Moreover, EU social citizenship rights remain underdeveloped,
for much of the emphasis of ‘positive EU social policy’ has been on industrial
citizenship rights, linked to employment and freedom of movement. As Closa
(1998) argues, a richer contract in terms of social rights at the EU level is made
difficult because it would need to embrace a degree of communitarianism
incompatible with the EU’s current direction.
One should also recognise the sea change in thinking, in both the Commission
and the member states, since around 1993, when, having put in place at
Maastricht the prerequisite mechanisms for freeing blocked legislation, several
major developments began to transform the policy agenda: the demise of the
Mitterrand/Delors axis and its replacement with a more centrist Commission
President and a right-wing (although paternalist) French president; a growing
resistance to a further transfer of authority to the EU, reflected more generally in
the importance given to ‘subsidiarity’ in the Maastricht Treaty; and a recognition
that high and rising rates of unemployment in Europe might require a rather
different approach to labour markets and social policy than in the past. The result
has been a shift in focus from employment protection towards employment
promotion (if necessary, through a more flexible re-regulation of labour market
rules), a questioning of cohesion policy priorities and plans to link the Structural
Funds more closely to employment imperatives (Hooghe 1997). There have also
been some new alignments in EU policy making and a sentiment in the
Commission—where the departure of Delors has diminished the influence of DG
V—that the social policy positions of Paris and Bonn have moved closer to
British Euro-scepticism.
But beyond ideological shifts, the fact remains that the creation of a European
economy has failed to elevate the level of logical social policy responses from
the nation state to Europe, beyond pressures to facilitate the freedom of
movement of workers and citizens and the creation of a minimum floor of rights
and entitlements for workers. For not only do welfare states and labour market
systems remain nationally embedded, but economic integration is helping make
the national level an increasingly important site of conflict, innovation and
regulatory reform. Whereas once the challenge for Europe was to produce an
upward approximation of social protection and entitlements as and when
convergence permitted—installing elements of a European social contract—there
is a pressing need now to reform national social contracts, albeit within a
framework which can and should be constructed at the European level.
 MARTIN RHODES 47

Challenges to EU welfare states and labour markets

These recent developments, coupled with the acknowledgement that much EC/
EU social policy has been linked to a market rather than state-building project,
appar-ently confirms the fears of the Euro-pessimists. The above discussion has
pointed out that, within the constitutional and intergovernmental constraints on
European policy making, a substantial process of innovation has occurred in
creating both the substantive and procedural dimensions of a European policy
regime. Nevertheless, a combination of political opposition, legitimacy
constraints and the sheer complexity of the regulatory task in Europe has placed
evident limits on this project.

National social contracts and solidarity dilemmas

This last point is an important one, for despite the fact that the welfare-state
systems of continental Europe were rooted in a similar ideological and political
background, the policy variations among them have been great. Even leaving
aside the British ‘liberal’ system, this makes it difficult to talk of a ‘European
Social Model’ as such, beyond certain common general characteristics such as
trade union rights to collective bargaining, extensive systems of workforce
protection and redistributive policies. As Ferrera (1998) points out, although at a
high level of abstraction there is a strong affinity among European systems, seen
from below the ‘European Social Model’ ‘shatters into a kaleidoscope of
historical sediment and national specificity’. Welfare states emerged with quite
different institutional structures and modes of operation (Esping-Andersen
1990): the Scandinavian model achieved a high degree of ‘decommodification’
(distancing the citizen from market dictates) and a cross-class commitment to
high levels of welfare spending and taxation; the ‘Germanic’ continental model
had a lower level of decommodification and a more status or occupational basis
for welfare provision, but, nevertheless, a strong consensus behind a
comprehensive system; meanwhile, the Anglo-Saxon model has always been less
generous, providing flat-rate benefits based on taxation and a general social
insurance system, and was built on a much narrower class coalition. A
distinctive, and unevenly institutionalised variant of the continental ‘social
contract’ emerged in southern Europe after the 1960s, dependent on a
combination of state programmes and traditional (charity and family-based)
welfare (Ferrera 1996; Rhodes 1997).
Given the diversity of the ‘social contract’ among—and within—Europe’s
‘welfare families’, it is unsurprising that they now face rather different
challenges. This applies as much to their labour markets as their benefit and
social security systems, given the various combinations of rules that underpin
them, the different balance between regulation based on law or on collective
bargaining, and the way that employment systems are linked to welfare states via
funding arrangements, either taxation, social charges or a mixture of the two.
48 DEFENDING THE SOCIAL CONTRACT

These systems remain distinctive, despite pressures for convergence. Just as

these welfare families confront quite diverse solidarity dilemmas and political
and institutional constraints on reform, they also have quite different
understandings of the nature of social problems and traditions of responding to
them. Thus, while poverty in France is interpreted as a failure of society,
producing a debate on how best to increase solidarity via social spending, in
Britain—where a jump in inequality since the late 1970s has put more adults and
children below the poverty line than in any other European country—poverty has
revived the nineteenth-century discourse about the negative consequences of
helping the poor (Paugam 1998). In Britain, the policy legacy of selectivity
(rather than ‘universalistic maintenance’), handed down from the time of the Poor
Laws, has facilitated an erosion of ‘solidarity’ via the spread of targeted, means-
tested services—an innovation much harder to introduce in continental Europe,
given its greater institutional and symbolic commitment to ‘contract-based’
solidarities (Ferrera 1998).
Thus, at one level these systems all face common problems, including
demographic change (the shift in the ratio of active citizens to passive welfare
recipients); the rising cost of health care (due to ‘demand-side’ factors such as
ageing, higher disposable incomes and greater insurance coverage, but also to
technological improvements and rising real prices); low economic growth and
high unemployment; and the changing nature of the labour market. The growing
proportion of non-standard forms of work and the increasing workforce
participation of women both challenge traditional arrangements—the first
because such workers may be denied access to entitlements devised for
permanent, full-time employees; the second because social protection is
generally geared to male breadwinners and tends to penalise female careers. Yet
responding to these common problems requires a quite different policy mix
depending on the country, making a uniform European approach impossible.
Thus, while some of these developments have attracted the active—and
legitimate—intervention of the EU in setting a minimum floor below which
entitlements cannot fall, other areas of intervention require a flexible national
approach, especially if they encroach on the droits acquis of different
professional groups or social categories. Moreover, not only do the different
solidarity dilemmas generated by these systems need to be tackled within
national settings (although European framework rules have their place), but they
also indicate that the past emphasis of EU policy—on helping defend or raise the
level of acquired rights and entitlements—may no longer be appropriate. A
complex process of reregulation, involving a loosening of some regulations,
shifting others from legal bases to collective bargaining or abolishing existing
rules while compensating for them through social security or tax innovations will
be needed to tackle unemployment and other social problems. In this context, the
role of the Commission as a ‘clearing house for ideas and a catalyst for action’
(Commissioner Padraig Flynn cited in Hantrais 1995:207), and the source of
‘soft’ forms of regulation (e.g., recommendations, flexible framework laws and
 MARTIN RHODES 49

agreements) may be more appropriate and feasible than blanket interventionism

(cf. Streeck 1995).
The issue of unemployment shows how different national systems have to face
the sometimes adverse consequences of existing social contracts and swallow the
bitter pill of reform. Thus, in the Scandinavian countries, the distributional costs
of generous social contracts were met by those in employment who have paid
high taxes for an overdeveloped public sector to soak up the potentially
unemployed. In continental Europe, governments, employers and labour unions
have more or less agreed that the price of adjustment should be shouldered by the
unemployed, comprised largely of younger, female and older workers (Esping-
Andersen 1996). In southern Europe, an acute ‘inside-outsider’ problem has
developed as a result of the fragmentation and disparities in the income support
system for those without work, with large differences in the level of protection
given to core and marginal workers (Rhodes 1997). But everywhere there is an
emerging consensus that if labour market ‘outsiders’ are to become ‘insiders’,
then changes to the regulations that cover both employment and the funding of
welfare will have to be made. If income inequalities are not also to increase, such
changes must be accompanied by other innovations such as work-sharing and
reforms to taxation, e.g. the introduction of a negative income tax, alongside a
reregulation of the sheltered sectors of continental economies, to price people
with low or non-existent skills into work (Scharpf 1997a).
But there are big difficulties in moving forward with such an agenda, in part
because European states have lost some of their margin for manoeuvre. First,
there is the issue of domestic political opposition. The general feeling is that any
change is a zero sum game which therefore encounters the fierce resistance of
the political losers. While the welfare status quo is itself beginning to undermine
the legitimacy of the social contract (from the viewpoint of young people, the
unemployed or women for example), its evolution and adaptation are presented
as an unacceptable attack on the entitlements and droits acquis of its present
beneficiaries (Rhodes and Mény 1998). Second, there is the question of
globalisation. Although the problems currently facing European labour markets
and welfare states have been caused neither by an absence of a European welfare
state nor by regime competition or ‘social dumping’, globalisation has become
important in obliging certain reactions and restricting policy options.

The impact of globalisation

But what, precisely, is the impact of globalisation? This is a complex and
controversial subject and can only be touched upon here (for a survey of
arguments, see Rhodes 1996). The ‘old’ social contract—and its diverse
institutionalisation in these welfare states—was very much part of the ‘golden age’
of western economic development, during which the preservation of national
sovereignty, uninterrupted growth and the Keynesian welfare state all went hand
in hand. National autonomy was preserved in the era of ‘embedded liberalism’
50 DEFENDING THE SOCIAL CONTRACT

with the help of exchange and trade controls, even if economies became
increasingly open after the 1950s (Ruggie 1982). This ‘relative autonomy’
allowed the construction of rather different types of welfare state and ‘social
contract’, each with its own approach to the provision of public goods and the
institutionalisation of ‘solidarity’. But in the post-1970s era of ‘disembedded
liberalism’, the ability of governments to fulfil their side of the welfare compact
is wearing thin, due to the loss of government control in a global economy over
employment and other broad economic policy objectives as the flow of goods
and capital has been liberalised (Ruggie 1994; Rhodes 1996). Meanwhile,
competitive pressures have allegedly created a decentralising dynamic in many
European countries, as the most appropriate site for the organisation of
production and innovation becomes the region and the most productive level for
post-Fordist labour relations becomes the company or plant (Cooke et al. 1997).
An increasingly popular metaphor to capture this phenomenon is the ‘hollowing
out of the state’ as decision-making powers and steering capacity is surrendered
to both higher and lower levels of authority. The increasingly central role for the
firm in this context, and its demands for greater autonomy from ‘inflexible’
national systems of employment regulation also has evident implications for the
role of the EU and supranational regulation.
However, as already argued, nation state decision making in social policy has
not been fully surrendered to higher levels. EU member states remain ‘semi-
sovereign’. National governments may have lost their power to expand social
spending at will, due largely to their inability to sustain growing public deficits,
but they remain the architects of welfare states and employment systems. As for
the decentralisation arguments, there are actually contradictory—although quite
logical—tendencies at work. On the one hand, decentralisation in formerly
centralised industrial relations systems has been induced by a combination of
factors: the new international division of labour within large transnational firms
and the introduction by multinationals of ‘alien’ elements into national
bargaining arenas; cross-class ‘flexibility’ alliances between employers and
workers have undermined ‘social corporatist’ systems, inducing a shift to a more
sectorally-based form of bargaining (e.g. some Scandinavian countries) while
employers in all systems are searching for greater company- and plant-level
flexibility in three areas: internal (or functional) flexibility in the workplace;
external (or numerical) flexibility vis-à-vis the wider labour market; and greater
pay flexibility at local levels. Meanwhile, the creation of the single market and
movement towards EMU are also placing pressures on wage-cost competition
given the new constraints on competitive devaluation. This again focuses efforts
on firm-level adjustment costs.
But at the same time, there are also pressures in favour of centralisation as
well as both national and European employment protection regulations. For in
response to competitive pressures, and the diffusion of new forms of ‘best
practice’ management and work organisation, manufacturers—as well as certain
service-sector companies—are embracing the principles and techniques of
 MARTIN RHODES 51

flexible specialisation, lean production and total quality management. This

implies the creation or maintenance of co-operative labour relations and a high-
trust internal firm environment. Well-designed systems of labour market rules
remain essential in this context. The optimal world of internal flexibility in this
environment is therefore built not by unilateral management action but on team
work and low levels of hierarchy within firms. It also depends not just on high
levels of skills but also on high capacities for skills acquisition and national
education systems. At the same time, building and sustaining high levels of trust
within the company/plant demands not a high degree, but a moderate degree of
external flexibility, i.e. the capacity of entrepreneurs to hire and fire and adjust
their levels of employment. Too high a level of external flexibility—i.e., the
absence of regulatory constraints on firms—destroys trust and undermines
internal flexibility. This trade-off—producing a productive form of ‘regulated co-
operation’—is a critical one for sustaining both competitiveness and consensus
in European labour markets. Furthermore, both cost competitiveness and stability
require more than simply a deregulatory strategy at the level of the firms: they
also require a means of preventing wage drift and inflationary pressures in the
labour market. This has focused the attention of governments in countries where
trade unions are still significant actors on revital-ising incomes policies, to keep
inflation in line with Maastricht convergence criteria and prevent rising wage
costs from damaging competitiveness and creating more unemployment (see
Rhodes 1998a).
Thus, globalisation not only involves the state as an agent in the process of
opening borders, liberalising markets and promoting the flow of finance and
trade, but also, of necessity, in channelling, constraining and legitimising market
power. The spread of market ideology (neo-liberalism) hits its functional limits
when the dependence of the market on national institutions is revealed. Quite
apart from ideological resistance, at that point a pure neo-liberal strategy
becomes dysfunctional, for the effective functioning of market mechanisms still
requires purposive state intervention, not just in deregulation but in reregulating
the domains of welfare, taxation, innovation, employment and education.
Although new rules have to be defined at the international level, as Boyer (1996:
110–11) argues, the next century ‘will still be the era of nation-states in charge
of disciplining and taming the markets (even if) the contours of this involvement
are still largely unknown’.

Recasting national employment and welfare systems: what

role for domestic and EU policy making?
As Boyer points out, the rules of the game are still being written. But there are
already indications as to the direction of state involvement and the role for
international regulation. As discussed above, recent institutional developments at
the EU level suggest not only that social policy decisions will continue to be
made largely by national government but that, contrary to a major theme in
52 DEFENDING THE SOCIAL CONTRACT

‘Euro-pessimism’ and in much of the globalisation literature, nation states retain

considerable capacity for a positive recasting of domestic social contracts.
Moreover, the failure to constitute a pan-European corporatism does not detract
from this capacity: indeed, there was always the danger, as recognised by the
German unions, that transferring authority to Europe would weaken it. At
present, many European countries are engaged in an agonising reappraisal of
their welfare-state arrangements, and many governments are beginning to
negotiate new social contracts. The outcome is as yet unclear; but the models
competing for attention in Europe still offer multiple rather than single-path, future
trajectories.
One of the futures that may prove appropriate for many European countries is
that of ‘competitive corporatist’ social pacts which seek a consensual and, in so
far as is possible, an equitable adjustment of European welfare systems and
labour markets. The EU is seeking to play a role in this process by encouraging a
European employment pact and promoting further advances in the European
social dialogue. Although such pacts can be criticised as ‘nationalist productivity
coalitions’, in which the power of capital is inevitably strengthened, they are
certainly more desirable than unilateral neo-liberalism. For not only can they avoid
a damaging breakdown in consensus on socio-economic priorities; they may
even build a consensus and institutional supports in countries where the
prerequisites for corporatism have always been weak or non-existent. Above all,
they are a method of bolstering state steering capacity in the area of welfare
reform at a time when it is being diminished by domestic resistance, the
declining legitimacy of redistributive politics and global constraints.
There has been a growing number of such examples in Europe in recent years,
including Belgium, Austria, Ireland, the Netherlands, Portugal, Italy and Spain.

• In Ireland, a rather comprehensive social pact negotiated in 1987, 1990, 1993

and again in 1996 has addressed tax, education, health and social welfare
issues in addition to incomes. The emphasis has been on inflation-proof
benefits, job creation and the reform of labour legislation in the areas of part-
time work, employment equality and unfair dismissal. Pay rises have been
subject to floor and ceiling levels. In return, trade unions have delivered
industrial relations harmony.
• In Italy, negotiations in the early 1990s that initially focused on reforming
Italy’s automatic wage-indexation system were extended to include the
rationalisation of bargaining structures, the reform of union representation in
the workplace, improvements to the training system, the legalisation of
temporary work agencies, assistance for the unemployed to enter the labour
market and, the most significant step, the May 1995 agreement between the
unions and the government on pension reform.
• In Portugal, there have been five tripartite pacts since 1987 focusing on
incomes and social and labour market measures, including pay-rise ceilings
and loosening rules on the organisation of work, the termination of
 MARTIN RHODES 53

employment and the regulation of working hours. The 1996 agreement also
covers social security issues, including a minimum wage, a reduction of
income tax for low income groups, and a more favourable tax treatment of
health and education benefits and old age pensions.
• In The Netherlands, a flexible form of corporatism, involving a considerable
degree of decentralisation in wage bargaining, has provided the basis for
industrial relations peace, wage moderation and an ongoing process of labour
market reregulation while preventing an increase in inequality and combatting
unemployment (now one of the lowest in the OECD). There have also been
agreements on social security contributions, work sharing and
industrial policy, training, job enrichment, the development of ‘entry-level’
wages and, in 1995, rights for temporary workers were strengthened in return
for a loosening of dismissal protection for core workers (Rhodes 1998a).

Where these social pacts have been formed around general macroeconomic
objectives and/or specific labour market objectives, it is much more likely that
concertation over more general welfare issues can also successfully occur,
especially where the ‘emergency’ character of such pacts has given way to a
more embedded, institutionalised set of relationships. As mentioned above, these
pacts have been criticised as ‘post-social-democratic coalition-building’ which
embody an ‘alliance between nationalism and neoliberalism’ (Streeck 1996:305–
13). Admittedly, the shift towards ‘competitive corporatism’ does represent ‘the
construction of national level coalitions to “modernise” the national economy’,
but it does not necessarily mean that ‘all other political objectives (are)
subordinate to that of increasing national competitiveness’ (Streeck 1996:311).
First, while there may be elements of nationalism in the way European countries
(and regions) still compete for inward investment, this is not the driving force
behind these pacts and their policy innovations, nor is a more general process of
regulatory arbitrage between competing welfare and labour market regimes. For
‘social dumping’ and ‘regime shopping’ by firms in tightly regulated labour
markets with high social expenses is mitigated by the importance of a whole
range of factors including unit labour costs, production organisation, skills and
education provision, quality, marketing, market proximity and after-sales service
as well as the ‘constructive flexibility’ that derives from productive forms of
labour market regulation and industrial relations arrangements. More important
are the more general competitive pressures that are driving changes in the form of
production and nature of work in all European economies that all governments
have to respond to. Moreover, while competitiveness may be a key concern,
these pacts contain important trade-offs between equity and efficiency of the
kind that have always characterised welfare states, even during their ‘golden
age’. Indeed, the new trade-offs are often responses to the solidarity dilemmas
and contradictions generated by those earlier bargains and may actually improve
on them if older equity gaps are filled and new forms of disentitlement prevented.
Under such circumstances, far from the pursuit of an outright neo-liberal strategy,
54 DEFENDING THE SOCIAL CONTRACT

some elements of ‘thirdpath’, ‘progressivecompetitiveness’ or ‘incentive

compatible-egali-tarianism’ can be put in place (Bowles and Gintis 1995). These
might include the generalisation of the following forms of innovation (Rhodes
1998a):

• a shift away from legislated or rule-governed labour market regulation to

negotiated labour market regulation, e.g. in minimum wages, as in the Irish
and Portuguese social pacts;
• the relaxation of high levels of security for full-time core workers, in return for
greater protection for temporary and part-time workers, as in the Dutch 1996
agreement on ‘Flexibility and Security’;
• a reform of employment regulations to price the low-skilled and unskilled into
work while providing compensation for income losses through other
innovations, such as a negative income tax;
• a redesign of social security systems to prevent implicit or explicit disentitle-
ments, in relation to two groups in particular: women workers (who are often
discriminated against by male-breadwinner-oriented social security systems);
and those not in permanent, full-time employment;
• and a parallel redesign of social security systems to allow a guarantee of
access to skill acquisition and social services at any point during the life
cycle, especially through education and training (Esping-Andersen 1994).

All of these adjustments attempt to respond to the dilemmas facing European

welfare states in maintaining legitimacy by adjusting political expectations and
maintaining or rebuilding supportive domestic coalitions. For while coping with
pressures from the international economy (including the deflationary, cost-
cutting impact of moves towards EMU), they must also maintain a balance
between the three basic components of the traditional social contract—insurance
against risk, the welfare safety net and the principle of solidarity (Sigg et al.
1996). Prioritising the insurance component (by basing a greater proportion of
entitlements on employment-linked social contributions) risks penalising the
poorer and inactive members of society. But prioritising social assistance and
income redistribution threatens the support given to welfare programmes by the
electorally and resource-important middle classes which are increasingly
predisposed towards individualist solutions in social security, health and
pensions. A loss of support from this quarter also threatens to undercut social
solidarity. Welfare-state reform must of necessity negotiate a middle course
between these two options if the European ‘social contract’, in all its national
varieties, is to be defended.
But what role can the EU play in this era of national welfare innovation and
change? As is clear from the above, the role—both actual and potential—for
national governments is still much more than a vector for globalisation or ‘the
spearhead of structural transformation to market norms both at home and abroad’
(Cerny 1997). For the nation state, while frequently an agent of
 MARTIN RHODES 55

‘commodification’, remains the central focus for consensus, loyalty and social
discipline. Moreover, while the institutional innovations achieved in recent
years, especially with the Maastricht Social Protocol and Agreement, have begun
to tackle the problems of the ‘joint decision trap’ (the clash between
irreconcilable member state interests) (Scharpf 1988) and the ‘corporatist
decision gap’ (the absence of effective bargaining between the European social
partners), the member states have yet to fully escape them (cf. Falkner 1997).
Indeed, it may be the case that the closer the EU comes to resolving such
problems in the decision-making machinery, the more reluctant will the member
states be to employ it, as suggested by the post-Maastricht concern with
subsidiarity. Moreover, the EU has yet to acquire the legitimacy and capacity for
intervention beyond certain boundaries, and these have been restricted, rather
than extended, since Maastricht, especially with German opposition to new EU
social exclusion and poverty programmes, again on the basis of subsidiarity. This
is not necessarily a tragedy. For while it is important that common European
labour standards prevent a ‘race to the bottom’ and ‘regime shopping’ by
transnational companies, within these parameters, the recasting of European
welfare states must be tackled by the member states. They remain the primary
level for the achievement, adjustment and defence of trade-offs between equity
and efficiency and for the complex bargains underpinning them.
Beyond more general policies with a positive impact on Europe’s social system
—such as a co-ordinated reflation of the European economy—a number of
propositions can be advanced for a future EU role. Of course, a new consensus may
emerge on advances in specific areas of social policy, with new legislation
developed either by the Commission and the Council of Ministers or between the
latter and the social partners, as allowed for under the Maastricht Social Protocol
and Agreement. The latter’s procedures will be strengthened by Britain’s
membership under the Blair government. There may yet also be agreement on
the inclusion of a series of social rights in the Treaty, although recent divisions
on this issue suggest it will be difficult to manage. More fruitful, and more
important in relation to member-state efforts to recast their own welfare states,
would be a new EU co-ordination role. Scharpf (1997a) has argued that this
could be achieved in two ways. The first would be to allow differential levels of
social protection, linked to varying levels of labour costs and social spending,
preventing the poorer member states from vetoing upward harmonisation among
the more prosperous. All European welfare states could be underpinned by an
explicit agreement on a threshold below which welfare expenditure would not
fall. Second, this floor could be supplemented by sub-European co-ordination
among groups of countries (i.e., ‘welfare families’) which have similar
institutions and policy mixes such as the wealthy ‘corporatist’ group of Sweden,
Denmark, Germany and Austria. ‘Coordinated reform strategies among countries
that share critical institutional preconditions are more promising, in. principle’,
argues Scharpf, ‘than unilateral coping strategies’ (1997b:29).
56 DEFENDING THE SOCIAL CONTRACT

However, such a role faces two predictable obstacles. The first is that the
poorer member states may resist the creation of a two-tier Europe in social
policy, especially if this accompanies a two-tier transition to full monetary
union. Pro-welfare elites in those countries may fear that such a differentiation will
consign them permanently to a second-class club and reduce pressures for an
implementation of EU legislation already on the statute books. In fact, the EU
needs to play a role in ensuring that an equitable balance in labour market
reregulation and social policy reform is achieved in these countries as much as in
their wealthier counterparts. For it is wrong to imagine that the poorer countries
(especially those in southern Europe) are simply ‘low regulation’ countries.
Indeed, one of the main features of these countries is the peaks of generosity in
social transfers employment protection which exist alongside significant gaps in
provision; and one aim of their social policy reforms should be to eliminate these
shortfalls in equity. As already suggested, the innovative nature of these pacts
makes them much more than ‘coping strategies’. Second, the confinement of the
southern and other member states to a lower level of regulation would not
necessarily make social policy innovation any easier among the wealthy. As
mentioned above, while the inclusion of two Nordic countries and Austria in the
EU bolsters membership of the high-regulation country club, their domestic
arrangements remain quite distinct. Moreover, Germany is now one of the
principal opponents of further supranational regulation in this area. Once again,
the complex nature of national trade-offs and social bargains, as well as their
legitimacy, is at stake.
On the other hand, the idea of an agreed welfare floor is a good one and much
more in keeping with EU tradition and practice than the creation of differentiated
‘clubs’. This could be bolstered by the supranational reinforcement and
encouragement of national bargains which tackle existing inequities in welfare
cover and extend the natural constituency of the labour movement, as well as
introduce new forms of flexible work and social security and tax reform. One
specific area where an EU role is required is in helping to ensure that both labour
and capital remain linked in national social pacts, given the low exit-costs in
many countries without a corporatist tradition. As for capital, action by the
Commission and member states at the EU level could ensure that the new
European Works Councils play a role in locking large firms, especially
multinationals, into national bargaining processes, and counter their tendency to
break away, as in the Irish case. As for the problem of trade union exit,
additional incentives for continued participation must be provided. At the
national level this could be achieved by scheduling productivity-linked wage
increases and employment creation in line with a return to non-inflationary
growth. At the European level, the Commission and member states should also
attempt to forge a link between national pacts and the European social dialogue:
the conclusion of a European employment pact stressing the importance of
education and training, as well as setting out the conditions for a coordinated
strategy of European reflation, would make an important contribution.
 MARTIN RHODES 57

Conclusions
In contrast to both the ‘optimist’ and ‘pessimistic’ positions, this chapter—which
could be called a ‘realistic’ interpretation—has argued the following:

• that given the weak foundations for, and widespread antipathy to pan-
European social policy initiatives, significant advances have been made in
putting in place a loosely linked regime comprising substantive rules,
procedural mechanisms and enforcement procedures that constrain and
underpin member-state policies in this domain;
• that although one should not minimise the importance of European-level
social policy developments, in either institutional or policy output terms, as
traditionally conceived, European policy initiatives are inadequate for dealing
with many of the pressing issues currently facing European social and labour
market systems;
• that this inadequacy does not derive from the failure to put in place a federal
welfare state—something that was neither politically possible nor
economically feasible—but from a combination of challenges from within
member-state systems and from beyond their borders;
• that a putative federal system would not necessarily assist in this process,
given that the nature of these challenges requires a recasting of national welfare
states and labour markets that must be dealt with primarily within domestic
policy structures, either at the national or still lower levels of political
organisation, allegiance and legitimacy;
• and that the appropriate and feasible role of the EU in this context is to
establish a floor of standards, at a level acceptable to the majority of member
states; ensure that inequalities that cannot be resolved by redistributive
policies within member states are met with pan-European transfers; and help
implement a set of ‘best practice’ policies to facilitate a process of consensual
national adjustment.

References

Ball, C.A. (1996) ‘The Making of a Transnational Capitalist Society: The Court of
Justice, Social Policy and Individual Rights Under the European Community’s Legal
Order’, Harvard International Law Journal, 37, 2, pp. 307–88.
Bowles, S. and H. Gintis (1995) ‘Productivity-Enhancing Egalitarian Strategies’,
International Labour Review, 134, 4–5, pp. 559–85.
Boyer, R. (1996) ‘State and Market: A New Engagement for the Twenty-First Century’,
in R. Boyer and D. Drache (eds) States Against Markets: The Limits of Globalization,
London: Routledge, pp. 84–114.
Cerny, P. (1997) ‘Paradoxes of the Competition State: The Dynamics of Political
Globalization’, Government and Opposition, 32, 2, pp. 251–74.
58 DEFENDING THE SOCIAL CONTRACT

Closa, C. (1998) ‘Some Sceptical Reflections on EU Citizenship as the Basis of a New

Social Contract’, in M. Rhodes and Y. Mény (eds) The Future of European Welfare:
a New Social Contract?, London: Macmillan 1998.
Cooke, P., T. Christiansen and G. Schienstock (1997) ‘Regional Economic Policy and a
Europe of the Regions’, in M. Rhodes, P. Heywood and V. Wright (eds)
Developments in West European Politics, London: Macmillan, pp. 190–206.
Cox, S. (1993) ‘Equal Opportunities’, in M. Gold (ed.) The Social Dimension:
Employment Policy in the European Community, London: Macmillan, pp. 41–63.
Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism, Cambridge: Polity
Press.
——(1994) ‘Equality and Work in the Post-Industrial Life Cycle’, in D. Miliband (ed.)
Reinventing the Left, Cambridge: Polity Press.
——(1996) ‘Welfare States without Work: the Impasse of Labour Shedding and Fam-
ilialism in Continental European Social Policy, in G.Esping-Andersen, Welfare
States in Transition: National Adaptations in Global Economies, London: Sage, pp.
66–87.
Falkner, G. (1997) ‘Social Policy and the Various Decision Traps of Regional
Integration’, Paper for the Joint Sessions of the ECPR, Bern, 27 February–2 March.
Ferrera, M. (1996) ‘The ‘Southern Model’ of Welfare in Social Europe’, Journal of
European Social Policy, 6, 1, pp. 17–37.
——(1998) ‘The Four “Social Europes”: Between Universalism and Selectivity’, in M.
Rhodes and Y. Mény (eds) The Future of European Welfare: a New Social
Contract?, London: Macmillan.
Frøllesdal, A. (1997) ‘Do Welfare Obligations End at the Boundaries of the Nation-
state?’, in P. Koslowski and A. Frøllesdal (eds) Restructuring the Welfare State:
Theory and Reform of Social Policy, Studies in Economics, Ethics and Philosophy,
Vol. 12, Berlin: Springer, pp. 145–163.
Gold, M. (1993) The Social Dimension: Employment Policy in the European Community,
London: Macmillan.
Hantrais, L. (1995) Social Policy in the European Union, London: Macmillan.
Holloway, J. (1981) Social Policy Harmonization in the European Community,
Farnborough: Gower.
Hooghe, L. (1997) ‘The Structural Funds and Competing Models of European
Capitalism’, paper presented at the conference on ‘Territorial Politics in Europe: A
Zero-Sum Game?’, European University Institute, Robert Schuman Centre,
Florence, April 21–22.
James, P. (1993) ‘Occupational Health and Safety’, in M. Gold (ed.) The Social
Dimension: Employment Policy in the European Community, London: Macmillan,
pp. 135–52.
Lange, P. (1992) ‘The Politics of the Social Dimension’, in A.M. Sbragia (ed.) Euro-
Politics: Institutions and Policy making in the ‘New’ European Community,
Washington DC: The Brook-ings Institution, pp. 225–56
——(1993) ‘Maastricht and the Social Protocol: Why Did They Do It?’, Politics and
Society, 21, 1, pp. 5–36.
Leibfried, S. and P. Pierson (1995) ‘Semisovereign Welfare States: Social Policy in a
Multi-tiered Europe’, in S. Leibfried and P. Pierson (eds) European Social Policy:
Between Fragmentation and Integration, Washington DC: The Brookings
Institution, pp. 43–77.
 MARTIN RHODES 59

Majone, G. (1996) ‘Which Social Policy for Europe’, in Y. Mény, P. Muller and J.-L.
Quer-monne (eds) Adjusting to Europe: The Impact of the European Union on
National Institutions and Policies, London: Routledge, pp. 123–36.
Montanari, B. (1995) ‘Harmonization of Social Policies and Social Regulation in the
Euro-pean Community’, European Journal of Political Research, 27, 1, pp. 21–45.
Moravcsik, A. (1993) ‘Preferences and Power in the European Community: A Liberal
Inter-governmentalist Approach’, Journal of Common Market Studies, 31, 4, pp. 473–
524.
Ostner, I. and J. Lewis (1995) ‘Gender and the Evolution of European Social Policies’, in
S. Leibfried and P. Pierson (eds) European Social Policy: Between Fragmentation
and Integration, Washington DC: The Brookings Institution, pp. 159–93.
Paugam, S. (1998) ‘Poverty and Social Exclusion: A Sociological View’, in M. Rhodes
and Y Mény (eds) The Future of European Welfare: a New Social Contract?,
London: Macmillan.
Pierson, P. (1996) ‘The Path to European Integration: A Historical Institutionalist
Analysis’, Comparative Political Studies, 29, 2, pp. 123–63.
Pierson, P. and S. Leibfried (1995) ‘The Dynamics of Social Policy Integration’, in S.
Leibfried and P. Pierson (eds) European Social Policy: Between Fragmentation and
Integration, Washington DC: The Brookings Institution, pp. 432–65.
Rhodes, M. (1992) ‘The Future of the Social Dimension: Labour Market Regulation in
Post-1992 Europe’, Journal of Common Market Studies, 30, 1, pp. 23–51.
——(1995) ‘A Regulatory Conundrum: Industrial Relations and the Social Dimension’, in
S. Leibfried and P. Pierson (eds) European Social Policy: Between Fragmentation
and Integration, Washington DC: The Brookings Institution, pp. 78–122.
——(1996) ‘Globalization and West European Welfare States: A Critical Review of
Recent Debates’, Journal of European Social Policy, 6,4, pp. 305–27.
——(1997) ‘Southern European Welfare States: Identity, Problems and Prospects
for Reform’, in M. Rhodes (ed.) Southern European Welfare States: Between Crisis
and Reform, London: Frank Cass, pp. 1–22.
——(1998a) ‘Globalization, Labour Markets and Welfare States: A Future of
“Competitive Corporatism”?’, in M. Rhodes and Y. Mény (eds) The Future of
European Welfare: a New Social Contract?, London: Macmillan.
——(1998b) ‘An Awkward Alliance: France, Germany and Social Policy’, in D. Webber
(ed.) The Franco-German Relationship in the European Union: The Hard, the
Rotting or the Hollow Core, London: Routledge.
Rhodes, M. and B. van Apeldoorn (1997) ‘Capitalism versus Capitalism in Western
Europe’, in M. Rhodes, P. Heywood and V. Wright (eds) Developments in West
European Politics, London: Macmillan, pp. 171–89.
Rhodes, M. and Y. Mény (1998) ‘Europe’s Social Contract under Stress’, in M. Rhodes
and Y. Mény (eds) The Future of European Welfare: a New Social Contract?,
London: Macmillan.
Ross, G. (1995) Assessing the Delors Era and Social Policy’, in S. Leibfried and P.
Pierson (eds) European Social Policy: Between Fragmentation and Integration,
Washington DC: The Brookings Institution, pp. 357–88.
Ruggie, J.G. (1982) ‘International Regimes, Transactions and Change: Embedded
Liberalism in the Postwar Economic Order’, International Organization, 36, 2, pp.
379–415.
60 DEFENDING THE SOCIAL CONTRACT

——(1994) ‘Trade, Protectionism and the Future of Welfare Capitalism’, Journal of

Interna-tional Affairs, 48, 1, pp. 1–11.
Scharpf, F.W. (1988) The Joint Decision Trap: Lessons from German Federalism and
European Integration’, Public Administration, 66, pp. 239–78.
——(1997a) ‘Employment and the Welfare State: A Continental Dilemma’, Max-Planck-
Institut für Gesellschaftsforschung Working Paper, No. 7, July.
——(1997b) ‘The Problem Solving Capacity of Multi-level Governance’, Max-Planck-
Institut für Gesellschaftsforschung, mimeo.
Sigg, R., I. Zeitzer, X. Scheil-Adlung, C. Kuptsch and M. Tracy (1996) ‘Developments
and Trends in Social Security, 1993–1995’, International Social Security Review, 49,
2, pp. 5–126.
Skocpol, T. (1992) Protecting Soldiers and Mothers: the Political Origins of Social
Policy in the United States, Cambridge: Harvard University Press.
Streeck, W. (1995) ‘From Market-Making to State-Building? Some Reflections on the
Political Economy of European Social Policy’, in S. Leibfried and P. Pierson (eds)
Fragmented Social Policy: The European Union’s Social Dimension in Comparative
Perspective, Washington DC: The Brookings Institution, pp. 389–431.
——(1996) ‘Public Power Beyond the Nation-State: The Case of the European Commu-
nity’, in R. Boyer and D. Drache (eds) States Against Markets: The Limits of
Globalization, London: Routledge, pp. 299–315.
——(1997) ‘Citizenship Under Regime Competition: The Case of the ‘European Works
Councils”, Max-Planck-Institut für Gesellschaftsforschung Working Paper, No. 3,
March.
Threlfall, M. (1997) ‘Spain in Social Europe: A Laggard or Compliant Member-State’,
South European Society & Politics, 2, 2, pp. 1–33.
Trubeck, D. (1996) ‘Social Justice after Globalization: the Case of Social Europe’, paper
presented to the seminar ‘Globalization and the Law’, European University Institute,
Florence, Department of Law, November.
Tsoukalis, L. and M. Rhodes (1997) ‘Economic Integration and the Nation-State’, in M.
Rhodes, P. Heywood and V. Wright (eds) Developments in West European Politics,
London: Macmillan, pp. 19–36.
 4
THE IMPACT OF THE EUROPEAN UNION
ON UNEMPLOYMENT AND
UNEMPLOYMENT POLICY
Richard Jackman

The rapid growth in unemployment during the 1970s and early 1980s, and the
sustained high levels of unemployment since that time, in much of western
Europe, must be counted one of the most conspicuous failures of the European
Union. In the 1950s and 1960s, the nations of western Europe had achieved a
remarkably successful record of full employment. Not only that but, and perhaps
more worryingly, the recent experience of the EU countries has been very much
worse than that of the major industrial nations outside the EU, in particular the
United States and Japan (see figure 4.1). The working age population in the
States has been growing at twice the rate of the EU countries, yet the peak US
unemployment rate (in 1992) of 7.2 per cent was lower than the lowest rate
achieved by the EU during the past decade. Closer to home, the low
unemployment rates achieved by many of the smaller non-EU western European
economies such as in Scandinavia, Austria or Switzerland (figure 4.2) during the
1980s can be contrasted with the sharp rise in unemployment in Finland and
Sweden which has coincided with their accession to the EU.
It is clearly reasonable to ask how the major economies of western Europe
have achieved so abysmal a record. Has the formation of the EU itself
contributed to the growth of unemployment in the member states, and if so how?
Have EU policies made matters worse, and if so in what ways? What can be
done now, either by the EU itself or by the governments of member states?
The EU itself accepts that it has a responsibility for the unemployment rates of
its member states. In this light, the White Paper, ‘Growth, Competitiveness,
Employment’ (CEC 1993) proposed the objective of halving European
unemployment, then standing at 10 per cent, by the year 2000. The White Paper
focused on the perceived ‘competitive weaknesses’ of the EU economies and
proposed policies of increased investment and labour market deregulation to
improve competitiveness. This work formed the basis for a meeting of the
European Council at Essen in December 1994, which urged EU countries to
take action in five areas (‘the Essen Conclusions’). These were:

i investment in vocational education

ii increasing the employment intensity of growth
iii reducing non-wage labour costs
62 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

Figure 4.1 Unemployment rate EU 15, US, Japan

Source: European Economy (1995), no. 60, table 3.
iv improving the effectiveness of labour market policy and
v more help for groups particularly hard hit by unemployment.

These conclusions are clearly phrased in a manner to allow different member

states to interpret them in accordance with their own perceptions. For example the
UK government has instanced the growth of part-time employment as a
contribution to ‘increasing the employment intensity of growth’. It may be noted
that the obligations are imposed on the governments of the member states rather
than on the EU, but are at the same time phrased in such general terms as to
impose no specific requirement on any member state. Not surprisingly, therefore,
nothing has come of this initiative and, three years after the publication of the
White Paper the EU employment rate still stood at 10.8 per cent.
Overshadowing these developments have of course been the moves towards
Economic and Monetary Union (EMU). Monetary union requires not only the
creation of supranational monetary institutions and the adoption of common
monetary policies for participant countries, but also, as a result of the
convergence criteria laid down in the Maastricht Treaty, the adoption of
restrictive fiscal policies on the part of prospective EMU members. Arguably,
the macroeconomic requirements of the Maastricht timetable have had a much
 RICHARD JACKMAN 63

Figure 4.2 Unemployment rate EU 15, Sweden, Austria

Source: European Economy (1995), no. 60, table 3.

greater influence on the evolution of unemployment in Europe in the last five

years than any labour market measures.
In this chapter, I first set out the broad dimensions of the unemployment
problem, contrasting recent experience in the EU with that of other OECD
countries. The chapter then examines recent policy developments, and their
impact on unemployment, in three main areas: macroeconomic management;
trade unions, wage bargaining and employment legislation; and unemployment
benefits and income support. The main conclusion of this chapter is that the
adjustment to economic change in the labour markets of the EU countries is
likely to entail a wide range of changes, and this argues for a deregulatory
approach to wage and employment legislation, including legislation protecting
trade union rights. Such an approach will harm the interests in particular of
organised labour in the wealthier EU countries, in whose interests many EU
initiatives in the labour market have been designed. With the move towards the
single market and a single currency in the EU matched by even more far-
reaching trade liberalisation in the world economy, not to mention the
prospective accession of the former socialist economies of eastern Europe, the
EU is not in a position to protect such groups from economic change.
64 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

Recent developments in OECD labour markets

In identifying the most important recent trends in labour markets there is no
better place to start than the United States. Of the developed economies, the US
labour market is the most obviously competitive and flexible, the least subject to
protection or regulation, and thus an arena in which the workings of market
forces are most transparent. Unemployment in the United States, as already
noted, has shown virtually no trend increase since the 1950s, yet over the
decades, and in particular over the last ten years, the distribution of wages has
become wider and wider (see Blackburn et al. 1990 or Katz and Murphy 1992).
Despite the general improvements in living standards, the real wages of the
poorest ten per cent of workers are lower now than they were in 1970.
At the same time there has been in the United States a substantial growth in
skilled relative to unskilled employment. The rise both in relative wages and in
employment of skilled workers suggests that the main driving force must be on
the demand rather than on the supply side. During the past decade or so, there
has been a marked increase in the relative demand for skilled as against unskilled
labour. Katz and Murphy (1992) have investigated to what extent shifts in the
pattern of demand can be attributed to changes in the industrial structure, and to
what extent to changes in the proportions of different skills employed within
each sector. They find that the main factor has been an increase within each
industrial sector in the proportion of more educated and more skilled workers,
and of women, despite the rise in the relative wage of these groups. They
attribute this shift largely to the nature of technological change in recent years,
which has progressed beyond the stage of heavy machinery requiring manual
strength or skills for its operation to computers and electronics requiring
intelligence in those who work with them.
At the same time, there have been substantial changes in the composition of
employment by industrial sector. The share of business and professional sevices
and of health, education and welfare have risen, while the proportion employed
in manufacturing as well as in agriculture, distribution and the retail trade has
fallen. These shifts also serve to raise significantly the demand for skilled
relative to unskilled labour and for women rather than men.
The US experience also demonstrates that the present phase of technological
development need not be destructive of employment overall. As shown in figure
4.3, in the last decade employment growth has been very much faster in the US
than in EU countries, both absolutely and relative to growth in the working
population. The introduction of new technologies can coexist with the creation of
new jobs, though mostly in service activities, and as already noted, most of the
employment growth has been in skilled and relatively well-paid occupations.
These technological developments will have affected the labour markets of the
EU countries too, but in contrast to the US, in most EU countries the wage
structure has not become more unequal. Only in the UK has inequality increased
to any marked degree (OECD 1993). Many US economists, such as Krugman
 RICHARD JACKMAN 65

Figure 4.3 Total population of working age (15–64) and employment (1960 as base year)
Source: Labour Force Statistics, OECD, table 2, various issues and Economic Outlook,
OECD, July 1996

(1994), have argued that in the face of falling demand for unskilled labour
wages have been held up by a variety of institutional forces, such as benefits,
minimum wage legislation and trade union bargaining rights. The obvious
corollary is that the combination of falling demand and rising real wages has led
to widespread unemployment of unskilled workers in Europe. Thus, Krugman
has characterised the EU unemployment problem as ‘collision’ between, on the
one hand, market forces which are raising the demand for skilled, and depressing
the demand for unskilled, labour, and European welfare state policies on the other.
The basic conclusion is that Europe must become more like America, and permit
greater income equality, which would both sustain more jobs for unskilled
workers and increase incentives to workers to acquire skills and qualifications.
While there is undoubtedly some truth in this line of argument, it has to be
noted that in most European countries, unemployment rates of skilled as well as
those of unskilled workers have been rising. Indeed, the ratio of unskilled to
66 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

Table 4.1 Relative unemployment rates since 1979 (measure ratio: low education/high
educationa

Source: S. Nickell and B. Bell, Oxford Review of Economic Policy, vol. 11, no. 1, 1995
Notes:
a ‘Low education’ refers to workers with no educational qualifications or with primary

school certificate only and ‘high education’ to workers with at least two years’ university
education or a further education college or university degree.
b In these countries data on education is not available and the ratio is instead of low

occupation to high occupation unemployment rates. Low occupation refers to production

and related workers, transport equipment operators and labourers. High occupation refers
to professional, technical and related administrative and managerial workers. The data are
for males only.

skilled unemployment rates has shown no systematic increase with more

European countries showing a decline (The Netherlands, Sweden and UK)
than an increase (Italy and Spain) in this ratio (see table 4.1). This suggests that
the causes of EU unemployment cannot be attributed exclusively to the effects
on the low paid of benefits or trade union rights. Most European countries have
strong educational systems and the proportion of new entrants to the labour
market with skills and qualifications is rising rapidly. Indeed, the evidence
suggests that in many countries the growth in the supply of skilled labour
matches, or comes close to matching, the growth in demand (Manacorda and
Petrongolo 1996). The rise in European unemployment may more plausibly be
linked to the effect of the welfare state and collective bargaining systems on the
labour market as a whole rather than just on the unskilled.
The EU labour market as a whole has experienced high wage and low
employment growth as compared to the United States, as shown in figure 4.4.
The main factors associated with high rates of unemployment in Europe include:
Figure 4.4 Employment and real wages (index 1970=100)
Source: Economic Outlook, OECD, annex tables 12, 14 and 20, July 1996.
RICHARD JACKMAN 67
68 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

first, wage bargaining procedures including the legal rights of unions and
workers and legislation affecting the employment contract, such as minimum
wage laws or employment protection rights; second, the treatment of
unemployed people including the level and duration of unemployment benefits,
assistance with job search and other forms of active labour market policy; and
third, in the short and medium term, restrictive macroeconomic policy which can
increase unemployment not only through its direct effects on demand but also
through hysteresis effects (for example, the creation of long-term
unemployment) and through possible adverse effects on other areas of
government policy (for example, when unemployment is high, governments may
be forced to strengthen employment protection legislation or raise benefits).

Macroeconomic management
The idea that macroeconomic management is the key to maintaining full
employment has of course been long dead. It is now widely recognised that the
rate of unemployment that can be sustained in an economy in the long run
depends on structural factors and labour market institutions, and not on aggregate
demand. But economies remain subject to macroeconomic, as well as structural,
shocks, and it is in this area that EU policies appear to have caused most trouble
in recent years.
The problems have revolved around the attempt to create a fixed exchange rate
zone, most recently through the Exchange Rate Mechanism (ERM) of the
European Monetary System, and ultimately a single currency, for the EU trading
area. It should be stressed that the commitment to a single market with free trade
in goods and services and free mobility of capital and labour does not of itself
logically necessitate a single currency, or fixed or even stable exchange rates.
The growth in, and liberalisation of, world trade has continued unabated during
the flexible exchange rate era. Similarly, the collapse of the ERM has coincided
with, and in no way impeded, the introduction of extensive EU trade
liberalisation measures during the last few years. Not only is it possible to
envisage a single market with many separate currencies, but calculations of the
benefits of moving to a single currency (e.g. European Commission 1990) have
found only relatively modest gains. (For example, the transaction costs of
converting from one currency to another are estimated to be of the order of 0.5
per cent of GDP.) Even so, the EU has pressed forward in its determination to
introduce the single currency within the original Maastricht timetable.
The idea embodied in the Maastricht Treaty of the ERM as a half-way house
to monetary union is now in ruins. The collapse of the ERM in September 1992
highlighted two fundamental problems with the management of fixed exchange
rate systems which arguably have yet to be solved and could return to haunt a
future single currency arrangement. First, a fixed exchange rate system, or a
single currency, provides no mechanism of adjustment to macroeconomic shocks
affecting member states differentially. This weakness was shown up to disastrous
 RICHARD JACKMAN 69

effect by the sharp increase in the German budget deficit following reunification.
The macroeconomic adjustment to this deficit required an increase in German
relative to other EU prices in EU and world markets. An appreciation of the
DM could not be achieved within the ERM, while the Bundesbank was not
prepared to see a sharp increase in inflation in Germany. Deflationary monetary
policy in Germany was transmitted to the other ERM countries via the fixed
exchange rate leading to recessions in the other countries. Speculators in the
foreign exchange markets took the view that, rather than attempt to force a
decline in money wages and prices, which would have required even deeper and
more prolonged recessions, the governments of the other countries would choose
to leave the ERM. Speculative pressures thus forced the collapse of the ERM.
(Under monetary union, of course, this could not have happened, and governments
would have had no choice but to accept a recession of the length and depth
required to bring about the requisite relative price adjustment.)
While German reunification was a ‘one-off’ event, rather the same problems
arise where countries are at different phases in their economic cycles. In the first
quarter of 1997, for example, the UK was around the peak of an economic cycle
with many, including the Governor of the Bank of England, arguing for
restrictive monetary policy while France and Germany were in recession. With
flexible exchange rates, monetary policy can be expansionary in France and
Germany and at the same time restrictive in the UK, but under a single currency
that is no longer possible.
The standard ‘textbook’ analysis of optimal currency areas (Mundell 1961)
recognises that when wages and prices are not perfectly flexible an economy can
insulate itself from some external shocks by maintaining an independent
monetary policy under a flexible exchange rate regime. However, shocks that
affect a group of countries in a similar or symmetrical way cannot be dealt with
by adjustments in countries’ exchange rates relative to one another. Hence, with
inflexible wages and prices, countries with similar economic structures and
policies, and hence subject to similar shocks, are best placed to form a currency
union. Following this line of argument, the European Commission has argued
that the economic structures of the EU countries are as similar as, for example,
those of the major regions of the United States and the conditions for currency
union are thus adequately satisfied. The Commission has also expressed the hope
that the single market will of itself bring closer convergence (European
Commission 1990), though the permanence of substantial regional disparities
within a number of EU countries, such as Italy or the UK, may cast doubt on this
prospect. Whether or not one accepts this argument (for an evaluation, see Bean
1992), one may note that the capacity of the United States economy to operate
with a single currency may reflect other elements of labour market flexibility not
present in many European countries, in particular the much higher rate of
internal migration in the United States as compared to most European countries.
Thus, for example, Layard et al. (1991, ch. 6) contrast the permanence of
regional unemployment rate differentials in European countries with the
70 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

transient character of such differentials in the US. Equally, it is generally

believed that wages in the US are more responsive to market pressures than is the
case in many European countries. In this sense, labour market flexibility may be
seen as an alternative to exchange rate flexibility, which suggests it might be
dangerous to give up the one until one has achieved the other.
The second, and perhaps more fundamental problem concerns the convergence
of inflation rates. While few people now think there is a permanent trade-off
between inflation and unemployment, the output and employment costs of
reducing inflation remain heavy, and analysis of the political economy of
inflation policy remains an area of active dispute. It seems clear that in a number
of EU countries, in particular the UK, France and Italy, inflation has been
reduced in recent years at costs which would previously have been judged
unacceptable, and that aspirations to European monetary union have provided an
explicit objective in this context. But other EU countries, such as Greece,
continue to maintain significantly higher inflation rates, and it is hard to envisage
that they might be able to join a monetary union. It may be assumed that the
more developed the economy, the greater the costs of inflation relative to other
forms of taxation, so that the prospects for convergence of inflation may have to
await a greater degree of economic convergence than currently exists in the EU.
Historical evidence appears to support the view that countries have different
inflation tolerances and that those which have traditionally shown inflationary
tendencies cannot easily adjust to the rigours of stable prices. In 1983, France
embarked on the Franc fort policy and its unemployment rate has been climbing
ever since, and is now standing at 12.5 per cent. More dramatically, in 1990
Sweden abandoned its traditional commitment to full employment in favour of
price stability. The policy has been successful in reducing inflation to practically
zero, but the unemployment rate shot up from two per cent in 1990 to close on
ten per cent in 1993 and, despite massive training and job creation programmes
for the unemployed, the unemployment rate in early 1997 still exceeded ten per
cent.
On fiscal policy, the Maastricht Stage Two proposal that budget deficits be
limited to three per cent of GDP—and government debt to sixty per cent of GDP
—does not address the requirements of fiscal co-ordination, but is concerned
instead with attempting to avoid the situation of a member state government
defaulting on its debt which could in turn generate a community wide financial
crisis. It is clear that the Maastricht debt condition is impossibly demanding for a
number of the EU countries, in particular, Belgium, Greece, Ireland and Italy,
and has effectively been abandoned. The deficit criterion, by contrast, which
lacks any economic rationale, has been elevated into the critical entry
requirement. Attempts by member states to reduce their budget deficits have
been to a large extent self-defeating and served to create a recession throughout
Europe which only countries opting out of the single currency like Denmark and
the UK have been able to avoid.
 RICHARD JACKMAN 71

If the EU were to put in place the preconditions for successful currency

integration, it would need to focus on three areas. First, regional and structural
policies would be necessary to achieve greater economic convergence. The main
mechanism here is the Structural Funds, which exist to promote development
in the poorer regions and to assist areas in industrial decline and suffering high
unemployment. These Funds are at present relatively small, amounting to only
about one quarter of the EU budget. However, the intention is that more of the
budget will be shifted into these Funds, and that disbursements from the Funds
could amount to as much as five per cent of GDP for the poorer regions (Bean
1992). While this is large relative to other international support programmes
(roughly the same scale as the Marshall Plan, and not far short of the total
transfer of international support to sub-Saharan Africa as a proportion of GDP
today), it will clearly not significantly reduce differentials within the EU within
the timescale currently being envisaged for monetary union.
Second, fiscal harmonisation, relating both to the development of rather less
arbitrary criteria for determining the size of sustainable deficits, and with the
objective of preventing the fiscal policy of one country from creating imbalances
between economies, would need to be achieved. Such imbalances with separate
currencies destabilise exchange rates, and with a single currency create costly
pains of adjustment. (These criteria may bear some resemblance to the types of
constraints imposed on local government budgets by central governments in
federal countries.)
Finally, the development of ‘automatic stabilisers’, that is mechanisms through
which countries hard hit by particular shocks receive automatic fiscal support at
the EU level, in the same way that regions do in the event of a decline in the local
economy through the workings of the central government budget, is desirable.
There is no centralised EU tax system on individuals of the type which provides
automatic fiscal transfers in national economies. The only stabilisers to exist at
the EU level at present are the Structural Funds, but these are for the finance of
specific individual projects, and whatever their other strengths and weaknesses
there is no possibility that they can be adjusted sufficiently rapidly in the short
run to provide immediate fiscal support to alleviate shocks. What is required is
something closer to a ‘sliding scale’ of contribution rates to the EU budget,
whereby a member state suffering an economic downturn automatically receives
a rebate in the form of a reduced rate of contribution to the EU budget.

Trade unions, wage determination and employment

legislation
It was noted above that trade unions and government legislation continue to play
a major role in wage and employment determination in many EU countries. It
was argued that this might constitute a possible cause of high unemployment in
Europe, not just for unskilled and manual workers, but throughout the labour
market as a whole. The argument is that the social criteria which influence wage
72 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

setting, in conjunction with taxes and other non-wage labour costs, are resulting
in ‘excessive’ labour costs. In a closed economy, the share of wages in national
income might be regarded as a policy issue. But the argument now is that the
opening up of international trade and capital mobility means that labour in
each country is in competition with labour in every other country, with the
implication that labour costs in each country can differ only in line with
differences in labour productivity.
Most EU countries are reluctant to abandon the principle that people should be
able to earn a decent living, to support themselves and their dependents, from their
work, and that the structure of wages plays an important role in maintaining
social equity. This contrasts with the position of ‘liberal’ economists, which
underpins economic policy in the Anglo-Saxon countries, who argue that wages
should reflect market forces, while social objectives should be the responsibility
of governments and implemented through the tax and social security systems.
The approach in ‘corporatist’ systems is instead that the ‘social partners’,
employers, unions and government, share responsibility for economic welfare.
There are obvious difficulties in tying economies where wages are set on
social principles with those where they are set by market forces into a single
trading bloc, such as the European single market. While we examine these
problems in more detail below, it must always be recognised that international
trade and capital mobility are increasing all the time throughout the world, and
the globalisation of world trade constitutes a more fundamental challenge to
European labour markets than any effects of the European single market.
As present constituted, the European single market operates across nation
states each with their own legislation on wages, employment and working
conditions. There is, however, clearly pressure within the EU for some
harmonisation of wages and working conditions, on the grounds that differentials
could distort competition between firms located in different member states. For
example the CEC 1989 report, Employment in Europe, argues that ‘if differences
in working conditions (wages, social protection, social benefits, etc.) are not to
lead to distortions of competition, these standards may need to be brought closer
in line across the Community’ (1989:67). While various aspects of wage and
employment legislation may be ‘brought closer in line’, it is hard to see how
wages themselves can be harmonised given that existing wage differentials
reflect different levels of skills and productivity in the workforces of the
different member states. As a rough order of magnitude, labour productivity in
the most prosperous parts of the EU is about twice as high as in the poorest parts,
so wage equalisation is not a practical possibility. Any attempt to impose uniform
wages in the single European market can only create mass unemployment in the
low productivity regions, exactly as happened in East Germany after unification.
Competition within the single market will create pressure towards the
equalisation of unit labour costs within each industry across countries, which in
turn requires that wages differ across countries to take account of differences
both in productivity and in non-wage labour costs.
 RICHARD JACKMAN 73

A second implication of increased competition is that firms are likely to be

vulnerable to larger shocks. Where a market is highly competitive, small changes
in non-labour costs, or in preferences can have a large effect on a firm’s
competitive position and hence on its demand for labour. A corollary is that
‘solidaristic’ wage policies within countries, according to which workers in
different sectors receive the same wage, or at least the same wage increase, may
no longer be feasible. Employers may need to be able to adjust wages in line
with market conditions in their own sector. Thus, for example, Freeman and
Gibbons (1993) argue that centralised bargaining broke down in Sweden because
it was unable to accommodate the adjustments in relative wages being forced on
the Swedish economy by increased international competition during the 1980s.
It is frequently argued that centralised wage setting arrangements have been a
force for wage moderation in many countries, and it follows that the gradual
disintegration of such systems can be expected to create problems of economic
management. In particular, it may oblige countries seeking price stability both to
accept higher average rates of unemployment and to introduce institutional
changes to weaken the bargaining power of unions given that this is no longer
effectively neutralised through centralised bargaining systems. As it takes time to
change institutions, this may be another argument for postponing the introduction
of the single currency until economies are adjusted to the consequences of the
single market.
The single European market, set up to encourage competition across national
boundaries, may in fact prove to be as hostile an environment for unions as has
been the great continental market of the United States. In America, the unions
have been effectively eliminated in the private sector (with only around 10 per
cent of workers belonging to a union), and wages are set locally in accordance
with market conditions and adjust flexibly as conditions change. These
developments obviously run counter to the traditions of involving unions in
economic management and of the ideal of the social partnership including
representatives of employers and workers taking responsibility for economic
affairs, which is part of the traditional mode of government in many continental
European countries.
As noted above, there has also been pressure for harmonisation of labour laws
and practices across the EU countries in the name of ‘fair’ competition. Many of
the provisions of the social chapter of the Maastricht Treaty were motivated by
the concern that different legal standards relating to employment could affect
(particularly non-wage) labour costs and thus the competitiveness of firms
located in different states. The objectives of the social chapter have been
endorsed by all EU countries except the UK.
Numerous aspects of the employment contract are subject to laws or
regulation. The main concern in the present context, however, has been the
coverage of legislation on workers’ rights, including employment protection and
working conditions. More specifically, the fear has been that firms operating in
more tightly regulated EU countries will relocate to countries with less regulated
74 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

markets, where they can take advantage of unprotected part-time, temporary or

casual workers to reduce not only their wage costs but also their legal obligations
with regard, for example, to sick pay or in some cases their need to make
contributions to workers’ pension funds. The process whereby firms in less
regulated markets can undercut their competitors by virtue of not providing
supporting social services for their workers has sometimes been described as
‘social dumping’ (see chapter 5 in this volume). The ‘Action Programme’
supporting the social charter contains various directives and other instruments
designed to bring a degree of consistency to the labour market rules and
regulations of the various member states.
An example of this process, which has been a cause of much concern to the
UK government, has been the support given by the social charter to the principle
of a minimum wage. Here the objective is that each member state ought to have a
minimum wage, though it is accepted that the level at which the minimum is set
should be defined at the level of the member states. (Many EU countries have
statutory minimum wages and in most of the others minimum wages are set in
collective bargaining and workers not covered are entitled to have their wages
set by reference to such agreements. Only the UK and Ireland at present have no
general minimum wage provision.) Where a minimum wage is enforced, its
practical impact varies from the substantial—in France, for example—to the
insignificant—for instance, in The Netherlands.
It may seem illogical to seek to introduce EU provisions on the principle of a
minimum wage if there is no attempt to influence the level at which that
minimum is set. In part, the reason may be that minimum wages are one
instrument by which organised labour can fight off the threat of being undercut
by part-time, temporary or casual labour whose employment falls outside the
scope of standard collective bargaining agreements. Similar principles apply to
directives governing the wages, overtime pay, holiday entitlements and
employers’ social insurance contributions for part-time workers. The directives
require only that such working conditions for part-time workers be aligned with
those of full-time workers, and that employers’ taxes are levied on part-time
workers on an equivalent basis to those levied on full-time workers.
But is such harmonisation required for economic efficiency? If labour is
immobile between countries, heavier uniform taxes on labour in one country than
another do not create competitive distortions, but simply depress the post-tax
wage of workers in countries where taxes are high. Similarly the imposition of
other uniform costs (for example, provision of paid holidays) will not distort
competition, but will tend to be associated with compensating wage differentials
(for example, lower annual wages in countries with longer holiday entitlements).
Where distortion arises is if taxes are not uniform across sectors, and differ
across countries. For example if country A taxes the X industry and country B
taxes the Y industry, and workers can work in either industry in their own
country, and the products of the two industries are internationally tradeable, then
production of X will be located in country B and of Y in country A, for reasons
 RICHARD JACKMAN 75

having no economic rationale except to avoid taxes. This relocation also means
that neither country collects any tax revenue. A similar point may be made in
relation to taxes on different types of labour: if country A taxes only full-time
workers and country B taxes only part-time workers, then the industrial structure
in A will tend to favour sectors and production technologies employing part-
time workers while in country B sectors intensive in the use of full-time workers
will be at an advantage. Again such specialisation has no economic rationale but
is simply the outcome of tax avoidance.
The provisions in the social chapter, insofar as they concern the imposition of
uniform treatment of different types of workers within each country with regard
to taxes and regulatory requirements, rather than the level of such taxes, appear
thus consistent with the principles of non-distortionary taxation. However, such
arguments do not carry over from taxes to direct interventions such as a
minimum wage. While it is economically sound to argue that a minimum wage,
if one exists, should apply equally to unionised and non-unionised workers, as
well as to those in part-time work, a minimum wage necessarily affects some
sectors more than others and if set at different levels relative to productivity in
different countries will tend to distort competition between them. (The fact that
low-wage workers tend to be concentrated in domestic service sectors such as
household services or hairdressing means that concerns over international
competition may not be not too important a consideration in practice.)
Even if economic theory suggest that taxes on a fixed factor, such as labour
within one country, are borne by that factor and do not undermine the
competitive position of an industry, this perception is often not shared by
industrialists and politicians. Competition in the single market can then be
expected to be associated with competitive tax-cutting and deregulation policies
on the part of national governments. This development is clearly of concern to a
number of national governments and to the European Commission, but it is
difficult to achieve agreement in an area where national governments have
different views on taxes and regulations in terms of their effects on internal
economic efficiency and social welfare.

Unemployment benefits and income support

The experience of severe and persistent unemployment in many EU countries
has meant that many unemployed people have suffered long spells out of work.
In many countries, the proportion of long-term unemployment has risen to fifty
per cent or more of total unemployment while many others experience repeated
spells of unemployment interrupted only by brief spells in temporary jobs. Many
long-term unemployed people, particularly older workers, appear to have given
up looking for work and become resigned to life on the dole.
The persistence of unemployment and the build-up of long-term
unemployment have led many to question the design of income support
programmes for the unemployed. It has sometimes been suggested that the root
Table 4.2 Replacement ratesa for single-earner households, 1994
76 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

Source: OECD, Employment Outlook (1996), table 2.1, p. 32.

Note:
a Replacement rates are the ratio of a person’s income if wholly unemployed and eligible for unemployment benefit to the wage the person

might expect to receive if in work. The latter is calculated as two-thirds of the average level of earnings of production workers.
 RICHARD JACKMAN 77

cause of unemployment in Europe is the ‘generosity’ of unemployment benefits,

while others have been more concerned about benefits being in some systems
available indefinitely and unconditionally. This latter concern has led to a
redirection of policy towards ‘active’ measures to encourage unemployed people
to search more widely, to go on training courses or take temporary work in the
hope of addressing structural imbalances in the labour market and of preventing
the emergency of an ‘unemployment culture’ associated with long-term
unemployment.
In most EU countries, the level of unemployment benefit is higher than in the
United States or Japan, but lower than in Sweden or the other Nordic countries
(table 4.2). What distinguishes the EU countries is not so much the level as the
duration of benefit entitlements. In the United States and Japan, people can draw
unemployment insurance for six months only (subject in the US to local
variation) and there is no unemployment assistance except for universal
programmes, such as AFDC in the States. In low unemployment European
countries, such as Switzerland and Sweden, unemployment insurance terminates
after about a year, but the system in both these countries is characterised by
severe job search and work test requirements.
There is a clear correlation in the data between the extent of long-term
unemployment and the duration of benefit entitlement (figure 4.5). This could in
part be a statistical artefact, in that entitlement to benefit gives people an
incentive to register as unemployed. In the Figure, unemployment is measured on
the ILO definition, i.e. people who are out of work available for work and
actively looking for work, and the data is derived from national Labour Force
Surveys. It is possible that people who are registered as unemployed and entitled
to benefit, but not looking for work, may answer ‘yes’ to these questions, in case
the survey is crosschecked with their benefit claim.
There is little doubt that the main cause of the correlation between the duration
of benefits and the proportion of long-term unemployment is that people become
accustomed to being unemployed and adjust to it. Thus active labour market
policies in many countries have involved both obligations on the unemployed to
attend interviews, to apply for jobs, and to accept jobs that they are offered, as
well as advice and assistance with job search and the provision of training and
temporary work placements. The evidence (OECD 1993) appears to suggest that,
of these activities, assistance with job search is the only type of policy to have
systematically beneficial effects. The inability of more direct interventionist
policies to solve the unemployment problem is a further factor which may
encourage labour market deregulation.
At present, the rules and regulations covering unemployment insurance and
assistance in the EU are entirely at the discretion of the member states. It is not
clear that national autonomy in this area would be at all logical in the context of
free mobility of labour between the member states, and a case could be made for
harmonisation of various dimensions of unemployment benefit systems much
along the lines of the treatment of other non-wage dimensions of the
78 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

Figure 4.5 Benefit duration and incidence of unemployment

Source: Long-term unemployment: Employment Outlook, OECD, various issues. Benefit
duration: R. Jackman, R. Layard and S. Nickell, ‘Combating unemployment: is flexibility
enough’, Centre for Economic Performance, Discussion Paper no. 293.
Note: AUL—Australia; BE—Belgium; CA—Canada; DK—Denmark; FI—Finland; FR-
France; GE—Germany; IR—Ireland; JA—Japan; NL—Netherlands; NO—Norway; NZ—
New Zealand; PO—Poland; SP—Spain; SWE—Sweden; SWI—Switzerland; UK—
United Kingdom; US—United States.

employment contract. Although the numbers are not large, the treatment of
citizens of one country becoming unemployed while resident in another raises
delicate problems in the context of the notional free mobility of labour.
The UK government is clearly moving most rapidly in the direction of limiting
the entitlement to unemployment benefit to established workers who lose their
jobs, as against the situation where unemployment benefit is a sort of universal
income support system. Whatever one’s views on this approach, it could quite
clearly lead to the labour market in the UK developing very differently from in
the other EU countries, in particular with regard to the availability of part-time or
casual work, which may generate continuing difficulties with regard to
harmonising wage and employment legislation.

Conclusion
The economies of the EU countries are having to adjust both to very major
changes in the world economy brought about by technical change and trade
liberalisation, but also to the requirements of the single European market. Their
labour market institutions appear ill suited to this task. EU policy has often
appeared more concerned with strengthening workers’ rights than with
enhancing labour market flexibility. The attempt to improve the pay and
 RICHARD JACKMAN 79

conditions of workers irrespective of the demand for them has been a major
factor behind the rise in unemployment in many EU countries.
Not only do these problems remain, but there are new difficulties to be faced.
The EU has to date responded in a timorous way to the liberalisation of the
economies of eastern Europe, but to the extent that its main policy reaction has
been to postpone rather than refuse market access to these countries it is
obviously storing up problems for the future. The combination of high levels
of education and low wages in eastern Europe presents a serious additional threat
to the privileged position of the EU worker.
It seems likely that, as far as the employment prospects of the majority of
workers is concerned, the main hope must lie in the development of new private
sector activities. These may or may not involve work patterns different from the
traditional, but it would seem ill advised to put obstacles in the form of
legislation or otherwise in the way of those seeking to develop new businesses
with non-traditional employment arrangements. Likewise the wage aspirations of
the unskilled cannot be allowed to continue to rise in the absence of any growth
in the demand for them. Insofar as some EU countries have built up systems
looking to the employer to provide a ‘social safety net’ for their workers, it may
be time to consider whether such responsibilities might now be returned in part
to individuals themselves and in part to the state.

References

Bean, C.R. (1992) ‘Europe 1992: A Macroeconomic Perspective’ Journal of Economic

Perspectives, vol. 6, no. 4 (Fall) 31–52
Blackburn, M., D. Bloom and R.B. Freeman (1990) ‘The Declining Economic Position of
Less-Skilled American Males’ in G. Burtless (ed.) A Future of Lousy Jobs?, The
Brookings Institution, Washington: DC
Commission of the European Communities (CEC) (1989) Employment in Europe,
Luxembourg: Office of Offical Publications of the European Communities
(1993) ‘Growth, Competitiveness, Employment: The Challenges and Ways Forward into
the 21st Century’, Bulletin of the European Communities, Supplement 6/93
European Commission (1990) ‘One Market, One Money’ European Economy, (Oct.) no.
44
Freeman, R. and R. Gibbons (1993) ‘Getting Together and Breaking Apart: The Decline
of Centralised Collective Bargaining’, NBER Working Paper no. 4,464
Katz, L.F. and K.M. Murphy (1992) ‘Changes in Relative Wages in the United States,
1963–87: Supply and Demand Factors’, Quarterly Journal of Economics, 107, Feb.,
35–78
Krugman, P. (1994) ‘Past and Prospective Causes of High Unemployment’ in Reducing
Unemployment: Current Issues and Policy Options, Jackson Hole, Wyoming:
Symposium, Federal Reserve Bank of Kansas City
Layard, R., S. Nickell and R. Jackman (1991) Unemployment: Macroeconomic
Performance and the Labour Market, Oxford: Oxford University Press
80 THE IMPACT OF THE EUROPEAN UNION ON UNEMPLOYMENT

Manacorda, M. and B. Petrongolo (1996) ‘Skill Mismatch and Unemployment in OECD

Countries’ Discussion Paper no. 307, Centre for Economic Performance, London
School of Economics
Mundell, R.A. (1961) ‘A Theory of Optimal Currency Areas’ American Economic Review,
no. 51, Sept., 657–65
OECD (1993) Employment Outlook, OECD: Paris
 5
SOCIAL DUMPING WITHIN THE EU
David Goodhart

Social dumping first entered the UK political vocabulary in 1993 when the US
multinational Hoover decided to close a plant in eastern France and shift
production to Scotland, where the workers made significant concessions on
labour costs. The British government subsequently held up the Hoover case as
justification for its job-creating opt-out from the social chapter of the Maastricht
Treaty, while the French government complained bitterly about the dangers of
unfair competition from the ‘Taiwan of Europe’. If social dumping is the idea
that capital will flow to areas where labour is cheapest and least protected,
dragging down the labour standards elsewhere, the Hoover case seems a classic
example—at least of the first half of the equation. Good illustrations of both
elements are harder to find, although one rather unusual case emerged in
Germany at the same time as the Hoover affair. In the early 1990s Mercedes Benz
toyed with the idea of building a new plant for its A-class mini-car in Britain or
the Czech Republic. Eventually it stayed in Germany but only after concessions
on operating costs said to estimate DM200m were wrought from I G Metall, the
German metal union.1
For a period after the Hoover case the issue of social dumping dropped down
the political agenda in Europe. But elsewhere it started to attract more attention.
In the US it became a concern thanks to the North American free trade
agreement (NAFTA), and the associated fear of job losses to Mexico—a fear
which the first serious analysis of the employment effects of Nafta published by
the National Bureau of Economic Research in 1996 did not bear out. A little later
the debate in the World Trade Organisation about a minimum labour standard
social clause and the supposed threat to jobs and wages posed by regions like
southern China and eastern Europe also helped to make dumping a genuinely
global issue.
In the mid to late 1990s the issue surfaced again in Europe and the UK. Hoover-
type headlines accompanied several more Anglo-French incidents. A fast-
growing French software company relocated to Kent in 1996. In the same year a
Rotherham-based company, Hotel & Catering Staff Supplies, attracted the
attention of Michel Barnier, the French European Affairs minister, when it began
offering to recruit seasonal staff in the French alps at half the cost of a
normal French worker by paying British rather than French social security rates.
82 DAVID GOODHART

More generally, the arrival of the single currency may well heighten anxieties in
the hard-currency/high labour-cost countries that Britain and others could
unfairly benefit from a softer currency and lower cost labour. Indeed, many
continental European politicians began to ask whether ‘fair’ trade in an
increasingly integrated European economy requires considerably more
harmonisation of labour and welfare systems.
This chapter deals primarily with the issue of social dumping within the
context of the EU. It first seeks to ascertain how widespread social dumping is.
Attempts to guard against social dumping through the social dimension of the EU
are then considered. More than 90 per cent of labour regulations relating to the
cost of flexibility of employment within Europe currently arise from within
national labour markets. As Padraig Flynn, the Social Affairs Commissioner for
most of the 1990s, has put it:

There is much nonsense talked about both the volume and nature of social
legislation at the European level. In fact the quantity is limited and most of
it covers the key areas of health and safety, the free movement of workers
and equal opportunities between men and women, which are not
controversial.2

Nevertheless the EU social dimension has now established a small but

significant Europe-wide foothold not only in those fields but also in the wider
regulatory territory represented by the controversial directive on working time
which became law in November 1996. Much of the original justification for
establishing these Europe-wide minimum labour standards was to prevent labour
standards being driven down as capital flows more freely between EU member
states.

Dumping: how big a problem?

Social dumping is as old as the free market itself. In a competitive market,
capital will usually seek out the best long-term return within the constraints set
by technology, politics and prevailing morality. It thus demonstrates a preference
for low-cost and flexible labour where productivity and other factors affecting
the real return from labour are equal. Hence the preference for female over male
labour in some industries at the time of the industrial revolution, something
which is reappearing in parts of the service sector today. The debate over the Ten
Hours Bill in Britain in 1846 (and subsequent debates about the Factory Acts and
unionisation) prefigures much of today’s argument about social dumping: should
capital be free to drive down the price of labour or should there be a regulatory
floor? Macaulay’s 1846 speech in the House of Commons defending restrictions
on the employment of women and children had to combat the argument that
business would be lost to German factories if the Ten Hours Bill was passed.
He also makes an early defence of the economics of high-cost/high-productivity
 SOCIAL DUMPING WITHIN THE EU 83

labour against low-wage sweated labour by arguing that over a twenty-year

period a man working a six-day week will produce more than a man working a
seven-day week.
A large part of the economic history of industrial countries in the late
nineteenth and early twentieth century was about establishing national rules for
employment and, to a lesser extent, narrowing pay differentials between regional
labour markets. This restricted the opportunity for domestic social dumping
while the limited mobility of manufacturing capital meant that dumping across
national borders was not yet a major issue.
With the growth of world trade, the opening up of national markets, and the
growing internationalisation of business during recent decades, the dumping
issue has returned. But, focusing on Europe, how it is possible to establish
whether social dumping really exists? It is not sufficient to establish an increase
in international investment in lower-wage countries. Rather it is necessary to
show that it was the lower wages, or non-wage labour costs, which was the
primary incentive for establishing or shifting production there. It is also then
necessary to show that downward pressure on labour standards or wages in
higher-cost countries came as a result of the investment flow to lower-cost
countries.
It is difficult to provide hard evidence of the existence of social dumping in
the EU on the basis of any of the above questions. Even on international
investment flows the higher-wage EU economies have attracted considerably
more investment than the lower-wage economies over the past twenty years, and
inward investment in low-wage Ireland actually fell between 1973 and 1980 and
1981 to 1990 according to OECD figures. The truth is that within a developed part
of the world like the EU the dumping trend is rather muted and difficult to
disentangle from the ebb and flow of investment between countries caused by a
host of factors which have nothing to do with the price or flexibility of labour.
Even the case of Hoover is more complex on closer examination.

Hoover and the limits of dumping

The Hoover example appears, prima facie, to be a straightforward instance of a
relatively deregulated country, namely Britain, benefiting from the investment
decisions of a footloose and cost-conscious US multinational. The transfer cost
650 jobs in Dijon and created 400 in Glasgow, albeit on two-year contracts.
More importantly, Hoover used the competition between the two sites to force a
significant erosion in the terms and conditions of employment in Glasgow. The
president of Hoover Europe, William Foust—pronounced Faust, as union leaders
were eager to point out—said that non-wage labour costs of only 10 per cent in
Scotland compared with 45 per cent in France was a factor in the company’s
decision to move.
However there are also reasons for believing that the Hoover case is neither
typical nor purely driven by labour costs. Foust also claimed that the decision to
84 DAVID GOODHART

opt for Scotland was strongly influenced by the fact that the Scottish plant had
spare capacity. Hoover, which has a history of mobility outside America, had
decided in 1992 that it needed to concentrate its European activities on one site
and for reasons of capacity as well as cost Scotland was the most appropriate.
There are many more general reasons why low-labour costs are not on their
own an attraction to mobile capital. If they had been, Africa would have
experienced huge inward investment flows. Firstly, in the high technology
industries which increasingly dominate international trade, labour costs often
made up only a small proportion of total costs. In the UK computer industry, for
example, total wage costs represent only 15 per cent of production costs. In
electronics they represent 34 per cent and in aerospace 33 per cent. Manual
workers account for only 4 percent of production costs in computers, thirteen per
cent in electronics and 23 per cent in aerospace. Secondly, differences in labour
productivity tend to more or less match differences in wages, leaving unit labour
costs at rather similar levels across the EU. Calculations made in 1992 by the
Financial Times3 suggest that when measured in DM unit labour costs in
manufacturing are very similar between Germany, France, Italy and the UK.
Even nominal wage rates appear to be converging quite rapidly. According to a
study by Doug as McWilliams the standard deviation of European wage levels fell
from 46 per cent in 1974 to 31 per cent in 1991 and are expected to fall further
still to 24 per cent by the beginning of the next century.4 Thirdly, differences in
employers non-wage labour costs across the EU differ sharply—from 45 per cent
plus in France and Italy to less than 3 per cent in Denmark—but these
differences are not necessarily reflected in final costs. As the European
Commission’s 1993 Employment in Europe report states:

Where social systems are funded from general taxation whether through
taxes on income or expenditure, the net wages of employees in terms of
purchasing power will correspondingly be reduced and they will
accordingly need to earn a higher gross wage in order to achieve a given
level of real income. Businesses in such countries will therefore end up
paying more in wages—direct labour costs—than in countries where
employers, contributions are larger.5

Finally, companies are not interested only in labour costs and productivity, but in
a whole package of labour costs, flexibility and skill levels. When all these
factors are taken into account pluses and minuses often cancel each other out.
While Britain has a relatively deregulated labour market, but a patchy record in
education and training, Germany is expensive and highly regulated, but has
highly skilled workers. Some of the southern European economies, such as Spain,
are in theory cheaper than most of the northern European economies, even when
productivity is taken into account, but they also tend to be more tightly regulated
than most northern European countries in areas such as temporary and part-time
work, and making employees redundant.
 SOCIAL DUMPING WITHIN THE EU 85

Taken together the above points suggest that labour cost differences inside the
EU are much less significant than they seem. Indeed, given that the cost of
closing a plant in country A and moving to country B is quite large, especially
within the EU, it will rarely make sense to do so, unless the labour package
provides some special comparative advantage such as peculiarly high
productivity or the availability of a skill in a particular sector.

What do companies say?

If it is hard to show that differential labour costs are a key factor in determining
investment flows, it is going to be harder still to show that these flows are
causing downward pressure on labour standards. But what do companies
themselves say? The evidence from companies about why they invest in
different countries can reinforce such scepticism about dumping, but it does not
dismiss the labour factor completely. One authoritative survey on location
decisions by European and non-European multinationals placed labour quality in
second place and labour costs in fourth. The full ranking in the survey—for the
Invest in Britain Bureau—is as follows:

1 Proximity to markets
2 Labour quality
3 Air transport
4 Labour costs
5 Financial incentives
6 Labour availability
7 Site/premises availability
8 Road transport
9 Transport costs
10 Overall costs

Another investment location survey by Ernst and Young concluded: ‘For a few
projects there was a single factor that stood out as the key influence on the
decision. However for the majority of decisions, the outstanding attribute of a
winning region was that the region had a particular combination of
characteristics’ This survey had a similar ranking to the first, and while the cost
of labour and premises were the two most important direct cost factors neither
was identified as either a critical or important factor by a majority of respondents.
Responses from investors about individual countries were far more positive about
the higher-cost countries. Responses to Greece and Portugal were particularly
dismissive talking about the difficulties of doing business in countries with a
small industrial base. Hugh Stirk, Head of Personnel at Unilever, the Anglo-
Dutch consumer goods company, also points out that in the consumer sector the
freedom to choose where to site an export base is often constrained by the need
to be physically close to customers.
86 DAVID GOODHART

A problem for the future?

Nevertheless, the labour package is obviously important in some location
decisions, especially where brand new investment is involved and also in labour-
intensive sectors. Why after all, is computer programming being done in Bombay
for London Transport or keying in for the London telephone directory being
done in Jamaica? The case of the US—with significant cost and labour
regulation differences between regions—also provides some support to those
who argue that social dumping is a real menace. According to Douglas
McWilliams,6 there was until the early 1980s faster growth of investment in the
lower southern states despite a consistent trend for the wage differentials
between north and south to be squeezed. Some economists have also claimed to
spot an advantage accruing to ‘right to work’ states which ban the closed shop.
Even in Europe the labour cost factor may be more significant than companies
are prepared to admit. As David Shonfield of Incomes Data Services writes: ‘Few
companies want to advertise the fact that they make choices on the basis that
labour is cheap or legal protection is limited’.7 And as Hugh Stirk, remarks: ‘If it
costs twice as much to employ a senior manager in Germany as in Britain if will
eventually have some effect.’8 In the mid-1990s Germany was, indeed, the target
for advertisements from the Invest in Britain Bureau, which stated that British
wage costs were on average more than one-third lower than in Germany.
Presumably the organisation would not have wasted public money without some
evidence that the differences are both real and attractive to German investors.
Furthermore, however correct the Commission economists may be in theory in
claiming that non-wage labour costs affect only the mix of labour costs and not
their level, employers seem to take the more straightforward view that non-wage
labour costs are an addition to costs. US employers, for example, are said to be
particularly happy about investing in Britain because compared with their home
base or continental Europe their employee health costs are low.
OECD figures on direct inward investment flows over the past fifteen years do
suggest that, adjusted for GDP, the real winners in the EU have been cheap Spain
and deregulated Britain. The flow into Britain from 1981 to 1990 was $ 122bn
and the flow into Spain $46bn. Britain also claims the lion’s share of investment
from both the US and Japan. In 1991 the stock of Japanese investment in the UK
was $26bn, with Germany the next highest at $6bn. The stock of US investment
was $68bn, with the next highest Germany on $33bn. Indeed, in 1990 the share of
foreign-owned companies in gross UK manufacturing output was more than 25
per cent. There is, perhaps, a special Britain effect when it comes to mobile
international capital within the EU, however. The poorer southern European
economies—with the possible exception of Spain—have done less well than
might be expected because of poor infrastructure and relatively highly regulated
labour markets. Britain though has an attractive mixture of relatively low-wage
and non-wage labour costs (the latter thanks in part to the NHS), good
 SOCIAL DUMPING WITHIN THE EU 87

communications and a workforce which seems to respond better to foreign

management. The main losers appear to have been France and Germany.
Indeed, some groups of German workers might find the above view of social
dumping as a distant threat rather too sanguine. It is the Germans who have felt
most uncomfortable about Japanese car plants in Britain. And, under the threat of
seeing new plants located abroad, it is the Germans who have already had to
make significant concessions in at least two recent location decisions. When
Bosch recently decided to build its new components plant at Reutlingen in
Germany it was on the basis of an agreement to seven-day working. Even more
significantly, Mercedes-Benz comtemplated building the new plant for its A-
class mini-car in Britain, France and the Czech Republic, before deciding to stay
in Germany at Rastatt. By so doing the company won concessions on operating
costs from I G Metall worth a claimed DM200m. General Motors Germany had
struck a similar deal for a 475-job diesel engine line to be installed in
Kaiserslautern in preference to any of the nine options being considered outside
the country. This is probably the closest one gets to real social dumping in the
EU.
The above discussion leads to the tentative conclusion that the growing ebb
and flow of international capital is only sometimes influenced by the labour
package above all other factors. Beggar-my-neighbour industrial restructuring
within the EU, such as occurred in the Hoover case, is the exception. But it is a
possible danger in the future as productivity rises ahead of labour costs in poorer
countries and as Britain moves further in a different direction from continental
Europe. Also, as it becomes easier to buy in high-quality components from low-
cost countries, social dumping may spread through trade rather than direct
investment. There will be no need to close plants in high-cost countries but trade-
based dumping will reduce the labour standards of the dwindling band of
workers sticking the components together.

The European Commission, the social dimension and

dumping
At the end of the 1980s the social dimension of the EU was relaunched by
Jacques Delors with the strong support of François Mitterrand, largely for
political reasons. Delors and other senior figures in the Commission believed
that the single market project had become a business technicality. The social
charter, drawn up in 1989, was designed to give the single market some populist
appeal. It certainly had its desired outcome in Britain where, combined with
Delors’s famous visit to the TUC, it helped to convert organised labour and
much of the political left to the European cause. There is also a broader political
justification for the renewal of the social dimension, as has been identified by
Robert Lindley:
88 DAVID GOODHART

Combine the rigours of the single market with those of free capital
movement and there arises a situation in which financial markets have
apparently been handed much greater power to impose their judgements of
performances and priorities upon the workings of the other constituents of
the EU economy.9

The measures contained in the revived social dimension were an attempt to

ensure that the judgements of one of those constituents, namely labour, did not
go unheard.
Delors’s original social charter of 1989 was not a radical document. It drew
together several measures, many of which were already established in national
legislation, while others helped to make up a rather vague wish list. Wary of
interfering in such sensitive and domestic matters as employment rules, the
Commission did not originally intended to convert the social charter into the
directives of the Social Action Programme, but found itself under pressure to do
so after Margaret Thatcher refused to sign the charter.
Even prior to the legislation which flowed from the Social Action Programme
there was a well-established corpus of European labour law dating from the
1960s and 1970s. This had two main dimensions and two justifications. The first
was to help ease labour mobility between EU countries in the hope of creating,
eventually, a single European labour market; the second was to ensure a
minimum European-wide floor beneath which companies could not be tempted
to compete. (Related but somewhat distinct from both of these is the drive to
create a European model company with certain common features, such as
European works councils.)
The important pieces of EU legislation to encourage mobility have concerned
the right to work in other countries, the right to continue receiving benefit from
your own country for a limited period while in another EU country, the right to
become part of the social security system in another EU country, and, most
recently, the mutual recognition of qualifications. Another measure to encourage
mobility—easier transferability of occupational pensions—has made little
progress. This mobility legislation may have made some difference at the margin
to encourage EU citizens to work in other EU states, especially close to borders.
But, historically, it is large differences in average rates of pay that have caused
the major labour migrations in post-war Europe, primarily southern Europeans
moving to northern European countries. Aside from a few professions, such as
airline pilots, where there is relatively high mobility, most of the movement is
still from poorer countries to richer ones and is declining as poorer countries
become richer. Currently only about 1.5 per cent of the EU’s working population
works in another EU country, and the number has been falling in recent years as
the southern European economies have become richer. This highlights one of the
conundrums of the European social dimension. The more that rates of pay and
working conditions become harmonised in a single economic space the less
motivation there is for labour mobility within Europe. So the two justifications
 SOCIAL DUMPING WITHIN THE EU 89

for interference by Brussels in national labour markets may actually live in

tension with one another.
The second justification for labour legislation—to create a minimum
floor across Europe—was, until the 1990s, almost as uncontroversial as the
mobility legislation. As Padraig Flynn has noted, the first wave of harmonisation
in health and safety and equal opportunities enjoyed a broad consensus. More
recent legislative proposals concerning such things as regulations on working time
have proved more controversial. This is partly because in Britain they are seen to
derive from the more regulated labour market norms of continental Europe, and
have been resisted on the grounds that they are unnecessary and would increase
inefficiency. Britain has now opted-out of some aspects of the European social
dimension, while the other member states have used the ‘social chapter’
procedure to introduce Europe-wide legislation on European works councils and
parental leave.
While some of this legislation is more emblematic than practical there is also a
small clutch of directives which seek to address directly the fears of some
member states about dumping. One is the working time directive with its forty-
eight hour week and minimum holiday requirement. This has now been adopted,
but was unsuccessfully challenged by the UK before the European Court of
Justice. Another is the posted worker directive which requires that workers from
other EU countries observe the minimum wage levels of the countries they are
working in. This directive, which has been blocked, is aimed at the growing
practice of ‘labour dumping’, especially in the construction industry, where
foreign workers are brought in to a country by foreign companies or employment
agencies and receive the pay and social security benefits of the country they
came from rather than the one in which they are working. Germany has around
200,000 unemployed building workers, while almost 500,000, legal and illegal
immigrants work in the building trade, many of them from other advanced
economies such as Britain. After the posted worker directive was blocked by
Britain (with Portugal abstaining), Germany introduced national legislation (on 1
January 1997) which requires all companies, foreign and domestic, to pay
building workers at least $11 per hour.
Despite this renewed interest in the problems relating to social dumping,
officials in the European Commission’s labour ministry, DG V, concede, in
private, that large-scale social dumping is not an immediate threat. It was not
mentioned in the 1993 White Paper on ‘Growth, Employment and
Competitiveness’, and is described only briefly at the end of the Green Paper on
social policy of 1994. The drive for anti-dumping legislation, as with the posted
worker directive, now comes more from member states than from the
Commission itself.
But DG V has not abandoned the social dumping argument entirely. While
conceding the lack of hard evidence for it so far, they argue that it is a potential
danger worth guarding against. They also make a distinction between countries
which benefit from a given comparative advantage, such as low wages, which is
90 DAVID GOODHART

legitimate, and countries which consciously reduce labour standards and pay rates
to attract investors. It is quite acceptable, therefore, for Portugal, for example, to
attract investment on the basis that its wages are one-sixth the level that they are
in Germany. However, it would not be acceptable for the Portuguese government
to force down wages to one-seventh the German level, or to deregulate hiring
and firing, with a view to attracting foreign capital. However, introducing
intentionality as the main criterion for social dumping makes finding clear-cut
evidence of the problem even more complicated.
To British Conservatives, this reasoning seems peculiar. Given the principle of
subsidiarity, they demand to know the justification for intervening to prevent
countries competing on labour flexibility or costs. What right has the
Commission or ‘Europe’ to interfere with measures designed to create more jobs
domestically? Why should people not be allowed to trade off lower pay for
higher employment? Why should German managers not threaten their workers
with moving production to another country if it helps to improve the efficiency
of the business? The justification for a minimum floor is that what happens in
one region of a relatively open economic space like the EU has a potentially
large impact on other areas. But what happens when the Europe-wide minimum
floor itself has a large impact on the labour market traditions of one country?
Where is the line to be drawn between the perceived interests of the whole and
the principle of subsidiarity? Few politicians, even in the most pro-integration
European countries, would argue the case for a complete harmonisation of labour
standards. A degree of differentiation is considered legitimate in this field where
it is not in some others, in industrial subsidies for example. But how much
differentiation is permissible before it becomes an unfair competitive advantage?
The real justification for intervening to prevent competition ultimately comes
down to the belief that labour markets are special and regulated ones are
generally better than deregulated ones. It is natural enough that Britain, which
passed through a period of rapid labour market deregulation and has long had
less legally regulated workplaces than continental Europe, should be at odds with
most of the rest of Europe on this issue. But Britain’s advantages are sometimes
exaggerated and much of its foreign capital stock has been built up over many
decades during which relative labour costs were rather higher and flexibility
rather lower. Even now, the wage cost difference in larger plants is relatively low.
According to Eurostat, Britain, France and Italy are all very close in the car
industry and Britain is ahead of Italy in computers. Long-established factors such
as the openness of markets, including equity markets, making it easier to buy
companies, and the English language, probably count for more than labour
market deregulation in the eyes of potential inward investors from outside the
EU. And, as David Shonfield points out, US investment in Britain in the 1980s was
distorted by some heavy investment in North Sea oil.
Indeed, the European Commission ought to have more confidence in its own
beliefs in the superiority of the high-cost/high-productivity labour market model
as opposed to the low-cost/low-productivity model which Britain is aid to be
 SOCIAL DUMPING WITHIN THE EU 91

pursuing. If Britain is pursuing that model and it is counter-productive as the

Commission believes, then Britain is slowly committing economic suicide and will
scarcely threaten the economies of France and Germany. Moreover, the Hoover
case is rather misleading. Over the past few years there have been many
examples of companies closing plants in the UK precisely because it is relatively
cheaper to do so here than in Spain or Germany. In 1992, for example, Thomson
Consumer Electronics, closed its Ferguson TV plant in Gosport and sacked 3,000
workers. The company said it cost £7,000 to sack a worker in Britain compared
with £47,000 in Spain. Companies can be locked-in by high firing costs—one of
the factors behind the decision by Ford in early 1997 to concentrate production
cuts at the Halewood plant in Britain rather than in Germany or Spain. Britain
also loses out from its relatively low skill base and poor educational standards,
one reason behind Ford’s earlier decision to switch more of its R&D work to
Germany.

Conclusion
At least over the next few years Britain is unlikely to gain any significant new
advantage from its social chapter opt-out. That is partly because the social
dimension as a whole is unlikely to try anything very ambitious. Freedom from
low-cost measures such as company works councils may encourage some US
employers to cling even tighter to their- British base. But most British
multinationals will find it simpler to implement the works councils for all of
their European workers rather than take advantage of the opt-out. Also, more
powerful than the forces of divergence such as the British opt-out, and any
attempt to follow it, are the forces for convergence in labour markets as the
poorer countries gradually catch up with the richer ones. This certainly applies to
pay, as Douglas McWilliams has demonstrated (see above). There has also been
some convergence on labour flexibility with a greater acceptance of part-time
and temporary work, and, now, a growing interest in shifting the burden of non-
wage labour costs from employers onto the state.
The fact that reducing labour standards beyond a certain point produces
sharply diminishing returns is the best insurance policy against a downward
spiral of competition. But minimum standards within the EU do provide
governments with protection against parts of the business lobby keen to impose
radical cost-cutting solutions. The British model will continue to be a rallying
point for such groups, but it is not going to sweep all before it. EU policy makers
ought to be happy to allow competition between labour market systems.
Where should the line be drawn on minimum labour standards? Not even the
British government questions that there should be some rules, for example on
health and safety, and there is already a social clause in world trade agreements
which imposes restrictions on prison-made goods. Most companies in the high
quality sectors of the economy will be unaffected by minimum standards
legislation, except perhaps over something like working hours. So the jobs which
92 DAVID GOODHART

stand to benefit most from the protection are, in the long run, likely to be the
relatively low-paid and low-skilled ones. But, at least in the traded sector, they
are the ones which are most likely to be exported to developing countries,
something which regulation will make more likely. So the puzzle is to find a
minimum level of harmonisation which affords some protection to the labour
market losers of the high quality economies without causing a higher export of
such jobs than appropriate for both the developed and developing economies.

Notes

1 Financial Times,
2 Speech in Brussels, 28.5.9.
3 Ed Balls, Financial Times, .. 92.
4 Douglas McWilliams, ‘Will the Single European Market Cause European Wage
and Salary Levels to Converge?’, London Economics, January 1992.
5 Commission of the European Communities (1993) Employment in Europe, Office
for Offical Publications of the European Communities: Luxembourg.
6 McWilliams, op. cit.
7 Incomes Data Services (1993) Focus 66 (Social Dumping), April.
8 Interview with the author.
9 R. Lindley (199?) ‘European Integration and the Labour Market’, Institute for
Employment Research, University of Warwick.
 6
PUTTING THE CART BEFORE THE
HORSE?
Labour market challenges ahead of monetary union in
Europe1

Jens Bastian

At its Summit in Essen on 9 and 10 December 1994, the European Union (EU)2
had two major challenges on its agenda. One reflected the dramatic changes in
progress in central and eastern Europe since the end of 1989 and concerned EU
enlargement. The other challenge confronting the EU was mass unemployment.
Europe’s main economic problem displayed worrying characteristics: over
eleven per cent of the Union’s workforce is, and increasingly looks like
remaining, jobless. In comparative perspective, this figure is almost double
America’s jobless total (5.7 per cent in January 1996) and three times Japan’s (3.
5 per cent). At present, more than 18.3 million people in the fifteen European
Union countries are unemployed. In the course of 1995 more than 1.8 million
people in the EU lost their jobs. Short-and medium-term projections foresee no
significant change. While some of this unemployment is cyclical, there is good
reason to believe that a large proportion of the population that is out of work in
Europe is chronically unemployed. Yet unemployment figures tell only part of
the story. Jobless rates tend to underestimate the true gravity of the situation.
Many OECD countries are faced with substantial disguised or hidden
unemployment, represented by discouraged workers and people involuntarily
employed in part-time jobs. In 1992 these two categories, in which women
predominate, represented more than 13 million people.
The ‘black cloud’ of unemployment has been a familiar characteristic of EU
summits for over a decade. Moreover, even if individual European economies
can bounce back from stagnation or recession to predicted growth rates of three
per cent and better in the second half of the 1990s, the good news will only apply
to those who are in jobs and who can reasonably expect to remain so in the
coming years. Turning the corner of recession will not necessarily bring the
jobless back into sustained employment. Furthermore, there is evidence to
suggest that jobless growth is becoming a feature of contemporary economic
upturns in EU countries.
The major challenge for European labour markets, therefore, is to find the
institutional and political preconditions that will bring the jobless—or at least
some of them—back into the workforce. The response to this challenge has
included changes for those already in jobs, and relates to working conditions and
wage flexibility. These have taken root in economies across the EU, often
94 JENS BASTIAN

initiated by governments and emphatically supported by employers’

associations, but also advanced, albeit reluctantly, by trade unions. The reasons
for such changes, as well as the objectives which they seek to attain, are
manifold and at times contradictory. Nevertheless, the nine-tenths of Europe who
have jobs cannot expect that other tenth to remain hidden, nor can they safely
assume that unemployment will only affect others or that joblessness can be
blamed on the jobless (Bastian 1994a).
The principal impact of labour market policies initiated by the EU on national
policy and on the behaviour of, as well as relationships between, national actors
has been a bone of contention since the rise of unemployment in the mid-1970s.
Apart from summations of what the EU has achieved—or for that matter, failed
to carry out—analysis of policy performance frequently falls short of focusing on
the real consequences of EU action or non-action for the individual member
states. This chapter attempts to contribute towards remedying these deficiencies
by investigating three areas: first, how labour market policy has traditionally
been made at the national level and what the specific characteristics of this policy
area consist in; second, what measures the EU has conceived in this domain; and
third, the relative impact of the EU on national policy Its findings with respect to
the latter indicate that the EU influences, while not necessarily determining,
national policy making.

The development of labour market policies at the national

level
The use of work-sharing as an attempt to address the social and economic
problems caused by mass unemployment in western Europe constitutes one of
the most controversial policy developments in contemporary labour market
debates. After years of failing to create enough jobs through reliance on
economic growth alone, some western European governments, a few employers’
associations and a number of trade union organisations have increasingly sought
new ways to reduce long-term unemployment3 and curtail mounting budgetary
and social problems. Success, however, has proved elusive. Against a
background of prolonged labour market problems since the mid-1970s, one
innovative approach, namely, work-sharing, has sought to link two elements of
policy measures: a reduction in working hours and early retirement provisions.
The first implies a large-scale curtailment of the contractual working week to
bring about the ‘35-hour week’, while the second attempts to integrate the
younger and/or long-term unemployed by withdrawing employees aged 55 or
over from the workforce. The underlying argument in favour of linking work-
sharing and early retirement is that distributive equity (a more equal distribution
of employment) and social welfare (an improved quality of life) can be advanced
through the reduction of working hours, on either a weekly and/or annual basis.
Work-sharing proposals placed a greater emphasis on active job placement,
and thereby attracted the support of governments and the attention of European
 PUTTING THE CART BEFORE THE HORSE? 95

Commissioners with social affairs responsibilities, notably, the former Greek

Commissioner, Vassou Papandreou. Moreover, work/income-sharing places on
the public agenda the need to tackle the issue of burden-sharing when searching
for remedies to sustained unemployment. The fact that the working time
approach served both to create new jobs and safeguard existing ones made it
more appealing than traditional job creation policies. The idea was particularly
appealing in those countries of western Europe where there was no
institutionalised commitment to full employment, no flexible wage policy and a
degree of centralisation in the institutions of collective bargaining, notably,
France and Belgium. In both countries, a substantial number of workers took
early retirement during the 1980s (Bastian 1994a, b). However, it could not be said
that employment performance in either country was a ‘success story’ and labour
markets in both countries suffered from ‘institutional sclerosis’. More generally,
the arthritic condition of continental Europe’s labour markets has kept the door
shut on the unemployed.
Unemployment in Europe today, as much as at the beginning of the 1980s, is
to a large extent not cyclical, but structural. As a labour market policy, work-
sharing was characterised by its redistributive objectives which ran counter to the
constant calls by management theorists for ‘streamlining’, ‘contracting-out’ and
‘corporate downsizing’. Instead of emphasising the virtue of job changing, the
strategy seeks to influence the supply side by altering two parameters in the
operation of the labour market, namely, the duration and the organisation of
work-time. The advocacy of work-sharing (partage du travail in French) through
shorter hours envisaged a large-scale redistribution of paid work in the
mainstream economy between those in full-time employment and those seeking
(re-)entry into the labour market.
Support for work-sharing since the early 1970s has been essentially pragmatic.
Some governments, and many trade unions, in OECD countries, including
(West) Germany, France, Belgium and Britain, see the approach as a response to
the end of the halcyon days of continuous economic growth in combination with
(near) full employment. According to governmental and union blueprints
outlining the positive effects of work-sharing, the alleviation of employment
rested on two interdependent elements: first, the amount by which working time
is reduced; and second, the speed of implementation: the more speedily the
reduction is made, the more likely that job creation effects will materialise. Job
creation is thus perceived not only to be the product of new investment and
increased profitability, but also the outcome of redistributing the volume of
available work. Consequently, firms are compelled to combine improving
productivity potentials and reverting to the external labour market for additional
employment (Blyton 1982).
What emerges from the policy performance of the past decade is the
acknowledgment, albeit reluctantly among trade unions, that the redistributive
effect of work-sharing strategies has been exhausted. To those involved in the
policy process and its evaluation it became apparent that a redistributive policy
96 JENS BASTIAN

of work-sharing had four effects: firstly, it entailed consequences for income

formation and budgetary allocation; secondly, it affected the organisational
resources of the state as well as the industrial relations actors trying to mediate
the plurality of contending interests; thirdly, it revealed the extent to which
strategies have to be modified as a consequence of policy performance with
unintended by-products; and finally, it created a culture of new entitlements with
high social values and the attendant difficulties in attempting to curtail them. For
the time being the work-sharing strategy has been returned to the drawing board.
Work-sharing strategies at the end of the 1970s and beginning of the 1980s
took two forms. The first, characteristic especially of the early stages, took the form
of reducing working hours by establishing opportunities for early retirement. The
second consisted in limiting the working week to thirty-five hours. It is
noteworthy that Belgium, for instance, introduced various early retirement
schemes before finally deciding to reduce weekly working time. In the French
case, both options were implemented simultaneously after the Mitterrand
government took office in 1981. By contrast, British governments have
steadfastly refused to consider a policy of work-sharing that combined early
retirement schemes with measures curtailing weekly working time (Bastian
1994b).
Comparing the ambitious claims brought forward by the supporters of work-
sharing at the end of the 1970s with the situation more than a decade later, it
becomes evident that, with the exception of Germany, the only comparable
development has been the introduction of the 39-hour week on an industry-wide
scale in Belgium, France and Britain. In other words, after a first reduction at the
national level, demands for shorter hours proceeded no further. The recent
history of the issue suggests the general tendency of trade unions, and of the
early Mitterrand years in particular, to oversell work-sharing to their rank-and-
file and the public. Work-sharing tended to be introduced as a panacea for very
different labour market problems which in fact varied greatly. After the decade-
long advocacy of work-sharing objectives, it can be observed that small steps in
work-time reduction did not reverse long-standing unemployment problems
(Bastian 1994a).
If the experience of Belgium and France has not been a good one, what
explains the rise of work-share models on public policy agendas in Europe? The
salience of work-sharing must additionally be seen in the light of an institutional
challenge: recourse to other strategies capable of mastering the labour market
crisis were either blocked in various OECD countries or established routines of
policy making increasingly became subject to legitimation problems. With the
slowing, or even cessation, of economic growth and rapidly increasing
unemployment rates, public debate was forced to confront the readjustment of two
traditionally salient elements of industrial governance: first, determining
appropriate trade-offs in income distribution; and second, the allocation of
employment opportunities (Bastian 1989:323). However, only the first of these is
subject to contractual specification; the level of employment does not form part
 PUTTING THE CART BEFORE THE HORSE? 97

of collective bargaining agreements above the level of the firm. In other words, it
is a residual category not subject to specification by legally binding norms for
the actors concerned. With economic realities radically changing the
expectations of actors involved in collective bargaining, especially regarding
wages and benefits, the working class and the middle class were affected. As
economic growth decelerated, wage growth was curtailed and even went into
reverse for younger and less educated men and women in the workforce.
Two additional points are worth making. Firstly, demands for a reduction of
the working week and/or early retirement agreements focused on the adaptation
of the organisation of working time to the differentiated needs of society and the
changing leisure preferences of individual employees. In other words, the
reorganisation of work-time and the modification of time regimes, considered to
be overly rigid by employers, trade unions and employees alike, though for
different reasons, were regarded as measures supporting economic modernisation
and extending social welfare gains. In addition to such viewpoints, which
dominated the shorter hours debate during the period 1960–80, a variety of
social norms were invoked in connection with the linkage between work-sharing
and early retirement. These normative considerations included equality of
treatment and fairer divisions. For example, first and foremost, industrial unions
would call for a reduction in weekly working hours, and receive instant support
from their rank-and-file, because they viewed existing disparities between
manufacturing and white-collar staff as an unjustified practice. In particular,
engineering unions in Britain, Germany and Belgium concentrated on curtailing,
and eventually overcoming, differentials between occupational ranks during the
1970s and early 1980s.
Secondly, advocates of the work-sharing/early retirement approach cannot
ignore the so-called ‘demographic time bomb’. A recent study by the OECD
underscores the looming pension problem, stressing that declining populations
and a shrinking workforce are conspiring to put pension provisions under
pressure in all its member countries. The OECD cited France, Germany, Italy
and Japan as the members with the greatest potential financial problems. The
study forecast that in these four countries, state pension obligations would peak at
about fifteen per cent of GDP during the first half of the next century, compared
with current levels of between five and ten per cent. The OECD based its forecasts
on the premise that in all its member countries, except Britain,4 the ratio of
pensioners to workers would double by around 2035.
This observation points to the importance of two institutions, one political and
the other social, in determining labour market performance. As a political
institution the state has become directly involved in labour markets. However,
controversies persist over the extent of active labour market policies shaping
employment outcomes or impairing economic performance through
interventionist means (Scharpf 1991). The social institution, the welfare state, is
relevant in so far as it has influenced national capacities to maintain full
employment or whether it has contributed to confronting the unfolding labour
98 JENS BASTIAN

market crisis. In light of developments in the past decade, the institutional focus
of labour market performance raises the question of whether government money
can create jobs. In other words, do Europe’s governments absorb too much of
what their countries produce?
In 1994 the revenues of the European Union’s governments amounted to 46
per cent of their countries GDP. (The figure in America is 32 per cent). Some of
the purposes for which this money is spent are commendable; it pays, among
other things, for Europe’s welfare states. But while the motive is humane—and
the results are reassuring for those in jobs—the unemployed are not brought back
inside the working economy. Still, the fact that the welfare state has been
reformed in a number of EU states should not be ignored. Germany, Belgium5
and Ireland have cut spending as a share of GDP since 1985, while France,
Holland and Finland have held it steady. Only in Scandinavia has social spending
risen.
Redistributive labour market policies have received considerable attention not
only in individual countries, but have also featured in policy initiatives at the EU
level. Examination of recent EU proposals permits an assessment about how
significant action by Brussels has been compared with domestic policy
developments. It is also important to consider whether EU action has taken the
form of legislative measures, adopted collectively by the member states in the
Council of Ministers, or of rulings laid down by the European Court of Justice.

Recent developments at the European Union level

The European Commission President, Jacques Santer, has repeatedly called for a
Europe-wide employment pact between governments and the two sides of
industry. The 1996 Pact for Confidence and Jobs aimed at curtailing
unemployment by keeping wage growth below, or in line with, the rate of
inflation in return for job creation measures. Santer’s initiative recalls the
Delors’ White Paper on ‘Growth, Competitiveness and Employment’ which was
adopted at the Essen Council of December 1994. The initiative to combat mass
unemployment focused on creating jobs by promoting inter alia work-sharing
and a reduction of working hours. The employment package further urged wage
restraint, the reduction of welfare contributions by employers and tax incentives
for training. Delors heralded the initiative making it clear that he hoped it would
serve as the same kind of blueprint for policy making in the 1990s that the
Commission White Paper of 1985 had been for the Single Market Programme. One
of the aims of the 1993 White Paper was the creation of 15 million jobs by the
year 2000. It sought to combine a reduction in the price of labour with a new
approach to solidarity between those in work and those without, which took into
account major developments in the labour market, such as the increase in part-
time and temporary work. Consideration of work-sharing and reduced hours has
thus been an important theme for discussion within the Commission since the
mid-1980s (Bastian 1989:25 7).
 PUTTING THE CART BEFORE THE HORSE? 99

A striking aspect of the discussion of labour market policy in Brussels is the

mixture of pragmatism and effort in cross-national consensus, albeit with Britain
standing on the sidelines. Far from the overly ambitious regulatory approach
taken in the mid-1980s, the current initiatives seek to transcend the established
left-right divide. What matters is unemployment. Thus, the pragmatic Social
Affairs Commissioner, Padraig Flynn, was open to measures on working time,
and a directive on part-time work formed part of the Social Action Programme
unveiled in March 1995. This directive would require part-time employees to
receive the same hourly pay and conditions as full-timers. A majority of EU
members, excluding Britain, is keen to press the issue because it fits with their
domestic labour market agendas of promoting part-time work.6 In other words,
the draft directive impacts on national policy making, not by prompting member
states to take action, but rather because it supports existing trends.
By contrast, at a time when employers and employees in Germany, Belgium
and France, as well as politicians from both left and right, argue that
redistributive working time policies could help solve their structural
unemployment problems, the prospects for actually agreeing on such steps on a
European level appear dim. Such is the case in the wake of a bitter debate that
lasted over three years and represented a far more modest objective than the
work-sharing directive, namely, the implementation of a 48-hour working week.
The directive, adopted by European Community Social Affairs ministers in
November 1993, focuses on the adaptation of working time. The directive covers
a number of aspects of work-time organisation, requiring minimum periods of
daily rest of at least eleven continuous hours, the provision of rest periods for work
days of over six hours, while also establishing a minimum four weeks’ paid
holidays and imposing conditions for night and shift work. EU member states
were given three years to implement the directive.
The working week directive was adopted under health and safety
requirements, a procedure which has significant implications. Directives
concerning health and safety at work can be adopted by a majority of member
states and do not require unanimity. The UK, which has long opposed
Community intervention in labour market issues on the grounds that it trespasses
on the rights of sovereign states and contravenes the right of workers to work,
abstained during the vote and vowed to challenge the directive in court. Britain’s
then employment secretary, David Hunt, opposed the 48-hour working week
directive on the grounds that the directive was a piece of social legislation, and
therefore should not have been adopted by qualified majority voting. The
government further argued that the law should have been considered under
‘harmonisation’ procedures. This would have allowed Britain to veto the
measure, which then could have taken effect only with a British opt-out.
This intransigent position was maintained by the UK despite the fact that a
number of concessions had been won. Thus, the UK government obtained a
period of ten years’ grace in which to implement the directive. Also, workers
were given the option of working more than the maximum 48-hour week,
100 JENS BASTIAN

provided that the extra work was voluntary and safeguards were introduced to
avoid exploitation by employers. In addition, the 48-hour week has to be
averaged over four months, workers such as lorry drivers, the fishing industry,
police personnel, trainee doctors and other hospital staff were exempted from the
scope of the directive, and with the exception of the annual leave provision, all
those whose working time is not ‘predetermined’—a category which includes a
vast array of managerial posts—are excluded from the directive. In practice this
long list of qualifications and exemptions means that the sectors most associated
with long hours are removed from the scope of the directive.
However, the UK government was determined to maintain maximum labour
market flexibility which it regarded as an essential element in ensuring the
competitiveness of its economy. British workers were working by far the longest
hours in the Union with nearly a third of male full-time workers working more
than forty-eight hours a week. The UK was, moreover, the only member state
where the length of the working week had increased over the past ten years.7
While partly reflecting the exceptionally high levels of overtime in
manufacturing, this trend was also the result of the managerial and professional
employees working increasingly longer hours. Thus, the UK continued its
resistance to the directive by challenging its legality before the European Court of
Justice.
In March 1996, the British government lost the first round of its fight. The
French Advocate General of Court, Phillippe Léger, argued that the challenge
should be dismissed. In his interim ruling he maintained that the number of hours
worked was ‘clearly’ a health and safety matter. The concept of health and safety
should be given a broad interpretation to cover the general working environment,
‘far removed from an approach confined to the protection of workers against the
influence of physical or chemical factors alone’. The Advocate General accepted
the contention of the Council of Ministers, with the support of the Commission,
Spain and Belgium, that the time spent working and the pattern of working hours
influence workers’ physical and mental state. The opinion was met by angry
reaction in the UK. The then Prime Minister, John Major, argued that: ‘It is
precisely because of legislation like this and stupidities like this that the EU is
becoming uncompetitive and losing jobs to other parts of the world’. The
Conservative government pledged to continue the struggle against EU social
intrusion and to curb the powers of the Luxembourg Court—an objective that
was written into the government’s White Paper on the 1996 IGC. However, the
UK government could do nothing in the face of the ruling laid down by the
Court in November 1996, which found against it and was in line with the
Opinion of the Advocate General. Moreover, its efforts to circumscribe the power
of the Court at the 1996 Intergovernmental Conference Amsterdam came to
nothing.
Since the election in May 1997 of a Labour government, committed to signing
the social chapter, there has been a considerable change of climate and an end to
the tension that characterised the relationship between the UK and the EU for
 PUTTING THE CART BEFORE THE HORSE? 101

much of the 1980s and 1990s. However, interestingly, New Labour’s emphasis
on flexibility may mean that the UK still remains at odds with its European
partners over social policy in general and how best to address unemployment in
particular.
The decision of the European Court in the above case demonstrates its ability
to shape the domestic policy of member states. There are many other examples
of how the Court has influenced national policy in the social policy domain.
For instance, the guidelines for when companies and citizens can sue member
states for damages—labeled ‘discrimination manifestly contrary to EU law’—
were detailed in a ruling of March 1996 (Rs C-46 and 48/93). In two test cases,8
the Court set an important precedent by making it clear that governments must
pay damages for passing laws that violate the rights of any EU citizen in a
‘sufficiently serious’ manner. The March 1996 rulings are the first significant
follow-up to a 1991 landmark decision declaring that governments can be liable
for failing to put EU laws on their books. In fact, the Court set three conditions
for determining whether an individual or a company is justified in taking a
member state to court. The judges argued that compensation is due when a
government violates rights conferred on individuals, when a government does so
in a ‘sufficiently serious’ manner, and when the victim can show clearly that
damages occurred as a result of the state’s action(s). The Court’s decision marks
its first attempt at explaining in detail the issue of government liability. In the
landmark case in 1991, the ‘Francovich ruling’, the Court argued that member
states should pay damages to companies and citizens that lose money because the
government either fails to adopt EU legislation or passes new laws that breach
EU prerogatives.
The role played by the European Court of Justice in the social policy domain
has been highly significant in bringing about policy change in the member states.
However, taking cases before the Court is not the only way in which trade unions
and other interest groups have been able to fight, and often win, domestic battles
at the EU level. The balance of forces in the Council of Ministers may allow
interest groups in some member states to achieve at the European level what they
could not have won domestically. For instance, the 48-hour working week
directive left the detail of compensation or extra time off for exempted workers
to be settled by national legislation or collective bargaining. That spelled in
practice a potential, and for many British employers, an unwelcome, new role for
trade unions.
Another example concerns the decision in February 1996 by the European
Commission to scrap plans that sought to alter worker protection when jobs are
contracted out. The focus of the controversy was the 1977 EU Acquired Rights
Directive, which ensures that workers keep the same wages and conditions when
they are transferred to a new employer after a takeover or merger. The directive
also requires employers to deal with worker representatives during transfers, thus
bolstering the position of trade unions. Known in Britain as ‘TUPE’—Transfer
of Undertakings (Protection of Employment)—the legislation has been
102 JENS BASTIAN

successfully used by unions to challenge the British government’s attempts to

drive down costs in the public sector by contracting out and market-testing. The
courts in both Britain and the EU have upheld compensation claims by public-
sector workers forced to choose between cuts in wages and benefits or
redundancy when their jobs were privatised. For years the British government
had been manoeuvring to get the European legislation changed. Initially, it found
allies among other EU governments, especially in France and Germany, and
within the Commission, in support of exempting certain types of contracting-out
from the TUPE protection—a situation which reflected concern that the
European Court of Justice was interpreting the legislation too broadly. In a
surprise ruling in April 1994, the Court ruled that TUPE applied to contracted-out
services, even if only a single worker is involved.
Commissioner Flynn’s response was to propose restricting TUPE to the
transfer of ‘an economic entity that retains its identity’. This example of Euro-
speak would have meant in practice, for example, that workers transferred
without any equipment or machinery would not have been covered. Ignoring the
Commission’s position, British unions sought to sink the plan. As is so
frequently the case, the objective was made considerably easier by the UK
government’s isolated position in the social field. Given the UK’s repeated
efforts to block the adoption of EU measures relating to labour, its partners are
often rather reluctant, to say the least, to offer it any concessions. The British TUC,
working closely with and through the European TUC, lobbied extensively against
the Commission’s proposed changes. The campaign won support not just from
the TUC’s socialist allies in the European Parliament, but also Christian
Democratic politicians from the European People’s Party. By securing this cross-
party support, the British unions ensured the adoption of a resolution calling on
the Commission not to undermine the 1977 legislation. In consequence, the
Social Affairs Commissioner withdrew the proposed amendment. Thus, the
development of transnational alliances at different institutional levels between
domestic interest groups and the European Parliament against the Commission
won the argument. A significant, and not at all predictable, coalition was
established in order to safeguard existing social policy.
Despite the fact that some issues are now being fought at the EU level, the
importance of the domestic policy arena must not be underestimated. Indeed,
trade unions have been able to win battles against governments on a national
terrain. An example of the continued importance of the domestic arena comes
from March 1994 when the House of Lords laid down a ruling that delivered a
substantial setback to the UK government’s flexible labour market policy. The
Law Lords ruled that UK laws on part-time workers’ rights concerning
redundancy pay and unfair dismissal were in breach of European law. The Major
government was thereby compelled to draw up legislation which gives part-
timers rights equal to those in full-time employment. The Employment
Protection Act of 1978 had restricted the rights of those working less than 16
hours a week. Under the Act, part-time workers were covered by unfair
 PUTTING THE CART BEFORE THE HORSE? 103

dismissal and redundancy pay provisions only after completing five years of
continuous employment. Full-time employees qualify for such entitlements after
two years. According to the Law Lords the government had failed to prove that
the use of the 16-hour threshold had resulted in an increase in part-time
employment. As a result, the UK government found itself having to introduce
legislation to bring UK law in line with EU legislation, although it was seriously
concerned about the impact on part-time employment through the extra costs that
would be imposed on employers, especially given that this was the single most
important area of growth in the British labour market.

Questions still searching for answers

What implications does the above discussion have for work-sharing as a strategy
to enhance labour market effects? As indicated above, redistributive measures
aimed at job creation were at the heart of debates about labour market policies
during the past decade. By contrast, current debates turn around defining the
organisational features of working conditions. Achieving temporal flexibility has
become the new order of the day, and reduced basic hours are being considered
as a possible trade-off element in collective bargaining. This suggests that the
notion of enlarged flexibility options in working time organisation has gradually
been accepted by the unions and their membership. However, their commitment
to enhance flexibility in the areas of working conditions, job profiles,
rationalisation of bargaining procedures, and new-style pay systems constitute
the controversial compromise dimensions. In short, distributional objectives have
been replaced by concerns over the allocation of time and its influence on revised
working practices.
Within this context, flexible production patterns, highly differentiated working
conditions and new-style bargaining procedures constitute transformations that
connect with trends in individualised employment conditions, multi-skilling and
moves toward greater employment mobility. These features constitute what
career management consultants call the growing world of dejobbing. The extent
and nature of the ‘dejobbed’ future is contentious to say the least. Some
commentators, including Bridges (1995) and Rifkin (1995), claim that in today’s
workplace 100 per cent of jobs are temporary,9 and that the old idea of a ‘job for
life’ is disappearing. The result is a workforce made up of so-called Vendor
workers’ whosell their services to a variety of clients and work for them on
projects on a short-term basis. This model holds out the prospect of a future
which increasing numbers of people are hunter-gatherers, hungry freelancers
foraging for work and moving from project to project. While people are working
within organisations as full-time employees, their arrangements are too fluid and
idiosyncratic to be called permanent jobs. Such a perspective makes dejobbed
workers seem the downtrodden victims of economic necessity, an ideal
workforce for companies which want to limit their investment in the practice of
offering a job for life. The new buzz words of ‘dejobbing’ or ‘delayering’
104 JENS BASTIAN

havelongbeen regarded as a feature of manual work but only took off as a debate
when it began to affect white-collar workers, in particular in software firms
across the US.
According to the Institute of Employment Studies in Britain, the UK is already
dejobbing. About 57 per cent of the workforce remain in what can be classified as
‘traditional’ employment and only 22 per cent are ‘traditional-looking’
employees (Kent 1995:2). Temporary work, defined as working on a contract
with shorter than standard duration of hours, is carried out by 10 per cent of women
and 7 per cent of men in 1991 in the EU labour force. However, national
differences in employment markets remain strong. The recent annual report from
the European network for small and medium-sized enterprises highlights the
wide diversity between workforces across western Europe. In Spain 22 per cent
of men and 28 per cent of women were employed in temporary work. In Italy,
the proportion was reported at 3 per cent of men and 8 per cent of women
respectively. The fastest growth in temporary employment was in France where
it rose from 3 per cent for both men and women in 1983 to 7 per cent for men
and 10 per cent for women eight years later (Observatory Report 1995). What
these figures show is that the employment market is in flux across the EU,
subject to a turbulent economic environment. But this also illustrates that
sweeping talk of ‘dejobbing’ belies the detailed variety of the employment scene
from one country to another. The tenacity of custom and practice in employment
are too easily and frequently underestimated by generalisations such as
‘dejobbing’.
These developments in flexible working in various European labour markets
not only bring new issues on the policy agendas, but also demand conceptual
answers that invariably call to attention the strategies to be adopted in the future.
Measures to improve the flexibility of industrial relations, wage negotiations and
employment conditions merit a prominent place on the political agendas until the
end of the millennium. This is a large and uncharted subject where questions are
still searching for answers. As a first step, long-term trends need to be
distinguished from the short-term changes resulting from the fluctuating
economic cycle.
In this context, the question of who is to achieve the changes, formulate the
necessary compromises and monitor their implementation inevitably arises. This
question is even more pertinent when it is considered that while the
environmental pressure group, Greenpeace, and the human rights association,
Amnesty International, both enjoy a high level of respectability, and can
mobilise large numbers of the population across continental Europe within a
short period of time,10 the moral standing of trade unions, political parties and
(some) churches is subject to considerable criticism, and exercising the ‘exit’
option out of such mass organisations is becoming increasingly prevalent. At the
EU level the directive to form works councils is seen by some as the catalyst for
corporate change, and by others as the new arena for consultation and
information at the firm level. The form of employee involvement outlined in the
 PUTTING THE CART BEFORE THE HORSE? 105

directive lays out a range of possibilities, including employee representatives in a

European-wide consultation system, company-based joint management/
employee works councils, and primarily trade union representatives informing
each other about developments in their European-based multinational
companies.11
There is no single pattern for works councils. Countries like Germany and The
Netherlands with a tradition of employee representation at the firm level and
codecision-making enshrined in their respective constitutions, interpret the EU
directive differently from, for example, France and Italy, where the idea of joint
councils with management runs counter to the definition of decentralised trade
union action (Bastian 1994a:115). Furthermore, although the UK is not subject to
the works council directive as a result of the 1991 Maastricht opt-out, many
British companies are in fact setting up consultation and information
committees. At present, most companies that established European works
councils appear to be favouring joint management/employee forums, however,
without holding negotiating power. The areas of consultation cover training,
questions relating to production techniques and the introduction of new
technologies. Other subjects for the consultation agenda involve health and
safety, work organisation and the external environment. In two noteworthy cases
the agenda does go further. The German car manufacturer, Volkswagen, allows
working time and wages to be discussed in its company-wide works council,
while the French food conglomerate, BSN, permits issues of sexual equality to
be debated.
The significance of these European works councils should not, however, be
overestimated. The temptation to over-sell them is apparent in some trade union
statements. It will take time to discover whether the works councils are capable
of transforming European-based multinationals. For example, how will such
companies conduct their corporate strategies in providing wide-ranging
consultation and information disclosures of their business activities to their
employees? The supporters of the directive, and they are not exclusively from
the trade union camp, see works councils as a catalyst for much needed corporate
reform. But questions remain and gaps persist. Europe’s single-market legislation
is still without a European company statute, for example. Moreover, the
effectiveness of the councils will depend on a number of factors such as the
willingness of companies to develop an open and co-operative policy towards
their employees and interest representatives and the abilities of trade unions to
press their agendas at company level. Only then will it be possible to determine
whether the European works council directive is a marginalised irrelevance in
the exercise of corporate governance or an important step in the evolution of a
more representative form of European-based company where employees exercise
rights like shareholders (Transfer 1995).
The demands on the agenda of collective bargaining and industrial policy
during the 1990s include the dismantling of labour market regulations,
performance-related pay systems, access to training and qualifications, just-in-
106 JENS BASTIAN

time production and breaking through demarcation lines of the working day and
the five-day working week. The working time issues include weekend working,
annualised hours schemes, round-the-clock working schedules, non-standard
working time schemes, and part-time work.12 In short, changing temporal
flexibility is considered to be a vehicle for changes in the way labour markets
operate. Placed in a broader context, it can be argued that the dynamic of change
points to the ‘modernisation’ of the regulatory framework of the labour market.
Such is the terminology being utilised by the conference of the Group of Seven
leading industrial countries (G7) on achieving job-creating growth in Lille,
France, in April 1996. For the European participants, the principal aim was to
identify policies that not only reduce Europe’s soaring unemployment in the
short term, but that allow labour markets to adjust to economic changes in future,
within the requirements of European Monetary Union.
The fundamental question that arises from considering issues surrounding
flexibility relates to the extent to which a society wants to push the argument of
labour market deregulation. Answers will require imaginative thinking, but
will also reflect the nature of the social fabric of EU democracies. Jobs that are
provided at hourly rates, often at or below minimum wage levels,13 not only
mean increased insecurity, but also reinforce absolute poverty, as reflected in the
terms the ‘working poor’ and ‘work poor’ households. Moreover, product-
market restrictions14 may be as important as labour market rigidities in
explaining unemployment and influencing future job creation. However, no
magic formula is available to confront the jobs crisis afflicting European
economies. If economic growth cannot create jobs, then new solutions must be
sought.
The new commitments included in the Amsterdam Treaty concerning
employment should be welcomed. However, doubts remain about the
consistency across the member states of the political will required to support
meaningful EU initiatives. Differences in the traditions and approaches to market
issues between, and among, existing and prospective EU members are still
marked, while most employment policy tools remain in the hands of national
governments. Moreover, labour and especially business are sceptical about the
usefulness of EU action. For these reasons, it would be unwise to expect the
Union to implement radical measures to combat unemployment.

Notes

1 For her unending inspiration and concern, I wish to thank Calliope Spanou.
2 The term ‘European Union’ is used to refer to the fifteen member states. However,
for the collectivity to become a union in institutional and political terms, much
remains to be achieved in the realms of legal, social and economic integration.
3 Defined as those who have been unemployed for more than a year, the long-term
unemployed make up roughly 40 per cent of the total jobless pool and their number
is rising. During the last year for which comparable pan-European data are
 PUTTING THE CART BEFORE THE HORSE? 107

available, namely 1992, the long-term unemployment rate stood at 35.4 per cent of
all unemployed.
4 The British government introduced generous tax breaks to encourage saving in
private pensions during the 1980s. More than half of the $2 trillion in private
pension assets in Europe are held in Britain and The Netherlands.
5 The Belgian government has started experimenting with workfare schemes. The
long-term unemployed are now required to accept small jobs offered to them. The
state employment agency lines up the jobs, offering the services of unemployed
workers at modest rates, made more attractive by tax breaks. If the jobless person
repeatedly turns down offers, unemployment benefits are suspended. But if he or
she takes the job, the income supplements the check from the agency.
6 In the same area, for ten years Britain successfully blocked attempts to institute
parental leave for a three-month period after childbirth for mothers and/or fathers
and special leave of undefined duration for pressing personal reasons. However, in
March 1996, under the first agreement to be reached by means of the Social
Dialogue (see chapter 7 in this volume) parental leave for at least twelve weeks on
an unpaid basis was granted to both men and women. In order for British workers
to benefit from the agreement, however, British multinational companies located in
the UK will have to decide to start voluntary negotiations with employee
organisations. In consequence, they would thereby circumvent the government’s
veto and Maastricht opt-out. On another matter, the UK won a four-year exemption
from an EU law restricting work by children and adolescents to a maximum of
twelve hours a week.
7 At the time of writing 6 per cent of British employees were working seven days a
week, 16 per cent put in more than forty-eight hours a week compared with an EU
average of 7 per cent and 20 per cent were entitled to less than four weeks off a year.
8 In the first case, the UK was ordered to pay compensation to Spanish fishing
companies that had been denied the right to register their vessels in Britain. The
second decision concerned a German law that restricted the sales of beers brewed
in other EU member states.
9 Having to ‘kick the job habit’ is the credo of such pessimistic forecasts. In Bridge’s
own words, ‘the reality is that what is disappearing today is not just a certain
number of jobs, or jobs in certain industries or in one country—or even jobs in the
developed world as a whole. What is disappearing is the very thing itself: the job’
(Bridges 1995:6).
10 The success scored by Greenpeace in June 1995 against the sinking of Shell’s oil
rig ‘Brent Spar’ off the coast of Scotland was a remarkable example of mobilisation
and organisational flexibility. Within days the boycott of Shell’s filling stations
spread across continental Europe, and was particularly closely followed in
Germany, creating an unprecedented coalition that extended from the churches,
trade unions and employers’ associations, to political parties, governments as well
as EU institutions.
11 It was estimated in early 1996 that the directive covers more than 1,500 European
companies and 61 works councils have been signed. Companies employing over 1,
000 workers with more than 150 in at least two member states are required to
establish European works councils.
12 Equal treatment for part-time workers is the order of the day, strongly pushed by
European legislation, and gradually making governments change direction. A recent
108 JENS BASTIAN

example from Britain serves to illustrate this trend. The Major Government
proposed in April 1995 that part-time employees should henceforth be able to take
full part in a variety of share plans such as profit sharing and employee share
ownership trusts.
13 Temporary and part-time work is especially low paid. According to Business
Strategies, a private, independent consultancy in London, no more than a quarter of
women in part-time jobs are earning more than £6 an hour (Business Strategies
1996).
14 For example, in the controversial area of biotechnology, appeal is constantly made
to the job creation potential in order to overcome the legal and moral concerns
raised by policy makers and the public.

References

Bastian, J. (1989) ‘1992 im Visier—der Europäische Binnenmarkt als Herausforderung für

gewerkschaftliche Handlungsstrategien: das Problem der Arbeitszeitpolitik’,
Zeitschrift für ausländisches und internationales Arbeits- und Sozialrecht, 3 (4), 257–
87
——(1994a) A Matter of Time: From Work-skaring to Temporal Flexibility in Belgium,
France and Britain, Aldershot: Avebury
——(1994b) ‘Modern Times: Institutional Dynamics in Belgian and French Labour
Market Policies’, West European Politics, 17, 34–56
Blyton, P. (1982) ‘The Industrial Relations of Work-sharing’, Industrial Relations
Journal, 13, 6–12
Bridges, W. (1995) Jobshift: How to Prosper in a Workplace Without Jobs, London:
Nicholas Brealey
Business Strategies (1996) Labour Market Flexibility and Financial Services London:
Business Strategies
Kent, S. (1995) ‘Old Job, New Job—No Job?’, The Guardian, 4 March
Observatory Report from EIMI, Report on Temporary Work, Zoetermeer, 1995
OECD (1994) Economic Outlook, Paris: OECD
Rifkin J. (1995) The End of Work, New York: G.P. Puttnam and Sons
Scharpf, F.W. (1991) Crisis and Choice in European Social Democracy, Ithaca: Cornell
University Press
Transfer (1995) European Review of Labour and Research, 1:2, April
 7
SOCIAL PARTNERSHIP AT THE EU
LEVEL
Initiatives, problems and implications for member states1

Michael Gold

Introduction
On 14 December 1995, a framework agreement on parental leave was signed in
Brussels by representatives of European-level unions and employers’
organisations. The significance of this event lies not only in its substance—the
setting out across Europe of minimum standards on parental leave—but also in
its procedure. For the first time under the terms of the social protocol of the
Treaty on European Union (the ‘Maastricht Treaty’), employers and unions had
arrived voluntarily at an intersectoral agreement covering all member states,
except the UK (under the ‘opt-out’ provisions of the social protocol). The
Commission had first attempted to introduce a draft directive on parental leave in
1983, but little or no progress had been made since. The topic had proved too
controversial, with the then Conservative government in the UK repeatedly
stressing its opposition to the proposed legislation. However, once the Treaty on
European Union had come into force in November 1993, a new procedure became
possible.
Article 4 of the agreement on social policy (contained in the social protocol)
allows employers and unions at EU level to conclude agreements through ‘social
dialogue’ which may then be implemented either in accordance with normal
practices in each member state or else through a Council decision following a
request to that effect from the signatories and the Commission. In this way, the
Commission can pass responsibility for certain areas of EC-level labour market
regulation from itself on to employers and the unions (the ‘social partners’).
Negotiations on parental leave, which had begun in July 1995, accordingly
reached a successful conclusion five months later, thereby baptising a new
regulatory procedure with important implications for member states. The social
partners duly requested the implementation of their framework agreement
through the Council, whereupon the Commission proposed a Directive to
achieve this purpose. This Directive was subsequently adopted by the Council on
3 June 1996: the social dialogue had achieved its first major success in
concluding and securing a substantive agreement at intersectoral EC level.
110 MICHAEL GOLD

Major questions
From the very beginning, two major questions have dominated debate over the
development of social and labour policy in the European Community:2

• the first concerns whether or not the terms and conditions of workers in the
member states should be regulated by the EC at all, but if so, then the extent
to which such regulation should take place; and
• the second concerns the methods through which regulation is best introduced
once the principle is conceded in a particular area. For example, it might take
the form of either binding legislation through the adoption of a directive, or
simply a non-binding recommendation, or else some other measure adopted
through ‘social dialogue’.

These two questions are, of course, closely linked. The enlargement of the EC
has led to the entry of a number of member states whose legal systems are not of
the predominant Roman-German type (Due et al. 1991), whilst since the 1980s
increasing numbers of member states have in any case themselves been adopting
or adapting deregulatory labour policies (Ferner and Hyman 1992b:xxvii).
Indeed, the concept of ‘subsidiarity’—which has been written into the amended
EEC Treaty as article 3B—reflects the view that the EC should intervene in a
policy area only if it cannot be adequately dealt with at national, regional or local
level (Spicker 1991). Overall, such trends towards decentralisation have, as we
shall see, induced the Commission to seek out approaches to social policy less
centred on legal regulation than in earlier stages of its development.
In the social and labour policy area, the principal alternative to the legislative
approach has come to be known as the ‘social dialogue’, a term which means
rather little to most British policy makers (for a historical overview, see Carley
1993). However, it should be borne in mind that the French term dialogue social
means, in essence, exchange of views or consultation between employer and
worker representatives. Furthermore, when applied to EC processes, its meaning
narrows to the exchange of views, consultation and—by extension—negotiation
at EC level with three distinct scopes:

• intersectoral (that is, covering employers and workers across all sectors in all
member states);
• sectoral (covering employers and workers in individual sectors of economic
activity across all member states); and
• company or organisational (covering all employees within an individual
company in all its various subsidiaries across the member states).

The intention here is to examine the impact of social dialogue on state autonomy
and on the behaviour of employers’ and union organisations across the member
states. However, this poses a major problem. Whilst the impact of EC
 SOCIAL PARTNERSHIP AT THE EU LEVEL 111

legislation, particularly directives, on UK social policy has been examined more

or less broadly in various places (see, for example, Nielsen and Szyszczak 1991;
Bulmer et al. 1992; Gold and Matthews 1996), the impact of the social dialogue
has not yet been subjected to such a thoroughgoing analysis.
There are several reasons for this. One is undoubtedly that the legislative
approach to the creation of the EC social dimension—which dates back to the
EEC Treaty itself—has a long pedigree of achievement that has invited comment
(particularly in the areas of equal opportunities and health and safety). Another
reason is that the social dialogue—as we stress below—had been designed from
the outset as no more than a consultative process. It was originally intended to
encourage and promote the legislative process, not to rival it and still less to
replace it. Putting it more fancifully, if legislation was to be the mother of the
social dimension then social dialogue was to be the midwife. Its effects have
therefore only ever, till recently anyhow, been indirect. The third, and most
significant reason, related to the last point, is that until 1993 there was no
provision in the social dialogue to result in binding agreements at all. Until then,
the process of EC-level social partnership had achieved only ‘limited
development’ (Hall 1994: 293). Only when the Maastricht Treaty came into
force, along with the social protocol, did the social dialogue consolidate its
function as a regulatory mechanism that could initiate binding measures in the
social field parallel to the legislative framework of the Commission.
Running throughout this chapter, therefore, is an underlying theme—that of
the constraints on the development of the social dialogue that have held back its
impact on the course of the integration of European social and labour policies. In
order to understand these constraints properly, the chapter begins with a brief
analysis of tripartism within the EC since its inception and then schematically
reviews the development of the social dialogue at its various levels since its
launch in 1985, with particular reference to its evolution since 1993.

Origins of the ‘social dialogue’

The social dialogue—as a specific process of consultation between the
Commission and employers’ and union organisations at European level—dates
from January 1985, when a series of informal tripartite contacts were inaugurated
by Jacques Delors, the then newly appointed President of the Commission. These
meetings brought together representatives of the Union of Industrial and
Employers’ Confederations of Europe (UNICE), the European Centre of Public
Enterprise (CEEP) and the European Trade Union Confederation (ETUC). They
culminated in a meeting the following November at Val Duchesse, where
discussions took place on economic growth and employment. A more formalised
system of working parties was then set up covering areas like new technology
and macroeconomic policy. These working parties have been collaborating ever
since on a series of issues; for example, in May 1995 the macroeconomic group
issued a joint Opinion on job-creating growth which examined the problems of
112 MICHAEL GOLD

high budget deficits and labour market reform. There was renewed emphasis too
on sectoral social dialogue—that is, EC-level consultations focusing on a
particular sector like construction, energy supply or retail.
However, social dialogue can also be identified as an approach to social and
labour policy as distinctively enshrined not only in the EEC Treaty itself but also
in a series of tripartite conferences, meetings and committees that have waxed
and waned over the years. Whilst the prospect of the Single European Market
undoubtedly threw the spotlight on Delors’ Val Duchesse initiative in 1985, this
was certainly no radical departure from earlier attempts to foster a consultative
approach towards social and labour affairs based on tripartism. Indeed, the
Commission, in pursuing the social policy objectives laid down in articles 117 to
128 of the EEC Treaty, is required to act by ‘making studies, delivering opinions
and arranging consultations’ (article 118). And, bearing in mind the sheer range
of social policy areas in which the Commission is required by article 118 to
promote ‘close co-operation’—including employment, labour law, working
conditions, social security and the right of association and collective bargaining—
consultation is clearly the guiding principle for any progress. Without the full
consent of employers’ and employees’ representatives there would be no
implemen-tation of social policy, no matter how boldly or imaginatively it might
be formulated. No wonder, then, that: ‘Within the institutions of the European
Community there are dozens of committees, joint committees, specialised
working parties, etc. composed of representatives of labour and management.
Some are directly provided for by the Treaty…. Still others were instituted in the
course of integration to assist the Council and/or the Commission in carrying out
their tasks’ (Commission of the EC 1988).
Undoubtedly the most well-known consultative body of this type is the
Economic and Social Committee (ESC), which was established under articles
193–8 of the EEC Treaty. It now has 222 members drawn from employers’
organisations, unions and ‘other interests’ including farmers, small- and medium-
sized businesses, consumers, the professions and so on, nominated by national
governments. The ESC must normally be consulted when the Commission
initiates a social policy measure, though its influence has tended to decline with
direct elections to the European Parliament since 1979. Other consultative
forums that should be noted include the six tripartite conferences that took place
between 1970 and 1978 on mainly macroeconomic issues and the Standing
Committee on Employment, an enduring legacy of the conferences. The
Standing Committee on Employment brings together employers’ organisations,
unions, the Commission and the Council of Social and Labour Ministers, which
presides. Since 1970 when it first met, the Committee discusses and helps to
clarify labour market questions (for example, by advocating and defining the
social dimension to accompany the completion of the Single European Market in
1992).
However, the role of these bodies, along with that of the many other ad hoc
consultative forums set up over the years, has been constrained by their status
 SOCIAL PARTNERSHIP AT THE EU LEVEL 113

within the EC’s constitution as purely consultative forums for the social partners.
And as we see below, other factors have also constrained the broader scope of
the social dialogue. These include the uneven involvement and legitimacy of the
social partners within the process and the great divergences between the
industrial relations systems across the member states in relation to
implementation of the terms of any joint Opinions or agreements that might be
concluded at EC level. Taken together, these factors have ensured that EC
‘social partnership’ has traditionally had very little impact on the autonomy of
member states, a situation that has only very recently begun to change with the
evolution of an enhanced role for social dialogue.
This is because the constitutional setting for the social dialogue has changed
dramatically since 1993, and steps have been taken to open up and democratise
the role of the social partners concerned. Yet its impact on the member states
will continue to depend on the most intractable constraint of all—enduring
variations in the social and legal frameworks of industrial relations systems
across the member states.

Intersectoral developments
So far, we have been reviewing the social dialogue in its broadest sense within
the EC—the range of bodies designed to bring employers, unions and EC
institutions together for the purposes of consultation, as well as the EC-level
organisations through which national employers and unions channel their efforts.
Now, however, we turn to the social dialogue in its narrower sense, as a specific
process of consultation launched by Jacques Delors in January 1985. What
objectives did the Commission hope to achieve? What results have there been?
What impact have they had on the member states? And what of sector- and
company-level social dialogue?
During the period 1980 to 1987, successive social and labour policy instruments
proposed by the Commission were either blocked by the Council or else watered
down. The reasons for this deadlock are complex, but include a general
questioning of labour market regulation across a number of EC member states,
notably in the UK (Hall 1994:292). In response, attention came to focus on two
principal remedies. The first was to extend qualified majority voting on the
Council of Social and Labour Ministers to prevent the ability of just one country
from blocking moves that had the support of the overwhelming majority of other
member states (extensions of this kind were indeed subsequently achieved
through both the Single European Act and the social protocol). The second
remedy—which is of concern to us here—was to focus increasingly on non-
legislative approaches to regulation, of the tripartite kind that already been tried
and tested over the years. What they required, however, was a new impetus.
In 1982, a joint meeting of Finance and Social Affairs Ministers
advocated ‘close consultation’ between the social partners in an attempt to
improve the economic situation (Commission of the EC 1984:9) whilst the social
114 MICHAEL GOLD

action pro-gramme adopted by the Council in June 1984 also stressed the need
for social dialogue. The programme required the Commission to improve
dialogue within the existing institutional framework and to ‘work out appropriate
methods for encouraging, whilst scrupulously respecting the autonomy of, and
responsibilities peculiar to, the two sides of industry, the developments of joint
relations at Community level’ (Commission of the EC 1988:110). This
requirement was later written into article 118B of the EEC Treaty under
amendments introduced through the Single European Act.
Jacques Delors, on his appointment as President of the Commission in January
1985, rapidly made the social dialogue one of his own personal projects. Indeed,
in his first statement to the European Parliament, he drew attention to the ‘need
for a balance between justice and efficiency’ and explicitly linked social
dialogue with the process of negotiation, declaring:

Let me then ask this: when will we see the first European collective
bargaining agreement? I would insist on this point. A European collective
agreement is not just an empty slogan. It would provide a dynamic
framework, one that respected differing views—a spur to initiative, not a
source of paralysing uniformity.
(Delors 1985:9)

Stage I
As a first step, Delors convened a series of informal meetings for EC-level
employers’ organisations and unions throughout most of 1985, culminating at a
formal session at Val Duchesse—a palace just outside Brussels—on 12
November attended by representatives drawn from UNICE, CEEP, ETUC and
the Commission. The parties adopted two joint declarations: one broadly
supported the Commission’s ‘co-operative growth strategy for more
employment’ whilst the other, on the social dialogue and the new technologies,
advocated the establishment of a working party to investigate the issues further.
The following spring, the Commission duly set up the two working parties,
one to investigate implementation of the growth strategy and the second to cover
new technology. They issued their first, non-binding Opinions in 1986 and 1987
respectively.
The European Council, meeting under the Belgian Presidency in May 1987,
reaffirmed its commitment to the new social dialogue, and the working parties
continued to meet throughout the following year, though no more Opinions were
agreed.
One of the major problems over the social dialogue, which had been left
unresolved, was its exact purpose. UNICE was prepared to discuss social and
labour policy but was emphatically opposed to entering into any kind of
binding agreement. It therefore insisted that the outcome of the two working
parties should be known as ‘Opinions’—that is, general statements which do not
 SOCIAL PARTNERSHIP AT THE EU LEVEL 115

constrain the parties on either side. The ETUC, on the other hand, believed that
these discussions could or would eventually lead to the conclusion of European-
level agreements on selected issues. The Commission hoped that the process
would at least define the contours of the social dialogue, not least in relation to
which areas would, or would not, require legislation. As we have seen, Jacques
Delors clearly also favoured the development of European-level collective
bargaining.
This lack of clarity over objectives led a couple of commentators, writing in
1988, to maintain that the idea of a social dialogue as a cornerstone of the social
dimension appeared to be ‘in ruins’, though they added that one tangible benefit
of the process had been ‘the restoration of good working relations between the
social partners’ (Brewster and Teague 1989:97).
However, at the same time that confusion appeared to be damaging the social
dialogue process, other developments were—at least in the eyes of the
Commission—demonstrating its importance. The 1985 White Paper on
completing the internal market (Commission of the EC 1985) led to the Single
European Act which, coming into force in July 1987, was intended to provide the
constitutional means for realising the ‘1992’ programme. This included the
promotion of the social dimension, both through the extension of qualified
majority voting to matters concerning health and safety and working conditions
(article 118A) but also through insertion of social dialogue as a specific
responsibility of the Commission. Article 118B of the amended EEC Treaty
runs: ‘The Commission shall endeavour to develop the dialogue between
management and labour at European level which could, if the two sides consider
it desirable, lead to relations based on agreement’
Furthermore, the Belgian Presidency, which in May 1987 had welcomed the
social dialogue process, was also laying the foundations for the Social Charter.
The Social Charter, which was eventually adopted by all the member states
except the UK at the Strasbourg Summit in December 1989, and its
accompanying social action programme were the results of pressure from the
legislative side, but the Commission was aware that, with the legislative
deadlock already alluded to, a voluntaristic approach was equally important if it
was to achieve its objectives. Indeed, the social dialogue can be seen very much
as a ‘twin track’ approach to social policy running alongside the legislative one.
For this reason, article 12 of the Social Charter states: ‘The dialogue between the
two sides of industry at European level which must be developed may, if the
parties deem it desirable, result in contractual relations in particular at inter-
occupational and sectoral level.’

Stage II
In this general context, Jacques Delors believed that the restoration of good
working relations between the social partners resulting from Stage I of the
social dialogue should serve as the basis for a relaunch. Indeed, the relaunch of
116 MICHAEL GOLD

the social dialogue took place on 12 January 1989, timed to coincide with the
beginning of the new Commission’s term of office.
This time, a more formal structure was adopted, with the creation of a steering
committee consisting of representatives of UNICE, CEEP, ETUC, the
Commission and certain other EC institutions designed to ensure progress in the
social dialogue. One of its tasks was to monitor achievements in the priority
areas, which included education and training and problems surrounding the
evolution of a European labour market. The Commission also committed itself to
publishing an Annual Report on employment within the EC which would first be
discussed within the social dialogue process prior to submission to the Standing
Committee on Employment (the first was duly submitted in July 1989). In
addition, the range of issues covered by the social dialogue was broadened to
include the allocation of structural aid programmes in individual member states
and—most notably—consultation over the contents of the Social Charter and the
draft European Company Statute (published in August 1989).
So the 1989 relaunch appeared to strengthen both the form and content of the
social dialogue. In due course, both the revamped working parties, which
focused on education and training and labour market issues, delivered a series of
Opinions covering questions like access to training and the formation of a
European geographical and occupational mobility area.
Yet despite all this activity, there was some criticism of its lack of impact on
the behaviour of the social partners and member states. Commenting in 1990, the
European Trade Union Institute (ETUI) declared that at this pan-European or
intersectoral level the social dialogue had ‘so far achieved too few tangible
results’ (European Trade Union Institute 1990:51). Fundamental disagreements
persisted over its aims and objectives, and it was clear that the more recent
Opinions reflected no movement towards the kind of agreement advocated by the
ETUC. Yet the ETUI continued to maintain that: The social dialogue between
the inter-occupational federations and at sectoral level could represent an
important means of further developing the social system of Europe’, adding that
a prerequisite for such a dialogue was ‘a change in the negative attitude adopted
by UNICE…with regard to the conclusion of European agreements’ (European
Trade Union Institute 1990:51). And changes were indeed shortly to take place.
The breakthrough in this respect came in the context of the Inter-governmental
Conferences held throughout 1991 prior to the European Council which took
place that December in Maastricht. UNICE had become increasingly concerned
at the prospect of amendments to the EEC Treaty that would further extend
qualified majority voting and allow (what it saw as) the imposition of statutory
European works councils on multinational companies operating across the
member states. For defensive reasons therefore, and under pressure from the
Belgian, French and Italian employers’ organisations, UNICE sought to
negotiate a compromise that would permit it to influence or delay EC-level
social policy through framework agreements. This was because it believed that
compliance with such agreements at national level would provide greater
 SOCIAL PARTNERSHIP AT THE EU LEVEL 117

flexibility and room for manoeuvre than compliance with binding directives
(Hall 1994:300).
On 31 October 1991, UNICE, CEEP and ETUC duly agreed to a series of
proposals for amending the existing provisions of the EEC Treaty. These
proposals later formed the social chapter, which was subsequently downgraded
to become the social protocol which itself came into force on 1 November 1993
along with the Treaty on European Union. Articles 3 and 4 of the social protocol
deserve special mention.
Article 3 focuses on the promotion by the Commission of ‘consultation of
management and labour at Community level’. The Commission is required to
consult the social partners ‘before submitting proposals in the social field’ and
again on the proposal itself once formulated. Even more significantly, the social
partners are granted the right to inform the Commission that they wish to negotiate
an agreement on the area covered by the proposal, normally within a nine-month
period (which is extendable), thereby shortcircuiting the need for immediate
legislation.
Meanwhile, article 4 fosters ‘contractual relations including agreements’ at EC
level. It lays down that agreements should be implemented: either ‘in accordance
with the procedures and practices specific to management and labour in the
member states’ (for example, through further negotiation on the details at sector
or company level); or through the Council to which it grants powers to issue
binding decisions enforcing such agreements provided that such a move has been
requested by the signatories.
Such an article could clearly have a major impact on the conduct of industrial
relations across the member states, but it also raises many difficult questions,
including how the decisions themselves could be enforced in the context of such
widely varying systems of collective bargaining across the member states. For
example, to which parties would the decisions be addressed? Would the
agreements negotiated within their framework cover all workers? And for what
duration? These questions are examined in greater detail below, but in any event
the first proposal to be tested under this procedure—for European works councils
—did not reach a stage that required any answers.
In October 1993, Padraig Flynn—the Commissioner responsible for social and
labour policy since the previous January—launched an appeal for negotiations
between the social partners on European works councils to begin as soon as
possible under the terms of the social protocol. He stressed the need to have a
‘new consensus in Europe on how to make the many changes we know are
coming’, towards which purpose ‘a climate of mutual confidence between the
social partners would contribute enormously’ (Agence Europe 1993:7). In the
event, negotiations eventually collapsed, and the Directive was adopted by the
Council of Ministers in September 1994 under the ‘opt-out’ procedures that then
exempted the UK (Gold and Hall 1994).
Nevertheless, the impetus behind the social dialogue continued to build up. The
Commission’s Green Paper—its consultative document on the future of
118 MICHAEL GOLD

European social policy (Commission of the EC 1993)—contained a section

entitled ‘Reinforcing the Social Dialogue’ and subsequently, in December, the
Commission adopted the text of a communication outlining its understanding of
the practical implications of the social protocol and its accompanying agreement
on social policy. It emphasised that the social partners had the right to
consultation both on the direction of Community social policy and on its content.
These points were later consolidated in the White Paper on social policy
published in July 1994 (Commission of the EC 1994a and 1994b).
With such a level of expectations aroused, it then became only a matter of
time before an agreement was signed. The issue selected for this purpose was
parental leave, on which the Commission had been attempting to legislate since
1983. After five months of negotiations, ETUC, CEEP and UNICE concluded a
framework agreement on parental leave on 14 December 1995. It set out
minimum requirements and provisions for parental leave with article 1.9
referring it back ‘to member states and social partners for the establishment of
the conditions for access and modalities of application in order to take account of
the situation in each member state’ (European Industrial Relations Review
1996b:35). The social partners then submitted the text to the Commission, which
later published its draft directive on parental leave that was subsequently adopted
by the Council on 3 June 1996. The directive left the terms of the framework
agreement intact and applied across all the EC member states except the UK
(which was then still subject to the opt-out).
The agreement and accompanying directive mark a major advance for the
social dialogue not least because they have demonstrated the willingness of both
sides of industry to adopt a legislative model at EC level that transcends existing
national systems. The model adopted is loosely derived from Belgian practice
where national intersectoral agreements concluded on the bipartite National
Labour Council form the basis for subsequent negotiations at sector level which
may then be rendered legally binding (Vilrokx and Van Leemput 1992:374, 377–
9).
Major questions are raised in the process, however. First, the social partners
had not voluntarily chosen to negotiate an agreement on parental leave, since the
subject had been selected for them by the Commission. It might be claimed that,
in such circumstances, employers are brought to the bargaining table more by a
negative concern to avoid legislation than by a positive concern to negotiate an
agreement (certainly a major factor, as we have seen, in explaining UNICE’s
change of heart over negotiating the social chapter/protocol).
Second, the implications for member states are also highly contentious. On the
one hand, the use of the social dialogue to generate directives has arguably
conferred a greater deal of openness on the EC legislative process than had been
achieved before. It is, after all, appropriate to involve the social partners centrally
in negotiating workplace regulations since they bear greater direct responsibility
than governments in carrying them out and ensuring their enforcement. On
the other hand, the Economic and Social Committee and the European Parliament
 SOCIAL PARTNERSHIP AT THE EU LEVEL 119

have had no democratic input into the process at all. Transposition of the
directive into national legislation required, as appropriate, new legislation across
the fourteen member states affected ‘basically at the behest of the three social
partners. The term “corporatism” inevitably raises its head’ (European Industrial
Relations Review 1996c:23). There are, of course, counterarguments: the terms
of the social protocol were themselves agreed democratically by the member
states which, acting on the Council, had the right either to adopt or reject the
directive. Nevertheless, through the social dialogue the role of the social partners
has now been dramatically enhanced in relation to national governments and
some of the further questions raised—such as the degree of their own legitimacy
—will be analysed below.

Sectoral developments
Progress, though less striking, has also been made at EC sector level. In a
number of industries joint declarations have been concluded by employers’
organisations and unions in areas of mutual interest.
Sectoral social dialogue, in its broad sense, has taken place since the 1950s on
formal joint committees within the EC institutions covering areas like coal and
steel (1955), agriculture (1963) and road transport (1965), amongst others.
Results include two recommendations on working time for agricultural workers
adopted by employers and unions in 1978 and 1980. Many of these committees
fell into disuse as a result of employer resistance and problems ensuing from
enlargement of the EC. Greatest success, however, occurred where the EC had
formulated an integrated policy for a sector such as in agriculture and fisheries
and then later in transport, where joint committees were set up in inland
navigation in 1980 and railways in 1984. A specialist unit to promote sectoral
social dialogue was set up in Directorate General V of the Commission in 1990
(unit A/2).
Since 1988 joint declarations or guidelines have been agreed by the social
partners across a range of sectors at European level. These include: retailing
(1988); construction (1990); rail transport and energy supply (1990); wood-
working (1994); industrial cleaning (1994); commerce (1995); hotels and
catering (1995); and even local and regional government (1995) (European
Industrial Relations Review 1997:24–9).
These joint declarations generally focus on ‘win/win’ issues like vocational
training (retailing, construction, rail transport/energy supply, cleaning), health
and safety (construction) and violence at the workplace (commerce). Some cover
more controversial issues, such as working time (cleaning) and labour flexibility
(hotels and catering). The memorandum of understanding in woodworking forms
the basis for further structured social dialogue on all topics except pay and pay-
related topics.
120 MICHAEL GOLD

Company-level developments
However, it is at the level of individual multinationals that there has been the
greatest and most remarkable movement towards EC-level agreements. These
have focused on the formation of information and consultation arrangements at
group level within multinationals.

Voluntary arrangements
This process had been underway for some years. Indeed, many of the
international trade secretariats have established world company councils
designed to monitor the operations of selected multinationals worldwide. The
International Metalworkers’ Federation, for example, set up the earliest ones in
1966 to cover General Motors, Ford, Chrysler and Volkswagen/Daimler Benz,
and by now there are several dozen more in existence (Rehfeldt 1992:51).
However, the creation of the Single European Market and the progressive
Europeanisation of company-level operations gave a significant impetus to these
developments, and induced a number of multinationals in the mid-1980s to
recognise European works councils (EWCs) or rather less formal arrangements
at their centre. The earliest examples were located principally in French
multinationals, such as Thomson, Bull and BSN (Northrup et al. 1988), but by
September 1994—when the European works councils directive was adopted by
the Council—there were already at least thirty-five voluntary agreements in
place, including some in household-name companies like Grundig, Renault,
United Biscuits and Volkswagen (Bonneton 1994).
The great majority of these pre-directive EWCs were based on written
agreement between management and employees’ representatives but some had
been established less formally, for example on an exchange of letters or unilateral
management initiative.
Companies across several member states were involved, covering a wide
range of sectors (including aerospace, chemicals, insurance, information
technology, metalworking, motor manufacturing and so on). Despite the
variations in circumstances, a basic framework emerged which was to serve as a
model for EWCs in the directive itself: joint meetings, between European-level
directors and works councillors/trade unionists drawn from the various European
countries where the company has subsidiaries, are held normally once a year to
discuss group-level issues. These meetings are informational in character, and
generally have rights neither to consultation nor negotiation (Hall et al. 1995:
chap. 4).
Management, for its part, has cited a series of benefits from such meetings,
including the chance to explain corporate strategy and company restructuring,
whilst employee representatives find that they can improve their own
international contacts and gather information direct from head office (Gold and
Hall 1992:47–51). The scale of this activity has been substantially boosted by
 SOCIAL PARTNERSHIP AT THE EU LEVEL 121

the provision of some 79 million ECU (approx. £66 million) through the
Commission to help fund transnational meetings of employee and employer
representatives over the five years 1992/96 inclusive.
Research reveals that these developments did not begin in random companies.
The earliest cases were in the French nationalised sector, encouraged through the
active involvement of the then Socialist government, but it is now clear that these
factors were irrelevant to their far wider subsequent evolution in the private
sector across other countries. According to Marginson (1991):

Management-trade union relations are more likely to emerge where

companies have a single management structure within Europe; have not
engaged in a rapid wave of recent acquisitions; produce similar products
and services in different locations or integrate production across locations;
where unions are able to create an encompassing organisation covering all
affiliates in an enterprise; where enterprise organisation already exists at
national level; and where significant groups within the workforce are
potentially mobile across borders.

This analysis, which has since been further developed (Marginson 1992;
Marginson and Sisson 1994), suggests that strong structural pressures had been
mounting behind the extension of these arrangements, though not evenly across
all kinds of company structure. Conglomerate multinationals, for example, fall
well outside the ‘ideal type’ profile outlined by Marginson above.

European works councils directive

Since the adoption of the EWC directive in September 1994, an additional factor
has played a major part in promoting the recent growth of European works
councils: article 13 of the directive itself. The directive is not a focus for this
chapter since it is a legislative measure and not—as events transpired—the result
of the social dialogue. Nevertheless, the directive, which had to be transposed
into national legislation by September 1996 across all member states of the
European Economic Area (excluding the UK), exempted from its terms any
existing European works council voluntarily agreed by that date, provided that it
covered the entire workforce and allowed for transnational information and
consultation of employees on group-level issues. The flexibility permitted under
this provision, contained in article 13, prompted growing numbers of companies
to take advantage. Some UK companies, for example, found it easier and more
acceptable to integrate their UK employees into the arrangements by voluntary
agreement than by waiting to negotiate them under the framework of the
directive as transposed into the legislation of another member state that excluded
UK employees from involvement owing to the UK opt-out. A notable company
in this category is National Westminster, which signed an agreement setting up
its worldwide NatWest Group Staff Council with the unions in January 1996.
122 MICHAEL GOLD

Other UK companies with EWC-type agreements include BOC, BT, Coats

Viyella, Courtaulds Textiles, Pearson, United Biscuits and Zeneca.
Indeed, an initial overview of article 13 agreements conducted after the
September 1996 deadline listed 173 companies, of which 29 (16.8 per cent) were
UK-based. However, total confirmed figures are likely to be much higher, possibly
around the 250 mark (European Works Councils Bulletin 1996b:11).
These developments clearly illustrate the limitations of the UK opt-out from
EC social and labour policy under the social protocol. Whilst it may have proved
possible through the opt-out for the UK government to avoid the impact of
legislation resulting from the transposition of a directive on some employment
matter (such as parental leave), UK employers are inevitably drawn into any issue
—procedural or substantive—where such innovations are freely supported,
negotiated and implemented by the social partners themselves.
With the EWC directive now in force—and eligible companies without
voluntary arrangements consequently required to negotiate an EWC or
information and consultation procedure on request—opinions vary over the
number of companies that might be affected. The TUC estimates that it covers 1,
234 multinational companies employing some 15 million workers across the
European Economic Area (Trades Union Congress 1995:59), whilst the ETUI
has listed 1,152 companies with headquarters based across 25 countries
worldwide. Of these, 274 companies are based in Germany, 187 in the USA, 122
in France and 106 in the UK (European Trade Union Institute 1995). The UK
companies are covered as they have sufficient employees in other member states
to trigger the required thresholds despite the opt-out.
Under the terms of the directive, such companies must delegate responsibility
for negotiating a European works council to one of their subsidiaries elsewhere
in the EEA. That also helps to explain why an increasing number of UK
employers, though not necessarily convinced of the merits of EWCs, sought to
retain control of developments by establishing UK-based arrangements in
advance of the directive. The decision of the Labour government, elected in May
1997, to ‘sign the social chapter’ will now dramatically increase the number of
UK companies involved. The TUC which had estimated that 113 UK companies
with 1.4 million employees in the UK would be covered under the opt-out, now
adds a further 127, with 800,000 UK employees, once the social chapter has been
signed (that is, a total of 240 UK companies with 2.2 million employees)
(European Works Councils Bulletin 1996c:1–2). The CBI, by contrast, is less
conservative, calculating that 160 UK-based companies were covered under the
opt-out, with up to an additional 200 once the social chapter were signed—a
total of 360 (Confederation of British Industry 1996:1).

Prospects for social dialogue

This overview of social dialogue leads to a consideration of its prospects as a
regulatory measure. We have already acknowledged the constitutional
 SOCIAL PARTNERSHIP AT THE EU LEVEL 123

limitations of bodies like the Economic and Social Committee that restrict its
competence broadly to consultative status. However, the Maastricht Treaty
accorded a more central, dynamic role to the Delors-inspired intersectoral and
sectoral social dialogue and we now turn to examine the constraints on its further
development.

Representational status of the parties

One serious constraint on the development of EC social dialogue is the degree to
which the organisations of the social partners involved enjoy genuinely
representational status, and hence legitimacy, in the eyes of their members and
other social agencies.
Broadly speaking, the contours of employers’ organisations and union
structures at European level are familiar enough. As noted above, there are
separate employers’ organisations for the private, public and agricultural sectors
(UNICE, CEEP and COPA respectively) whilst on the union side most national
union confederations affiliate to the ETUC, which also recognises a number of
European Industry Committees (for all the main sectors like metalworking, food,
chemicals, education and so on).
However, in no sense do employers’ and union organisations mirror one
another at this level. There are, for example, a number of significant contrasts
between UNICE and ETUC. Firstly, there are numerous organisations at EC level
that represent business and industry, such as the European Round Table, the
American Chamber of Commerce EC Committee, the European Community
Services Group and the UEAPME, which represents the interests of small- and
medium-sized companies. However, the ETUC is effectively the sole body
representing the European labour movement (though not professional and
managerial employees or CGT, the French Communist-oriented union
confederation which still remains outside its sphere). Secondly, the relationship
between the EC and UNICE on the one hand and the ETUC on the other is quite
distinct. The ETUC is funded in part by the EC and operates its own research
arm, the European Trade Union Institute (ETUI) and other specialist bodies on
training and health and safety as well as its own College. In addition, within
Directorate-General X a separate department is responsible for trade union
affairs. UNICE does not possess such research facilities, nor does it benefit from
such a close relationship with the Commission, though the new European Centre
for Industrial Relations in Florence is jointly run by UNICE, CEEP and ETUC.
Finally, the ETUC recognises and acts on behalf of fifteen European Industry
Committees (which group sector-level unions across Europe), but European-
level employers’ sectoral organisations do not belong to UNICE. Larger sectoral
organisations, such as CEFIC (chemicals) or CEDC (retail), make their own
representations as appropriate, but usually follow the lead of UNICE because
they are primarily trade or industry associations.
124 MICHAEL GOLD

This lack of structural ‘fit’ at EC level has provoked a crisis of legitimacy

which will undoubtedly worsen unless addressed. The Commission
recognises UNICE, CEEP and ETUC as ‘social partners’ but both UEAPME, on
behalf of small- and medium-sized enterprises and CEC, on behalf of
professional and managerial employees, have protested against their exclusion
from the social dialogue. Furthermore, they announced in consequence that they
were not bound by the terms of the framework agreement on parental leave,
whilst EuroCommerce, for businesses in the European commercial sector, does
not feel represented by UNICE and labelled the agreement ‘undemocratic’
(European Industrial Relations Review 1996a:4). Indeed, UEAPME submitted a
petition in September 1996 to the European Court of Justice seeking an
annulment of the subsequent directive on parental leave on the grounds that it
was ‘systematically disregarded’ at all stages of consultation under the social
policy agreement (European Industrial Relations Review 1996d:3). The progress
of social dialogue is bound to be held up until such basic questions of legitimacy
are resolved. To assist, the Commission published in 1996 a communication on
the development of social dialogue at Community level. It believes that the
question of ‘representativeness’ must be determined on a case-by-case basis and
calls on the social partners to propose solutions (European Industrial Relations
Review 1997:29).

Implementation and enforceability

As we have seen, article 4 of the social protocol outlines two ways in which EC-
level agreements could be implemented and enforced. The first is ‘in accordance
with the procedures and practices specific to management and labour and the
member states’. The second—which is restricted under article 2 to certain areas
like health and safety, information and consultation and equal opportunities—is
through a Council decision on a proposal from the Commission, by request from
the signatory parties. Parental leave was the first topic to be dealt with under this
procedure and the second was part-time work, the subject of a framework
agreement signed in June 1997 by UNICE, CEEP and ETUC.
However, these procedures raise a series of questions that have been concisely
summarised by Hepple (1993:26–31). First, member states are under no
obligation to ensure the implementation of EC-level agreements. The
Declaration on article 4(2) of the social protocol declares that member states are
under ‘no obligation…to apply the agreements directly or to work out rules for
their transposition, nor any obligation to amend national legislation in force to
facilitate their implementation’. Clearly such an agreement—unlike a directive—
cannot be relied on to guarantee minimum standards across the EC, even though
the legal status of the Declaration appears to be unclear.
Second, there is a wide divergence between member states in relation to the
nature of collective bargaining structures and the means to make them generally
binding across a given sector. In Belgium and the Netherlands, for example,
 SOCIAL PARTNERSHIP AT THE EU LEVEL 125

national procedures exist for the negotiation of national, intersectoral collective

agreements that may then be proclaimed generally binding by due process of law.
By contrast, in France, Germany, Spain, Portugal and Greece such a
centralised approach is not the practice. Agreements in those countries are
generally concluded at sector level and extension procedures (sometimes known
as erga omnes) may be invoked through the Ministry of Labour to ensure their
application to non-organised employers and employees throughout a given
bargaining unit (the conditions for extension naturally also vary from country to
country). In Italy there is also sector-level bargaining, but extension procedures
are likely to be considered unconstitutional (Treu 1991:95–6). And unlike their
Danish counterparts, Irish unions and employers have little influence over their
members who fail to comply with agreements. This is the situation also in the
UK, where provision for the extension of collective agreements under Schedule
11 of the 1975 Employment Protection Act was abolished by the 1980
Employment Act (Salamon 1987:377).
Weiss, too, in a more general discussion on the problems facing the
development of EC-wide collective bargaining, refers to similar impediments.
There is, for example, wide diversity between the states over the subjects that can
be negotiated and the criteria for establishing the representativeness of the
domestic negotiating partners. Differences also exist between states over the legal
regulation of strikes and lock-outs as well as implementation of the terms of
agreements, such as recourse to labour courts and the erga omnes aspects
referred to above. These factors, amongst others, ‘show clearly that there is no
homogeneous legal pattern of collective bargaining and collective agreement
throughout the Community’ (Weiss 1991:64).
Third, there are further problems involved if the parties requested the
Commission to submit their agreement to the Council for implementation
through a decision. The subjects are restricted by article 2 of the social protocol
and it may prove difficult to ‘squeeze framework agreements, intended to lay
down principles or minimum standards for the whole Community or a particular
sector into the mould of an EC “decision” in this limited sense’ (Hepple 1993:
31). Interestingly, Hepple also queries whether the term ‘decision’ is used in the
strict legal sense defined in article 189 of the EEC Treaty and suggests that the
Council could decide on any appropriate means to enforce an EC-level agreement,
including a directive (Hepple 1993:31). Events have proved him correct: the
Commission did indeed choose the means of a directive to implement the terms
of the framework agreement on parental leave.

Social dialogue and collective bargaining

So far, in analysing developments within the social dialogue, we have been, in
effect, focusing principally on developments within the process of information
disclosure and consultation at European level. We turn now to the prospects for
collective bargaining at European level (though many of the basic issues relating
126 MICHAEL GOLD

to representation and implementation are similar). Much has been written on this
subject over the last twenty years or so (for example, International Labour
Organisation 1973; Roberts 1973; Blanpain et al. 1979), and first we have to
be clear about what is meant by the term ‘collective bargaining at the European
level’.
Broadly, it can refer to two quite distinct processes (Trades Union Congress
1992). The first is the process through which the results of collective bargaining
in other member states are brought to bear on domestic negotiations at
intersectoral, sectoral or company level (so, for example, unions may prepare
demands based on best terms and conditions across other member states, whilst
employers may counter by comparing relevant international productivity
indicators). The second is the process through which employers’ organisations
and unions actually conduct negotiations face to face at European level in an
attempt to conclude binding agreements.
These agreements may themselves be of two sorts: procedural and substantive.
For a procedural agreement employers and unions negotiate ‘an operational
mechanism which details and regulates the manner in which a specified issue is
to be handled’ (Salamon 1987:387). To this extent, a number of such agreements
have already been concluded at European level. We have already observed, for
example, that the social chapter itself—subsequently the social protocol—was
the result of negotiations between ETUC, UNICE and CEEP which concluded in
October 1991, a few weeks before the Maastricht Summit. At sectoral level,
procedures relating to training and other issues have been agreed whilst, most
notably, some 250 multinational companies have already established European
works councils in some form or other, mostly following detailed negotiations.
Substantive agreements, by contrast, refer ‘to those terms of employment, such
as wages, hours, holidays, etc. which can be converted into monetary terms’
(Salamon 1987:289–90). At intersectoral level, the framework agreement on
parental leave and the agreement on part-time work are so far the only examples.
There are very few substantive agreements at European sectoral level, whilst the
case of Danone is significant at company level. In April 1996, this French
multinational signed an agreement with the unions for a Joint Information and
Consultation Committee, covering all its subsidiaries across Europe. Provision is
made for this Committee to ‘negotiate joint statements and measures, including
with respect to employment, training, information, safety and working
conditions, as well as to the exercise of trade union rights’. It has been
commented that this experience is ‘widely seen as the closest European works
councils have yet come to some form of collective bargaining at European level’
since the agreement is ‘the first to accord an explicit negotiating role to the
European works council’ (European Works Councils Bulletin 1996a:1).
Since procedural agreements already exist at EC level, what we need to
establish here is whether EC-level collective agreements on substantive issues
will just remain a vision, or whether they too could become a significant reality.
Is the experience at Danone merely a blip, or could it represent the start of a
 SOCIAL PARTNERSHIP AT THE EU LEVEL 127

more significant process? Some would argue, for example, that European
Monetary Union, in making pay levels across the member states more
transparent, could act as a catalyst for the gradual evolution of EC-wide
agreements covering pay and other conditions.
The answer depends initially on the degree to which recognition rights are
extended to unions and employee representatives to bargain collectively at EC
intersectoral, sectoral or company level. This in turn assumes that the problems of
representation, implementation and enforceability analysed above can be
satisfactorily resolved and, indeed, that the unions themselves actually demand it
(Marginson and Sisson 1994:44–5). These points are well summarised by Weiss:

The secret of the legitimacy of a collective agreement is the support it is

given by the workers and employers, in whose name it is being concluded.
This implies involvement which—at least until now—has not been reached
for negotiations taking place at European level. In addition there is no
doubt that the member organisations on both sides would hesitate very
much to give a mandate for the conclusion of European collective
agreements to their umbrella confederations at European level.
(Weiss 1991:65)

Developments at all three EC levels in relation to information disclosure,

consultation and the negotiation of procedural agreements have been patchy and
opportunistic, but that is scarcely surprising. The spread of recognition of
employee representatives for these purposes over the last hundred years or so
within any national economy has been equally patchy and opportunistic (see, for
example, the chapters on various industrialised countries in Bamber and
Lansbury 1993).
So clearly, when we come to consider the development of EC-level collective
bargaining we must bear in mind that it is not an all-or-nothing affair as is
sometimes implied. Teague, for example, asks why European collective
bargaining did not emerge during the evolution of the social dimension, with
very little consideration for the stages through which it is likely to have to
develop (1989:95). Union recognition—the process by which management
formally acknowledges the legitimacy of a union’s right to determine jointly
terms and conditions—is indeed ‘perhaps the most important stage in the
development of an organisation’s industrial relations system’ (Salamon 1987:
408). But it is important to take into account the fact that recognition too may
proceed in stages: the literature identifies the right to representation, the right to
consultation and the right to negotiation.

First time recognition can take three forms: first, the right to
representation, that is the right of the union to represent employees usually
through union representatives on individual grievances at work; second,
the right to consultation, that is the right of the union to be consulted
128 MICHAEL GOLD

Table 7.1 Union recognition at EC level for purposes of social dialogue

on non-negotiable matters; and third, the right to negotiation, that is the

right to represent members fully both in procedural and in substantive
matters such as pay and conditions.
(Farnham and Pimlott 1988:347)

On this basis, we can appreciate that the central theme of the preceding sections
on social dialogue has been to trace the progress made by unions to gain the
initial stages of recognition at EC level. However, to be strictly accurate, we
need to qualify the above quotation slightly to adapt it for EC-level purposes.
The right to representation is perhaps best exemplified at EC level not through the
right to represent employees in individual grievances (an illustration more
appropriate to workplace recognition) but through the right to information—in
other words, the right of unions at EC level to receive relevant information about
events likely to affect their members across the member states and to represent
their views accordingly in the light of it.
In addition, recognition is not static; once recognition has been granted by
employers for certain defined purposes, it may become relatively easier for its
boundaries to be spread further. For this reason, the mere fact that social
dialogue has taken place at all is an encouraging sign for those who believe that
labour market regulation should proceed on a voluntary, flexible basis. The
problems encountered so far, including employer resistance, inadequate
structures, lack of resources and economic recession, are not different in kind
from those encountered during the process of national recognition.
Developments so far are presented in table 7.1
Insofar as representation is concerned, we have covered intersectoral, sectoral
and company levels in preceding sections. The ETUC represents the views of
its affiliated unions—a total of some 45 million employees—in relation to
 SOCIAL PARTNERSHIP AT THE EU LEVEL 129

UNICE and CEEP on a variety of issues in a variety of forums, including the

Standing Committee on Employment and the social dialogue steering committee
and working parties. National union confederations, like the TUC, are
represented on the Economic and Social Committee. In addition, there are around
250 multinationals in which works councils or unions, through some form of
European works councils arrangement, are recognised for the purposes of
information disclosure, and this figure is growing rapidly.
Consultation is considerably more limited, though the Economic and Social
Committee is consultative and the relaunched social dialogue—particularly
through the provision of working parties on key issues—promotes the exchange
of views between the social partners. At company level, however, there is
virtually no consultation yet, with only the agreements at Bull and Volkswagen
having so far a consultative element. Yet it is also true that unions and employee
representatives are keen to extend existing information rights to embrace
consultation as well, as part of their strategy within multinationals.
Negotiation or collective bargaining remains, however, the most controversial
area. Sectoral agreements have been concluded at European level covering, for
example, training (rail transport and energy supply) and working time (cleaning),
and formal information disclosure procedures have been established in numerous
companies through EWCs.
Furthermore, there are now two agreements at intersectoral level on substantive
matters, those on parental leave and part-time work. The most significant step
prior to this was undoubtedly the agreement concluded in October 1991 by
UNICE, CEEP and the ETUC on procedures to promote and enforce EC inter-
sectoral and sectoral ‘contractual relations’ which subsequently formed the basis
for the social protocol to the Treaty on European Union.
Unless recognition is granted—unless, that is, employers see recognition as
serving their own longer term interests—it seems likely that the social dialogue
will be generally restricted to little more than ‘social monologue’ on the side of
the employee representatives. The nature and timing of recognition will
themselves be moulded by deep-seated structural factors that must also be
considered when weighing up future prospects for the social dialogue. Yet it
must be stressed that over the last ten years major steps towards recognition at
all levels have already been taken.

Future prospects for EC-level collective bargaining

The debate on the future of the social dialogue in general and EC-level collective
bargaining in particular has tended to be couched very much in the style of ‘on
the one hand this, on the other hand that’. Optimists have tended to emphasise
pressures towards the emergence of collective bargaining on the one hand, whilst
the pessimists tend to emphasise the barriers on the other. Though an
under- standing of these pressures is, of course, important, analysis needs to focus
130 MICHAEL GOLD

more critically on the levels at which social dialogue is most likely to take place
and the forms it could take.
Foremost amongst the optimists has been Peter Coldrick, who has argued that
‘European collective bargaining will be here sooner than later’ for three principal
reasons (1990a). First, he points out that ‘in some areas European industrial
relations already exist’. He cites the social dialogue as an example, as well as the
fact that large companies already follow the kinds of deals their competitors are
reaching with their workforces. However, we have already analysed the
limitations of the social dialogue, and European performance comparisons have
been used by employers and unions for many years. Throughout the 1970s, for
example, the Ford pay claim was drawn up on behalf of the Transport and
General Workers’ Union by the Trade Union Research Unit at Ruskin College,
Oxford, making full use of relevant international comparisons (Gold et al.
(1979): chap.1). And although European-level union campaigns for the 35-hour
week, for example, adumbrate closer union cooperation, the success of the
campaign, from the unions’ point of view, still relies on national, not European,
bargaining strengths. Secondly, Coldrick maintains that European legislation—
such as the draft European company statute and the contents of social action
programmes—will bring employers and workers together, especially at the
company level. However, as we have seen, requirements to disclose information
or even to consult do not necessarily lead to recognition for the purposes of
collective bargaining on substantive issues. And thirdly, Coldrick believes that
European Monetary Union (EMU) will not be realisable or sustainable unless
collective bargaining becomes ‘European’. Elsewhere, he argues that before long,
‘everyone will be paid in ECUs instead of in DM or francs or pounds. Workers—
and managers—are bound to make comparisons between what they are being
paid and what similar people a few miles away across a frontier in another
country are being paid’ (Coldrick 1990b:4). Such comparisons will, he claims,
promote the Europeanisation of bargaining within countries, and then pave the
way for European collective agreements within the larger multinationals under
pressure from public authorities, both national and European, eager to make
EMU a success.
This is, of course, a highly contentious view. Even if a common currency were
in general use this does not, in itself, constitute a sufficient basis for the
emergence of cross-border collective bargaining. Indeed, in the context of
monetary union, opposite pressures might develop: since devaluation would no
longer be possible as a way of combating inflation, greater flexibility and
decentralisation in pay bargaining may be required to prevent loss of
competitiveness and rising unemployment. Marsden argues that:

the social partners and governments in member countries should

concentrate on mobilising awareness of the constraints of the new
macroeconomic environment and on developing national pay forums
to discuss pay in a wider economic context. They should also seek
 SOCIAL PARTNERSHIP AT THE EU LEVEL 131

controlled decentralisation to company level, and should develop policies

designed to weaken the linkages in wage structures and boost productivity.
(1992:601)

The question then becomes not whether EMU will spawn European-level
collective bargaining, but rather whether inflexible or overcentralised pay
structures—characterised by wide variations in labour costs between the member
states—may themselves undermine EMU. In other words, the development of
EMU might have exactly the opposite effect to that envisaged by Coldrick. Far
from promoting EC-level collective bargaining, EMU could well encourage the
introduction of greater flexibility into pay structures of a kind required to reduce
inflationary pressures across the member states.
However, whatever the eventual fate of EMU, Teague points to three sets of
barriers that have already impeded the development of European-level collective
bargaining: the economic recession, employers’ opposition and trade union short-
comings (1989:95). Economic recession has forced a defensive reaction on to the
unions which have ‘frequently’ tried ‘to persuade multinationals to transfer their
closure programmes to another country’ (1989:96). Employers’ resistance, as
articulated through UNICE, has focused on the possible loss of competitiveness
which could result from European-level collective bargaining. And organisational
and political shortcomings on the part of the unions, as well as lack of resources,
have also hampered moves in this direction. In this respect, improvements have
resulted in the 1990s from the financial support granted by the Commission to help
unions meet and develop joint policies for the purpose of setting up European
works councils.
Teague distinguishes between ‘maximalist’ and ‘minimalist’ views of the
social dimension. Broadly speaking, these contrast such ‘co-operationist’ views
as expressed by Coldrick on the one hand with the deregulatory views as
expressed by UNICE on the other. He concludes: ‘since the gap between these
two models is so wide it is hard to see how a compromise solution can emerge’
(1989:113).
One possible result would be consolidation of a ‘two-speed’ Europe with the
fifteen existing members pursuing a redefined maximalist strategy but new
members, in the context of enlargement into eastern Europe, pursuing a
minimalist line. But even so, the maximalist strategy is itself undergoing
redefinition under pressure from serious levels of unemployment—
acknowledged by all the EC institutions and member states—and the Labour
government’s indication that it will continue to cast a sceptical eye on further
regulation of the employment market. Signing the social chapter clearly does not
imply wholehearted endorsement of maximalism. In any case, further major
practical problems remain for the UK, not least because of the wide divergences
between its own voluntaristic system of industrial relations and the more
prescriptive, regulatory-based systems in most of the other member states. These
divergences—if left untouched—would continue to impede the chances of an
132 MICHAEL GOLD

even-handed implementation of EC-level collective agreements across all

member states. Finally, it may be that the emphasis on even-handedness is
misplaced. In their recent analysis of framework agreements, joint opinions and
the diffusion of ‘best practice: at EC level, Marginson and Sisson (1996:20)
suggest that these looser arrangements are more appropriate in a rapidly
changing environment. If so, the gap between maximalist and minimalist views
of the social dimension becomes less problematic.

Conclusions
It is quite clear then that there will be no sudden breakthrough into European-
level collective bargaining like a kind of industrial relations ‘big bang’. It is more
likely that information disclosure, consultation and negotiation will evolve in an
opportunistic way, within the context of an eventual EMU, whenever they favour
the mutual interests of the parties. Indeed, this is how they evolved in domestic
settings throughout the last 150 years or so, as unions across Europe gradually
established recognition for a variety of purposes.
In this respect, some likely spheres of development can be identified:

• Article 118B of the EEC Treaty gives a clear legal base for the Commission’s
endeavours in this area, to which articles 3 and 4 of the social protocol lend
further support. If the political will exists, then we might expect over time
that the various obstacles to more intensive use of social dialogue may be
gradually overcome, especially given a more sympathetic attitude adopted by
the UK government.
• The social dialogue process will continue at intersectoral and sectoral levels,
and further framework agreements in areas like sexual harassment at work
may well be concluded. Nevertheless, their implementation and enforcement
will remain highly problematic.
• At multinational company level, the establishment of information/consulta-
tion arrangements will accelerate under pressure from the Directive on
European works councils. It is perhaps at this level that the mutual benefits
are easiest to perceive as companies, faced by the challenges of the single
European market and the need to restructure and remain competitive, find it
expedient to explain their strategies in European-level forums.
• The principal level for determining pay and conditions will remain for the
time being the individual profit-centre within the company or, where unions
are recognised, the relevant bargaining unit.

So whilst there are identifiable pressures within the EC to maintain the interest
of both social partners in the social dialogue at all levels, the emergence of
a genuine EC-level industrial relations area characterised by common
information, consultation and negotiating procedures will be a slow and
opportunistic process.
 SOCIAL PARTNERSHIP AT THE EU LEVEL 133

Notes

1 I should like to thank Duncan Matthews and David Mayes for their comments on a
much earlier draft of this chapter which was published as a working paper by the
National Institute of Economic and Social Research. I should also like to thank the
editors of this book for their helpful suggestions on refining and improving this
version.
2 The term ‘European Community’ is used throughout this chapter except in relation
to specific references to the Treaty on European Union (the Maastricht Treaty).

References

Agence Europe (1993) ‘Mr Flynn invites social partners to begin negotiations
immediately on European works councils—UNICE willing?’, 15 October
Bamber, G.J. and Lansbury, R.D. (1993) International and Comparative Industrial
Relations, London: Routledge
Blanpain, R. et al. (1979) Relations between Management of Transnational Enterprises
and Employee Representatives in Certain Countries of the European Community,
International Institute for Labour Studies Research Series No. 51, Geneva:
International Labour Organisation
Bonneton, P. (ed.) (1994) Voluntary Agreements on Information and Consultation in
European Multinationals, Working Paper No. WP/94/50/EN, Dublin: European
Foundation for the Improvement of Living and Working Conditions
Brewster, C. and Teague, P. (1989) European Community Social Policy, London: Institute
of Personnel Management
Bulmer, S., George, S. and Scott, A. (eds) (1992) The United Kingdom and EC
Membership Evaluated, London: Pinter
Carley, M. (1993) ‘Social Dialogue’ in Gold, M. (ed.) (1993), pp. 105–134
Coldrick, P. (1990a) ‘Collective Bargaining in the New Europe’, Personnel Management,
October, pp. 58–61
——(1990b) Project 1992. EMU and European Collective Bargaining, November,
Brussels: ETUC
Commission of the EC (1984) Social Europe, No. 2, Brussels
——(1985) Completing the Internal Market, COM(85)310 Final June, Brussels
——(1988) The Social Dimension of the Internal Market, special issue of Social Europe,
Brussels
——(1993) European Social Policy: Options for the Union (Green Paper),
Communication by Mr Flynn, COM(93)551, 17 November, Brussels
——(1994a) European Social Policy -A Way Forward for the Union. A White Paper, COM
(94) 333 Final, 27 July, Brussels
——(1994b) White Paper on European Social Policy—Key Proposals, Memo 94/55, 27
July, Brus-sels
Confederation of British Industry (1996) ‘An Informed Choice—the European Works
Councils Directive’, Human Resources Brief, July
Delors, J. (1985) ‘The Thrust of Commission Policy’, Statement to the European
Parliament, Strasbourg (14/15 January), Bulletin of the European Communities’
Supplement No. 1
134 MICHAEL GOLD

Due, J., Madsen, J.S. and Jensen, C.S. (1991) The Social Dimension: Convergence or
Diversification of Industrial Relations in the Single European Market?’, Industrial
Relations Journal, summer
European Industrial Relations Review (1996a) ‘“Outsider” organisations dispute partners’
parental leave deal’, No. 264, January, p. 4
——(1996b) ‘Framework Agreement on Parental Leave’, No. 264, January, pp. 35–36
——(1996c) ‘Into the unknown: implementing the parental leave directive’, No. 267,
April, pp. 19–23
——(1996d) ‘UEAPME challenges parental leave directive’, No. 274, November, p. 3
——(1997) ‘Commission sets out options for the future of social dialogue’, No. 276,
January, pp. 24–9
European Trade Union Institute (1990) The Centenary of May Day: Portrait of the
European Trade Union Confederation, Brussels
——(1995) European Works Councils: Inventory of Affected Companies, Brussels
European Works Councils Bulletin (1996a) ‘Danone EWC’s negotiating role confirmed’,
No. 2, March/April
——(1996b) ‘Voluntary EWCs—the final picture’, No. 5, September/October, pp. 11–15
——(1996c) ‘UK “opt-in” would extend Directive to 127 new UK companies’, No. 6,
November/December, pp. 1–2
Farnham, D. and Pimlott, J. (1988) Understanding Industrial Relations, London: Cassell
Ferner, A. and Hyman, R. (eds) (1992a) Industrial Relations in the New Europe, Oxford:
Black-well
——(1992b) ‘Industrial Relations in the New Europe: Seventeen Types of Ambiguity’ in
Ferner, A. and Hyman, R. (eds) (1992), pp. xvi–xlix
Gold, M. (ed.) (1993) The Social Dimension: Employment Policy in the European
Community, Basingstoke: Macmillan
Gold, M. and Hall, M. (1992) Report on European-level Information and Consultation in
Multinational Companies -an Evaluation of Practice, Dublin: European Foundation
Gold, M. and Hall, M. (1994) ‘Statutory European Works Councils: the Final
Countdown?’ Industrial Relations Journal, September, Vol. 25, No. 3, pp. 177–86
Gold, M., Levie, H. and Moore, R. (1979) The Shop Steward’s Guide to the Use of
Company Information, Nottingham: Spokesman Books
Gold, M. and Matthews, D. (1996) The Implications of the Evolution of European
Integration for UK Labour Markets, Research Series No. 73, March, London:
Department for Education and Employment
Hall, M. (1994) ‘Industrial Relations and the Social Dimension of European Integration:
Before and After Maastricht’, in Hyman, R. and Ferner, A. (eds) (1994), pp. 281–311
Hall, M., Carley, M., Gold, M., Marginson, P. and Sisson, K. (1995) European Works
Councils —Planning for the Directive, London: Eclipse/Coventry: IRRU, University
of Warwick
Hepple, B. (1993) European Social Dialogue—Alibi or Opportunity?, August, London:
Institute of Employment Rights
Hyman, R. and Ferner, A. (eds) (1994) New Frontiers in European Industrial Relations,
Oxford: Blackwell
International Labour Organisation (1973) Multinational Enterprises and Social Policy,
Geneva
Marginson, P. (1991) ‘Bargaining in ECUs? European Integration and Transnational
Management-Union Relations in the Enterprise’. Paper for the International
 SOCIAL PARTNERSHIP AT THE EU LEVEL 135

Industrial Relations Association European Regional Congress, Bari (23–25

September 1991)
——(1992) ‘European Integration and Transnational Management-Union Relations in the
Enterprise’, British Journal of Industrial Relations, 30, pp. 529–45
Marginson, P. and Sisson, K. (1994) ‘The Structure of Transnational Capital in Europe:
the Emerging Eurocompany and its Implications for Industrial Relations’, in Hyman,
R. and Ferner, A. (eds) (1994), pp. 15–51
——(1996) European Collective Bargaining: A Virtual Prospect?, Brussels: European
Trade Union Institute
Marsden, D. (1992) ‘Incomes Policy for Europe? or Will Pay Bargaining Destroy the
Single European Market?’, British Journal of Industrial Relations, 30, pp. 587–604
Nielsen, R. and Szyszczak, E. (1991) The Social Dimension of the European Community,
Copenhagen: Handelshojakolens Forlag
Northrup, H.R., Campbell, D.C. and Slowinski. B.J. (1988) ‘Multinational Union-
Management Consultation in Europe: Resurgence in the 1980s?’, International
Labour Review, 127, pp. 525–43
Rehfeldt, U. (1992) L’expérience des comités de groupe européens, February, Paris: CNRS
Roberts, B.C. (1973) ‘Multinational Collective Bargaining: A European Prospect?’,
British Journal of Industrial Relations, 11, pp. 1–19
Salamon, M. (1987) Industrial Relations: Theory and Practice, Hemel Hempstead:
Prentice Hall
Spicker, P. (1991) ‘The Principle of Subsidiarity and the Social Policy of the EC’,
Journal of European Social Policy
Spyropoulos, G. (1990) ‘Labour Law and Labour Relations in Tomorrow’s Social
Europe’, International Labour Review
Spyropoulos, G. and Fragnière, G. (eds) (1991) Work and Social Policies in the New
Europe, Brussels: European Interuniversity Press
Teague, P. (1989) The European Community: the Social Dimension, London: Kogan Page
Trades Union Congress (1992) ‘The European Collective Bargaining Agenda’, Workshop
Paper presented by the Trades Union Congress to the TUC Conference, After
Maastricht —the Challenge of Social Europe, 27 February, London
——(1995) European Works Councils, London: TUC/Labour Research Department
Treu, T. (1991) European Employment and Industrial Relations Glossary: Italy, London:
Sweet and Maxwell/Luxembourg: Office for Official Publications of the European
Communities
Vilrokx J. and Van Leemput J. (1992) ‘Belgium: A New Stability in Industrial
Relations?’ in Ferner, A. and Hyman, R. (eds) (1992a), pp. 357–92
Weiss, M. (1991) ‘Social Dialogue and Collective Bargaining in the Framework of a
Social Europe’ in Spyropoulos, G. and Fragnière, G. (eds) (1991) pp. 59–75
 8
THE EUROPEAN UNION AND WOMEN’S
RIGHTS
From the Europeanisation of national agendas to the
nationalisation of a European agenda?1

Sonia Mazey2

The introduction of equal opportunities legislation on behalf of working women

throughout the European Community (EC) during the 1970s was a direct
consequence of EC-level judicial and legislative activity. Whereas in other areas,
discussed elsewhere in this volume, established, national policies have become
progressively ‘Europeanised’, the EC was a major catalyst in the generation and
extension of national sex equality laws to protect the rights of working women.
In short, the EU delivered a ‘shock’ to national policy systems and helped to
create a new policy area at the national level. The origins of these policies lie,
however, in the activities of second-wave feminism during the late 1960s and
early 1970s. Feminist ideas, values and policy demands constituted a major, new
challenge to long-established, cultural attitudes and traditions regarding the
socio-economic and political status of women. European feminists were
therefore key members of a new ‘advocacy coalition’ (Sabatier 1988), which
emerged during the 1970s and which sought, and continues to seek, to ‘reframe’
(Rein and Schön 1991) the way in which policy issues and problems which
affect women are addressed by governments. In particular, women have sought
to persuade policy makers of the need to address the socio-political causes of sex
discrimination against women.
This chapter focuses upon just one aspect of this campaign, namely the
demand for sex equality within the workplace. As argued below, the EC
constituted an important, alternative policy making arena or venue for European
feminists in their campaign for equal pay and equal treatment between male and
female employees. The European Commission in particular, backed by the
European Parliament and women’s networks, has been a ‘purposeful
opportunist’ (Cram 1994:198) in this sector. The principal policy developments
at the EC level in this sector are outlined and their impact upon national policies
is evaluated. This analysis highlights the crucial role played not only by the
European Commission, but also by EC law and the European Court of Justice
(ECJ) in supporting the rights of working women and forcing national policy
change. As several commentators have observed, the overall, material impact of
the EC equality policies has been limited: women’s pay as a ratio of men’s has
remained at about 75 per cent in the EU as a whole; occupational segregation of
the labour market by gender is still the norm; and ‘indirect’ discrimination
 SONIA MAZEY 137

against women workers continues to be widespread. However, application of the

EC equality Directives has undoubtedly benefited working women, by providing
them with a legal means of redress in cases of sex discrimination. Moreover,
politicians and civil servants can no longer afford to ignore the gender
implications of welfare and labour market policies. Thus, this case study
provides a good illustration of the power of European institutions, such as the
Commission and the ECJ, to construct new national agendas and to force national
political systems to attend to new problems. Incorporation of the equality
Directives into national law has also generated a whole new area of bureaucratic
and political activity at EU and national levels. Notwithstanding feet-dragging by
some member states, the past twenty years have witnessed the development of a
formal, institutional framework at EU and national levels, associated with the
implementation and monitoring of EC legislation and positive action
programmes. Several transnational women’s networks and Brussels-centred
interest group coalitions have also developed around this policy issue. As
Hoskyns (1996) and Warner (1984) point out, feminist groups played an
important catalytic role in the development of EC equal opportunities legislation
during the 1970s. Twenty-five years later, a much wider range and number of
women’s organisations, trade unions, employers associations, local authorities
and firms throughout the Community are routinely involved in the formulation
and implementation of sex equality policies. Regularly consulted by Commission
officials, many of these organisations are also associated with the official
European Women’s Lobby (EWL) in Brussels, the European Network of Women
(ENOW) and the Committee for Women’s Rights in the European Parliament.
Thus, at the very least, the EU has changed the ‘stakeholder’ (Richardson 1996:4)
map in this sector. The EU has thus played a key role in the creation and
legitimation of new policy actors with whom national governments now have to
deal. Moreover, as women have become more sophisticated policy actors, so
their interest and participation in a whole range of policy issues such as health,
the environment, education, citizenship and political representation has increased.
Women’s rights can no longer be contained by policy makers within a single
sector. Just as the environmental movement became a significant cross-sectoral
policy actor (at both the EU and national levels) during the 1980s, so the
women’s movement seems now to be following a similar trajectory (though
some way behind).
Notwithstanding the significance of the above developments, national
governments remain influential in this sector as EC sex equality policies are
affected by and adapted to suit national policies and policy traditions. Even in
dirigiste EU policy areas such as competition policy there is much cheating,
slippage and re-steering by national and regional governments (Richardson 1996:
278–94). Such an implementation gap is particularly apparent with regard to EC
sex equality policy, not least because it is very much an adolescent policy area in
the early stages of development. In addition, as argued below, the juridical basis
for EC invention in this sector is relatively weak and narrow. In consequence,
138 THE EUROPEAN UNION AND WOMEN’S RIGHTS

Commission attempts to expand the scope of EC sex equality policies beyond the
narrow confines of article 119 have invariably been contested by some
‘minimalist’ member states (notably the UK). It is also the case that policy
responses and outcomes in this sector remain, for the moment at least, largely
anchored at the national level. National political traditions and ideology have
been influential ‘filters’ in the sense that they have determined the manner in
which national governments have complied with EC legislation and, by
implication, its impact. More importantly, national governments continue to
enjoy autonomy over policies which fall beyond the legislative scope of article
119 (for example, childcare provision, welfare and taxation policies, education),
but which nevertheless affect the position of women within the labour market. In
short, EU initiatives in this area have been mediated via often strong national
‘policy styles’ and the ‘policy hinterland’ created and shaped by particular policy
traditions and ideas. Forbes (1996), for instance, argues that the ideological
commitment of successive UK Conservative governments since 1979 to the
minimal state has brought about the ‘privatisation of sex equality policy’.
Equally important in this sense is the impact of factors exogenous to the policy
sector at both EU and national levels. There can be little doubt that the impact of
EC equality policies has been limited by recent international developments and
changing, transnational policy fashions. In particular, globalisation and
increasing international competition have persuaded many EU heads of
government and employers of the need for greater labour market flexibility, more
deregulation and lower labour costs. Meanwhile, EU member governments
generally are seeking to reduce welfare expenditure levels, a trend reflected in
recent welfare reforms in France, Germany and the UK, which have reduced the
level of social protection provided to workers and their families by the state. In
short, the social demo-cratic/welfare consensus which prevailed among EC
member states during the 1970s—and which facilitated the introduction of EC
equality legislation—no longer exists. In its place, there now exists among EU
national governments and employers’ lobbies a new policy fashion based upon
market-oriented, socioeconomic policies and minimal state intervention. The
policy-making environment generally throughout the EU has therefore become
less supportive of policies specifically aimed at women which increase
employers’ social costs or which increase state welfare expenditure levels. Thus,
though the issue of women’s rights is now—thanks largely to the EU—on
national agendas, the future development of sex equality policies seems
somewhat uncertain as the ‘window of opportunity’ (Kingdon 1984) seems to be
closing.

The traditional policy frame: gendered national welfare

and labour market policies
The position of women in the labour market—the central concern of EC
sex equality policies—is linked to, and mirrors to a considerable degree, their
 SONIA MAZEY 139

status within national family and welfare regimes. As illustrated below, such
policies have traditionally been based upon a policy ‘frame’ within which
women are assumed to be primarily dependants and mothers rather than
economically independent workers. All public policies are a product of the
relationship between ideas, values, interests and the manner in which issues are
‘framed’. Rein and Schön define framing as a way of selecting, organising,
interpreting and making sense of a complex reality in order to provide guideposts
for knowing, analysing and acting. Thus a frame provides a perpective from
which an amorphous, ill-defined and problematic situation can be made sense of
and acted upon (Rein and Schön 1991:263). Influential in this process are
advocacy coalitions, defined by Sabatier as comprising interest groups,
administrative agencies, journalists, analysts and researchers with an interest in
the policy sector (Sabatier 1988:138). Members of the advocacy coalition have
the potential capacity to create new policy frames and to transpose their ideas
and values from one policy arena to another. This dynamic, conceptual
framework is particularly helpful in understanding how and why the issue of sex
equality, initially raised as a national policy problem in the 1960s, rapidly
became an EC policy issue. This approach also highlights the crucial role played
in this process by influential policy entrepreneurs in transmitting new policy
frames from the national to the supranational arena—and back again to national
policy makers.
As illustrated below, national welfare and labour market policies prior to the
1970s were underpinned by long-established cultural values, traditions and
assumptions. Moreover, they were held in place by an effective constellation of
interests, including governments, employers, (some) trade unions, and even
middle-class women who believed women’s proper role to be that of
homemaker. Thus, policies for working women, such as they were, were an
artefact of much broader societal developments, not the product of ‘women’s’
policy. So, the fact that France formally adopted provisions on equal pay much
earlier (in the 1950s) than other European countries owed much to the wartime
resistance role played by women, the post-war programme of the French Left and
the preamble to the 1946 Constitution, which guaranteed women equal rights ‘in
all domains’ (Hoskyns 1996:55). Major policy change in this sector was,
therefore, dependent upon the emergence of some new and important actors,
developments and issues capable of challenging this dominant, but increasingly
anachronistic and therefore increasingly unstable policy settlement. In short,
policy change was largely a consequence of the emergence in the late 1960s of a
new, feminist ‘advocacy coalition’, which exposed the sexist nature of the
traditional policy frame.
In general, the concept of sex equality played little role in the design of post-war,
state family and welfare policies. Indeed, such policies were based, albeit to
varying degrees, upon the assumption of a male breadwinner and a dependent
wife and children. The gendered division of labour which characterised post-war
European welfare regimes has deep historical roots. As Lewis points out, at the
140 THE EUROPEAN UNION AND WOMEN’S RIGHTS

turn of the century ‘social investigators, philanthropists and policy makers

shared the view that the traditional division of labour between adult family
members was crucial to social stability and personal welfare. Thus, ‘the concern
was not so much to maximize the welfare of working women as mothers, but to
minimize their labour market participation, a position that was shared by male
and female trade unionists and by middle-class women social reformers’ (Lewis
1993:16). Influential public policy instruments used to achieve this objective
were taxation and welfare regimes, which with few exceptions penalised married,
working women via high marginal tax rates and low benefits. As such, these
policies constituted a major barrier to women seeking to enter the labour market.
Inadequate publicly funded childcare provision constituted an equally important
obstacle to working mothers. Since the 1970s, some modification of welfare and
labour market policies, often in response to pressure from EC law, has improved
the situation for working women somewhat (for example, the introduction in the
UK in the 1980s of individual taxation for married women). However, as recent
research undertaken by the European Network of Experts on the Situation of
Women in the Labour Market confirmed ‘welfare state reform in Europe still
does not include a rethinking of the male breadwinner systems on which many
countries base their welfare system’ (European Commission 1996:8)
In Britain, for instance, under the post-war Beveridge settlement, women were
treated as dependants for the purposes of social security entitlement. Until the
mid-1970s, married women were even offered the ‘married women’s option’ of
paying lower national insurance contributions in return for a lower entitlement.
British governments have also provided little support for working mothers:
maternity rights granted in 1975 were actually eroded in the 1980s and the
number of publicly funded childcare places was reduced.3 In similar vein, the
German tax system continues to be heavily weighted in favour of married, single-
earner couples, while German family law has served to underpin the ideal of
paternal authority. Indeed, until 1977, a (West) German husband was legally
empowered to prevent his wife from taking paid employment if he felt this to be
detrimental to family life (Ostner 1993). However, adherence to the male
breadwinner model has been strongest and most long-lived in Ireland where a
marriage bar prevented women from working in the civil service until 1977 and
where the tax system subjected married working women to high marginal rates
and low tax-free allowances. In addition, until the mid 1980s (and pressure from
EC law), married women received lower rates and shorter lengths of benefit and
were not eligible for unemployment benefit (Lewis 1993:17). At the other end of
the spectrum, the Nordic countries may be described as weak male breadwinner
states, since here the welfare state has provided for women as workers as well as
dependants. In Sweden, for instance, government policy in the early 1970s
actively encouraged the entry of women to the labour market and the creation of
a dual breadwinner family norm via the introduction of separate taxation, the
expansion of publicly funded childcare provision and the introduction of a
generous parental leave policy. In France also, women have historically been
 SONIA MAZEY 141

recognised as paid workers. There were no early-twentieth-century attempts to

push women out of the labour market and paid maternity leave was introduced as
early as 1913. Since the 1970s, governments have provided both generous family
allowances to those families with a single earner and a high level of publicly
funded childcare. Nevertheless, as Hantrais (1993) argues, the attitude of the
French state towards women’s welfare has been ambivalent, resulting in
contradictory policies, some of which treat women as workers while others view
women as dependants and mothers. Thus, as in Germany, until 1970, French
family law permitted the husband to decide whether his wife should work.
Moreover, both the French tax and social security systems (which are household
based) continue to penalise married women workers. Thus, European state
welfare and labour market policies towards women vary between EU countries,
ranging across a spectrum from so-called strong male breadwinner states
(Ireland, UK, Germany) to weak male breadwinner states (Nordic countries).
The former model (which is consistent with the traditional policy frame
identified above) defines wives primarily as dependants and mothers and
provides few incentives for married women or mothers to work. By contrast, the
latter perspective, which fits more closely with the aspirations of women’s
groups, expects all adults to be employed and provides incentives through
individualised taxation and benefits and through assistance with childcare. In
reality, most contemporary EU welfare and labour market regimes exhibit
elements of both strong and weak male breadwinner states. However, as the
recent report by the European Network of Experts on the Situation of Women in
the Labour Market noted, the traditional policy frame continues to exert
considerable influence in most EU member states. Moreover, as the report
concludes:

the direction of change [in welfare policies] is towards more means-

testing, fewer individual rights and more limited support for parents in
their attempts to reconcile work and family life…. The progressive
integration of women in the wage economy may have highlighted the
inequalities associated with the male breadwinner model of organisation,
but the pattern of female integration into the wage economy over recent
years has continued to be shaped by the gender division of labour in the
household.
(European Commission 1996:6)

Thus, it would appear that national policy traditions and styles have proved quite
resilient to the attempts by women’s groups and EC policy makers over the past
twenty-five years to reframe welfare and labour market policies in order to
address some of the key sources of sex inequality within the labour market.
142 THE EUROPEAN UNION AND WOMEN’S RIGHTS

Achieving sex equality in the workplace: the importance of

the Brussels policy arena
During the 1960s, the political salience of feminism increased as women’s
movements throughout western Europe became actively involved in
national campaigns for sex equality in all spheres of public and private life. The
demand for sex equality within the workplace—notably the demand for abolition
of wage differentials between men and women doing the same job—was central
to this campaign. Generally speaking, however, national policy makers remained
unresponsive to women’s material demands. In part, this was due to the nascent
and internally divided nature of the European feminist movement at this time,
which undermined its political effectiveness. However, lack of policy change
was also attributable in part to the overwhelming weight at that time within
national policy-making arenas of traditional beliefs and values regarding the
relationship between women and the labour market. Powerful socio-economic
interest groups including male-dominated trade unions and employers were also
reluctant to revise their view of the labour-market value of women employees.
However, as Baumgarter and Jones argue, it is often the case that in a pluralist
political system ‘there remain other institutional venues that can serve as avenues
of appeal for the disaffected’ (Baumgarter and Jones 1991:1,045). As they go on
to explain:

Each venue carries with it a decisional bias, because both participants and
decision-making routines differ. When the venue of a public policy
changes, as often occurs over time, those who previously dominated the
policy process may find themselves in the minority, and erstwhile losers
may be transformed into winners.
(Baumgartner and Jones 1991:1,047)

In short, both the institutional structures within which policies are made and the
individual strategies of policy entrepreneurs are important in determining policy
outcomes.
For European feminists, the EC constituted just such an alternative venue, not
least because article 119 of the Treaty of Rome already provided (in theory) for
equal pay between men and women. In a strategic move, women’s groups began
in the early 1970s to invoke article 119 of the Rome Treaty in national equal pay
campaigns and to focus their lobbying activities upon EC policy makers.
Significantly, article 119 had been included in the Treaty primarily in response to
French concerns over the possible need to harmonise social costs to employers
within the common market arising from national variations in differential wage
rates for men and women. No attempt had been made by national governments to
apply article 119 once the Treaty came into force. However, as Hoskyns (1996)
observes, article 119 was rescued from oblivion by two kinds of political
activism generated by Belgian women which helped to place the new ‘feminist’
 SONIA MAZEY 143

policy frame on the EC agenda: industrial action taken by women employees of a

munitions factory, who sought to use article 119 in support of their claim for
equal pay; and the professional activities of the advocate and academic lawyer,
Eliane Vogel-Polsky who argued for a strong definition of article 119 in the
courts. Indeed, it was Vogel-Polsky who brought the Defrenne test case against
the Belgian state airline, Sabena which resulted in the ECJ’s landmark ruling
confirming the direct applica-bility of article 119.
Article 119 undoubtedly provided EC policy makers and the women’s lobby
with a necessary juridical hook on which to hang their demands for further EC
sex equality legislation. However, other factors also helped to make the EC a
more favourable venue for women’s groups. First, EC policy makers,
unencumbered by pre-existing policies and vested interests in this sector, were
generally more receptive to the new policy frame which underpinned women’s
policy demands. Secondly, the pluralist and ‘open’ nature of the EC decision-
making process (in contrast to the highly centralised and ‘closed’ nature of many
national political systems) provided the women’s lobby with multiple ‘acccess
points’ to decision makers. Thus, as Vallance and Davies (1986) demonstrated,
links between women’s groups and women MEPs, established during the 1960s
proved extremely useful in placing women’s rights on the EC’s policy agenda.
Thirdly, as members of a new political system, EC Commission officials,
European judges and MEPs were in the early 1970s generally committed to
consolidating and extending the policies and legal authority of the EC. Thus,
since its inception, the European Commission has actively cultivated close
relations with the relevant policy commuity in an attempt to create
‘constitutency’ support for EC intervention in a particular policy sector (Mazey
1992). This is a familiar pattern of EC policy development which we and others
have have observed in a number of policy sectors (Mazey and Richardson 1995;
1996; Cram 1993; Peters 1991). As argued elsewhere (Mazey 1996), the
development of EC sex equality policy constitutes yet another example of a
policy area developing critical mass via skilful bureaucratic management of key
interests by the Commission. Fourthly, Hoskyns suggests that the general mood
within the EC at this time was socially progressive. Thus she cites one of the
ECJ judges involved in the Defrenne case, who referring to the activities of the
Court said ‘this was not a Court engaged in conservatism and reaction—the
mood was progressive…. The events of 1968 did not disturb us very much, we
felt we were already acting in the spirit of 1968' (Hoskyns 1996:71). Moreover,
on the specific issue of equal pay, several EC policy makers were influenced by
the fact that both the 1951 International Labour Organisation (ILO) Convention
(No. 100) and the UN’s Universal Declaration of Human Rights contained a
commitment to the principle of equal pay between men and women. Finally, as
Meehan (1990) has argued, during the early 1970s EC political leaders were
anxious to enhance the popular legitimacy of the Community and so decided to
strengthen EC social policy. Following the 1972 Paris Summit the European
Commission was asked by EC heads of government to draw up a Social Action
144 THE EUROPEAN UNION AND WOMEN’S RIGHTS

Programme. Adopted by the Council of Ministers in 1974, this programme listed

as a priority ‘the undertaking of action to achieve equality between men and
women as regards access to employment and vocational training and
advancement, and as regards working conditions including pay’. Thus, at the EC
level, women encountered a somewhat more favourable policy-making venue to
that which prevailed in most national capitals.

EC action designed to eliminate sex discrimination: policy

and institutional developments
In contrast to other policy sectors, the Treaty basis for EC competence with
regard to sex equality is relatively weak. This fact has necessarily influenced the
type of EC policy instrument used in this sector. Commission proposals for EC
legislation in this sector have been based upon either article 119 or, as in the case
of the 1992 maternity Directive, upon article 118 (Health and Safety at Work).
Commission attempts to introduce legislation on related issues which affect the
labour market position of women, notably childcare provision, sexual
harassment in the workplace and parental leave, have been challenged in the
Council of Ministers on the grounds that they lie beyond the narrow confines of
article 119. Checked, the Commission has nevertheless sought to extend the
policy debate to such issues by means of ‘soft’, legally non-binding policy
instruments, including recommendations and positive action programmes.
Though not legally binding upon member states, there is some evidence that
these initatives, combined with other social and political changes, have
contributed to greater awareness of sex discrimination on the part of employers,
trade unions and the public generally. They have also enabled the Commission to
broaden the policy agenda in this sector.

The EC equality Directives

Article 119 of the EC founding Treaties states that:

each Member State shall during the first stage ensure and subsequently
maintain the principle that men and women should receive equal pay for
equal work. For the purpose of this article ‘pay’ means the ordinary basic
or minimum wage or salary and any other consideration whether in cash or
in kind, which the worker receives, directly or indirectly, in respect of his
employment from his employer.

This article constitutes the only legal basis for EC women’s policy. In short, it is
the hook upon which all subsequent EC legislation in this sector hangs. It came
up for interpretation before the European Court of Justice for the first time in
1971 in Defrenne vs.the Belgian State. The case was a complex one which lasted
five years and involved three separate appeals relating to differential retirement
 SONIA MAZEY 145

ages, pension entitlements and pay for male and female cabin staff employed by
the Belgian state airline, Sabena. The Court ruled that article 119 did not extend
to pension schemes or retirement ages. On the question of equal pay, however,
the Court’s 1976 ruling in the Defrenne case was a landmark in the development
of Community law on equal pay. Crucially, the Court ruled that article 119 had
‘direct effect’ in member states; women could rely upon it in national courts
irrespective of whether or not national legislation existed on equal pay. The
ruling came as a shock to governments throughout the EC who realised they
could no longer ignore article 119 (Landau 1985).
The Defrenne ruling gave fresh impetus to women’s rights campaigners
throughout the Community and brought the issues of equal pay and equal
treatment firmly to the forefront of the EC’s political agenda. The way in which
the policy issue was processed within the Commission highlights the policy-
making importance of different institutional structures and policy-making arenas.
Significantly, within the Commission, debate extended beyond the problem of
achieving proceduralité equality between women and men within the workplace
to include other aspects of the policy hinterland which adversely affected women’s
position within the labour market, namely tax and social security measures,
childcare facilities, and education and training opportunities. Furthermore, key
individuals involved in this analysis of the policy problem were women who
were prominent members of the ‘feminist’ advocacy coalition committed to
analysing the problem of women’s issues within a new, wider policy frame.
These included the French sociologist, Evelyne Sullerot, author of the influential
analysis of women’s importance in the labour market, Histoire et sociologie du
travail féminin, and Jacqueline Nonon, a French Commission official in DG V
who was given responsibility for preparing the equality Directives. Having
decided to create an ad hoc working group on women’s work, Nonon
deliberately chose not to consult established ‘independent experts’ or civil
servants from appropriate departments, but sought instead to nominate women
with a genuine interest in the issues. Of the eighteen national representatives
appointed to the group, only five were men and several women appointed were
actively involved in equal pay negotiations. Trade unions active at the EC level
who argued that the group should have been set up as a sub-group of the
Standing Committee on Employment were also by-passed. Though all members
of the group stressed the need for ‘positive’ intervention, i.e. policies affecting
women’s rights beyond the workplace, to help women reconcile domestic
responsibilities with employment aspirations, Nonon’s strategy ‘was to expand
policy outwards from equal pay and “stretch the elastic as far as it would
go”’(Hoskyns 1996:102).
This strategy is reflected in the six EC Directives adopted between 1975 and
1992 and in the incremental development of this policy sector at the EU level
(Mazey 1996). The 1975 Equal Pay Directive (75/117) introduced the principle
of equal pay between men and women for ‘work of equal value’, thereby
confirming the provisions of article 119. The 1976 Equal Treatment Directive
146 THE EUROPEAN UNION AND WOMEN’S RIGHTS

provided for equal treatment of women and men as regards access to employment,
vocational training, promotion and working conditions. The 1978 Directive (79/
7) concerned the principle of equal treatment for men and women in matters of
statutory social security benefits (excluding retirement ages and survivors’
benefits). This was followed by two further equality Directives: the 1986
Directive (86/378) on equal treatment in occupational social security schemes
and the 1986 Directive on equal treatment between men and women engaged in
an activity including agriculture in a self-employed capacity, and on protection
of self-employed women during pregnancy and motherhood. As Cunningham
(1992) has argued, these measures were based upon a narrow definition of social
policy as primarily concerned with economic concerns. They were also based
upon a liberal interpretation of equality: the emphasis was upon removing
barriers and on non-discrimination, rather than upon the development of
‘positive’ or special policies for women, which might entail a redistribution of
opportunities from advantaged groups to disadvantaged groups. However, the
1992 Directive on the protection of pregnant women from exposure to hazardous
substances in the workplace and on rights to maternity leave was arguably the
first Directive based upon an acceptance of the need to treat women differently to
men in order to promote a more equal outcome in terms of employment
opportunities.

EC positive action programmes for women

The above Directives have been complemented since the early 1980s by a series
of pluriannual, EC ‘positive action programmes’ on behalf of women, intended
to increase the impact of EC equality laws, raise public awareness of women’s
issues and promote equal opportunities for women and men beyond the
workplace. Specific initiatives funded have included in-service training for
women, women’s co-operatives, ‘confidence-building’ courses for women, the
appointment of equal opportunities counsellors in companies and local
authorities, creche facilities, and information campaigns on EC equality. More
recent programmes have sought to change the image of women portrayed by the
media, encourage a more equal division of labour within the household, and
improve the representation of women in all spheres of decision making in
political, professional and public arenas (Commission of the European
Communities: 1991b). Two additional programmes were introduced by DG V
for women during the 1980s, which were influential in the creation of new local
and transnational women’s networks: the Local Employment Initiatives for
Women (LEIs); and the Community Programme for Women’s Vocational
Training Schemes (IRIS). The LEIs programme provides grants for women
starting new businesses. The IRIS network, which has now ended, sought to
increase the provision of high quality training for women by means of
transnational and national partnerships and sponsorships. The programme was
co-ordinated by the Centre for Research on European Women (GREW), which
 SONIA MAZEY 147

works under the direction of the Commission (Commission of the European

Communities 1991a). These initiatives were followed by the creation in 1990 of
a new Community Initiative Programme, New Opportunities for Women (NOW).
Introduced as part of the reformed Structural Funds, the NOW programme was
designed to assist the integration of women into the labour market. Unlike the
Directives, these programmes, funded partially by the European Social Fund are
not legally binding and their impact at the national level has varied considerably
between member states depending upon the availability of co-financing.
Nevertheless, their existence has enabled the European Commission to extend
the policy agenda in this sector to issues such as housework, childcare, political
representation, women’s health, sexual harassment, all of which lie beyond the
juricial scope of article 119. As the former UK Commissioner, Ivor Richards, on
leaving the Commission in 1985 argued:

without the Action programme to use as a lever on the Council, the

Commission would have had to justify every step it tried to take in this
field [Equality Policy]. We can wave it at governments to justify work in
areas where member states might not wish us to be too active.
(CREW Report January 1985 V.1. Quoted in Rutherford 1989, p. 303)

Institutional developments at the EU level

The past twenty years has also witnessed the gradual development of a number
of institutions, agencies and networks at the EU level associated with the
formulation and implementation of EC equality policies. This institutionalisation
of the policy sector has been important in helping to keep women’s issues on
European and national policy agendas, thereby maintaining the momentum for
further policy change. Women MEPs have, since the 1970s, constituted an
important part of the women’s lobby at the European level and, since 1981, there
has been a standing committee for women’s rights within the European
Parliament. Within the Commission, some twenty-five full-time officials are
employed in the Equal Opportunities Unit, set up within DG V (Employment,
Industrial Relations and Social Affairs) in 1976. This Unit works in close
collaboration with the Advisory Committee on Equal Opprtunities, established
by the Commission in December 1981. This Committee, which meets twice a
year, to review policy developments and future initiatives, brings together
representatives from the official equal opportunities bodies in the EC member
states. The European Women’s Lobby (EWL), employers and trade union
organisations also have observer status on this Committee. In the European
Parliament, women’s interests are formally represented in the Standing
Committee on Women’s Rights.
As an active policy entrepreneur, the Commission has also played a crucial
role in promoting the development of EU and transnational policy networks in
this sector. For instance, there are now nine European Networks of Experts, each
148 THE EUROPEAN UNION AND WOMEN’S RIGHTS

of which comprises between twelve and twenty-four independent experts (one or

two from each member state) who monitor the impact of existing legislation and/
or collect data which might be used to justify further Community action. The
most well-established networks include the Expert Network (of lawyers) on the
Application of the Equality Directives, set up in 1982, and the Network (of
economists) on the Position of Women in the Labour Market, established in
1983. Four additional networks were created in 1986: the Network for Positive
Action in Enterprises; the Steering Committee for Equal Opportunities in
Broadcasting; the Network on Childcare and other Measures to Reconcile Work
and Family Responsibilities; and the Working party on Equal Opportunities in
Education. These networks constitute influential ‘epistemic communities’ (Haas
1992), a term invoked by Haas to describe transnational networks of scientific
and professional experts who are influential in the policy-making process. In this
particular sector, they have played a significant monitoring role. They have also
drawn into the EC policy-making process other national, authoritative experts,
academics and interested groups (for example in Commission funded seminars
and workshops), thereby generating new transnational ‘epistemic communities’
asociated with EC equality policy.
The Commission has also encouraged the growth of a transnational European
women’s lobby to support and legitimise Commission initiatives in this sector. As
part of this mobilisation process, the Commission established the Women’s
Information Service in 1976 to publicise EC equality policies in the member
states and to organise international conferences for women. The European
Women’s Lobby (EWL), set up in 1990, is also funded by the European
Commission. It co-ordinates the lobbying activites of some forty-eight national
and European non-governmental organisations throughout the EC, whose total
membership exceeds 100 million. As the ‘official’ women’s lobby in Brussels,
the EWL is regularly consulted by the Commission on EC legislative proposals
affecting women and on wider EU developments such as the 1996 IGC. As Bew
and Meehan (1994) note, as a transnational network, the EWL has also played an
important role in communicating downwards information about EU policy
initiatives. However, compared to business and industrial networks, the policy
community associated with EC equality policies is fragile. In part, this fragility is
due to the relative immaturity of the policy sector. However, it is also
attributable to the nature of the women’s lobby. In particular, the political and
cultural diversity of the women’s lobby has sometimes resulted in internal
divisions within the lobby over strategy and/or policy objectives (e.g. over issues
such as abortion). In addition, women’s groups, especially at the national level,
tend to be loosely organised and poorly resourced. Not surprisingly, such groups
find it difficult to be effective EU lobbyists (Bretherton and Sperling 1996).
Nevertheless, there now exists at the EU level an established policy community
and politico-administrative framework for policy making in this sector. Though
based around a relatively small Unit within the Commission, this organisational
 SONIA MAZEY 149

framework may yet (as occurred in the case of EC environmental policy),

become more prominent within the EC policy-making process.

Forcing national policy change: the importance of national

policy styles and policy hinterlands.

The legislative impact of the EC equality directives

Adoption of the above Directives prompted a flurry of implementing legislation
in EC member states. The precise way in which the Directives were incorporated
in each country varied according to prevailing social norms, traditions of
labour market regulation and politico-administrative arrangements. In Germany,
for instance, civil servants initially decided that the equality provisions in the
Constitution and the right of appeal to the Federal Constitutional Court provided
sufficient protection for women and no further action was needed. Only in 1980
was a ‘compliance law’ introduced specifically to ban sex-discrimination in
recruitment, promotion and dismissal, a right to equal pay for the same or
equivalent work and a strong ‘recommendation’ against sex-specific language in
job advertisements was added to the Civil Code (Hoskyns 1996:119).
Interestingly, the UK was not a member of the Community when it introduced its
Equal Pay Act in 1970 or when the possiblity of a Sex Discrimination Act was
first mooted. However, as Meehan and Collins (1996) suggest, the very fact that
the UK government aspired to EC membership at this time—and that it had been
warned that it would fail the test on article 119—may well have been influential
in forcing the UK to be a pioneer in this sector. Member states were also obliged
to establish official equal opportunities agencies to monitor the implementation
of the Directives and assist complainants. In Ireland, the Employment Equality
Agency (EEA) was created to monitor legislation and policies from the
perspective of women. Meanwhile, in Germany the working group on women’s
issues of the Federal Ministry for Youth, the Family and Health was extended
and given responsibility for the dissemination of information on women’s
projects. In the UK, the Equal Opportunities Commission was established,
charged with the responsibility of working towards the elimination of sex
discrimination, promoting equality of opportunity between men and women and
monitoring equality legislation. Thus, both ECJ rulings and legislative initiatives
undertaken by the European Commission were influential in forcing policy
change at the national level.
Undoubtedly, the Directives have been crucially important in prompting
national policy change in this sector, demonstrating the capacity of exogenous
developments to force national policy change. Forbes (1996) thus cites Lord
Lester’s view that in the case of the UK ‘Community law has enabled the EOC
and individual women and men to win in the courts what we in the mid-1970s
could not win in Whitehall and Westminster’ (Lord Lester of Herne Hill 1994:
150 THE EUROPEAN UNION AND WOMEN’S RIGHTS

231). The European Court of Justice over the years has been a powerful
institutional catalyst of change. Landmark ECJ rulings have been important both
in clarifying and—in most cases—extending the scope of the Directives. Cases
such as Worringham and Humphreys v Lloyds Bank (1981), Burton v British
Railways Board (1982), and Barber v Guardian Royal Exchange (1990 and
1993), for instance, have confirmed that the provisions of article 119 and the
Equal Treatment Directive apply to pension and redundancy benefits
(irrespective of whether they are paid under a contract of employment, under
statute, or on a voluntary basis), private contracted-out and company pension
schemes (Honeyball and Shaw 1991; Financial Times 21 December 1993). The
rights of part-time workers (who are predominantly female) have also been
strengthened (albeit at a rather uneven and slow pace) by Court rulings based
upon EC equality Directives. In September 1994, for instance, a European Court
ruling (in the case Vroege v NICV and another) on sex equality in company
pensions stated that employers must admit part-time workers to pensions
schemes if barring them constitutes an indirect form of sex discrimination. The
Court also pointed out that this principle had, in fact, been established in an
earlier ruling (Jenkins v Kingsgate) in 1976. In view of this fact, the Court ruled
that female, part-time workers hitherto excluded from company pension schemes
may claim retrospective benefits in respect of employment dated back to 1976. A
UK government actuary’s report estimated that backdated pension claims from
female part-timers could cost UK companies and their pension funds £7 million.
In the same month, the UK House of Lords ruled that the application of different
qualifying conditions for part-timers compared with full-timers in the UK unfair
dismissal and redundancy payments legislation contravened EU equal pay and
equal treatment laws, because the hours threshold had a disproportionately
adverse effect on women (Department of Employment 1994). Overtly sexist job
classification schemes and collective agreements have also been eradicated as a
result of the Directives. More generally, in legislative terms, the development of
a body of EC equality case law has resulted in the permeation of domestic
legislation and company policies with equal opportunities clauses.

The importance of the policy hinterland

However, application of the Directives has also highlighted their limitations.
Leaving aside the problems of non-implementation and non-compliance with EU
equality Directives, as Hoskyns and Luckhaus (1989) have argued, the flexibility
enjoyed by member states as to how they implement the Equality Directives may
limit their ‘positive’ impact. For example, as Meehan and Collins (1996) argue:

UK governments have been ungenerous in the way in which they comply

with new requirements stemming from the EC; for example, responding
slowly to some key rulings (or ignoring them until forced to do otherwise),
being cautious about income taxation, making it more difficult to claim
 SONIA MAZEY 151

disability allowances, fighting the idea of a Directive for pregnant women

workers, and equalising retirement ages upwards instead of downwards.
(Meehan and Collins 1996:29)

National policy styles beget a dense ‘hinterland’ of detailed programmes,

policies and institutions and it takes a very long time for EU institutions to
permeate and change this hinterland significantly. Meanwhile, national political
and cultural traditions, hegemonic values and the characteristics of the politico-
administrative system may either reinforce or undermine EC sex equality
policies. As Forbes (1996) argues, the neo-liberal, minimal state philosophy of
successive Conservative governments has effectively limited the impact of EC
policies within the UK. A major policy consequence of this philosophy has been
the extension of flexible and part-time working, promoted by the UK
government as ‘an aid to equality of opportunity’ (Forbes 1996:150). However,
as Forbes points out, this trend has, in reality, been accompanied by a reduction
in the level of labour market protection for (predominantly women) part-time and
low-paid workers (as reflected, for example in the abolition of the wages
councils). Meanwhile, EC attempts to increase access to full-time benefits,
maternity and childcare provision are all characterised by the UK government ‘as
socially (even socialist) inspired policies which would detrimentally skew the
operation of the labour market and produce results harmful to society’s and
women’s interests’ (Forbes 1996:150). The philosophical commitment of recent
Conservative governments to a minimal state is, Forbes argues, also detrimental
to sex equality since it allows the government to avoid the gender implications of
policies which lie beyond the narrow confines of sex discrimination laws. Thus,
policy issues relating to the family, education, welfare and poverty can be left to
the market or the voluntary sector. The ‘Opportunity 2000’ campaign, launched
by the Prime Minister, John Major, in 1991 provides a good illustration of this
non-interventionist, market-oriented, policy style. Ostensibly, the central
objective of this campaign was to increase the quantity and quality of women’
participation in the labour market. Significantly, however, it was not a
government initiative, but a self-financing campaign set up by an organisation
called Business in the Community, operating under the Charities Act. Member
firms (which numbered 305 in December 1996 (The Guardian 2 December
1996) pay an annual fee for advisory information and network services on issues
relating to women’s employment. According to the Director of Opportunity 2000,
Liz Bargh, the campaign is driven by the needs of business: the aim is to help
employers to realise the potential economic value of women employees (Forbes
1996). Though women may benefit from this campaign, this is arguably a
secondary consideration to the primary objective of assisting business interests.
Thus, in the UK, the gendered analysis of public policy advocated by women
which has gradually emerged since the late 1960s has been seriously challenged
since the late 1970s by a national policy frame based upon different and
opposing values and objectives. Moreover, on those occasions when the UK
152 THE EUROPEAN UNION AND WOMEN’S RIGHTS

government has sought to shape the policy agenda on ‘women’s issues’ such as
the family, abortion and chidcare, it has directly challenged the values and policy
objectives of the feminist policy frame, emphasising instead the importance of
women as mothers and the societal importance of the traditional, nuclear family.
In contrast, in France during the early 1980s, the situation was quite different.
Here, the election of a Socialist government in May 1981, backed by a socially
progressive coalition of interests, provided a far more favourable policy
hinterland for sex equality policies than existed in the UK at this time. The
ideological commitment of the Mitterrand administration to Keynesianism,
democratisation and redistributive social justice provided a sympathetic ‘policy
frame’ for sex equality policies. In terms of specific actions, the new government
appointed a Minister for Women’s Rights and in 1983 introduced ‘the most
significant single piece of legislation on women’s rights with respect to equality
at work’ (Hantrais 1993:123). The Loi Roudy (named after the Minister for
Women’s Rights, Yvette Roudy) legally obliged all firms to produce an annual
report on the situation of men and women employees in order to ensure
compliance with equal opportunity laws. Companies were also expected to set
quantitative and qualitative targets for recruitment, training and promotion of
female workers. In those cases where such targets were not met, firms could
establish positive action programmes for women (funded partly by the
government) or operate quotas for promotion to positions where women were
under-represented (Hantrais 1993:123). More generally, during the period of the
first French Socialist administration (1981–4), women’s interests were
incorporated into policy debates on issues such as political representation,
health, poverty, citizenship and welfare. Nevertheless, France provides a good
illustration of how quickly such ‘windows of opportunity’ (Kingdon 1994) can
disappear. In 1986, Yvette Roudy’s Ministry was downgraded to a Délégation à
la Condition féminine by the newly elected, right-wing government and was not
reinstated by the Socialists when they were re-elected in 1988. Instead, they
appointed a Secrétaire d’Etat chargée des Droits des femmes. Edith Cresson’s
1991 (centre-left) government included a Ministre délégué aux Droits des
femmes responsible to the Minister for Labour Employment and Vocational
Training. As Hantrais observes, the choice of title reflects the policy orientation
of the government in power. Whereas the left has tended to be more concerned
historically with women’s rights, particularly as workers, the right has tended to
emphasise women’s status as mothers. One important consequence of this
ambivalent attitude towards women has been generous family allowances,
maternity and parental leave arrangements and publicly funded childcare
provision. In contrast to UK governments, French governments of both left and
right—in keeping with the French policy style—have been strongly
interventionist in this policy sector.
 SONIA MAZEY 153

The changing international and European context: a rival

policy frame emerges
Implementation of EC sex equality policy has also been affected by international
and European-level economic and political developments. By the early 1980s,
the fragile combination of circumstances which had facilitated the introduction
of the early EC equality Directives was beginning to disappear. During the
1980s, national economies throughout the EC suffered prolonged economic
recession and high unemployment levels. Increasingly, at national and EC levels
debate has therefore centred upon the need to restore economic competitiveness
in order that European industries might be able to compete with Japan and the
USA. Central to this debate within the EU during the 1980s was the disagreement
over the ‘correct’ labour market and social policies to be pursued. On the one
hand, there were those, such as the UK government, employers and business
associations, convinced of the need to deregulate and cut labour market costs,
irrespective of the social consequences. Meanwhile, others including the former
Commission President Jacques Delors, the French and German governments,
trade unions, acknowledged the need to improve competitiveness and restructure
European industry, but wished to do this by pursuing ‘a European middle way’,
which would preserve a minimum set of rights for workers. Over time, the
deregulators have prevailed, both at the national levels (notably in the UK, but
more recently in France and Germany) and at the EU level where,
notwithstanding the provisions of the 1989 Social Charter, market liberalisation
and deregulation have acquired the status of a new orthodoxy. Moreover, this
policy trend has been reinforced by the domestic policy consequences of another
major EU policy commitment, namely Economic and Monetary Union (EMU).
In order to meet the convergence criteria for EMU membership, national
governments throughout the EU have been forced to reduce public expenditure
levels and pursue deflationary economic policies. Both developments have
resulted in welfare cuts and low wages.
Women workers in particular, have been adversely affected by these policy
developments. Though female labour market market participation rates have
increased in recent years, women tend to be concentrated in low-paid, part-time
and casual jobs. As such, they have been particularly affected by labour market
deregulation and welfare cuts (European Commission 1996). Moreover, against
this backdrop of economic liberalisation, there is little support within the
Council of Ministers for further EC equality legislation, unless such legislation is
compatible with the needs of the internal market. This may mean that the window
of opportunity for EC sex equality policy has all but closed. Certainly, if they are
to continue to be influential EU lobbyists, women’s groups (and others such as
environmentalists and trade unionists) must now adapt their strategy to
accommodate the emergence of a new European policy frame which emphasises
the needs of a powerful advocacy coalition within Europe, namely that of
154 THE EUROPEAN UNION AND WOMEN’S RIGHTS

business and industry. Given the relative immaturity and internal diversity of the
European women’s lobby, this may prove a difficult task.

Conclusion: EC equality policies at a critical juncture

The foregoing analysis of EC equality policy highlights the capacity of European
institutions to force policy change at the national level. It also demonstrates the
importance of the EU as an alternative policy arena or venue for interests such as
women and environmentalists, who find themselves marginalised at the national
level, but who are able to use the EC policy-making process to bring recalcitrant
national governments into line. Despite the tenuous Treaty basis for EC sex
equality policy, the past twenty years have witnessed the gradual expansion of
EU competence in this aspect of social policy. The ECJ and the European
Commission, backed by women’s groups, have both played a central role in this
process. Since the late 1970s, the Commission has also fostered the development
of transnational women’s networks and set up European networks of ‘experts’ to
monitor and advise on various aspects of equality policy, thereby keeping the
issue of women’s rights on national agendas.
However, further Europeanisation of this policy area in the near future is likely
to be incremental in nature. Given the precarious legal basis for Community
action in this sector, the introduction of further legislation will almost
certainly require the support of all EU member states. Such support is unlikely to
be forthcoming. The changed economic and political climate since the late 1970s
has facilitated the emergence of an increasingly dominant ‘competitiveness’
policy frame (Mazey and Richardson 1997), which has curbed the enthusiasm of
EU member states for interventionist, anti-discriminatory policies. Moreover, it
would, for instance, be foolish to underestimate the resilience of traditional
national policy styles in this sector: though gendered public policy analysis is no
longer stuck in a ghetto, it is far from being routine practice among national
policy makers. Existing policies are also underpinned by powerful interests and
established socio-cultural traditions which are likely to prove resistant to change
and which are likely to endorse the need for competitiveness. Thus, it is unlikely
that EC policy makers will be able to penetrate the dense policy hinterland,
which lies beyond the legislative reach of the EU, but which affects the rights of
working women.
Worsening economic conditions and the resurgence of neoliberalism in
several EU member states has also prompted widespread support for economic
deregulation within the Union. The further development of EC equality policy
raises fundamental constitutional questions of sovereignty inside the
Community. As Streek has argued, the supranational European state governing
the internal market is likely to resemble a ‘pre-New Deal liberal state’
characterised by a high level of civil rights and a low level of social rights
(Streek 1992:113). Business support for the SEM was premised upon the
assumption that the future European political economy was to be ‘less subject to
 SONIA MAZEY 155

institutional regulation—national or supranational—than it would have been in

the ‘harmonisation'-minded and social democratic 1970s’ (Streek 1992:110).
Anti-discrimination laws constitute a form of state intervention interrupting the
functioning of the market. The effectiveness of EC equality policies in the future
is therefore likely to depend upon whether removal of discrimination is
functional to the market, for example, by redressing irrational under-utilisation
of women’s skills. The UK group, Employers for Childcare, has for this reason
supported EC proposals for a Childcare Directive.
Commission officials within the Equal Opportunities Unit acknowledge that
present conditions make the introduction of new equality legislation unlikely.
The emphasis at present is therefore upon increasing the effectiveness of existing
Directives and ‘mainstreaming’. This involves the replacement of specific inita-
tives for women by the integration of equal opportunities policies into other EC
economic and structural policies on the grounds that equal opportunities, just like
environmental policy, is no longer a marginal question, but central to all aspects
of EC policy making. The current debate within the Commission on flexible
working time is cited by officials as a good illustration of how equality issues
such as family responsibilities might be incorporated into general EC policies.
The logic of this argument is appealing: such a development would help to
ensure that women’s rights permeate policy making in all sectors at the EU and,
by implication, national level. However, in order to be successful, this strategy will
also require the support of policy makers in other DGs within the Commission.
As Hoskyns (1996:151) reports, such support has not always been forthcoming
in the past from officials. Thus, EC sex equality policy seems to have reached a
critical juncture. Important material benefits have been achieved for women in
the workplace and a much wider debate on women’s rights has been forced onto
national political agendas by EC action in this sector. However, the obstacles to
further development of this policy sector are now daunting.

Notes

1 The empirical material on EU sex equality policies used in this chapter is drawn
from an earlier publication: Mazey 1996.
2 The author would like to thank Jeremy Richardson for his helpful comments on an
earlier draft of this chapter.
3 Publicly funded childcare for children aged 0–3 years, percentage of age group
covered: UK (age group 0–5 years): 2 per cent; Germany: 2 per cent (W), 50 per
cent (E); France: 23 per cent; Italy: 6 per cent; Denmark: 48 per cent; Sweden: 33
per cent (Bulletin on women and Employment in the EU, No. 9, October 1996, p. 8.
156 THE EUROPEAN UNION AND WOMEN’S RIGHTS

References

Baumgartner, F. and Jones, B. (1991) ‘Agenda Dynamics and Policy Subsystems’, The
Journal of Politics, vol. 53 (4) 1,044–73
Bew, P. and Meehan, E. (1994) ‘Regions and Borders: Controversies in Northern Ireland
about the European Union’, Journal of European Public Policy, vol. 1(1) 95–114
Bretherton, C. and Sperling, L. (1996) ‘Women’s Networks and the European Union:
towards and Inclusive Approach?’, Journal of Common Market Studies, vol. 34(4)
487–508
Commission of the European Communities (1991a) ‘Equal Opportunities for Women and
Men’, Social Europe, 3/91, Luxembourg: Office for Official Publications of the
European Communities
(1991b) ‘Equal Opportunities for Women and Men. The Third Medium-Term Community
Action Programme—1991–1995, Women and Europe Supplements, no. 34
Cram, L. (1993) ‘Calling the Tune without Paying the Piper? Social Policy Regulation:
the role of the Commission in European Community Social Policy’, Policy and
Politics, vol. 21, 135–46
(1994) ‘The European commission as a Multi-Organisation: Social and Information
Technology Policy-Making in the European Union’, Journal of European Public
Policy, vol. 1(2) 195–217
Cunningham, S. (1992) ‘The Development of Equal Opportunities Theory and Practice in
the European Community’, Policy and Politics, vol. 20 (3) 177–89
Department of Employment (UK) (1994) Rights of Part-time Workers, Press Notice, 20
December
European Commission (1996) Bulletin on Women and Employment in the EU, No. 9,
October
Forbes, I. (1996) ‘The Privatisation of Sex Equality Policy’, Parliamentary Affairs, vol. 49
(1) 143–60
Haas P (1992) ‘Introduction: Epistemic Communities and International Policy Co-
ordination’, International Organisation, vol. 49 (1) 1–35
Hantrais, L. (1993) ‘Women, Work and Welfare in France’, in Lewis, J (ed) Women and
Social Policies in Europe. Work, Family and the State, Aldershot: Edward Elgar
Publishing, 116–37
Honeyball, S. and Shaw, J. (1991) ‘Sex, Law and the Retiring Man’, European Law
Review, vol. 16, 47–58
Hoskyns, C. (1996) Integrating Gender: Women, Law and Politics in the European
Union, London: Verso
Hoskyns, C. and Luckhaus, L. (1989) ‘The European Community Directive on Equal
Treatment in Social Security’, Policy and Politics, vo. 17 (4) 321–35
Kingdon, J. (1994) Agendas, Alternatives and Public Policies, New York: Harper Collins
Klein, R. and O’Higgins, M. (1985) ‘Social Policy After Incrementalism’, in Klein, R.
and O’Higgins, M. (eds) The Future of Welfare Policy, Oxford: Basil Blackwell
Landau, E. (1985) The Rights of Working Women, Luxembourg: Commission of the
European Communities
Lewis, J. (ed) (1993) Women and Social Policies in Europe. Work, Family and the State,
Aldershot: Edward Elgar Publishing
 SONIA MAZEY 157

Lord Lester of Herne Hill (1994) ‘Discrimination: What Lawyers can Learn from
History?’, Public Law, 231
Mazey, S. (1988) ‘European Community Action on behalf of Women: the Limits of
Legislation’, Journal of Common Market Studies, vol. 27(1) 63–84
——(1992) ‘Conception and Evolution of The High Authority’s Administrative Services
(1952–1956): From Supranational Principles to Multinational Practices’, in Morgan,
R. and Wright, V. (eds) ‘The Administrative Origins of the European Community’,
Yearbook of European Administrative History, Baden-Baden: Nomos
Verlagsgesellschaft, 31–49
——(1996) ‘The Development of EU Equality Policies: Bureaucratic Expansion on
Behalf of Women?’, Public Administration, vol. 73(4) 591–610
Mazey S. and Richardson, J. (1995) ‘Promiscuous Policy-Making: the European Policy
Style?’, in Rhodes, C. and Mazey, S. (eds) The State of the European Union, Vol.3:
Building a European Policy, Boulder: Lynne Rienner and Longman, 337–60
——(1996) ‘EU Policy-Making: a Garbage Can or an Anticipatory and consensual Policy-
Style?’, in Mény, Y, Muller, P, Quermonne, J-L (eds) Adjusting to Europe, London:
Routledge, 41–60
——(1997) ‘Policy Framing: Interest Groups and the 1996 Intergovernmental Conference
(IGC)’, West European Politics, vol. 20(3) 111–33
Meehan, E. (1990) ‘Sex Equality Policies in the European Community’, Journal of
European Integration, vol. 13(2–3) 185–96
Meehan, E. and Collins E. (1996) ‘Women, the European Union and Britain’,
Parliamentary Affairs, vol. 49 (1) 221–34
Ostner, I. (1993) ‘Slow Motion: Women, Work and the Family in Germany’, in J. Lewis
(ed.) Women and Social Policies in Europe. Work, Family and the State, Aldershot:
Edward Elgar Publishing, 92–115
Peters, B. Guy (1991) ‘Bureaucratic Politics and the Institutions of the European
Community’, in Sbragia, Alberta M. (ed.) Euro-Politics: Institutions and
Policymaking in the ‘New’ European Community, Washington DC:The Brookings
Institution, 75–122
——(1994) ‘Agenda-setting in the European Community’, Journal of European Public
Policy, vol. 1,9–26
Rein, H. and Schön, D. (1991) ‘Frame Reflective Policy Discours’, in P. Wagner, C.H.
Weiss, B. Wittrock and H. Wollman (eds) Social Sciences, Modern States. National
Experience and Theoretical Crossroads, Cambridge: Cambridge University Press
Richardson, J. (ed.) (1996) European Union: Power and Policy-Making, London:
Routledge
Rutherford, F. (1989) The Proposals for a European Directive on Parental Leave: some
Reasons why it Failed’, Policy and Politics, vol. 17(4) 301–10
Sabatier, P. (1988) ‘An Advocacy Coalition Framework of Policy Change and the Role of
Policy-Orientated Learning therein’, Policy Sciences, vol. 21,128–68
Streek, W. (1992) ‘From National Corporatism to Transnational Pluralism: European
Interest Groups and the Single Market’, in Treu T. (ed.) Participation in Public
policy-making: the Role of Trade Unions and Employers Associations, New York:
Walter de Gruyter, 97–121
Vallance, E. and Davies E. (1986) Women of Europe: Women MEPs and Equality Policy,
Cambridge: Cambridge University Press
158 THE EUROPEAN UNION AND WOMEN’S RIGHTS

Warner R.H. (1984) ‘Social Policy in Practice: Community Action on behalf of Women
and its Impact in the Member-States’, Journal of Common Market Studies, vol. 23,
141–67
 9
TRAINING POLICY
Steering between divergent national logics

Susan Milner

Every soil brings forth its own trees. The same can be said for the
different vocational training systems in Europe. They have adapted
to their environment.
CEDEFOP leaflet, 1995a

Training policy was the subject of an apparent consensus in the 1980s and
1990s, as EC institutions, governments and opposition parties alike, as well as
social actors, proclaimed their commitment to improving the skills of Europe’s
workers, particularly in the face of unprecedented competition from low-wage
but highly skilled labour forces in the fast-growing Pacific Rim economies. But
this apparent consensus hides a real division between radically different
approaches to training, which is visible in the persistence of nation-specific
approaches to training in the pursuit of identical objectives. Thus, while training
systems in all member states underwent significant change in the 1980s and
1990s, important differences remain and the EC itself has been largely powerless
to influence such change directly. Nevertheless, it will be argued in this chapter
that the EC has been able to act as a catalyst for change in the sense that it has
accompanied and legitimised changes already taking place and facilitated an
exchange of information, creating a menu of choices which national
governments have been able to use selectively in their own search for economic
competitiveness. Given that the impetus for change comes from the international
commercial environment, governments seeking to improve national systems
have explicitly compared their performance with that of competitors, and in this
context the EU has been able to find a role in compiling information and
disseminating best practice.
As will be discussed later, training systems are notoriously embedded in
nation-specific institutional settings. As such they represent a nexus of interests
and relationships, at the heart of which are business companies. However,
although the behaviour of companies to a large extent determines employee
access to training and the amount and content of training received, states shape
the system as a whole in their relationship with organised interests. This
relationship between national governments and organised interests, which has
160 TRAINING POLICY

developed over many years if not centuries, explains why EC policy has been
slow to take root. Moreover, Crouch (1995) shows that training policies reflect
fundamental choices of economic strategy which are also strongly ideological.
He describes the difference between the German and UK training systems as that
between two rival logics—neo-corporatism and neo-liberalism—which dictate
solutions to the central policy question: how can governments encourage
companies to invest in training? It will be argued here that the EC’s method of
working does not allow it to choose between fundamentally divergent ideologies.
Rather it seeks compromises between member states, always preferring
consensus to majority voting. As a result, it has been unable to shape policy
choices in vocational training.

EC initiatives in the field of vocational training

The Rome Treaty gives clear competence to the EC to promote vocational
training, whereas there is no mention of common policies on education. Article
128 of the Rome Treaty authorises the Council of Ministers, on a proposal from
the Commission and after consulting the Economic and Social Committee, to lay
down general principles for the implementation of a ‘common policy on
vocational training capable of contributing to the harmonious development both
of the national economies and of the common market’. Thus in a Decision of
19631 the Council established the principle that all individuals should receive
adequate training, with particular reference to the need for member states to
promote basic and specialised training, and, if necessary, retraining together with
opportunities for promotion through higher qualification. Common vocational
training policy was to rest on the individual rights of workers to life-long
training. However, despite the clear mandate for common training policies given
by the Rome Treaty and the 1963 declaration of principles, EC training policy
made only slow progress thereafter (see Milner 1992; Rainbird 1993).
In fact, article 128, with its provision for a common policy, sits rather oddly
with the accompanying measures in the chapter of the Treaty which sets up the
European Social Fund (ESF). Article 125, which lays down the rules for
applications to the ESF, makes clear that member- state governments retain
responsibility for planning retraining arrangements, including financing training
schemes (with costs to be shared on a fifty-fifty basis with the EC). Spending on
EC training programmes has overwhelmingly taken place within the ESF’s
retraining activities (see table 9.1). This effectively leaves the EC as the
instrument of member state restructuring. The 1988 reforms of the Structural
Funds, which led to a doubling of resources, significantly enhanced the role of the
Commission by setting Community-wide objectives and earmarking a proportion
of funds for multi-annual programmes, but member states subsequently used the
principle of subsidiarity to claw back powers (see Marks 1992; Allen 1996).
Anderson (1995:148) notes that ‘the Community has defined the problem,
adopted objectives, and employed instruments in ways that, apart from the level
 SUSAN MILNER 161

of subnational involvement in the policy process, are scarcely distinguishable

from national approaches employed throughout Europe’.
Moreover, by placing training policy within the context of the European
Social Fund, the Rome Treaty effectively limits training policy to retraining
workers threatened by redundancy, although the objectives of the ESF are
defined very broadly to include the improvement of workers’ employment
opportunities and facilitate free movement of labour.
The position within the Rome Treaty of provisions for a common vocational
policy undoubtedly explains the confusion surrounding subsequent policy
initiatives. First, the emphasis on retraining unemployed workers tended to
encourage reactive or compensatory measures at the expense of forward-looking
policy initiatives. Second, the distinction between initial and continuing vocational
training or retraining has never been clearly made: the Commission’s 1991
‘Memorandum of Vocational Training’, a key document setting out policy after
Maastricht, omitted to define vocational training (DGB 1992). This failure to
define the respective contributions of initial and continuing training—and
thereby the division of responsibilities between the traditional actors within
national training systems, notably between the public and private sectors—made
it very difficult to develop focused policies. On the other hand, however, the
ambiguities surrounding definitions of vocational training allowed the EC to
interpret its policy brief widely when it chose to, as for example, in the case of
higher education.
A comparison with policy on education, particularly higher education, is
illuminating. Despite the omission of education policy from the powers given in
the Rome Treaty, in 1976 the first Education Action Programme laid down
objectives for co-operation on education policy: the promotion of closer relations
between the education and training systems in Europe, increased co-operation
between universities and institutions of higher education, improved possibilities
for academic recognition of diplomas and periods of study, encouragement of
freedom of movement of teachers, students and researchers, achievement of
equal opportunity of access to education.
Undoubtedly, the relative importance of higher education and vocational
training reflected the priorities of national governments. It was not until the late
1970s and the growth of mass unemployment that vocational training,
traditionally the poor relation of national education and training systems,
attracted the serious attention of policy makers. However, even in more recent
years it has proved easier to set common programmes in higher education than in
vocational training. It is true that national structures of higher education are on
the whole more similar than vocational training structures and that in most
countries the role of the state is more clearly defined. This clearer division of
responsibilities is seen in the fact that the body responsible for making decisions
on education and training policy was the Council of Education Ministers. In
some member states, both education and training come under the remit of the
education ministry, but in other countries the two policy areas are split.
162 TRAINING POLICY

Table 9.1 Expenditure on education and training programmes/European Social Fund/ R &
D programmes

Source: Commission of the European Communities, EC Education and Training

Programmes 1986–92 (1993)

In the absence of a dedicated policy unit, training policy inevitably developed

on an ad hoc, reactive basis and remained firmly under the control of national
government (especially since the ESF depended on national government financial
support). It was not until the Task Force for Human Resources, Education,
Training and Youth was set up within DG V in 1985 that training became a major
policy issue. But the institutional arrangements themselves provide only part of
the answer, because they in turn reflect policy priorities. Cram (1993) shows that
the Commission acted in an entrepreneurial way to carve out areas of
competence in social and environmental policy, using its limited treaty powers to
the full. Why, then, was there a lack of political will on the part of supranational
actors in the area of vocational training? It may well be that, as in national policy
settings, the importance of vocational training became apparent only in the late
1970s. But it is noteworthy that from the start the EC lacked both clear
objectives in training policy and a framework in which the central question of
how to involve companies in training could be addressed. This reflects a
fundamental policy dilemma which can be seen in many of the EC’s
pronouncements on training: whether to opt for a high-trust, neo-corporatist
approach to training or a neo-liberal approach. As Crouch (1995) and Coffield
(1992) make clear, the difference between these two alternatives does not simply
represent a choice between centralisation and decentralisation, as many
politicians would have us believe. In fact, Crouch shows that the neo-liberal
approach is strongly statist, since it seeks to prevent organised interests from
building up networks of influence.
 SUSAN MILNER 163

The EC itself appears to oscillate between these two approaches. Lacking the
resources of a state, the EC has sought to promote neo-corporatism in its own
methods of working in order to build up a network based on reciprocal trust,
necessary to ensure even the most limited policy implementation. Also, in order
to legitimise supranational policy initiatives, it points to international
competition and argues in its own policy documents in favour of a high-skills
economic strategy. According to this argument, Europe’s competitive advantage
lies in its human capital, in line with Porter’s (1990) work on the comparative
advantage of nations. The model here is Germany, which, Porter notes (1990:
368), has no great natural resources, but the strength of its economy lies in its
highly paid, highly skilled and highly motivated workforce. The 1995 White
Paper on education and training (CEC 1995a) stresses that the European
dimension of training forms a necessary component of the ‘European social
model’ in which competitiveness, employment, education and training are linked.
At the same time, however, the ethos of EC economic policy has largely
followed the neo-liberal approach. This apparently schizophrenic approach—the
tension between ‘market-making’ and ‘market-breaking’—to most areas of
social policy characterises the Single European Market initiative, and has
propelled training policy since the mid-1980s. It is typical of the multi-tiered
system of governance described by Leibfried and Pierson (1995).
Although the Single Act itself contained nothing in the way of new provisions
on training, it opened the way for a new wave of policy initiatives. The Hanover
Council of 27–8 June 1988 stated that the Single Market should be accompanied
by a commitment to continuing training. The new policy offensive stemmed from
four main strands of thinking. First, the new orthodoxy of the 1980s saw economic
competitiveness as increasingly dependent on optimum use of human resources,
namely skills. Second, implementation of the principle of worker mobility (one of
the four freedoms which has proved remarkably difficult to achieve despite a
rash of measures in the 1960s which in theory removed many of the barriers to
free movement) meant that the Commission could point to a clear ‘transnational’
element of training policy and thus justify greater Community co-ordination of
national policies. Third, the Single Act gave rise to calls for accompanying
measures to ensure a ‘level playing field’, notably in the social field (leading to
the adoption of the Social Charter). Fourth, even the optimistic Cecchini report
noted that additional measures would be needed to preserve social cohesion,
particularly an increased need for compensatory measures (employment and
retraining initiatives). Thus the Single Act provided the justification for increased
Community action which, it should be added, the new Commission after 1985
was willing to use to the full. The Commission set up a separate policy unit
within DG V, a Task Force, to deal with education and training.
The late 1980s saw a flurry of new initiatives (see table 9.2): COMETT was
launched in 1986; ERASMUS in 1987; and PETRA in 1988. Youth for Europe,
arising out of the Adonnino report on a People’s Europe adopted by the
European Council in 1985, was established formally in 1988. EUROTECNET,
164 TRAINING POLICY

originally set up experimentally in late 1980s, was formalised in 1990, LINGUA

and TEMPUS launched in 1990, and FORCE set up in 1991. Here it should be
noted that the political will expressed in the Single Act allowed the Commission
to develop a Community policy which went beyond previous competence in two
significant respects. First, it set up a policy network which to some extent
bypassed national government, and it was able to do this because a transnational
dimension of policy had been identified. Second, the Community continued to
develop its competence in the sphere of education even though it had no
constitutional mandate to do so. It was opposed in this by the UK, notably in the
cases of ERASMUS and LINGUA, but rulings laid down by the European Court
of Justice allowed the Commission to continue to expand its competence in this
area through its generous interpretation of the term Vocational training’ (Nielsen
and Szyszczak 1991:75). This helps to explain why the EC has not sought to
clarify definitions of training and the division of responsibilities within training
systems.
As well as these Community programmes, moves towards a common training
policy received a boost from the Social Charter (point 15):

Every worker of the European Community must be able to have access to

vocational training and to benefit therefrom throughout his [sic] working
life. In the conditions governing access to such training there may be no
discrimination on grounds of nationality. The competent public authorities,
undertakings or the two sides of industry, each within their own sphere of
competence, should set up continuing and permanent training systems
enabling every person to undergo retraining, more especially through leave
for training purposes, to improve his skills or to acquire new skills,
particularly in the light of technical developments.

This provision is interesting because it echoes the individual rights approach

fostered in the 1963 Council Decision. It also gave rise to specific measures
outlined in the Social Action Programme for the first time. However, these
measures were limited in scope. They concentrated on reorganising training
activities within the Commission so as to increase efficiency. In 1990, EC
training programmes were rationalised. For instance, the Youth for Europe
programme became integrated into PETRA, and the various training initiatives
under the European Social Fund were now regrouped into several key
programmes, notably EUROFORM. At the same time programmes were
extended and given additional, though still very limited, financial support. It was
on the basis of these measures that the Commission claimed in its second report
on the application of the Social Charter that ‘Community action programmes in
the field of vocational training have made enormous progress since 1987 in the
wake of the adoption of the COMETT programme’ (GEC 1992:19).
Organisational streamlining continued and made a difference. The education
and training strands of Community action were grouped together in the Socrates
 SUSAN MILNER 165

Table 9.2 EC education and training programmes

Source: Commission of the European Communities, EC Education and Training

Programmes 1986–92 (1993)

and Leonardo programmes respectively. Also, the Task Force was moved out of
DG V and became a fully fledged Directorate-General, namely, DG XII, with
responsibilities for Education, Training and Youth, at the same time that a
Commissioner was nominated for Education, Training and Research for the first
time. The creation of a Directorate-General and a Commission portfolio
dedicated to education and training undoubtedly gave a boost to policy. Although
not one of the larger DGs, DG XII has a small team that is focused and
166 TRAINING POLICY

energetic. It has experience in the field and Edith Cresson as Commissioner keeps
a high profile. Moreover, organisational rationalisation can have an important
impact. As Marks noted in the case of structural policy, the creation of DG XXII,
established to manage the Structural Funds after the 1989 reforms, reflected a
shift in power towards supranational actors and away from national government
(but he also noted that ‘effective co-ordination demands power’ and expressed
doubts that the small new unit could wield sufficient authority) (Marks 1992:
220). Effective institutional co-ordination is a prerequisite for entrepreneurial
action on the part of supranational policy actors; it does not by itself denote
policy activism. Table 9.1 shows that neither the reform of the 1988 Structural
Funds nor the institutional rationalisation of education and training programmes
since the mid-1980s resulted in increased spending on education and training,
which still accounts for a small share of the total EC budget.
The Treaty on European Union provided new powers for the European Union
in the field of education. The Treaty gives the Council the power to adopt
recommendations on ‘incentive measures’ in the educational field, acting on a
qualified majority (using the new co-decision procedure) (article 126). Clearer
objectives for vocational training policy are also set out in article 127, which
authorises the Council to adopt measures towards these objectives according to
the co-operation procedure. Emphasis is now placed on shared cultural values of
education and training which will ‘provide the basis for the emerging European
identity and citi-zenship’ (CEC 1993b:2).
However, several commentators consider that the new provisions have
weakened Community competence in education and training rather than
reinforcing it (see DGB 1992:24), on the grounds that the new articles expressly
exclude any notion of harmonisation and pledge respect for national laws and
practices, following the principle of subsidiarity. Thus, the new article 127 does
not speak of a common policy on vocational training but ‘a vocational training
policy which shall support and supplement the action of the member states, while
fully respecting the responsibility of the member states for the content and
organisation of vocational training’. On the other hand, however, the objectives
of vocational training policy were widened by the TEU. It is made clear that
Community action covers both initial and continuing training, and training is
seen as a means of helping businesses adapt to change as well as integrating
young workers and the unemployed into the labour market.
In the 1990s, then, the powers of the Community to intervene were strictly
curtailed, with responsibility for policy making placed unambiguously in the
hands of national government. Harmonisation of the laws and regulations of
member states is expressly excluded. But in terms of breadth of policy coverage
or issue density, the Community has widened its sphere of action. The
recognition of the limits of Community competence, coupled with an expansion
of the EC’s policy fields, is typical of a new, ‘realist’ social policy approach. It
could be argued that it offers scope for action in new, controversial areas as well
as those which have traditionally been uncontested; that is, where a ‘European
 SUSAN MILNER 167

dimension’ can be identified, namely transnational exchanges and measures to

achieve greater transparency and recognition of qualifications in order to
promote labour mobility.
Thus, the new emphasis on the fight against unemployment legitimates
Community initiatives on training and gives vocational training a central place in
EC policy making. The first document to bring vocational training into the
mainstream and suggest a more pro-active training policy was the 1993 Delors
White Paper on growth, competitiveness and employment. In particular, the
White Paper promoted continuous vocational training as an instrument of
economic competitiveness, and adaptation to technological advances and
changing market needs. The December 1994 Essen Summit brought employment
to the forefront of EC activity and identified five priority fields of action,
including vocational training. It thereby opened the way for DG XII to put
forward new policy initiatives, which it duly did, contributing a list of proposals
for the Action Plan that followed Essen. Many of these proposals resembled
earlier Commission statements in that they represented vague exhortations to
member states to give greater priority to training. For example, they stressed the
need to widen access to training—the subject of a 1991 Joint Opinion between
social partners and a 1993 Council Recommendation. However, other proposals
were more specific and indicate a potentially more pro-active role for the
Commission in co-ordinating national policies and helping to set the agenda for
change at national level. These include, for example, the suggestion that member
states should set national targets for qualification levels of the whole workforce,
the idea of guaranteed training or work placements for young people—an idea
which has been floated by the British Labour Party—and the promotion of
lifelong learning. The latter proposal in particular was then taken up in the
November 1995 White Paper, entitled ‘Teaching and learning: towards the
learning society’, and gave rise to a specific policy initiative, namely, the
decision to designate 1996 ‘The Year of Lifelong Learning’ in order to highlight
activities such as career guidance and information on continuous training
opportunities in member states. In this way, the Essen Summit relegitimised
Community action on training and gave a new boost to the principles of EC
action which had been laid down in the 1963 Decision.
However, the June 1995 Commission Communication, based on the Essen
discussion, defined the role of EC actors as one of co-ordination and
information, notably the pooling of information on national practices. This is in
line with the provisions of the TEU, which clearly establish national
governments as the key policy actors and protect national training systems from
Community intervention. Thus, the exchange of issue density for specific policy
instruments may in fact restrict the role of EC institutions as independent policy
actors.
Nevertheless, the new deal on the division of labour—under the label of
subsidiarity—between EC institutions and member states may well suit the
former. It allows them to develop a policy brief, administer programmes and
168 TRAINING POLICY

acquire legitimacy. It also saves them from making fundamental choices of

economic strategy which it is, in any case, beyond their power to enforce.
Member states, on the other hand, preserve both their decision making and their
financial autonomy, since training programmes could potentially demand a
sizeable amount of state spending, whilst retaining the use of Community
programmes as an instrument of economic restructuring. Thus, the Council
response to the Commission’s 1995 White Paper warned of the dangers of
adopting a single set of proposals on education and training, emphasising instead
the complexity of the issues involved. Rather than seeking to impose a ‘single
institutional measure’, each member state ‘will endeavour to introduce and
develop such arrangements as it considers necessary’ (OJ 96/C 195/01). The
Council response stressed that the usefulness of EC initiatives lay in the
exchange of information and the funding of experimental projects at a time of
change.

National vocational training policies

Training systems are deeply embedded in the relationship between states and
national networks of organised interests. States play a crucial role in shaping
these systems. Crouch (1993) has shown that fundamental differences between
western European countries in the relationship between state, employers and trade
unions reflect state traditions which have developed over many centuries. Thus,
the neo-corporatist training systems of Germany, Austria and Scandinavia have
evolved separately and under different conditions. Austria, for instance, stands
out because of the strongly centralising state under the Habsburg empire.
However, they have all retained elements of the medieval guild system which
elsewhere, as, for example, in France during the French revolution, were
dismantled or eroded.
It should be noted, of course, that the situation in all EU member states is
dynamic: vocational training has undergone considerable change in recent years.
The process of economic convergence which has taken place has meant that
training policy has gained importance, as well as becoming the focus of debate
and criticism particularly in a common context of mass unemployment, not only
in the most developed economies of northern Europe, but also in the poorer
countries, which have had to adapt rapidly to the opportunities and risks of the
enlarged market. The impact of similar economic pressures in increasingly
globalised markets may therefore suggest a convergence of training systems.
Moreover, in the continuing debate on ways of improving training systems, much
attention has inevitably been paid to comparisons between countries, and some
countries have sought to copy elements of other systems which seem to work
well. At a general level, it is possible to identify some similar trends. However,
these trends can be seen across all industrialised countries, including newly
industrialised countries, and are not limited to the EU. It is therefore difficult to
argue that convergence is the product of EU policy co-ordination.
 SUSAN MILNER 169

In all countries, the nature and purpose of vocational training have been
transformed by the shift away from old industrial production methods towards
new production methods in industry. New technologies have made old skills
redundant and have broken down the generational reproduction of skills that
have traditionally been at the heart of initial vocational training, especially
apprenticeships. A similar need for rapid adaptation to customer needs and
technological change is evident in the growing service sector. These changes
have placed great strain on initial vocational training systems, which in most
member states have been revised to take account of companies’ changing needs
and to strengthen the link between business and training institutions. At the same
time, they have created a new need for continuous vocational training, since
skills learnt in initial training will need constant updating. Continuous vocational
training has therefore undergone radical change. From being an instrument of
personal development—adult education and ‘second-chance’ learning—or a
means for individual workers to gain promotion, it has become an additional
element of companies’ drive for competitiveness (see Podevin 1995). In the
1980s and 1990s, training came to be regarded as an important indicator of a
country’s competitive advantage, measured in terms of attainment of
internationally recognised qualification standards and expenditure by states and
companies on initial and vocational training. In the UK, for example, the
government funded a study of changing skill and qualification levels in France,
Germany, USA, Australia, Japan, Korea and Japan because of a perceived need
‘to improve education and training standards in the UK to meet those of our
international competitors’ (IES 1996:1). Finally, training systems have been
radically transformed by the introduction of specific programmes for groups
affected by mass unemployment, particularly youth and the long-term
unemployed, in which training serves social rather than economic ends.
It is little wonder, then, that a comparative study based on continuous training
in three sectors—construction, banking and insurance, and electricity/electronics
—carried out by CEDEFOP to support the 1991 Joint Opinion on ways of
ensuring access to training found a number of transnational trends of this nature.
In particular, it identified an increased financial commitment by the state and a
search for the appropriate legislative instruments to encourage companies to
invest in training. On the other hand, the study found a great range of diversity of
methods in each sector, not only between, but within, countries.
Similarly, four main issues emerged from a cross-national study of youth
training programmes in six European countries (Germany, Spain, France, Italy,
Sweden and the UK). One of these issues—the reproduction of social
inequalities in access to training—cut across national borders. But significant
differences were found at the level of structures (institutionalised or ad hoc) and
the economic choices governing the type of programme on offer. Differences
were also found between methods used to evaluate training programmes, with
some countries such as France providing data on individual career trajectories
170 TRAINING POLICY

and others, for example, Sweden, concentrating on the macroeconomic effects of

training schemes (CEREQ 1996a).
The Commission’s 1995 White Paper on education and training stressed both
common trends—lengthening of periods of study, wider access to higher
education, a search for more flexible ways of recognising skills, attempts to link
training more closely to the needs of business—and the diversity of national
situations.
The persistence of underlying features and structures of national training
systems, reflecting the historical development of the state in western European
societies, confirms the ‘societal effect’ approach to cross-national comparison
developed by Maurice, Sellier, Sorge and others (see Maurice and Sellier 1979),
which holds that ‘whatever happens in one sector of society is always connected
to events or to structures in other sectors’ (Sorge 1995:242). Crouch’s analysis
goes further in attributing a central role to the state in allowing organised
interests into the policy making arena—the neo-corporatist model—or
preventing them from gaining a foothold—the neo-liberal model (Crouch 1995).
To these two models, we might also add a third where vocational training has
traditionally been less important than state-sponsored formal education routes,
and the links between training and business companies weak. France follows this
approach, but it is also seen to some extent elsewhere, for example, in Finland.
Let us now look briefly at the training systems of Germany, the United
Kingdom and France to see how much they have changed in recent years and to
what extent any changes may be attributed to Community intervention or
influence.

Germany
Germany’s training policy has remained relatively stable. Rose and Page (1990)
identify only five new initiatives during the period 1979–89 in response to
unemployment (as opposed to forty-three in the UK). Crouch (1995) attributes this
stability to the continued effectiveness of the system, based on apprenticeships or
alternance training. The keystone is the ‘dual system’ in which school-leavers
receive college-based, certified training in transferable skills (usually for one day
a week) whilst employed on trainee wages within companies. Each year around a
third of young people leaving secondary education commence training within the
dual system. The system ensures a relatively good match between business needs
and the training provided. In the 1980s, the dual system came under criticism for
insufficient attention to labour market supply and demand, but this has been
corrected by recent initiatives which limit the number of apprenticeships in over-
subscribed professions. Initial training is therefore extremely important, and it
dovetails into workplace organisation, while career advancement is based on
attainment of recognised transferable skills (see Sorge 1995).
German businesses also invest relatively highly in continuous training,
although this type of training is likely to be targeted selectively, and to be of
 SUSAN MILNER 171

short duration (perhaps ‘refresher’ courses). In 1993, Germany came top out of
seven EU member states in a FORCE/EUROSTAT survey for the proportion of
businesses (59 per cent) using training courses (CEREQ 1996b).
Among EU member states, Germany has the highest proportion of young people
who at age 18 have followed a vocational education and/or training programme:
93 per cent as against 45 per cent in France and 16 per cent in the UK. This may
explain why Germany is alone among EU member states in having lower rates of
youth unemployment than for the population as a whole (CEC 1995b).
Impetus for change in the German system has come from two main sources.
First, German reunification added considerably to the already growing need for
active labour market policies for those made redundant or threatened with
redundancy in older industries. Already in 1970, West Germany was way ahead
of France and Britain with regard to the number of trainees on special
employment training schemes relative to the total workforce (Balfour 1972:121)
and such schemes have mushroomed in the new Länder. According to some
analysts, the severity of the unemployment situation in Germany’s eastern
regions created the conditions for policy innovation (see Blancke and Widmaier
forthcoming); others, however, criticise such training schemes for failing to
attack the roots of the problem, which lie in labour market regulation (see Lange
1993). Second, Germany’s ‘high skills equilibrium’ has come under threat from
employers who have complained about high labour costs. On the whole, the
social partners remain committed to the neo-corporatist arrangements which hold
the initial vocational training system in place, but the consensus is beginning to
fray at the edges. Continuous training is more problematic as companies feel the
recession bite (Bispinck 1990). However, for the time being at least, Germany’s
apprenticeship-based system is generally seen as effective in combating youth
unemployment and creating a highly skilled workforce able to adapt quickly to
changing economic and technological conditions.

The United Kingdom2

The UK is generally considered to lag well behind Germany in terms of the skill
levels of its workforce. In contrast with Germany, apprentices account for only a
small proportion of young workers, many of whom enter full-time jobs with no
qualifications. Traditionally, British companies prefer ‘on-the-job training’. But
they have failed to invest the necessary resources into informal workplace
training to bring the skill levels into line with those of their competitors. In 1964,
in an attempt to encourage companies to invest in human resources, the UK
government introduced Industrial Training Boards to administer sectorally
transferable skills training, with the imposition of training levies on firms. The
multipartite Manpower Commission, introduced in 1973, was supposedly
modelled on Sweden’s corporatist training administration (Crouch 1995:298).
However, in the UK it was used as an instrument of deregulation. The 1973
Education and Training Act weakened the powers of the Industrial Training
172 TRAINING POLICY

Boards and replaced the levy grant mechanism with a levy-exemption procedure
(Rainbird 1993). The Industrial Training Boards were then abolished or
privatised in the 1980s, and the apprenticeship system all but collapsed in the
recession. In the place of the MSC, eighty-two Training and Enterprise Councils
(TECs) were set up in England and Wales. TECs are responsible for the delivery
of government-funded training schemes. They are independent bodies, composed
of local business people and training providers. In theory trade unions are also
invited to join TECS but in practice they are dominated by employers. The TECs
were modelled on North American rather than European initiatives and
according to many academic observers they represent a further dismantling of
the UK training system. Crouch (1995) sees the TECs as continuing the logic of
neo-liberalism: they can enforce no sanctions, they have limited resources and
they must provide training as cheaply as possible. Many TECs have publicly
complained that government finances are insufficient to allow them to provide
adequate training. Since they are contractually obliged to carry out government-
sponsored schemes for the unemployed, their wider mission of matching training
to local company needs is often neglected. According to a survey of TECs in
northern England, TECs were unable to change the prevailing company culture
‘antipathetic to education, training and enterprise’ (Coffield 1992:15).
In 1988, vocational training was reorganised within the framework of a new
system of skills certification, National Vocational Qualifications (NVQs). NVQs
represent five levels of skill, ranging from NVQ1—ability to perform relatively
simple work, roughly corresponding to basic general education—to NVQ5—
equivalent to higher education or higher vocational certificates, e.g. recognised
professional qualifications. These five levels of attainment correspond to EU-
recognised training levels, as laid down in a 1985 Council Decision (OJ L199, 31
July 1985) They reflect a flexible approach to vocational training certification
because existing, non-certified skills acquired on the job may be validated at the
lower end of the scale. The NVQ approach has been severely criticised because
it seeks to validate the existing skills base, often at a very low level, rather than
to upskill. More worryingly for the government, take-up of NVQs has been very
slow, and traditional vocational qualifications have remained considerably more
popular than NVQs.
At the same time, the government regularly revamped training courses for the
young and long-term unemployed (over six months), and introduced an
accompanying series of changes to the unemployment benefit system.
The 1980s thus saw a series of changes in the UK training system, forty-three
new initiatives in total. Rose and Page (1990) attribute this policy activity to the
great flexibility of the UK system, but Crouch’s (1995) view is more negative.
All are agreed that the UK model is based on an economic strategy dependent on
flexible labour markets and low labour costs. According to Crouch, this strategy
creates problems in that it leads the UK to trade in low-value products which can
always be undercut by the newly industrialised economies. This strategy sits
uneasily with the UK government’s proclaimed desire to invest in skills, as is
 SUSAN MILNER 173

borne out in comparative surveys of skill levels in the developed world. In 1990
the House of Commons Select Committee on the European Communities
concluded that the UK ‘does not have a clearly articulated national strategic
framework for training’ and argued that ‘given the gap between the UK and its
main industrial competitors…and the long history of failure which has marked
the voluntary approach to training in this country, the Committee consider that
some form of statutory underpinning is needed to act as a catalyst for change’
(quoted by Rainbird 1993:199). The Confederation of British Industry, too, has
repeatedly expressed concerns about Britain’s dwindling skill base. The CBI’s
task force on vocational education and training noted that ‘the UK still compares
unfavourably in a number of sectors with EC competitors’, especially Germany
(CBI 1990: 109). It expressed a desire for the West German dual system to be
emulated in Britain, with the aim of providing training, full-time or combined
with employment, for all under-18s. It also called for the establishment of
individual career profiles from the age of fourteen.
Prompted by the CBI’s criticisms, in 1991 the government set official national
training targets for developing workplace skills. Thus by 1997, at least 80 per
cent of all young people should have attained NVQ Level 2; by the year 2000, at
least half of the cohort should attain NVQ Level 3. In addition, lifelong learning
targets were set, in accordance with EU training policy: by 1996, the European
Year of Lifelong Learning, all employees should have taken part in training or
development activities, and half of the employed workforce should be aiming for
qualifications within the NVQ, framework, preferably on the basis of individual
training plans; by the year 2000, 50 per cent of the employed workforce should be
qualified to at least NVQ Level 3 (CEDEFOP 1995a:391–2).
These targets do not by themselves, however, address the problems of
inadequate structural underpinning of training identified by the House of Lord
Select Committee and the CBI. Peter Robinson of the Centre for Economic
Performance wrote in the Financial Times (7 October 1996) that the new
vocational qualifications have not led to any appreciable increase in the training
available to individuals; take-up of the NVQs is slowing, and indeed the
government has been forced to abandon its 50 per cent target. The reforms
undertaken in the 1980s and 1990s continued the voluntaristic approach to
training. In its 1991 White Paper, ‘Education and Training in the 21st Century’,
the government restated its opposition to a statutory approach: ‘The commitment
of young people and their employers to training needs to be secured by voluntary
means.’ It is difficult to see how real improvement in skills can be attained by
exhortation alone within the prevailing business culture which sees training
solely as a cost.

France
France represents an institutional model of vocational training in which training
is essentially provided by schools or colleges. After a period of initial general
174 TRAINING POLICY

education (seven to nine years) students move on to vocational courses lasting

two or three years and leading to a Vocational Proficiency Certificate (CAP) AP)
or Vocational Education Certificate (BEP). After a further two years’ study, they
may prepare a Vocational Baccalaureate. In France’s elitist education system,
vocational training is something of a poor relation. Those following vocational
subjects are often those who have failed their basic subjects, and employers
appear to set little store by vocational diplomas (Caillods 1994). Many young
people leave the educational system with no qualifications whatsoever—around
15 per cent, although this has fallen from around a third in the early 1980s—and
the proportion of workers without vocational training is double that in Germany.
Apprenticeships traditionally do not enjoy high prestige and play a secondary
role in the training system, covering about one-seventh of the total number of
individuals receiving training (CEDEFOP 1995b:29).
Continuous vocational training occupies an important place in the French
system. The qualifications of French workers result from a combination of on-
the-job training, vocational experience and length of service. The relatively
dense supervisory layer in French businesses provides an opportunity for
individual career advancement (see Sorge 1995).
Employers’ investment in training is relatively high. In terms of spending per
employee, France comes top of the list in western Europe (CEREQ 1996b). This
may be explained by the statutory payroll levy of 1.1 per cent. The French levy
system, first introduced in 1971 and increased several times since then, certainly
encourages larger companies to invest in training: the actual contribution level
increased from 1.3 per cent of the wage bill in 1972 to 2.34 per cent in 1986
(CEDEFOP 1995b:142). However, the evidence suggests that access to training
remains unequal despite the presence of a company training plan in 40 per cent
of companies (as opposed to only 20 per cent in Germany). Only around 12 per
cent of small companies (with between ten and forty-nine employees) train their
employees compared with 46 per cent of French companies in total.
Various attempts have been made to boost apprenticeships, which involve
around 60,000 young people a year—around a tenth of those in Germany’s dual
system. An apprenticeship tax of 0.5 per cent of the total wage bill is levied on
companies, in addition to a regional apprenticeship tax. Also, since 1992–3,
work-experience placements have been introduced into BEP, CAP and
Vocational Baccalaureate courses.
In order to give training to the significant number of young labour market
entrants with no qualifications—up to a third of the cohort—a series of training
measures for sixteen- to twenty-five-year-olds were introduced after 1983 at the
initiative of the social partners (CEC 1995b): guidance contracts for unqualified
young people, lasting three to six months, with specified college-based modules
or on-the-job training, under agreement with the trainee; qualification contracts
lasting between six months and two years, building on initial training, with the
trainee paid a salary and guaranteed training for at least 25 per cent of the
working week; and adaptation contracts alternance training for specific job-
 SUSAN MILNER 175

related skills. These contracts are financed by an additional 0.1 per cent payroll
levy on companies, and have grown significantly in importance since their
inception. Whereas in 1985 3,031 qualification contracts were signed, in 1990
101,706 young people were registered on such contracts. However, doubts have
been expressed about the content of the training in such contracts, and there are
fears about simple substitution of low-paid trainees for stable jobs.
In July 1994, responsibility for provision of training to young people was
transferred to the regional authorities. The idea behind this move was to make
training provision more responsive to local business needs, but it is not yet clear
what effects the reform will have on training and the labour-market integration
of young people.
To summarise, the schemes initiated in 1983 introduced a significant change
into the French training system by creating second-chance training for those
leaving college without qualifications. The introduction and expansion of work-
experience placements into existing initial vocational training courses also
strengthened the link between business and training and moved France away
from its traditional institutional approach. However, although the German dual
system is much admired in France, it has not been emulated wholesale. Instead,
the French system may be considered something of a hybrid, since it has sought
to retain the central elements of its institutional model whilst incorporating
elements along the lines of the German system. This is undoubtedly for cultural
reasons. For example, French trade unions are much weaker than their German
counterparts and this is often cited as a reason why German methods would not
work in France. Employers have learned to live with the levy system and the
state-sponsored youth employment schemes, although their effect on
unemployment is limited. Youth unemployment is particularly high in France:
one in four French citizens between the ages of sixteen and twenty-five is
unemployed, and only one in four is now working without the aid of a
government grant or financial system of some kind.
As a result, there have recently been some calls for a radical overhaul of the
training system. A 1996 report recommended that the entire system be scrapped
and training provision be left to businesses to organise according to their own
needs. Such a radical deregulatory solution is unlikely to be implemented and
would take a good deal of political courage. It is interesting, however, to note that
the publication of a report recommending a voluntaristic, neo-liberal approach to
training represents a chink in the prevailing consensus on training, which has
tended to promote the German model.
From these brief overviews, evidence of direct EC influence over national
policy choices appears scarce. Rather, we see that national training systems are
culturally specific, but open to change as a result of pressures created by rising
unemployment, economic globalisation, demographic pressures and so on. In
this context, the European Union can provide a forum for the exchange of
information and ideas, and some financial backing for necessary changes.
Through the PETRA programme, too, member states have used the opportunity
176 TRAINING POLICY

to build a Community dimension into major national initiatives such as the

vocational baccalaureate in France, the reform of the istituti professionali in Italy,
and the introduction of a new type of vocational school (escolas profissionais) in
Portugal (CEC 1993a). The European Social Fund, too, has helped to finance the
development of training schemes, particularly for the unemployed. In Italy and in
Spain, ESF funding complements employer levies used for continuing training
and employment training; in Portugal, ESF funding has helped to finance a
radical overhaul of the vocational training system; and in Greece, individual
projects have benefited, rather than the system as a whole, which remains
somewhat piecemeal. Ireland too has benefited.
Of the three countries briefly surveyed above, Germany is closest to the model
of a high-skills economy advocated by exponents of European integration.
However, recent trends do not appear to be converging towards the German
model. Indeed, the UK neo-liberal model seems to hold some interest for would-
be reformers in France and Germany. Moreover, the UK’s approach to
accreditation and individualisation of training has much in common with
EC training policy in the 1980s. (We have already noted the similarity between
the EC’s five training levels and the organisation of NVQs.)
This apparent contradiction could suggest that in the 1990s the EU has come
round to the British way of thinking on social matters and adopted a deregulatory
approach to training, as British politicians often claim. More probably, the search
for a ‘lowest common denominator’ likely to win approval from all member
states leads the EU to a minimalist approach which resembles British
Voluntarism’. Effectively, this limits the EU to the ‘neo-voluntarism’ advocated
by Streeck (1995) as the only realistic policy approach.

Divergent policy styles and the impact of EC policy

As already indicated, training policy reform reflects what we might term policy
‘styles’, following Esping-Andersen 1990, as well as strategic social and economic
choices. British ‘voluntarism’, for example, blocks trade unions and other social
actors from access to decision making. This helps to explain why the UK
government is so keen to safeguard its autonomy and insistent on EU respect for
the principle of subsidiarity. However, the style of EU policy making opens up a
more ‘open-textured, multi-level perspective’ (Marks 1992:192) in which the
central role of national governments can be contested by regional and social
actors. The increasingly fragmented and technical nature of the EU offers greater
opportunity for the formation of policy networks than at the national level
(Mitchell 1993:15). Subsidiarity not only allows national governments to
challenge EU competence, but potentially gives greater power to sub-national
levels of decision making. Moreover, as Spicker (1991) argues, subsidiarity can
be interpreted in a horizontal as well as vertical sense: that is, policy making can
be opened up to include non-governmental actors such as employers, consumers’
organisations or trade unions. It is widely recognised that training particularly
 SUSAN MILNER 177

lends itself to corporatist modes of policy making because of the fundamental

issue of trust which any training system seeks to address.
During the time of the Task Force, the Commission cultivated its own policy
style which in many ways emulated German or Swedish-style neo-corporatism.
The reason was partly ideological—a commitment to a ‘high-skills
equilibrium’— but also practical. In the absence of real legitimacy among
member state governments, the EC sought to create a wide policy network to
legitimise its initiatives. Within the Task Force itself, the tripartite Advisory
Committee on Vocational Training ‘has, since [its establishment in] 1963, been
the principal forum where the social partners have discussed, reflected on, and
adopted positions on Community guidelines and actions’ (CEC 1992). It was
closely involved at an early stage in the preparation of texts which the
Commission adopts or submits to the Council of Ministers. In this respect, the
input of the ACVT was exceptionally high among the advisory committees
(Milner 1993). However, after training policies were streamlined in the wake of
TEU ratification, the Commission appeared to have had less recourse to the
Advisory Committee. The 1993 Commission proposals for future action (CEC
1993b) did not even mention the ACVT.
The ACVT constitutes a direct channel into national policy making networks,
on a traditional tripartite basis. In this way, the Commission has sought to
influence modes of policy formation in the member states, by inviting national
governments to consult with employers’ organisations and trade unions, and in
some cases with training providers, before compiling national reports in response
to specific policy objectives. This approach characterised the 1991
‘Memorandum on Vocational Training’ and, more recently, the 1995 White
Paper on education and training. However, the result has sometimes simply been
the submission of separate reports, for example, by the British government and
the Trades Union Congress. Attempts in 1992–3 to set up tripartite discussion
forums in each member state also failed to involve member states which were
hostile to increased involvement of social partners. This suggests that national
policy styles remain firmly resistent to EU influence. In addition, training policy
was explicitly driven by the Summit-level social dialogue. Thus, for example, the
1993 Council Recommendation on Access to Vocational Training refer in its
preamble to the November 1991 Joint Opinion signed by the social partners (the
European Trade Union Confederation, the Euro-level employers’ federation,
UNICE, and the European Centre for Public Enterprises CEEP). Moreover, the
Recommendation ended with an invitation to member states to provide a follow-
up report within three years. This extra requirement, which was hotly contested
by some countries but finally included, may thus be interpreted as a means of
providing legislative back-up, via concrete commitments by member states, to
the Joint Opinions reached by the social partners. However, the 1995 White
Paper on education and training contains no such reference to the social partners
in its preamble. In this respect, too, the link between the social partners, the EU
and national policy making appears to have been weakened since 1991.
178 TRAINING POLICY

EU training policy undermines national autonomy in another key respect. The

Structural Funds operate on the basis of a network of policy makers and
providers, and, in some cases, users. EC training programmes—the ‘European
dimension’ to training, essentially Leonardo and associated activities—follow
this model. The avowed objective is to create dense multilateral links between
local authorities, local associations and private bodies—companies, teaching and
learning institutions, and trade unions—which, through the contact supported
financially by EU schemes, gradually by-pass national governments. COMETT
and FORCE were seen as exemplary in this respect, because of the representation
of employer and worker interests on their advisory committees and the wide
range of organisations participating in the programme networks, especially with
respect to FORGE. Marks (1992) argues that such networks will increasingly
contest the decision-making power of national government.
In the long term, transnational networks may help to break down differences
between national policy styles by widening the menu of choices. In other words,
this limited ‘bottom-up’ approach stands a greater chance of influencing national
policy and practice than a ‘top-down’ attempt at harmonisation. However, for the
moment at least, the scope for effective co-ordination of sub-national actors
is often over-stated. Member states retain a large amount of control in the
selection of projects (Allen 1996). Cross-national networks of sub-national
actors can provide what Leibfried and Pierson (1995) term ‘policy innovation
and emulation’ but they are less politically effective than national governments.
Moreover, the territorialisation of policy in the Structural Funds and EU training
programmes means that there is little or no spillover into mainstream EC social
policy (Anderson 1995). But from the viewpoint of national government, the EU
and sub-national actors, this situation might be helpful in providing a more open
environment for policy innovation.

Conclusion
We have seen that national training systems are highly societally specific. There
is considerable pressure for change from the global economic environment,
rising unemployment and structural changes within national labour markets.
However, although these pressures tend to push training systems towards a
limited convergence, such trends are common to all industrialised countries
rather than suggesting the existence of a ‘European model’. Given the climate of
change, the European Community has been able to create a role for itself in
policy making as a forum for the compilation and exchange of information. It
has, however, been reluctant to move beyond this role to advocate specific
policies. This may be partly explained by the member states’ strong opposition to
any limits to their autonomy in policy making on training: training policy has
financial implications, but it also reflects fundamental economic and social
strategies and ideological choices. But the limited role given to the European
Community under the principle of subsidiarity also legitimises EC action within
 SUSAN MILNER 179

its priority fields, and saves it from an ideological dilemma it is probably not
equipped to face.

Notes

1 Council Decision, 63/266/EEC, 2 April 1963.

2 Note that in the UK separate arrangements exist for education and training in
Scotland and Northern Ireland. The training system discussed here is that of
England and Wales, but for the sake of brevity the term ‘UK’ is retained.

References

Allen, D. (1996) ‘Cohesion and structural adjustment’, in H. Wallace and W. Wallace

(eds) Policy-Making in the European Union, Oxford: Oxford University Press, 209–
234
Anderson, J. (1995) ‘Structural funds and EU policy’, in S. Leibfried and P. Pierson (eds)
European Social Policy, Washington DC: The Brookings Institution
Balfour, C. (1972) Industrial Relations in the Common Market, London: Routledge &
Kegan Paul
Bispinck, Reinhard (1990) ‘Qualifikationsrisiken, berufliche Weiterbildung und
gewerkschaftliche Tarifpolitik’, WSI-Arbeitsmaterialen, Dusseldorf
Blancke, S. and Widmaier, U. (forthcoming) ‘The politics of radical unemployment
policies in Germany’, in H. Compston (ed.) The New Politics of Unemployment in
Western Europe, London: Routledge
Caillods, F. (1994) ‘Converging trends amidst diversity in vocational training systems’,
International Labour Review, 133/2
CBI (Confederation of British Industry) (1990) Employment and Training, London:
Mercury Books
(CEC) Commission of the European Communities (1992) Second Report to the Council,
the European Parliament and the Economic and Social Committee on the application
of the Community Charter of Fundamental Social Rights of Workers (December)
——(1993a) EC Education and Training Programmes 1986–1992. Results and
Achievements: An Overview, COM(93)151 final, 5 May 1993
——(1993b) Working Paper: Guidelines for Community Action in the Field of Education
and Training, COM(93)183 final, 5 May 1993
——(1995a) White Paper on Education and Training, Teaching and Learning: Towards
the Learning Society
——(1995b) Education and initial training systems in the European Union, Luxembourg:
Official Publications of the European Communities
CEDEFOP (1995a) Apprenticeships in the EU member states: a comparison, Berlin:
CEDEFOP
——(1995b) Financing Continuing Training: What are the Lessons from International
Comparison? Berlin: CEDEFOP
CEREQ (1993) Formation Emploi, no. 43 (special issue: Europe)
——(1996a) ‘Actualités: comparaison européenne des dispositifs d’insertion des jeunes’,
CEREO Bref, 120
180 TRAINING POLICY

——(1996b) ‘La formation continue dans les entreprises: la place de la France en

Europe’, CEREO Bref, 116
Coffield, F. (1992) ‘Training and Enterprise Councils: the last throw of voluntarism?’,
Policy Studies, 13/4, 11–32
Cram, L. (1993) ‘Calling the tune without paying the piper? Social policy regulation: the
role of the Commission in European Union social policy’, Policy and Politics, 21:
135–46
Crouch, C. (1993) Industrial Relations and European State Traditions, Oxford: Oxford
University Press
——(1995) ‘Organized interests as resources or constraint: rival logics of vocational
training policy’, in C. Crouch and F. Traxler (eds) Organized Industrial Relations in
Europe: What Future? Aldershot: Avebury, 287–308
DGB-Bundesvorstand (1992) ‘Fortbildungsberufe starken—neue Weiterbildungsan-
forderungen umsetzen’, Dusseldorf
Esping-Andersen, Gosta (1990) The Three Worlds of Welfare Capitalism, Cambridge:
Polity Press
IES (Institute of Employment Studies) (1996) In Brief, 112
Lange. T. (1993) ‘Training for economic transformation: the labour market in Germany’,
British Review of Economic Issues, 15/37, 145–68
Leibfried, S. and Pierson, P. (eds) (1995) European Social Policy, Washington DC: The
Brook-ings Institution
Marks, G. (1992) ‘Structural policy in the European Community’, in A.M. Sbragia (ed.)
Europolitics. Institutions and Policy-making in the ‘new’ European Community,
Washington DC: The Brookings Institution, 191–224
Maurice, M. and Sellier, F. (1979) ‘Societal analysis of industrial relations: a comparison
between France and Germany’, British Journal of Industrial Relations, 17:3, 322–36
Milner, Susan (1992) ‘EC training policy’, European Business and Economic
Development, 1/1, 15–22
(1993) ‘Understanding the impact of social actors on policy-making at EC level: the case
of training policy’, Cross-National Research Papers, Loughborough
Mitchell, Duncan (1993) ‘Interest groups and the “democratic deficit”’, European Access,
no. 2, 14–17
Nielsen, Ruth and Szyszczak, Erika (1991) The social dimension of the EC, Copenhagen
Podevin, G. (1995) ‘De la promotion sociale a la promotion de l’économique: le role du
dispositif de formation continue depuis 1971’, Pour, no. 148, pp.65–79
Porter, Michael (1990) The Competitive Advantage of Nations, New York
Rainbird, H. (1993) ‘Vocational and educational training’, in M. Gold (ed.), The social
dimension. Employment Policy in the European Community, Basingstoke:
Macmillan, 184–202
Rose, R. and Page, E.C. (1990) Action in adversity: responses to unemployment in Britain
and Germany’, West European Politics, 13, 66–84
Sorge, A. (1995) ‘Labour relations, organization and qualifications’, in J. Van Ruysseveldt,
R. Huiskamp and J. van Hoof (eds) Comparative Industrial and Employment
Relations, London, Thousand Oaks and New Delhi: Sage, 243–66
Spicker, Paul (1991) ‘The principle of subsidiarity and the social policy of the European
Community’, Journal of European Social Policy, 1/1, 3–14
 SUSAN MILNER 181

Streeck, W. (1995) ‘From market-making to market-building? Reflections on the political

economy of European social policy’, in Leibfried, S. and Pierson, P. (eds) European
social policy, Washington DC: The Brookings Institution, 389–431
 10
EC ACTION AND INITIATIVES IN
ENVIRONMENTAL PROTECTION
David Freestone and Aaron McLoughlin

Introduction
This chapter argues that the expansion of EC competence in the field of the
environment has been an exercise in ‘Community opportunism’. The original
Rome Treaty contained no authorising provision for an environmental policy,
but it has nevertheless—through its range, degree of public support, and the legal
instruments it has generated—become one of the more successful of EC policies.1
Its development in both the domestic and international arena has inevitably come
at the direct expense of state competence. The development of the EC agenda for
environmental protection has for a number of member states2—particularly those,
such as the UK, that are perceived as less ‘green’—largely provided the national
agenda for environmental policy.
The development of national and latterly regional and global agendas for
environmental protection has been used skilfully by the Commission and the
European Parliament to expand Community competence first internally, and then,
by the doctrine of ‘parallelism’ (i.e. that Community competence in external
relations expands in parallel with internal powers), externally, though this has in
turn opened the EC to the charge that it has concentrated on the development of
legal instruments at the expense of enforcement and that it has gone beyond its
own infrastructure capabilities (MacRory 1992).3 Post-Maastricht, this argument
has been used as a justification for an attempt at ‘roll back’ of Community
competence under the guise of the ‘subsidiarity’ doctrine.4
However, as in other areas of EC policy-making, even after 1992, the locus of
power cannot be defined with precision. Relationships are still evolving, and the
strength of particular actors varies according to political context and the
constellation of alliances, including, most notably, those between the
Commission and particular member states. External factors can also play an
important role—most notably pressure from the United States, and threats of
WTO adjudication.5
This chapter will address some of these complexities. In some instances
the progress of EU environmental policy has been at the expense of the
traditional competence of member states. This is not however a static
 DAVID FREESTONE & AARON MCLOUGHLIN 183

relationship. Even in areas where member states perceive themselves as retaining

‘sovereignty’6 Community law may still impose restrictions on the exercise of
their powers—as for example in the recent judgment of the English courts
applying EC law in restricting the UK discretion unilaterally to define an
‘estuary’.7 The emergence of the doctrine of subsidiarity has also introduced
another wild card, some arguing it should be used as justification for the increase
in Community competence,8 while others take the opposite view. It is certainly
not axiomatic that subsidiarity involves a decrease in Community competence
and a consequential increase in members states’ powers in the environmental
area. Environmental problems and their solutions are not restricted by national
boundaries and article 3b of the EC Treaty (post Maastricht) provides for
Community action ‘only if and in so far as the objectives of that action cannot be
sufficiently achieved by the Member States and can therefore by reason of scale
or effects of the proposed action, be better achieved by the Community’.
EU institutions themselves are complex. Conflict is not unusual within the
Commission, between and within Directorate-Generals, between
Commissioners, and between the Commission, Parliament and Council.9 The
European Parliament, for example, is usually portrayed as a unitary actor, but its
various committees often have very divergent views on environmental matters,
although composite compromise amendments and resolutions do not always
reveal these. Likewise, EP political groupings are often internally divided, often
making national interest a stronger determinant of position than party group
membership. It is thus simplistic to see institutions as monolithic and cohesive:
policy outcomes are the result of a multitude of factors, both political and non-
political.
This chapter seeks to illustrate these observations through a range of issues
including enforcement, the role of the WTO in EU environmental policy, and the
influence of lobbyists. It starts by outlining the development of EC
environmental policy and the range of sectors it covers, the legal basis of the
policy—which with the increase of majority voting has considerable political as
well as legal significance—and looks briefly at the roles of the various EU
institutions.

Origins
The true origins of the Community environmental policy lie in the 1972
Stockholm Conference.10 Stockholm coincided with the formal end of the
transitional period11 and the negotiations for enlargement of the Community.12
The end of the transitional period left a lacuna in policy. Not all the Treaty
objectives had been met,13 but most of what was then thought politically feasible
was thought to have been achieved. The challenge of protecting the human
environment raised forcefully by the Stockholm Conference provided a higher
profile policy for the EC.
184 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

The famous 1972 Paris Summit of Heads of State or Government14 officially

acknowledged the direction of the Stockholm meeting, at which of course the
EC member states had participated. Despite the overwhelmingly economic
objectives of the text of the Rome Treaty, the Preamble to the Paris Summit
communiqué acknowledged that economic expansion was ‘not an end in itself’
but that economic growth should be linked to ‘improvement in living and
working conditions’ of the citizens of the EC. This phrase was to form the
tenuous basis for the development of a Community environmental policy,15 the
basic principles of which persist to the present.16 The Summit called on the
Commission to draw up a Community environmental policy and a year later the
Council of Ministers approved an ambitious four-year Community Action
Programme on the Environment.17 This designated three areas of activity:
reduction and prevention of pollution and nuisances; improvement of the
environment and quality of life; and Community action, or common action by
member states, in international organisations dealing with the environment.

The Environmental Action Programmes

The five Environmental Action Programmes (EAPs) established to date18
demonstrate the extent to which EC policy-makers have both reflected, and
contributed to, the evolution of the concept of sustainable development: the
notion that development and environmental protection need not be in conflict.
Reflecting Stockholm, the emphasis of the First Programme was on preventative
action, but at the lowest cost to the Community. By the Third Programme (1983)
the resources of the environment were coming to be thought of as the basis of—
but also the limit to—further economic and social development.
The 1983 Programme also introduced the concept that environmental policy
should be an integral part of other EC policies. This concept grew in importance
until with the most recent programme ‘the emphasis upon the integration of
environmental considerations into the formulation and implementation of
economic and sectoral policies was paramount alongside the concept of
“sustainable development”’. This concept is defined in terms of securing
‘continued economic and social development without detriment to the
environment and the natural resources on the quality of which continued human
activity and further development depend’. (COM(92)23, final 27 March 1992,
3).
The main priorities of the Fifth EAP are:

• improving the legal framework for environmental policy through more

coherent and comprehensive approaches to specific sectors, through simpler
legislative and administrative procedures, and by improving the enforceability
of the measures adopted;
• enhancing the role and implementation of reporting requirements under
Community environmental legislation;
 DAVID FREESTONE & AARON MCLOUGHLIN 185

• improving access to justice and facilitating public involvement in the

implementation and enforcement of legislation;
• sanctions for non-compliance and enforcement of environment policies.

The means for achieving sustainable development are set out in article 4 of the
Commission’s proposed decision.19 However, the agenda is hardly radical. In its
recent review20 of the Programme’s progress the Commission itself stressed the
need for improved integration of environmental concerns into other policies; for
a broadening of the range of instruments, better means of implementation, as
well as a reinforcement of the Community’s international role. Significantly, in a
change from the previous EAP the Commission has dropped from each heading
of proposed action the phrase ‘the Community will’, thereby removing the
potential threat of legal action if it were seen as having given a commitment to
act and then failed to do so.
The European Parliament—whose role is important given that Action
Programmes21 go through the co-decision procedure, giving the EP in essence a
right of veto—has been much blunter.22 In its report at the first reading of the
Commission’s review of the Fifth EAP, the Parliament was highly critical of the
Commission’s position; its Rapporteur calling it a ‘step backwards’, claiming that
the original obligations of the Fifth EAP had been ‘completely watered down’,
and that there was no binding timetable as a statement of ‘real political commit-
ment’.23
Most recently, the Commission has proceeded with caution in the
environmental area, reflecting both the modest political standing of DG XI24
within the Commission and Jacques Santer’s doctrine of undertaking ‘less but
better’ legisla-tion.25 The 1997 Commission work programme contained only
two new legislative proposals relating to the environment. The programme opted
for realism, passing over proposals that had previously failed, or were being
reviewed or updated. Thus for example, after the proposed directive on
integrated pollution prevention control for small installations was dropped in
April 1997, only one environmental legislative proposal remained—to regulate
airport noise.26 Even that proposal was withdrawn when it received support only
from the Nordic countries and sustained opposition from industry and other
member states.27

The legal bases for EC environmental policy

The Treaty of Rome

The Paris Summit found a mandate, albeit tenuously, for environmental
protection in the commitment in the Preamble to the Treaty of Rome, to ‘the
constant improvement of the living and working conditions of their peoples’.
This has been interpreted, somewhat expansively, to mean improvement in the
186 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

‘quality of life’ and thus the environment. There was also an argument, derived
from market-building principles, that discrepancies in national environmental
protection laws could result in distortions or obstructions to trade in that differing
national standards could be used to discriminate against goods from other
member states.28 There were thus two separate Treaty bases for environmental
legislation: articles 100 and 235.
Article 100 authorises directives approved unanimously ‘for the
approximation of such provisions laid down by law, regulation or administrative
action in the Member States as directly affect the establishment or functioning of
the common market’. The wording clearly signifies a link with economic
policies and while it has provided a satisfactory basis for legislation in a number
of spheres, such as water quality29 or noise emission,30 where different national
standards could confer unfair trading advantage on certain enterprises, in other
spheres it has proved too difficult to demonstrate that such discrepancies have
affected the ‘establishment or functioning of the common market’. Then recourse
has had to be made to article 235 under which legislation not envisaged
elsewhere is authorised if it is ‘necessary to attain in the course of the operation
of the common market, one of the objectives of the Community’. Here the
Preamble was invoked to justify the argument that protection of the environment
was one of the objectives of the Community,31 leading, it should be said, to some
strange results, such as the claim that the conservation of species of wild birds is
necessary for ‘the harmonious development of economic activities throughout
the Community and a continuous and balanced expansion’.32

The Single European Act

The 1987 Single European Act33 (new article 130, paragraphs R, S, and T)
obviated the need for this juristic artifice. The SEA gave formal recognition to
the Community environmental policy and provided for the first time a clear and
unambiguous legal basis for EC environmental law. Article 130R defined the
objectives of EC environmental policy: to preserve, protect and improve the
quality of the environment; to contribute towards protecting human health; to
ensure a prudent and rational utilisation of national resources. Article 130R(2)
then set out the principles on which Community action to achieve these
objectives should be based, namely that preventive action should be taken, that
environmental damage should, as a priority, be rectified at source, and that the
polluter should pay. It also required that environmental protection considerations
be a component of the Community’s other policies.34
Title II of the Single European Act envisaged that environmental legislation
would be based on one of two main legal grounds. Article 130S, by providing
specifically for the enactment of environmental legislation, freed it from the
requirement noted above that it should serve economic ends,35 but such
legislation be adopted by unanimous agreement of the Council of Ministers,
unless (by unanimity) it chose to define those matters as ones on which decisions
 DAVID FREESTONE & AARON MCLOUGHLIN 187

shall be taken by a qualified majority.36 Action taken under article 130 was
subject to an early version of the principle of subsidiarity,37 namely that: ‘The
Community shall take action relating to the environment to the extent to which
the objectives [of EC policy] can be attained better at the Community level than
at the level of the individual Member States.’ It was also subject to the general
safeguard provision in article 130T that: The protective measures adopted in
common pursuant to article 130S shall not prevent any Member State from
maintaining or introducing more stringent protective measures compatible with
this Treaty.’
An alternative basis for environmental legislation was provided under article
100A. This article provides for action by majority vote in the Council (though
member states are specifically permitted to adopt stricter measures of domestic
environmental protection if they so wish).38 To ensure that Single Market
measures do not always take precedence over environmental considerations, the
Commission is obliged when presenting proposals for environmental action
under this article to ‘take as its basis a high level of protection’ (article 100A
(3)).

The Treaty on European Union

The 1992 Maastricht text furthered the new constitutional recognition of
environmental policy accorded by the SEA. Article 2 defined as a Community
goal: ‘the promotion throughout the Community, of a harmonious and balanced
development of economic activities, sustainable and non inflationary growth
respecting the environment…‘Article 3(k) included A policy in the sphere of the
environment’ as a means of reaching these objectives. The SEA commitment
that environmental protection requirements were integral to other Community
policies was reinforced by a further declaration that the Commission and the
member states should ‘take full account of their environmental impact and of the
principle of lasting growth’. Alongside the principle of preventive action, article
130R(2) also introduced the so-called ‘Precautionary Principle’39 to join the
existing principles that environmental damage should as a priority be rectified at
source and that the polluter should pay.
The new Treaty also increased qualified majority voting on environmental
issues—article 130R making it now the norm, except that ‘by way of derogation’
unanimity would, in the first instance, still be required for some classes of EC
environmental legislation (fiscal provision, town and country planning, some
sections of land use, and some measures affecting national energy policy).40

The Draft Treaty of Amsterdam

The Amsterdam Treaty made more modest changes, though at the time of writing
full details had not been fully clarified, and the Treaty remains unratified.41 The
text reaffirms ‘sustainable development’42 as a cornerstone of EU policy and ‘a
188 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

high level of protection and improvement of the quality of the environment’ as

the norm.43 Integration of environmental policies into all sectoral policies is
strengthened with explicit Treaty references.44
The European Parliament is to be granted greater powers and the legislative
process simplified to three procedures (assent, co-decision, co-operation). Most
environmental legislation will be subject to qualified majority voting by the
Council of Ministers. Unanimity will be preserved for those matters under article
130S(2) which touch on the politically sensitive matters of national policy.45
A controversial aspect of the draft Treaty, however, concerns an agreed
derogation permitting member states to take more rigorous environmental
protection measures ‘on grounds of a problem specific to the Member State’.46
This concession, inserted at the demand of the Nordic states, is explicitly to
protect those states with high environmental standards, and in a certain sense is a
repatriation of a degree of environmental competence to member states. The
Commission will have six months to judge whether any national measures so
introduced are justifiable on environmental grounds and ‘do not constitute an
obstacle to the functioning of the internal market’.47 This issue will arise again
when the deroga-tions in the accession Treaties of the most recent EU entrants
(Austria, Finland and Sweden) come up for review. The Commission—as well as
many in the business community—see these derogations as a potential threat to
the integrity of the internal market.

The forms of Community environmental legislation

Article 189 EEC authorises two main methods of Community legislation: the
regulation and the directive. The former has general application throughout the
member states and is directly applicable, becoming automatically part of the law
of the member states without implementation.48 A directive, on the other hand,
specifically requires implementation into domestic law.49
The necessity of relying heavily on article 100 as a legal base in the early
development of environmental legislation dictated the use of the directive, for
that article, concerned as it is with harmonisation, only authorises action by
directive. Although article 235 does not impose a similar restriction it has been
suggested that the Commission, anxious not to be challenged as going beyond its
legal power, has been very cautious in its use of article 235 and other forms of
legal instrument.50
However, the way in which the directive has been used in environmental
policy areas is not strictly in accord with this distinction, and contains within it
the implication of greater restriction on member states’ margins of discretion or
their freedom to implement directives in particular ways which they would
prefer. The obligations imposed on member states by environment policy
directives fall into three broad categories often with different categories of
obligation within the same directive.51 The first category contains the ‘typical’
directive—imposing a clear result obligation, but genuinely leaving the means to
 DAVID FREESTONE & AARON MCLOUGHLIN 189

the member states.52 In practice such obligations are often procedural, as in the
enforcement of obligations imposed elsewhere in the instrument. The second
category is of the ‘regulation type’ imposing detailed substantive obligations,
(prohibitions, standards and tolerances, etc.) often contained in annexes with
simplified amendment procedures, which give no effective leeway or discretion
to member states.53 The third is the framework directive, such as the classic
aquatic environment54 directive which simply provides a framework for future
supplementation by more detailed ‘regula-tion-type’ directives, where there is
often no need for the framework directive itself to be incorporated into national
law. Rehbinder and Stewart conclude that ‘with respect to substantive law the
distinction between regulation and directive has been blurred, although it has
retained most of its validity in the field of proce-dure’.55 The Court of Justice has
implicitly approved this elision of legislative forms.56
Largely as a result of the regulatory way that directives are often phrased, the
ECJ has on occasions found that certain provisions of directives fulfil the
requirements of the doctrine of direct effectiveness—they are ‘complete and
legally perfect’.57 This means that an individual (whether natural or legal) could
rely on such provisions in the national courts in proceedings against the
government,58 in suits alleging failure to implement or faulty implementation.
This doctrine, a judicial development by the European Court of Justice, has made
a significant impact in other sectors of Community law, though as yet not
significantly in the environmental area. It is noticeable however that although
there was a trend for environmental directives and proposals to be drafted in
unequivocal terms which might be found to fulfil the requirements of direct
effectiveness,59 the incorporation of subsidiarity into the legislative programme
has tended to reverse this trend.60
It should be added that the regulatory approach which manifests itself in the
specificity of the obligations imposed by directives in this sector is in fact a
hallmark of the nature of EC environmental instruments as well as their form.
Taking its lead perhaps from the majority of domestic policies of the member
states, it is notable that the overall approach of Community environmental law
has been regulatory: harmonised standards, such as environmental quality
standards, and product and process (for example, emission) standards, are
imposed on member states which have the responsibility to implement and
enforce them under the supervision of the Community.61 Very little use has been
made to date of other types of powers; indeed the EC has seldom taken anything
other than a passive regulatory approach, that is, amending existing laws to keep
up with technological advances rather than seeking to force technological
developments by setting progressive standards—an approach sometimes taken in
the United States of America (where it is known as ‘technology-forcing’). Again,
it may in the past have been the use of the harmonisation devices of article 100
which inhibited such approaches.
Commentators have pointed out that a number of devices other than passive
regulation are available for the development of environmental policies,62 and in
190 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

many member states public opinion may well have swung, or be in the process
of swinging, towards support for environmentally progressive taxation such as the
differentiation which now exists on lead-free petrol in the United Kingdom and
other European states.63
The directive on waste oils does require member states to organise and
subsidise the collection, regeneration and combustion of waste oils, and current
proposals on waste encourage recycling and national self-sufficiency,64 but the
systematic use of subsidies always threatens to fall foul of the prohibition on
state aids in article 92. In the Fourth Action Programme some priority was
attached to the development of appropriate instruments for environmental
protection, in particu-lar the ‘development of efficient instruments such as taxes,
levies, state aid, authorisation of negotiable rebates with a view to implementing
the principle that the polluter pays’.65

Environmental politics and the role of EC institutions

The Environmental Action Programmes described above have not emerged in a
political vacuum. They have been generated in response to a wider European
issue agenda in which environmental politics have increased in importance over
the last decade, both at EC and national level.66 However, that response has been
shaped by a range of factors, including the variations in the salience and
direction of environmental politics at national level, the tendency for EC policies
to respond to crises and high-profile events, the complexities in inter- and intra-
institutional relationships at EC level, and perhaps most importantly of all, the
complex legal and administrative politics of implementation and enforcement.
Despite the undoubted achievements of the Action Programmes, critics of
their shortcomings have been vigorous and persistent. First, there is, perhaps
predictably, considerable dissatisfaction with the trade-offs which are made
between environmental and commercial issues. Secondly, both the SEA and the
Maastricht Treaty have been criticised: the former because article 130R(3), if
rigidly adhered to, is seen as imposing virtually insurmountable obstacles to new
legislation;67 the latter in particular for its explicit incorporation of the principles
of subsidiarity and proportionality, which are frequently seen as a reason for
Commission inaction. Finally, with the choice of some ten different legislative
processes available for Community environmental legislation, procedures are
seen as having become far too complex and the process itself an arcane exercise
master-able only by a tiny handful of experts. This lack of transparency and
reliance on technocrats68 is not unique to environmental issues, but is as acute
within it as anywhere.
As in areas of social policy described in other chapters of this book, therefore,
the extent to which EC institutions really lead the Community agenda, and the
extent to which member-state autonomy is genuinely limited by Community
action can only be understood by reference to the politics of environmental
questions within the EC institutions, to which we now turn.
 DAVID FREESTONE & AARON MCLOUGHLIN 191

The Council of Ministers and the European Council

It is in the Council of Ministers that national differences of perspective, culture
and approach inevitably come to the fore, with protracted and sometimes bitter
disputes. The positions of the northern states—Denmark, The Netherlands, and
Germany, the earliest converts to an environmental agenda—frequently contrast
with the Mediterranean countries which are often accused of putting
development (even non-sustainable development) before environmental
concerns.69 The northern position has been strengthened with the accession of
Austria, Finland and Sweden. The UK position has also been distinctive in areas
such as water quality standards70 and automobile emission control.71 Its claims
for distinctive standards suiting local conditions72 have been increasingly
perceived as a defence of lower standards, and a defence of British industry’s
‘dirty’ practices, rather than genuinely scientifically based policy alternatives.73
The dynamics of agreement or consensus formation within the Environment
Council (the Council of Ministers of the Environment) meetings are complex,
and illustrate the significance of intricate and highly interactive policy networks
in operation. Von Moltke74 sees the process in terms of a ‘consensus cycle’
under which national policy proposals provide the initial impulse for Community
proposals;75 these proposals although not adopted by the Council are often taken
up by other member states which then introduce them domestically. The
Community proposal, albeit often in modified form, then emerges as a consensus
position. Dashwood’s more cautious ‘radiator effects’ theory suggests that the
substance of a novel Community proposal is often taken over as a national
policy; this national adoption will often ‘radiate’ back to the Community
process, thus making the Commission proposal more acceptable.76
As Rehbinder and Stewart suggest,77 both approaches over-simplify, but
environmental policy formation at national and Community levels certainly
operates symbiotically. National policies in the sector are relatively young and
undeveloped, particularly when compared with, for example, fiscal or economic
policies. On occasions the early involvement of the EC appears to have
facilitated an often surprising degree of consensus among member states.78
Notwithstanding the resultant danger of ‘lowest common denominator’ policies,
the evidence does not support the view that EC environmental policy always
moves at the pace of the slowest. It may not always meet the aspirations of the
‘greenest’ but it has provided an important policy ‘spur’ to most national
environmental policies. For example, the proposals to implement EU-wide
legislation to label packaging waste is a move to curtail the possible effects of
distortion of the internal market caused by the German DSD (Duales System
Deutschland) system. EU measures on packaging waste and marking of
packaging waste will bring to many states regulation were none existed before,
albeit not as stringent as existing German regulation.79
The European Council naturally plays a more demonstrative but also more
occasional role, frequently through ‘disaster driven’ responses to causes célèbres,
192 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

as in the case of the specific sea pollution programme agreed shortly after the
wreck of the Amoco Cadiz, or in 1980s when the acid rain effects on the Black
Forest were first highlighted, and the 1983 Stuttgart European Council decided
that environmental protection policy should be a priority within the Community,
emphasising the need particularly to reinforce the fight against pollution and the
dangers to European forest areas. The March 1985 Summit designated 1987 as
the European Year of the Environment.80 In its now famous Rhodes Declaration,
the European Council pledged itself to ‘play a leading role in the action needed
to protect the world’s environment’ and to continue to strive for ‘an effective
international response…to such global problems as depletion of the ozone layer,
the greenhouse effect and the ever growing threats to the natural environment.’81
More recently the European Council meetings have been a forum for political
deals on the implementation of subsidiarity in relation to environmental
instruments.82

The European Parliament

Despite its still limited powers,83 the EP is comprised of able and ambitious
politicians who have taken advantage of the political capital to be made from a
greater environmental awareness among electorates. An early success was the
adoption by the Council in 1983 of a ban on the import into the Community of
seal pup skins, after a series of Resolutions by the Parliament drawing attention
to the culling issue.84
Since then major parliamentary initiatives have generally been the result of the
work of the Environment, Public Health, and Consumer Protection Committee
which has established itself as an important, high-profile influence. Through its
work, Parliament has been able to provide sophisticated inputs into debates on
legislative proposals on a variety of issues including environmental impact
assessment and hazardous waste transport,85 to establish its own inquiries into
controversial issues such as the handling of waste,86 and to flag up important
issues not yet receiving attention, such as sea-level rise.87 It has also conducted
inquiries into the implementation of a number of key environmental directives:
dangerous substances (76/464), drinking water (80/778) and bathing water (76/
160).88 Environmental policy has also benefited from general moves by
Parliament to strengthen its own position within the Community decision-making
process, including the strengthening of areas of non-obligatory expenditure89 and
its successful pressure on the Commission to present an annual report90 to
Parliament on the Commission’s work in the moni-toring of the application of
Community law.91
However, the EP is split into numerous party groups,92 national political
groupings, committees, delegations and inter-groups,93 the internal politics of
which are complex and frequently divisive, as for example in relation to bio-
technology or nuclear power. Thus in the bio-technology area the Research and
the Environment Committees have taken markedly different lines, with the
 DAVID FREESTONE & AARON MCLOUGHLIN 193

former being identifiably more sympathetic to industrial development.94

Divisions on nuclear power were evident, for example in the Soulier report95 on
the Commission’s communication on the future of nuclear power, with French
interests in nuclear power sheltering under the claimed environmental benefits of
limiting the output of carbon dioxide, in opposition to exponents of an increase
in funding for renewable sources of energy, which exclude nuclear power.96

The Commission, implementation, enforcement

As initiator of legislation and guardian of the Treaties,97 the Commission has
the central role both in the development of the action programmes and in
implementing legislative proposals. The factors which condition its role as policy
initiator are complex and depend to a large degree on political conditions within
the member states, and their willingness to allow the Commission a leadership role.
As with other Directorate-Generals, such factors also include:

• the style of the Presidency (where Delors’ permissiveness towards legislative

initiatives contrasts with Santer’s98 chastened caution);
• relations between directorates general (DG XI’s brief requires both a great
deal of co-ordination with other DGs—some with diametrically opposed
interests—and the capacity to persuade them to undertake environmental
evaluations of their portfolios and programmes);
• the resources available to the lead DG itself;99
• the status of the Commissioner in charge (the recent vicissitudes of the
colourful Ritt Bjerregaard and her misfortunes before the EP Environment
Committee have been seen by some as highly prejudicial to DG XI’s current
influence.100

However, in the area of environmental policy, where the range of legal

instruments adopted over the years is large, questions of enforcement and
implementation are no less fundamental than those of policy initiation, and it is
in this area that the real controversy has been focused in recent years.101 As with
enforcement in other sectors, such as competition policy and state aids, the
Commission’s decisions about the actions it takes to enforce rules in cases of
apparent non-compliance are likely to involve delicate judgements and
essentially political considerations, with member states often able to escape legal
challenges because the Commission decides it is impolitic or impractical to be
aggressive.102 Certainly, the Environment Commissioner is the regular target of
complaints about lack of action against member states’ non-compliance.103
The Commission’s efforts to ensure compliance were extensively documented
in its 1995 Communication on the Implementation of Community Environmental
Law,104 which identifies several types of problem including those arising from
the quality of legislation; lack of transparency; poor co-operation between
member states and the EC; difficulties in monitoring and evaluation of the
194 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

effects of legislation; limitations on knowledge of EC environmental law

amongst practitioners; and lack of Community funding of the implementation of
Community environmental legislation. The Commission proposed that in some
cases new voluntary agreements would be more appropriate instruments than the
traditional, top-down, regulatory methods. It also raises the possibility of
expanding the role of the European Environmental Agency105 to become an
independent enforcement agency.106 The latter, it was argued, could be given
powers to investigate alleged failures to implement and apply European
environmental laws, to make binding protective and final orders, and to levy
fines, separating the enforcement function from the Commission’s legislative
role and from the political constraints imposed by the Commission’s general
relationship with the member states. It may be recalled that this was in fact the
original role envisaged for the EEA.
The desire to de-politicise environmental enforcement, or make it more
independent, is felt by many NGOs and legal practitioners.107 Indeed, it has
expressed been alleged that some member states have disliked the zeal with
which officials in DG XI have acted and have sought to interfere in its internal
administrative poli-tics, and even in staffing policy.108 However, since the EEA
is primarily an information gatherer, and relies on the trust and support of
national governments and agencies, endowing it with enforcement power would
put that relationship under pressure.
Other enforcement problems arise from the fact that most environmental
legislation is in the form of directives, which purport to give member states
extensive discretion in implementation, and often making full and proper national
transposition and implementation very slow. Other problems result from the
delays and complexity involved in the cumbersome mechanisms provided by the
Treaty under articles 169–171 under which states may be brought before the ECJ
for violations of Community law.109
Special problems of implementation also arise in member states with highly
devolved power structures, where regions or federal states have to transpose
directives into their own law, as in the cases of Belgium and Germany. There are
also often problems when EU legislation requires member states to amend
existing national rules. Problems with applying EU environment law are most
frequent in the areas of nature protection, environmental impact assessment,
waste disposal and water pollution, frequently because of incorrect or incomplete
transposal of directives or a lack of the technical infrastructure needed to meet
EU requirements.

Enforcement: law and politics

Articles 169, 170 and 171110 provide mechanisms by which, respectively, the
Commission may take a member state before the ECJ for breach of Community
law, member states may take another state before the Court for the same reason
and by which the Commission can request the ECJ to impose fines on member
 DAVID FREESTONE & AARON MCLOUGHLIN 195

states which, having been found by the Court to have been in breach of Community
law, have not remedied that breach.111 Article 169 has to date been the primary
method for enforcement of Community environmental law.112 Use of the inter-
state action under article 170 is as yet extremely limited, and politically highly
sensitive,113 but there are signs that the new power to fine under article 171
introduced by the Maastricht Treaty may prove a significant weapon in the
enforcement armoury of the future.
One example demonstrates the highly charged political atmosphere in which
formal actions against member states take place. In 1996 Ireland started to
investigate the possibility of taking the UK before the ECJ over plans to set up a
nuclear waste treatment plant near Sellafield on the Irish Sea coast.114 The Irish
argument apparently was that Britain’s nuclear waste agency had not disclosed
the details of alternative sites, contrary to the environmental impact assessment
directive,115 and that the coast of the Irish Sea was an inappropriate location for
such a facility. For political reasons the Irish government did not proceed with
the formal action, but did support a private lawsuit to shut down the
controversial British Nuclear Fuels reprocessing facility at Sellafield, brought by
Irish citizens from Dundalk on the western coast of the Irish sea, who claimed
that Sellafield was a serious health threat. The Irish government support was
itself an attempt to deflect an action brought against it by the same citizens, who
claimed that Ireland had been negligent in failing to check the expansion of
Sellafield in the past, particularly during the planning and commissioning of the
THORP plant, in use since 1995. The Irish government reportedly decided in
principle to provide financial and other support to the Dundalk plaintiffs,
including scientific investigation, research and legal work, on condition that the
case against itself was dropped. In 1997, the Irish government also intervened for
the first time in a UK planning inquiry by objecting to a preliminary scheme to
store radioactive waste underground at Sellafield.116
Though article 170 has yet to be used in the environmental arena, applications
to the ECJ under the new article 171(2) for financial penalties against member
states which have not complied with previous court judgments have begun to be
used.117 In June 1996, the Commission adopted criteria118 for assessing when to
request penalties and their size. Its intention is to levy fines that have real
deterrent effect, and reflect the seriousness of the infringement and its duration,
taking into account economic prosperity and population size. The Commission
exercised these new powers on 29 January 1997, making applications to the ECJ
against Germany and Italy for failing to implement previous judgements of the
Court for infringing European environmental law. It requested that financial
penalties be levied on Germany for infringements in the areas of bird
protection119 of ECU 26,400 per day, groundwater120 (ECU 26,400) and surface
water121 (ECU 158,400); and on Italy in the areas of waste disposal122 (ECU 123,
900) and radiation protection123 (ECU 159,300).
Commissioner Ritt Bjerregaard said of the implementation of the power that
‘we have decided the amount of penalties to propose to the ECJ concerning five
196 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

court cases—all within the field of the environment. It is the first time that the
Commission makes use of its powers according to article 171 in the Treaty. It is
also high time. The public and the EP are waiting impatiently as they rightly see
article 171 as needed to improve…implementation in general and in the
environment and internal market in particular.’124
This statement perhaps inadvertently draws attention to the wide discretionary
power which the Commission enjoys in relation to all powers to pursue
enforcement proceedings. The Treaty itself gives the Commission considerable
freedom of manoeuvre, which, it might be argued, is essential given the realities
of environmental politics at EC level. If the Commission decides not to exercise
its discretion to institute an action against a member state under article 169, for
example, that failure to act, whatever the political realities, cannot be challenged.
Nor does the Commission make public the documents related to the various steps
it has to take in initiating proceedings.125
Given the limited rights of direct action against the Commission which the
Treaty gives to the individual126 and the very restrictive way in which even those
limited rights have been interpreted by the European Court127 the opportunities
for individuals or groups of individuals to challenge the exercise of this
discretion are negligible. MacRory has commented that ‘a more mature legal
system should begin to address these issues’128
Although the European Court of Justice has shown signs of taking a proactive
stance on environmental issues129 it has made no concessions in relation to the
rights of locus standi (or legal standing) of individuals or NGOs before the
Court. In the Spanish Canaries case,130 which centred on a challenge by
Greenpeace and local residents to the legality of a Commission grant of
structural funds for the construc-tion of power stations in the Canary Islands, the
issue was whether the award of aid had been in conformity with environmental
requirements contained in the relevant structural fund regulations, especially
those concerning environmental impact assessment. The Court refused to
consider the substance of the case, ruling that the applicant had no standing. It
took a similar position in the French Polynesian Nuclear Tests case.131 In the
Irish Tourist Board—WWF case132 the plaintiffs challenging the grant of aid to
build a tourist centre in an area of outstanding natural beauty, the Court of First
Instance again did not find the case admissible.
On some funding matters, however, the Commission has recently made a
markedly pro-environmental policy switch. In April 1996, the European
Commission proposed taking legal action against the Irish government over its
decision to proceed with a controversial sewage plant at Galway Bay.133 The
Commission argued that the project would infringe the habitats directive134
because the island plant would be built on a significant bird sanctuary. At the time
of writing, the issue was still being argued between the Irish government and the
Commission, which through its regional affairs Commissioner has made clear
that no Commission funding will be forthcoming. This is the first time that the
Commission has refused funding on environmental grounds.135
 DAVID FREESTONE & AARON MCLOUGHLIN 197

Inevitably political questions may be asked about the criteria which the
Commission uses to determine whether or not to institute legal proceedings
against member states. In March 1996 the Commission opened proceedings
against Sweden for requiring vehicles already type-approved elsewhere in the EC
to obtain a Swedish national exhaust-emissions certificate.136 The Swedish
system required, inter alia, that producers and importers recall cars if their
emissions reduction equipment were found to degrade too quickly. The
Commission claimed that the requirements discriminated against imports and
went beyond pre-existing EC certification rules, pointing out that the scheme
was being challenged before the ECJ by a car manufacturer. Significantly,
however, the Commission has not yet taken any action against the German
government which operates a similar scheme. The reason for the Commission
decision not to treat the two member states in the same way appears difficult to
justify, and many observers argue that although the EC is a union of equal states
the political reality is that some are more powerful than others.137
Rather similar considerations apply in relation to the Commission’s relations
with European business interests.138 Environmental policy touches the economic
nerve of leading vested interests.139 For example, Greenpeace claims that since
1990 nearly $15 billion of taxpayers’ money has been used to support Western
Europe’s fossil fuel and nuclear industry, and that, between 1990 and 1995 the
UK government gave an annual subsidy to the fossil fuel industry of $1217.9m,
$2885.9m to nuclear energy, and $94.9m to renewable energy sources.140
Industry naturally has a legitimate right to protect its vested interests.141
Indeed companies are usually obliged to do so by their duty to their shareholders
under domestic company law. The main instrument for achieving this objective
is lobbying. Lobbying is an inherent part of the democratic system and Brussels
is fast becoming as much a city of lobbyists as technocrats. There are estimated
to be over 20,000 lobbyists in the city. Major lobbying firms are credited with
turning around public opinion on the issue of the use of furs and have helped
promote the benefits of genetically modified food.142 For example, during the
passage through the European Parliament of the controversial biotechnology
patents directive,143 MEPs were subject to a constant barrage of faxes,
information-packs, and letters from the biotechnology industry and
environmental movement. It is widely thought that the massive lobbying effort
by the biotechnology industry helped overturn the European Parliament’s initial
rejection of the directive. The debate over genetically modified soya and maize
also saw the biotechnology industry orchestrate a major lobbying campaign,
eventually helping to persuade the Commission to authorise the use of these
products in the EC, despite the opposition of some member states. As a result,
Austria, which implemented the ban after a national referendum,144 now faces
legal action for its ban on their use, as the Commission contends its unilateral
action is contrary to the free trade provisions of the Treaty.145
198 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

The scope of community environmental policy

We turn now from actors and instruments to the policies themselves. Space does
not permit an examination of every aspect of environmental policy,146 but two
areas in particular highlight the dynamics of the Community/member-state
interaction, nature protection and water quality.

Nature protection
In this area, in addition to intervention in response to high profile campaigns
(such as the imposition of restrictions on imports of seal skin and whale
products)147 there have been more generalised measures on species and habitat
protection such as directive 79/409 on the conservation of wild birds,148 which
imposes strict obligations on member states to maintain populations of wild
birds, to protect their habitat, to regulate hunting and trading and to prohibit
certain methods of killing and capture, and establishes a centralised system of
monitoring. Perhaps sensing a degree of strong public support on this issue, the
Commission has adopted a relatively high profile, proactive role on enforcement
policy, not only in relation to the prohibition of hunting for protected species in
the southern countries but also in relation to the protection of important habitats.
In response to NGO complaints to the Commission, the UK was persuaded to
abandon proposals for expanding whisky production in the Isle of Islay on a
designated bird site.149 In 1989, in the first of three significant case before the
European Court, Germany in the Leybucht Dykes case, faced violation
proceedings under article 169 EEC for engineering work in an important wetland
site.150 Although the Court did not find that Germany was in violation of its
obligations under the directive, the strict terms of its judgment considerably
strengthened the impact of the directive. In the light of that case, and later cases
against Spain151 and the UK,152 much of the discretion which member states had
presumed that they possessed in relation to the designation and alteration of such
sites appeared to have been removed, and the obligations appeared considerably
more rigorous than they had previously thought. However, even as the Court was
considering its judgment in the Spanish case, the habitats directive was being
negotiated and, reportedly at the instigation of the UK, provisions were inserted
purporting to reverse the effects of the Court’s jurisprudence153 so as to allow
member states to impinge on protected areas for ‘imperative reasons of
overriding public interest, including those of a social or economic nature’ (article
6(4). The habitat directive keys in with and expands the approach of the wild
birds directive, and the network of sites established by both directives will form a
European network of special protection areas by the year 2000.154 It seems likely
however that the restrictions on state discretion that the ECJ was developing in
the birds directive cases have been rudely curtailed by the Council.155
At the same time, utilising the doctrine of parallelism, the Commission has
also been able to develop the competence of the EC on the international scene, so
 DAVID FREESTONE & AARON MCLOUGHLIN 199

that the Community has become a party to a number of important wildlife

protection treaties, notably the 1979 Berne Convention on the conservation of
European wildlife and natural habitats,156 (implemented by the wild birds
directive) the 1979 Bonn Convention on the conservation of migratory species of
wild animals,157 the 1973 Washington Convention on international trade in
endangered species of wild flora and fauna158 and the 1980 Convention on
Antarctic marine living resources.159

Water
Water pollution policy was given priority status by the first action programme,160
and more than twenty-five legal instruments have been adopted in this sector.
From the beginning the policy had two main goals: to establish ‘water quality
objectives’ which must, by a given time, be met for waters used for specified
purposes, and to regulate the quality of contaminated emissions from fixed
installations.161 To ensure member states meet both, detailed and legally
binding standards set maximum contamination levels and compulsory
monitoring proce-dures.162
Water quality objectives have been established for surface water for
drinking,163 bathing water,164 water for freshwater fish life165 and shellfish
waters.166 Directives designate basic parameters (for example, for physical,
chemical and microbiolog-ical characteristics), which waters must meet or aspire
to meet. The competent authorities of member states are responsible for
monitoring in accordance with the directive, but it is the member state itself
which is responsible for designating the waters to which the directive applies
(although of course the member state cannot in good faith use this discretion in
order to defeat the objectives of the directive).167 The only exception is the 1980
drinking water168 directive which established mandatory standards for all water
intended for human consumption. These standards have caused problems for the
member states. A large number of article 169 actions have been taken to the
European Court of Justice for non-compliance.169
A second group of directives seeks to control emission standards. This
approach has been the subject of a long and much reported controversy between
the United Kingdom and the rest of the Community which has been well
analysed by Boehmer-Christiansen who suggests that the controversy ‘was never
primarily technical, but political’170. The United Kingdom, which had a
relatively established practice of regulating the pollution caused by emissions to
ambient water quality,171 objected to a system of EC standards for all emissions
from fixed installations. This dispute came to a head with the enactment in May
1976 of the framework directive 76/464 on the discharge of dangerous
substances into the aquatic environment172 and resulted in a mixed regime.
Dangerous substances (based on toxicity, persistence and bioaccumulation), are
placed on List I (the black list), while List II substances ‘are characterised by the
fact that their deleterious effects on the aquatic environment are confined to a
200 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

given area and dependent on the characteristics and location of the waters into
which they are discharged’.173 Member states are obliged to eliminate pollution
from List I substances by enforcing maximum limit values of these substances in
discharges or in receiving waters (that is, either a ‘uniform emission standards’
(UES) or ‘environmental quality objectives’ (EQO) approach). List II substances
are controlled by an EQO approach, enforced on the basis of the quality of the
receiving waters. Implementation has not been without difficulty, however.
Although 129 List I substances have been proposed only four directives
establishing limit values were passed until 1986174 when the framework directive
was amended to expedite deci-sion making.175
Water legislation has been a major battleground in the subsidiarity debate.176
In response to the demands of the 1992 Edinburgh European Council, the
Commission’s plans for adapting water legislation to the demands of subsidiarity
were set out in its 1993 Report to Council.177 Accepting that the previous
emission control approach has not been entirely satisfactory the Commission
proposed a more integrated, source-oriented approach to supplement the existing
regime. Important examples of this new approach are the directives on municipal
waste water and pollution by nitrates from agricultural sources (both creatures of
the International North Sea Conference—discussed below). These make a real
attempt to attack the root of the problem by seeking to change waste-water
treatment and farming practices. Crucially, and in line with the principle of
subsidiarity, member states are themselves to designate the vulnerable zones to
which these directives apply and the less vulnerable zones in which less stringent
measures will be acceptable. It is not difficult to see the potential for conflict and
even abuse of this approach. Already the UK government has been disciplined by
its own courts for a breach of Community law in seeking to exclude important
estuarine areas from its domestic application of the waste water directive.178
The 1996 directive on integrated pollution prevention and control (IPCC) is
set to formalise this more integrated approach to water pollution control.179
Similar insights into the nature of EC environmental law in the post-subsidiarity
era are also provided by the proposed directive on the ecological quality of
surface waters. It is no longer envisaged that this will become law in its present
form, but very similar provisions are planned to form the basis of a new
framework directive on water resources.180 The draft text of the ecological
quality directive181 envisaged that the member states would set the operational
targets for good ecological quality as defined by the directive and they would
draw up integrated programmes to meet these targets. The obligations of the
draft are not of result—as in previous water quality directives—but of procedure:
member states must take the necessary procedural steps indicated in the directive,
allowing the elaboration of solutions tailored to the needs of individual waters. In
the Commission’s communication on a European water policy of 21 February
1996182 it articulates the need for a new framework directive on water resources,
which reflects the new approach of the waste water and nitrates directives, and
the proposal for a directive on the ecological quality of water. It seems therefore
 DAVID FREESTONE & AARON MCLOUGHLIN 201

that in the water quality sector at least there has indeed been some conceptual ‘roll
back’ of the role of the Community, conferring wider discretion on member states.

International aspects
In tandem with measures for the regulation of water pollution within the EC
itself, the Commission has also sought to play an active role in the international
regulation of water pollution. Under the doctrine of ‘parallelism’ developed by
the Court of Justice in a line of cases starting with the classic ERTA case,183 the
external relations powers, or competences, of the Community mirror, or parallel,
its internal competences. The development of internal Community
environmental law from 1973 has resulted in the corresponding expansion of the
external competences of the EC to represent the member states, most notably in
the area of water. The EC is party to the 1974 Paris Convention on land-based
pollution,184 and thus participates, alongside its contracting member states in the
Paris Commission (Parcom). It is party to the 1983 Bonn Agreement for co-
operation in dealing with pollution of the North Sea by oil and other harmful
substances.185 It has also signed the 1982 Law of the Sea Convention186 and
participates in the International Maritime Organisation. It is a party to the
International Rhine Convention,187 the 1976 Rhine Chemical Convention188 and
participates in the Rhine Commission. The EC has observer status at the Oslo
Commission as, for competence reasons, it has not ratified the Oslo
Convention189 and has also participated at the three international conferences on
the protection of the North Sea.190 The EC also participates in UNEP
conventions and is a party to a number of relevant UNEP regional seas
conventions.191
The EC has also played a significant role in the first three International North
Sea Conferences (1985 Bremen; 1987 London, 1990 The Hague) not only as a
negotiator but also as the body responsible for producing implementing
legislation to meet the objectives agreed through that process. Notable legislative
outcomes are the urban waste water directive and the nitrates directive. The EC
has also been involved in the discussions on the possible establishment of
Exclusive Economic Zones in the North Sea as well as a number of other
resulting issues.192
Commentators are divided on the value of the EC’s input into these fora.193
Because of the parallelism concept Community external relations competence is
continually developing and expanding. Hence it is difficult, if not impossible
(and from the EC perspective certainly undesirable), for it to state categorically at
any time the exact limits of its external relations competence. This causes
difficulties: sometimes measures cannot be approved at international meetings
because the EC currently lacks internal competence to put them into effect (that
is, it acts as a brake) whereas in other situations the existence of Community
competence, and the presence of EC member states with a united and progressive
position, may well provide an important impetus to the success of international
202 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

negotiations. Here too the process can be symbiotic. The international

conferences for the protection of the North Sea have provided objectives for the
participating states in an area in which the EC is probably the most important
single actor. Agreements within Parcom194 as well as EC legislation195 stem
directly from the declarations issued by these meetings. However, issues of
Community competence have also been reported to be to blame for the five-year
delay in the coming into force of the 1992 OSPAR Treaty.196

Policy implementation

International trade and the environment

Just as the EC limits the autonomy of its member states, so wider international
economic regimes limit that of the EC—a limitation which in turn affects the
member states themselves, though it should be noted that, from the perspective
of certain such states, especially those opposed to higher environmental
standards, the effect is by no means always negative. In practice, the existence of
GATT rules and WTO arbitration procedures adds an additional tier of decision
making to certain environmental issues, and means that the EC will be restrained
in certain areas—eco-labelling, for example—from acting for fear of causing
difficulties for itself at WTO level.197
The international trade and environment debate revolves around the lack of
explicit environmental standards for trade in the GATT (General Agreement on
Tariffs and Trade). EU law, however, has been explicit in permitting
environmentally protective actions since 1974.198 The trade rules of the World
Trade Organisation WTO are based on the principle of non-discrimination,
which in effect prevents trade prohibitions or quantitative restrictions on imports
or exports other than duties or taxes; tariffs are the only acceptable trade barriers.199
Article XX of GATT allows some exemptions for trade barriers ‘necessary to
protect human, animal or plant life or health’ or ‘relating to the conservation of
exhaustible natural resources if such measures are made in conjunction with
restrictions or domestic production or consumption’. However, despite the
development of some positive jurisprudence on the issue within the GATT
dispute settlement panel, in practice this article has not allowed the EU to pursue
the multilateral environment agreements sought by many proponents in the
Commission, the Parliament,200 and the more environmentally minded
governments. The December 1996 WTO meeting in Singapore made little
progress on this matter, and EU efforts to obtain a strengthening of article XX
met the resolute opposition of a number of developing nations, who perceive
attempts to introduce environmental conditions into international trade as
environmental imperialism—a position also shared by the ASEAN states.
The case of the EC eco-labelling scheme illustrates some of the Commission’s
dilemmas in this area. Regulation 880/92201 granted a European-wide quality
 DAVID FREESTONE & AARON MCLOUGHLIN 203

label to those products which have better environmental characteristics than

others, to date affecting products such washing machines and dishwashers,
laundry detergents, soil improvers, toilet paper and kitchen rolls. Certain
member states also possess their own national eco-labelling regimes, though one
of the most well-known—the German ‘green dot’ scheme whereby the
packaging can be left at designated places to be collected by the DSD (Duales
System Deutschland)—has been the subject of complaints202 to the Commission
for anti-dumping violations, and anti-competitive behaviour contrary to article
85.203
Certainly, systems of eco-labelling raise complex trade-related issues, and in
member states with high environmental standards can easily favour home-
country products against imported, whether intentionally or inadvertently, since
requirements which may be very meaningful in the importing country, for
environmental reasons, may, however, be of little or no significance in the
exporting country because of its environmental objectives. Problems—for
example regarding transparency of conditions—are also posed by whether the
scheme is an official government one, or, as in The Netherlands, a non-
governmental scheme.204
However, when the Commission recently proposed a directive on the marking
of packaging205 to implement an EU-wide system of standard labelling for
packaging, to resolve some of these difficulties, it ran into an immediate threat
of inconsistency with ISO standards,206 and of WTO litigation, and seems likely
to be withdrawn.207 The issue of eco-labelling came up alongside that of reform
of article XX of GATT at the 1996 Singapore WTO meeting, but met the same
difficulty. The Commission therefore faces a delicate balancing act, destined to
last for some years, between on one side the demands of its more
environmentally active member states, EC lobby-groups, and the European
Parliament, and on the other its trade partners in the wider world. The European
Parliament has criticised the Commission for its refusal to take a tough stance on
the genetically modified maize labelling issue, an animal testing ban, and novel
food labelling, because of potential conflicts with the GATT provisions.208 The
USA has been vocal in its threats to use the WTO to seek resolution of any potential
discriminatory trade measure the EU may implement,209 and currently the
Commission’s operational policy appears to be to avoid potential WTO referrals.
Its willingness to take a tougher line depends ultimately on the political will of
member states to force the issue by lodging a complaint at the WTO on the
details of the case and the wider circumstances in which it arises.210

Conclusions
The rapid expansion of Community action on the environment into a programme
illustrates the effectiveness of the tactical opportunism of the Commission, and
its ability to occupy the moral high ground identified by Giandomenico Majone
in chapter 2 of this book. In terms of the quantity and range of the legislation
204 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

enacted under its auspices, and in terms of its increasing popular support,
environmental policy has become one of the Community’s more successful
policies in the social domain. Initially concerned with preventing obstructions to
trade, environment policy now has an independent existence and rationale
derived largely from global arguments about the sustainable use of resources.
Although the environmental policy field was not empty at the national level
when the EC began its First Action Programme it has used the developing global
and regional environmental awareness to develop it own competences. Having
established a certain legitimacy as an appropriate arena for EC action, the next
task is to establish a parity with other sectors in order that environmental
considerations are given full weight in wider EC policy development. To date,
the results of this are mixed: more progress has been made in the sphere of
fisheries, for example, than that of agriculture.
Admittedly, problems of competence, of the impact of subsidiarity and of the
often related difficulty of securing agreement on a uniform policy stance, mean
that it can also sometimes act as a brake on regional and international
developments, and from the point of view of substance, even the environmental
policy’s strongest proponents accept that there is a down side.211 As its policies
cut deeper there are increasing problems of enforcement, and the number of
treaty violation procedures is increasing. Political compromises sometimes result
in a incoherent legal documents.212 Nevertheless, the achievements should not be
underestimated. There have been a number of major changes in environmental
practices within the Community as a direct result of its environment policy, most
notably in water quality control in member states. The wild birds directive also,
while not offering a model at the level of compliance, has necessarily resulted in
fundamental changes in habits in some member states, particularly in the
Mediterranean. The policy has generated significant public law developments,
such as the recent directive on freedom of access to information on the
environment, and on wildlife habitat; proposals on the disposal of waste and
carbon emissions are in the pipeline. Some member states—most notably
Denmark—have not been reticent to voice the view that common standards will
mean lower standards, but there can be little doubt that, delinquencies aside, the
common policy does more to encourage the laggards than to hold back the
leaders.
At the wider international level, although the ability of the European Union to
act further may be curtailed by a WTO that has no explicit environmental agenda,
the European Union is a powerful force in the international arena, with an
influential environmental agenda capable of having a direct impact on
neighbours and non-European states and companies. To return finally to the issue
of erosion of sovereignty, it is interesting to note that the impact of the EU in this
wider arena is often considerably greater than the sum of its parts.
 DAVID FREESTONE & AARON MCLOUGHLIN 205

Notes
The views expressed in this chapter are those of the authors and should not be
attributed to their employers.

1 See generally S.P. Johnson and G. Corcelle, The Environmental Policy of the
European Communities, Graham and Trotman, London, 1989; P. Birnie, ‘The
European Community’s Environmental Policy’ in E.D. Brown and R.R. Churchill
(eds) The UN Convention on the Law of the Sea: Impact and Implementation:
Proceedings, Law of the Sea Institute Nineteenth Annual Conference, Law of the
Sea Institute, Hawaii, 1987, 527–556; E. Rehbinder and R. Stewart, Environmental
Protection Policy, Vol. 2 of Integration Through Law, De Gruyter, Berlin, 1985;
N. Haigh, EEC Environmental Policy and Britain, Longman, Harlow, 2nd edn
1987. Also N. Haigh et al., European Community Environmental Policy in
Practice, 4 Vols, Graham and Trotman, London, 1986 onwards. D. Freestone,
‘European Community Environmental Policy and Law’ in Churchill, Warren and
Gibson (eds), Law, Policy and the Environment, 1991, 135–154. D Judge (ed.) A
Green Dimension for the European Community Special Issue of Environmental
Politics, Winter 1992; David Freestone and Diane Ryland, ‘EC Environmental Law
after Maastricht’, Northern Ireland Legal Quarterly, 1994, 45, 152–176.
2 Ludwig Kramer, European Environmental Law Casebook, Sweet and Maxwell,
London, 1993, v.
3 Richard MacRory, ‘The Enforcement of Community Environmental Laws: Some
Critical Issues’ Common Market Law Review, 1992, 29, 347–369.
4 See this argument analysed further in David Freestone and Han Somsen, ‘The
Impact of Subsidiarity’ in Jane Holder (ed.) The Impact of EC Environmental Law
in the UK, 1997, 87–99.
5 ‘EU/US to Hold Talks on Eco-Labelling’, Environment Watch Western Europe
(EWWE) 5:20:6.
6 For a convincing critique of the traditional concept of sovereignty see: K. Ohmae,
The End of the Nation State: The Rise of Regional Economics, 1996, 12.
7 R v Secretary of State for the Environment ex parte Kingston-upon-Hull City
Council and R v Secretary of State for the Environment ex parte Bristol City
Council and Woodspring District Council, The Times Law Report, 31.1.96.
Judgment reprinted in the Journal of Environmental Law, 8, 2, 336–344.
8 Jan Brinkhorst, ‘Subsidiarity and EC Environmental Policy: A Panacea or a
Pandora’s Box?’, European Environmental Law Review, 1993, 3, 8; See also
House of Lords Select Committee on the European Communities, Report on the
Implementation and Enforcement of Environmental Legislation, Session 1991–92,
Ninth Report, HL Paper 53–1, para 87. And Freestone and Somsen, n. 4.
9 T. Burke, ‘Sir Leon Sets a Trap’, New Statesman, 8 August 1997, 20–21.
10 United Nations Conference on the Human Environment (UNCHE) held in
Stockholm, 5–16 June 1972, UN Doc. A/CONF.48/14/Rev.l. Although some
environmental legislation had been adopted before then, mainly to eliminate
distortions in the common market, e.g. First environmental directive adopted 67/
548/EC, on classification, packaging and labelling of dangerous substances.
11 Under 8 EEC. the transitional period was designed to run for twelve years, 1958–
70; in fact it was accelerated.
206 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

12 The proposed accession of Denmark, Eire, Norway and the United Kingdom;
Norway of course withdrew after a referendum voted against membership.
13 For example, the failure to develop a common transport policy, which was the
subject of an article 175 EEC action (for ‘failure to act in infringement of [the]
Treaty’ by the European Parliament, see European Parliament v. Commission and
Council case 13/83 [1985] I 138.
14 The predecessor of the European Council, and now formally recognised by article
2, Single European Act.
15 Note also that article 2 EEC designates ‘an accelerated raising of the standard of
living…as one of tasks of the Community’.
16 These are set out at length in the First Programme (OJ 20.12.73 C112), reproduced
in Johnson and Corcelle, n. 1, pp 12–14 and summarised well in Birnie, n. 1, p. 354,
and The European Community and the Environment European Documentation, 3/
1987.
17 OJ 20.12.73 C 112. The five main objectives were as follows: to abolish the effects
of pollution; to manage a balanced ecology; to improve working conditions and the
quality of life; to combat the effects of urbanisation; to co-operate with states
beyond the EC on environmental policy on environmental problems (p. 445). Of
the eleven implementing principles ‘prevention at source’ and ‘the polluter pays’
have been the most significant.
18 For texts see: Second Programme (1977–81), adopted 17 May 1977, OJ 13.6.77
C139; Third (1982–86), adopted 17 February 1983, OJ 17.2.83 C46; Fourth (1987–
92), adopted 19 October 1987, OJ 7.12.87 C328.
19 Proposal for a EP and Council Decision on the review of the European Community
Programme of policy and action in relation to the environment and sustainable
development ‘Towards Sustainability’ COM(95)647, final.
20 The review of the Fifth Environmental Action Programme, ‘Towards
Sustainability’, Proposal for an EP and Council Decision’. (COM(96)648).
21 Article 130s(3) EC Treaty.
22 ‘Committee Tables Over 100 Changes to EC Action Programme’, Environment
Watch 5:19:15.
23 ‘Ritt Bjerregaard Comes Under MEPs’ Scrutiny Over Fifth Programme’, European
Report, n. 2175–16 November 1996, 16.
24 ‘Doubts over Bjerregaard Dampen EU Policy Expectations for 1996’, Environment
Watch 5:1.
25 The Commission’s Programme for 1997, Jacques Santer, Strasbourg, 22 October
1996.
26 An initiative by DG VII, Transport.
27 Environment Watch, 6:8:1–2.
28 These arguments are very fully discussed in Rehbinder and Stewart, n. 1, pp. 15–
30.
29 See further below.
30 See Johnson and Corcelle, n. 1, pp. 220–236.
31 See n. 1, also Commission v Italy (Re Detergents directive) [1981] I CMLR 331.
32 Directive 79/409, 10th preamble, note also that ‘harmonious’ and ‘balanced’ have
been interpreted to imply respect for conservation and natural resources—see
Johnson and Corcelle, n. 1, ch. 1.
 DAVID FREESTONE & AARON MCLOUGHLIN 207

33 UKTS 31 (1988), Cm. 372; EC12 (1986), Cmnd. 7958; 25 ILM 506. On the
environment policy after the SEA, see J.S. Davidson, ‘The Single European Act
and the Environment’, International Journal of Estuarine and Coastal Law, 1987,
2, 259, 63; P. Kromarek, ‘The Single European Act and the Environment’,
European Environment Law Review, 1986, 1, 11.
34 Article 130R (3) also obliges the Community, when preparing its action relating to
the environment to take account of: available scientific and technical data;
environmental conditions in the various regions of the Community; the potential
benefits and costs of action or lack of action; the economic and social development
of the Community as a whole and the balanced development of its regions.
35 See further H. Somsen, ‘EC Water Directives’, Water Law, 1990, 1, 93.
36 Article 1 30S (second indent). The Commission had proposed that the procedure
for adding new substances to the annex of directive 76/464 on dangerous
substances be changed (by unanimous vote) to a majority approval procedure, see
further below.
37 In fact the EC appears to have adopted such an approach in the past regarding
environmental legislation: see Progress Made in Connection with the
Environmental Action Programme and Assessment of the Work Done to Implement
it (Communication from Commission to Council), COM(80)222, final, 7 May
1980, cited Birnie, n. 1, p. 551.
38 Subject, that is, to the procedure of article 100A(4): ‘If, after the adoption of a
harmonisation measure by the Council, acting by a qualified majority, a Member
State deems it necessary to apply national provisions on grounds of major needs
referred to in article 36, or relating to protection of the environment…, it shall
notify the Commission of these provisions (emphasis added). The Commission
shall confirm the provisions involved after having verified that they are not a
means of arbitrary discrimination, or disguised restriction on trade between
Member States.’ Note also the Danish declaration attached to the SEA (quoted in
Davidson, n. 33, p. 259) and A. Toth, ‘The Legal Status of the Declarations
Attached to the Single European Act’, Common Market Law Review, 1986, 23, 802.
39 There is an extensive literature on this but see David Freestone, ‘The Precautionary
Principle.’ in Robin Churchill and David Freestone (eds), International Law and
Global Climate Change, 1991, pp. 21–40. More recently see David Freestone and
Ellen Hey (eds), The Precautionary Principle and International Law: the
Challenge of Implementation (1996).
40 For a more detailed discussion of this see Freestone and Ryland, op. cit.
41 Consolidated Draft Treaty Texts, 30 May 1997, to be examined on the 5–6 June
with a view to presenting the draft Treaty for Amsterdam.
42 Amendment to 7th indent of the Preamble to the TEU, Amendment to article B of
the TEU.
43 Amendment to article 2 of the TEU.
44 New article 3d in the TEC: ‘Environmental protection requirement must
be integrated into the definition and implementation of Community policies and
activities referred to in article 3, in particular with a view to promoting sustainable
development’. This will lead to the deletion of article 130r(2). Declaration to the
Final Act: ‘The Conference notes that the Commission undertakes to prepare
environmental impact assessment studies when making proposals which may have
significant environmental implications.’.
208 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

45 ‘Reform of EC Treaty’, ENDS Report, June 1997, 269,44.

46 ‘Nordic Success Pleases “Green” Groups.’ European Voice, 3, 25 (2 July 1997), 18.
47 Ibid.
48 Indeed such implementation is contrary to Community law: see, for example,
Commission v. Italy (Slaughtered Cow Case 11), Case 34/73 [1973] ECR 101.
49 Article 189(3) reads: ‘A directive shall be binding, as to the result to be achieved
upon each member State to which it is addressed, but shall leave to the national
authorities the choice of form and methods’.
50 Rehbinder and Stewart, n. 1, pp. 245–252.
51 Ibid., pp. 33–36, 137ff.
52 For example, directive 90/313 on freedom of access to information on the environ-
ment, (OJ 23.6.90 L158/56).
53 For example, the early water quality directives, below.
54 Directive 76/464, below.
55 Rehbinder and Stewart, n. 1, p. 36.
56 Case 91/79, Commission v. Italy [1980] ECR 1099; Case 92/79, Commission v.
Italy [1980] ECR 1115.
57 There is an enormous literature on this concept. Notably see J.A. Winter, ‘Direct
Applicability and Direct Effect: Two Distinct and Different Concepts in
Community Law’, Common Market Law Review, 1972, 9, 425 and A. Dashwood,
‘The Principle of Direct Effect in European Community Law’, Journal of Common
Market Studies, 1978, 16, 229. See also T.C. Hartley, The Foundations of
European Community Law (OUP, 2nd edn 1 988), 183ff., and Freestone and
Davidson, The Institutional Framework of the European Communities, Croom
Helm, London, 1988, 27–44.
58 Which includes ‘an emanation of the State’ (per ECJ in Marshall v Southampton
and Southwest Area Health Authority, Case 152/84 [1986] I CMLR 688. This
means ‘any body providing a service under the State’s control’ ECJ in Foster v
British Gas [1990] 2 CMLR 833, (1990) 1 Water Law, 54.
59 For example, directive 90/313 on freedom of access to information on the
environment, above; see also the Commission proposal for a directive on civil
liability for waste, OJ 4.10.89 C251/.
60 See Freestone and Somsen, n. 4.
61 See: ‘Report of the Group of Independent Experts on Legislative and
Administrative Simplification.’ COM(95)288. Molitor Report, 51–64, 86–80.
62 For example, Rehbinder and Stewart, n. 1., pp. 226–231.
63 ‘UK and Ireland move on Green Taxes’, EWWE 5:23:5.
64 Directive 75/439 on the disposal of waste oils, OJ 25.7.75 L194/23 (as amended).
Note also the recent proposals on waste, OJ 19.11.88 C295/3 and 8, which adopt
similar approaches.
65 See Council resolution on the implementation of a European Community policy
and action programme on the environment (1987–1992) of 19 October 1987, (87/
C328/01) item(s).
66 Eurobarometer 1992, and Eurobarometer Top Decision Makers Survey Summary
Report (199 7). 5 per cent of top decision makers cited the environment amongst
the most serious problems. This was in comparison to 85 per cent of the general
public who in 1992 considered environmental protection as an ‘immediate and
urgent concern’.
 DAVID FREESTONE & AARON MCLOUGHLIN 209

67 Somsen, n. 35.
68 For a critical analysis of technocracy see Fischer, Technocracy and the Politics of
Expertise, Sage, Newbury Park, 1990.
69 G. Pridham and M. Cini ‘Enforcing Environmental Standards in the EU: Is there a
Southern Problem’ in Environmental Standards in the EU in an Interdisciplinary
Framework, 1997.
70 Directive 76/464, see further below.
71 See Johnson and Corcelle, n. 1, pp. 126–136 for a detailed account of the
negotiations and the final approval of the directives on 3 December 1987, for texts
see OJ 9.2.88 L36/1.
72 The UK claimed that controls on sewage dumping at sea were not necessary due to
the coastal tides. It was the last North Sea state to stop dumping sewage sludge.
After considerable pressure from the other North Sea states it announced
immediately prior to the 1990 Hague Conference that it would end sewage
dumping by the end of 1998. See further D. Freestone, ‘The Third International
Conference for the Protection of the North Sea’, Water Law, 1990,1, 17, 18.
73 The United Kingdom has insisted on adding the rider that ‘best available
technology’ means ‘not entailing excessive cost’ (BATNEEC), see the footnote to
this effect in The Hague Declaration, 1990 (reproduced D. Freestone and T. IJlstra
(eds) The North Sea. Basic Legal Documents on Regional Environmental Co-
operation, Graham and Trotman/Martinus Nijhoff, London and Dordrecht, 1991,
6) reported to have been included at the insistence of the United Kingdom.
74 K. von Moltke, Institute for European Environmental Policy, Annual Report 1981,
4ff, cited Rehbinder and Stewart, n. 1, p. 265.
75 There would be historical reasons for this in the 1973 Council ‘Standstill’
Agreement, OJ 15.3.73 C9/1, under which the member states agreed to inform the
Commission as soon as possible of their intention to introduce national
environmental measures, and then to suspend such national action for at least two
months to allow the Commission to decide whether it should propose Community
measures instead.
76 A. Dashwood, ‘Hastening Slowly: The Community’s Path Towards
Harmonisation’ in H. Wallace, W. Wallace and C. Webb (eds) Policy Making in
the European Communities, 1973, 195–6. His theory is not restricted to
environmental issues.
77 Ibid, p. 266.
78 See further, for example, S. Saetevik, Environmental Co-operation between the
North Sea States, Belhaven, London, 1988.
79 See later section on International Trade.
80 Johnson and Corcelle, n. 1, p. 20.
81 EC Bull. 12 1988, point 1.1.11; reproduced in Freestone and IJlstra, n. 73, p. 232.
82 Report of the 1992 Edinburgh Council in EC Bull., no 10, 12, 129–130; and
Commission Report to the European Council on the Adaptation of Community
Legislation to the Subsidiarity Principle, COM(93)545, final, 24 November 1993,
at p. 3. Discussed in Freestone and Somsen, n. 4, p. 92.
83 For discussion of the EP’s current powers, see Freestone and Ryland, n.2, and above
at 183–4.
84 Initially by a resolution of 5 January 1983 OJ 18.1.83 C14, calling on Norway and
Canada to examine the issue further, and subsequently by directive 83/129, OJ 9.4.
210 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

83 L91/30. See Johnson and Corcelle, n. 1, p. 241. See directive 85/444, OJ 1.10.
85 L259/70.
85 Rehbinder and Stewart, n. 1, p. 269.
86 EP Report 1 1376/83, Resolution OJ 14.5.84 C127/67.
87 EP Report Doc A 2–87/89 on the consequences of a rapid rise in the sea level along
Europe’s coasts, 19.4.89.
88 K. Collins and D. Earnshaw, ‘The Implementation and Enforcement of European
Community Environmental Law’, Environmental Politics, 1, 1992, 213–249, 235.
89 In the 1991 Draft Budget the European Parliament at its first reading increased the
environmental allocation from the initial Commission proposal of 74m ECU
(reduced by the Council to 56m) to more than 190m ECU, of which it wished to
see 36m go to a new ‘Environment Fund’. The remainder would go to existing
schemes: environment and regional development (ENVIREG), 125m;
Mediterranean (MEDSPA), 13m; biotypes and nature improvement (ACNAT),
15m; and action by the Community on the environment (ACE), 5m, see Water Law,
1991, 2, 4. Also see: Joint Meeting on Integrating environmental protection
requirements into Community budget and policy. Committee on the Environment,
Public Health and Consumer Protection and Consumer Protection and Committee
on Budgets. Strasbourg, 16 July 1996.
90 See Seventh Annual Report, Luxembourg, Office of Official Publication., p. 34. In
addition the European Parliament has passed a number of resolutions on the
monitoring of the application of environmental law which the Commission is
following up: for example, on water, OJ 11.4.88 C94/155; air, OJ 11.4.88 C94/151;
habitats, OJ 14.11.88 C290/137.
91 See, more generally, Report on the Enforcement of Community Environmental
Law, Rapporteur Ken Collins (A4- 109/97). COM(96)0500, 21 March 1997.
92 Political groups of the European Parliament are PES (Socialists) [214], EPP
(People’s Party) [181], UFE (Union for Europe) [55], ELDR (Liberal) [41], EUL/
NGL (Green/Left Parties) [33]; Greens [9]; ERA (Radical Alliance/Progressive
Left) [20]; I-EN (Anti-Integrationists) [18]; Independent [NF, Lega Nord, Ian
Paisley].
93 e.g. Intergroup on the Welfare and Conservation of Animals.
94 Report on the Review of Directive 90/200/EEC in the Context of the Commission’s
Communication on Biotechnology and the White Paper. COM(96)630.
95 [F-EPP] (A4–131/97).
96 ‘Parliament Calls for a Huge EU Boost to Renewables’ EWWE 5:14:15.
97 See article 155 EEC, and Freestone and Davidson, n. 57, 57–66.
98 See ‘EU Political Horse-Trading’, European Voice, Legal Briefing, 9–14 May
1996, 20.
99 DG XI has sixteen lawyers who spend 60 per cent of their time on enforcement
actions. DG XI is able only to undertake one to five investigatory visits to the
member states per year. Ludwig Kramer, HL Select Committee, Evidence. p. 6.
100 ‘Doubts over Bjerregaard Dampen EU policy expectations for 1996’, Environment
Watch 5:1:1.
101 See the House of Lords Select Committee on the European Communities, 9th Report
1991–92, Implementation and Enforcement of Environmental Legislation. R.
MacRory, ‘The Enforcement of Community Environmental Law: Some Critical
Issues’, Common Market Law Review, 1992, 347–369.
 DAVID FREESTONE & AARON MCLOUGHLIN 211

102 See n. 98.

103 In 1995 there were 265 suspected infringements of EC environmental legislation.
This is a marked decrease from 455 in 1991, but still constitutes the second largest
area of complaints received by the Commission. DG XV, dealing with the internal
market, had 512 suspected infringements out of a total of 1,252. see: Thirteenth
Annual Report on the Monitoring the Application of Community Law (1995), COM
(96)600, final.
104 Communication from the Commission on the Implemention of Community
Environmental Law (COM(96)500. Also see the opinions: Rapporteur: Mr Ken
Collins ‘Working Document on Implementation of Community Environmental
Law’ 9 October [PE 219.420], and ‘Draft Council Resolution on the Drafting,
Implementation and Enforcement of Community Environmental Law’ [Adopted 19/
20 June 1997].
105 Regulation 1210/90 OJ 1990, L 120/1. Despite pressure from the European
Parliament to give the agency a more explicit inspection and enforcement function,
the Regulation restricts its activities broadly to the gathering and assessment of
environmental data. Article 20 however provides that after two years after entry
into force of the Regulation, the Council, having consulted the Parliament and on
the basis of a report from the Commission, must decide on further tasks for the
Agency including ‘associating in the monitoring of the implementation of
Community environmental legislation, in cooperation with the Commission and
existing competent bodies in the Member States’.
106 It is reported in the European Voice, 31 January 1996, ‘Plans to strengthen
environment laws’ (p. 2) that ‘Officials in DG XI…believe that the establishment of
EU-wide inspectorate could be another effective means of cracking down on
member states that fail to fulfil their legal obligations’.
107 Proposal for a Council Decision on a Community action programme promoting
non-governmental organisations primarily active in the field of environmental
protection. COM(95)573, final.
108 Action brought on 4 July 1996 by Ludwig Kramer against the Commission of the
European Communities. Case T-104/96. OJ No C 247/20.
109 See L. Kramer, EC Treaty and Environmental Law, Sweet and Maxwell, London,
2nd edn, p. 153–155.
110 As amended by the Maastricht Treaty.
111 Article 171(2) TEU.
112 See some examples cited below; an increasingly important means is by preliminary
reference from an action before the national courts, under article 177 EC, see e.g.
Case C-44/95, Sec of State for the Environment, ex parte Royal Society for the
Protection of Birds, judgment of 11 July 1996.
113 Article 170 has been used only once in Case 141/78, France v United Kingdom
[1979] ECR 2923. This was a dispute involving the Common Fisheries Policy.
114 ‘Ireland Backs Private Lawsuit to Shut Down UK Nuclear Plant’. EWWE 5:22:8.
115 Council directive 85/337/EEC on the assessment of the effects of certain public and
private projects on the environment. OJ L. 175, 5 July 1985.
116 Also see ‘UK Nuclear Fuel Company Taken to Court’ EWWE 5:19:8.
117 Press Release, ‘The Commission for the First Time Seeks Financial Penalties
Against Non-Compliance with European Court Judgements’, Commission IP/97/63.
29 January 1997.
212 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

118 IP/97/5 rev. Council of Ministers.

119 Council directive 79/409/EEC on the conservation of wild birds, OJ L 103, 25.04.
1979.
120 Council directive 80/68/EEC on the protection of groundwater caused by certain
dangerous substances, OJ L 20, 26.1.1980.
121 Directive 75/440/EEC on the quality of water intended as drinking water, OJ 194,
25.7.1975.
122 Council directive 75/442/EEC on waste, OJ L 194, 25.7.1975.
123 Council directive 84/466/Euratom OJ L265, 5.10.1984.
124 See above, note 117.
125 See further R. MacRory, ‘Community Supervision in the Field of the Environment’
in H. Somsen (ed.), Protecting the European Environment: Enforcing EC
Environmental Law, Blackstone, London, 1996.
126 See e.g. articles 173, 175, 184, 215. Article 177 has been more productive.
127 See e.g. the earliest, classic case: Case 25/62, Plaumann & Co v EEC Commission
[1963] ECR 95.
128 McRory, n. 125, at 21.
129 See the Leybucht dikes case and others below and P. Sands, ‘The European Court
of Justice: An Environmental Tribunal?’ in Somsen, n. 125.
130 Case T-858/93 T-585/93 Stichting Greenpeace Council (Greenpeace International)
and Others v Commission [1995] ECR II2205 Now the subject of a second action
as C-321/95.
131 Case T-219/95, Danielsson and others v Commission, 22 December 1995.
132 Case T-461/93, Taisce a.o. v. Commission, [1994] ECR at II-733.
133 ‘EU Commission Moves Against Controversial Irish Project’ Environment Watch
5:7:10.
134 Directive 92/43 on the conservation of flora and fauna. OJ L206/7.
135 See n. 133.
136 ‘EU Executive to Start Legal Action Over Swedish Emissions Rules’, EWWE 5:5:
7.
137 ‘EU Commission to Tolerate German Car Tax Incentives’, EWWE 5:22:6.
138 See K. Middlemas, Orchestrating Europe: The Informal Politics of the European
Union 1973–1995, Fontana, London, 1995, chs. 10–12.
139 In 1996 it was reported that twelve of the world’s largest oil and chemical
companies had formed an exclusive lobbying group with the purpose of fighting
environmental taxes in general and an EU-level carbon dioxide/energy tax in
particular.(see e.g. Proposal for a framework model for a carbon dioxide/energy tax,
COM(95) and proposal for a directive on taxation of energy products, COM(97)
30). Particular controversy arose over the claim that the work of the group would
include efforts to influence the outcome of EC-funded research on the
environment. This was fuelled by a subsequent decision by the Commissioner
responsible for research funding to cut off funds to an individual—known to be
hostile to the so-called ‘double dividend’, model set out in the Commission’s 1993
white paper on growth, competitiveness and employment, according to which,
environmental tax, shifting the focus of taxation from labour to natural resources, will
create jobs and benefit the environment at the same time. A letter from the CBI
member informing EU officials of these activities was subsequently published by
the Danish newspaper Borsen. (‘CBI Member Blows Whistle on Anti-Green Tax
 DAVID FREESTONE & AARON MCLOUGHLIN 213

Lobby Group’, EWWE 7 June 1996, p. 14.; For a more detailed analysis of the
issue of regulatory capture see: S. Peltzman, ‘George Stigler’s Contribution to
Economic Analysis of Regulation’ Journal of Political Economy, 1993, 101, 5,
818–832.)
140 Greenpeace, ‘Energy Subsidies in Europe: How Governments Use Taxpayers’
Money to Promote Climate Change and Nuclear Risk’, Greenpeace, London, 1997.
141 See: M.G. Cowles, The EU Committee of AMCham: The Powerful Voice of
American Firms in Brussels’, Journal of European Public Policy 3, 3, September
1996, 339–58.
142 ‘The Acceptable Face of Disaster’ The Guardian, 13 August 1997, G2, 2–3.
143 Proposal for a European Parliament and Council directive on the legal protection of
biotechnological inventions. COM(95)661.
144 One-fifth of all Austria’s voters (1.2m) voted against the release and patenting of
GMOs ‘Strong Vote Against GMOs in Austria’, EWWE 6:811.
145 ‘Brussels Set to Order Austria to Lift Transgenic Maize ban’, EWWE 6:10:11.
146 For a comprehensive coverage of EC Environmental Legislation see: Commission
of the EC, Directorate-General for Environment, Consumer protection and Nuclear
Safety, European Community Environmental Legislation, 1967–1991. Brussels,
(1992). Seven Vols. and 1991–1994 (1996) Vols. 1–7. These two texts are known
as the ‘Green’ and ‘Grey’ books respectively.
147 Council regulation 348/81 on common rules for import of whales and other
cetacean products, OJ 12.2.81. L39/1.
148 OJ 10.2.82. L103/1.
149 S. Lyster, International Wildlife Law, Grotius, Cambridge, 1985, 67.
150 See David Freestone, ‘The Leybucht Dikes Case: Some Wider Implications’, Water
Law, 1991, 4, 2, 152–156. An application for an interim order preventing further
work—the first application of its kind—was also unsuccessful.
151 Case C-355/90, Commission v Spain (Marismas de Santoña case) [1993] ECR-I
4221.
152 Case C44/95, Secretary of State for the Environment, ex parte the Royal Society for
the Protection of Birds (Lappel Bank) case (not yet reported).
153 See article 6, particularly 6(4), and 7 of the habitats directive, for a more detailed
discussion of these cases see David Freestone, ‘The Enforcement of the Wild Birds
Directive: A Case Study’ in Somsen, n. 125, pp. 229–250.
154 For text of original proposal see OJ 21.9.88 C247/3, and for text of proposed annexes
see COM(90)59, final. For the final text with the amendments see directive 92/43
on the conservation of natural habitats and of wild flora and fauna, OJ 1992 No. L
206.
155 See Freestone, 1996, op. cit.
156 See directive 79/409 on the conservation of wild birds. It is noticeable that the
directive makes no mention of the 1979 Berne Convention which it clearly
implements—is this an example of contemporaneous parallelism—where internal
and external powers are claimed virtually simultaneously?
157 Council decision 82/72, OJ 10.2.82 L38/1.
158 Council decision 82/461, OJ 19.7.82 L210/100.
159 Implemented originally by Council regulation 3626/82, OJ 31.12.82 L384/1 (now
much amended).
214 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

160 See Johnson and Corcelle, n. 1, p. 25. By contrast, the first air pollution legislation
was in 1980.
161 Although do note the more recent diffused source controls below.
162 These requirements are so strict they are in reality more like regulations, see further
above.
163 Council directive 75/440 concerning the quality of surface water intended for the
abstraction of drinking water, OJ 15.7.75 L 194, as amended by Council directive
79/869, OJ 29.10.79 L271 /44.
164 Council directive 76/160 concerning the quality of bathing water, OJ 5.2.76 L31/1.
165 Council directive 78/659 on the quality of fresh waters needing protection in order
to support fish life, OJ 14.8.78 L222.
166 Council directive 79/923 on the quality of shellfish waters, OJ 10.11.79 L28 1/47.
167 See, for example, bathing water directive, above, article 1.
168 Council directive 80/778 relating to the quality of water intended for human
consumption, OJ 30.8.80 L229/11.
169 Somsen, n. 35, p. 96.
170 S. Boehmer-Christiansen, ‘Environmental Quality Objectives Versus Uniform
Emission Standards’ in D. Freestone and T. IJlstra, The North Sea. Perspectives on
Regional Environmental Co-operation, Graham and Trotman/Martinus Nijhoff,
London and Dordrecht, 1990, 139.
171 Somsen, n. 35, points out that the United Kingdom as an island state with short,
relatively fast-flowing rivers derived some competitive advantage from such a
system, and that the use of UESs conflicted with the British ‘tradition of
decentralised and pragmatic pollution control’; see further D. Vogel, National
styles of regulation: environmental policy in Britain and the United States, 1986.
172 Council directive 76/464 on pollution caused by certain dangerous substances
discharged into the aquatic environment of the Community, OJ 18.5.76 L129/23.
173 Somsen, n. 35, p. 97.
174 For mercury: Council directives 82/176, OJ 27.3.82 L81/29 and 84/156, OJ 17.3.84
L74/49; cadmium: Council directive 83/513, OJ 24.10.83 L201/1; HCH: Council
directive 84/491, OJ 17.10.84 L274/11. Note that the 129 substances were listed in
Council resolution of 7 February 1983, OJ 17.2.83 C46, and that Council directive
80/68 on the protection of groundwater against pollution caused by dangerous
substances, OJ 26.1.80 L20/43 was enacted pursuant to article 4 of directive 76/464
and follows the general approach of that directive.
175 By Council directive 86/280 on limit values and quality objectives for discharges
of certain dangerous substances included in List 1 of the annex to directive 76/464,
OJ 4.7.86 L181/16. Progress remains slow and the Commission seeks to change the
basis on which substances are added from unanimity to QMV See COM(90)9, final
for original version of proposal and for comment, Somsen, n. 35. Of course, under
the procedure of article 130R EEC, such a proposal must be approved unanimously
by the Council.
176 For a more detailed discussion see Freestone and Somsen, n. 4, pp 92–97.
177 Commission Report to the European Council on the Adaptation of Community
Legislation to the Subsidiarity Principle, COM(93)545, final, 24 November 1993.
178 R v Secretary of State for the Environment ex parte Kingston-upon-Hull City
Council and R v Secretary of State for the Environment ex parte Bristol City Council
and Woodspring District Council, Times Law Report, 31.1.96. Judgment reprinted
 DAVID FREESTONE & AARON MCLOUGHLIN 215

in the Journal of Environmental Law, 8, 2, 336–344. See also Philippe Sands and
Caroline Blatch, ‘Estuaries in European Community law: Defining Criteria’,
International Journal of Marine and Coastal Law 1998, 13, 1–22.
179 Directive 96/61, OJ 1996 L275.
180 COM(93)680, final. See now COM(96)59, final.
181 COM(93)680, final.
182 COM(96)59, final.
183 Commission v Council (Re European Road Traffic Agreement), Case 22/70 [1971]
ECR 263. See also A. Nollkaemper, ‘The EC and International Environmental Co-
operation—Legal Aspects of external Community powers’, Legal Issues of
European Integration, 1987, 2, 55–91.
184 1974 Paris Convention for the prevention of pollution from land-based sources,
UKTS 64 (1978; Cmnd. 7251); 13 ILM 352 (1974); and with amending Protocol,
see Freestone and IJlstra, n. 73, 128ff.
185 1983 Bonn Agreement for co-operation in dealing with pollution of the North Sea
by oil and other harmful substances; UKTS Misc 26 (1983; Cmnd. 9104); and with
1989 amending decision, see Freestone and IJlstra, n. 73, pp. 17 1ff.
186 For the text of the EC Declaration on signature of the Law of the Sea Convention
on 7 December 1984, listing its legislation in the field, see Freestone and IJlstra, n.
73, pp. 228ff.
187 1963 Berne Agreement on the International Commission for the protection of the
Rhine against pollution, 994 UNTS 14538 (1976), supplemented by 1976 Bonn
Agreement; see further A. Nollkaemper, ‘The Rhine Action Programme: A
Turning-point in the Protection of the North Sea?’ in Freestone and IJlstra, n. 170,
p. 123.
188 1976 Bonn Convention on the protection of the Rhine against chemical pollution,
27 ILM 625 (1988), and see OJ 19.9.77 L240.
189 1972 Oslo Convention on the prevention of marine pollution by the dumping from
ships and aircraft, UKTS 119 (1975); Cmnd. 6228; 11 ILM 262 (1972); for text
with amending protocols, see Freestone and IJlstra, n. 73, pp. 91ff.
190 For the full texts of three Declarations, see Freestone and IJlstra, n. 73, Bremen,
1984, pp. 62–90; London, 1987, pp. 40 61; The Hague, 1990, pp. 3–39.
191 See generally, P. Sand, Marine Environment Law, Tycooly, Dublin, 1988; for
example, 1976 Barcelona Convention for the protection of the Mediterranean Sea
against pollution (and protocols) 15 ILM 290 (1976); also the 1983 Cartagena
Convention for the protection and development of the marine environment of the
wider Caribbean region (and first protocol) 22 ILM 221 (1983).
192 See generally Freestone, ‘Some Institutional Aspects of the Establishment of
Exclusive economic Zones by the EC Member States’, Ocean Development and
International Law, 23, 1992, 97–114. and Freestone, ‘The Declaration on the co-
ordinated Extension of Jurisdiction in the North Sea’, The International Journal of
Marine and Coastal Law, 8, 1993, 171–175.
193 See for example, Saetevik, n. 78, and J.-L. Prat, ‘The Role and Activities of the
European Communities in the Protection and Preservation of the Marine
Environment of the North Sea’ in Freestone and IJlstra, n. 170, p. 101.
194 See, for example, Parcom recommendations 89/1 on the precautionary principle,
and 89/2 on best available technology, reproduced in Freestone and IJlstra, n. 73,
pp. 152 and 153 respectively.
216 EC ACTION AND INITIATIVES IN ENVIRONMENTAL PROTECTION

195 For example the current EC Commission proposal for a directive concerning the
protection of fresh, coastal, and marine waters against pollution caused by nitrates
from diffuse sources. Original text at COM(88)708, final, as amended in light of EP
proposals COM(89)544, final, and see Water Law, 1990, 16.
196 See Hey, IJlstra and Nollkaemper, ‘The 1992 Paris Convention for the Protection
of the Marine Environment of the North East Atlantic: a Critical Analysis’,
International Journal of Marine and Coastal Law, 1993, 8, 1–50. The full text of
the new Convention is annexed at pp. 50–76.
197 See: D.A. Reid, ‘Trade and the Environment: Finding a balance. The EU
approach’. European Environmental Law Review, May 1996.
198 Procureur du Roi v Dassonville, Case 8/74 [1974] ECR 837 at p. 852.
199 Report on the Communication from the Commission to the Council and the
European Parliament on trade and the environment. Rapporteur: Mr W.Kreissl-
Dorfler (A4–0319/96).
200 Report on the Communication from the Commission to the Council and the
European Parliament on trade and the environment. (A4–0319/96). Rapporteur Mr
W. Kreissl -Dorfler.
201 Council Regulation 880/92/EEC on a EU award scheme for an ecolabel. OJ L99, 5.
11.1992.
202 See L.Gyselen, ‘The Emerging Interface Between Competition and Environmental
Policy in the EEC’, Ch 3 in J. Cameron et al. (eds) Trade and the Environment:
The Search for Balance, Cameron and May, London, 1995.
203 Press Release IP(93) 820 of 30 September 1993.
204 WTO Trade and Environment Committee Discusses Market Access, TRIPS and
Eco-labelling. WTO Press/TE 009.1 May 1996.
205 Proposal for a directive on the marking of packaging and the establishment of a
conformity and assessment procedure for packaging. COM(96) 191, final.
206 ‘ISO Group Agrees on Dual Meaning for Moebius Loop’, EWWE 2 May 1997, p. 4.
207 ‘ISO Pressures EU Draft Packaging Marking’, EWWE 5:18:1.
208 see Kreissl-Dorfler, n. 199.
209 ‘Trade Strains Possible as EU Gene-Tech Maize Decisions Delayed even further’,
EWWE 5:17:15.
210 See generally: J. Morris, Green Goods? Consumers, Product Labels and the
Environment, London, Institute of Economic Affairs, 1997.
211 Johnson and Corcelle, n. 1, p. 9. A recent example is the delay in the EU
ratification of the 1995 UN Agreement on Straddling Stocks, see further David
Freestone and Zen Makuch, ‘The New International Environmental Law of
Fisheries’, Yearbook of International Environmental Law, 1996, 7, 3–51.
212 Johnson and Corcelle, n. 1.
 11
CONCLUSION
The European Union, member states and social policy

Hussein Kassim and David Hine

This book, with its three companion volumes, has examined the extent to which
developments at the EU level have constrained or enhanced the autonomy of the
member states. It has investigated how these developments have affected the
substance of national policy, national policy processes and national actors. Claims
that power has migrated from national capitals to Brussels cannot be properly
assessed without careful examination of this dimension of the relationship. If we
are to understand European integration fully, we need to examine not just
institutional action and policy development in Brussels, but also what Moravcsik
has called, ‘substantive domestic policy adaptation’ (Moravcsik 1993:473). In
the first section of this concluding chapter, the extent to which the European
Union has affected the autonomy of the member states in the specific area of
social policy will be examined, while in the second section we shall compare the
findings of this volume with the conclusions reached in the companion volumes
dealing with other sectors.

The European Union, national autonomy and social policy

The chapters of this book demonstrate that while there is clearly a difference
between rhetoric and reality, and between the aspirations expressed and the
development of policy, the contention that little has been achieved by the EU
within the social realm (Lange 1992; De Swann 1992) cannot be sustained, nor
can the corollary—that the integrity of territorial sovereignty of member states
has been maintained. Even if policy development across the social dimension
falls far short of an EU welfare state or a comprehensive social policy, the Union
is active across a wide range of fronts. Member states remain the primary
institution of European social policy, and have in general resisted EU action in this
domain, but important inroads have been made nevertheless.
The picture that emerges from the case studies, in terms of the impact of
EU action on national policy, is therefore complex and highly differentiated. In
some areas, such as women’s rights, the EU has been the primary force; in
others, such as environmental policy, it has played the role of opportunist, taking
advantage of the prevailing political climate to persuade member states to grant
competence to the EU. In others still, such as workers’ rights, it has made
218 CONCLUSION

progress on a few issues, but not on many others. There is no single explanation
for this variegated picture. It is the consequence of the interaction of a range of
factors, some positive, some negative, of which the most important are:

• the treaty base itself, giving a very strong constitutionally protected position
to member states in social policy, underpinned by their reluctance to cede
authority upwards, and by the suspicion of several of them about the policy
ambition of the Commission;
• the large differences in the detailed operation of the European welfare state
across member states (even if in broader comparative perspective, there are
common features of a ‘European’ model) most notably in the way in which
welfare is delivered, and the emphasis which different states put on particular
areas of provision (pensions, health care, income support, unemployment
benefits);
• the absence of a central EU regulatory function, as exists for example in
competition policy for industry and commerce, or through direct market
intervention for agriculture;
• the capacities of the Commission, in the absence of this central ‘hard-law’
regulatory function, to exploit other ‘soft-law’ opportunities, and to establish
a moral and didactic leadership in the social policy sector;
• the important but uneven impact of the Court of Justice, which, like all other
constitutional courts, can only influence policy on issues that reach it through
the legal system in a slow, almost haphazard manner;
• the prevailing policy climate as affected not just by national political
developments, but by changing perceptions of the general economic and social
values the Union should pursue, and indeed by broader global attitudes
towards welfare, markets and social choice—perceptions which inevitably
feed through to national opinion leaders at different rates.

How these factors combine to make for the uneven purchase of social policy
across the Union can be best illustrated by considering the difficulties
encountered in particular sectors. Here we look particularly at the areas of ‘social
dialogue’ and collective bargaining. Article 4 of the protocol outlines two ways
in which EU-level agreements can be implemented and enforced. The first is ‘in
accordance with the procedures and practices specific to management and labour
and the member states’. The second—which is restricted under article 2 to
certain areas like health and safety, information and consultation and equal
opportunities—is through a Council decision on a proposal from the
Commission, by request from the signatory parties. Parental leave and part-time
work were the first two issues taken under the latter procedure. Part-time work was
the subject of a draft agreement concluded in May 1997 by UNICE, CEEP and
ETUC.
Now the Declaration on article 4(2) of the social protocol makes clear that
member states are under ‘no obligation…to apply the agreements directly or to
 HUSSEIN KASSIM AND DAVID HINE 219

work out rules for their transposition, nor any obligation to amend national
legislation in force to facilitate their implementation’. Clearly, then, such an
agreement—unlike a directive—cannot be relied on to guarantee minimum
standards across the EC. Moreover, there is a wide divergence between member
states in relation to the nature of collective bargaining structures and the means
to make them generally binding across a given sector. In Belgium and The
Netherlands, for example, national procedures exist for the negotiation of
national, intersectoral collective agreements that may then be proclaimed
generally binding by due process of law. By contrast, in France, Germany,
Spain, Portugal and Greece such a centralised approach is not the practice.
Agreements in those countries are generally concluded at sector level and
extension procedures may be invoked through the Ministry of Labour to ensure
their application to non-organised employers and employees throughout a given
bargaining unit (the conditions for extension naturally also vary from country to
country). In Italy there is also sector-level bargaining, but extension procedures
are likely to be considered unconstitutional. And, unlike their Danish
counterparts, Irish unions and employers have little influence over their members
who fail to comply with agreements. This is the situation also in the UK, where
provision for the extension of collective agreements under Schedule 11 of the
1975 Employment Protection Act was abolished by the 1980 Employment Act.
There is also wide diversity between the states over the subjects that can be
negotiated and the criteria for establishing the representativeness of the domestic
negotiating partners. Differences also exist between states over the legal
regulation of strikes and lock-outs as well as implementation of the terms of
agreements. These factors, amongst others, ‘show clearly that there is no
homogeneous legal pattern of collective bargaining and collective agreement
throughout the Community’ (Weiss 1991:64).
Very similar problems in the degree to which policy can establish a purchase
arise in relation to collective bargaining at the European level. ‘European’
collective bargaining can, of course, refer to two quite distinct processes. The
first is the process through which the results of collective bargaining in other
member states are brought to bear on domestic negotiations at intersectoral,
sectoral or company level. The second is the process through which employers’
organisations and unions actually conduct negotiations face to face at European
level in an attempt to conclude binding agreements. These agreements may
themselves be of two sorts: procedural and substantive. For a procedural
agreement employers and unions negotiate ‘an operational mechanism which
details and regulates the manner in which a specified issue is to be handled’
(Salamon 1987:387). To this extent, a number of such agreements have already
been concluded at European level. We have seen in chapter 7, for example, that
the social chapter itself was the result of negotiations between ETUC, UNICE
and CEEP in October 1991, a few weeks before the Maastricht Summit. At
sectoral level, procedures relating to training and other issues have been agreed
220 CONCLUSION

and some 250 multinational companies have already established European works
councils in some form or other, mostly following detailed negotiations.
Substantive agreements, by contrast, refer ‘to those terms of employment, such
as wages, hours, holidays, etc. which can be converted into monetary terms’
(Salamon 1987:289–90). At intersectoral level, the framework agreement on
parental leave and the agreement on part-time work are so far the only examples.
There are very few substantive agreements at European sectoral level, though the
case of Danone is significant at company level. In April 1996, this French
multinational signed an agreement with the unions to form a Joint Information
and Consultation Committee, covering all its subsidiaries across Europe.
Provision is made for this Committee to ‘negotiate joint statements and measures,
including with respect to employment, training, information, safety and working
conditions, as well as to the exercise of trade union rights’. Some see this as ‘the
closest European works councils have yet come to some form of collective
bargaining at European level’ and the agreement as ‘the first to accord an
explicit negotiating role to the European works council’ (European Works
Councils Bulletin 1996a:1).
Procedural agreements already exist at EC level. Whether agreements on
substantive issues will be developed will depend on the degree to which
recognition rights are extended to unions and employee representatives to
bargain collectively at EC intersectoral, sectoral or company level. This in turn
assumes that the problems of representation, implementation and enforceability
analysed above can be satisfactorily resolved and, indeed, that the unions
themselves actually demand it (Marginson and Sisson 1992:44–5). One
secondary factor which may eventually help is the capacity of European
Monetary Union to make pay levels across the member states more transparent,
and thus act as a catalyst for the gradual evolution of EC-wide agreements
covering pay and other conditions.
Developments at the EC level in relation to information disclosure,
consultation and the negotiation of procedural agreements have also been patchy
and opportunistic, but that is scarcely surprising. The spread of recognition of
employee representatives for these purposes over the last hundred years or so,
even within any national economy, has been patchy and opportunistic. Union
recognition—the process by which management formally acknowledges the
legitimacy of a union’s right to determine jointly terms and conditions—is a key
stage in the development of an organisation’s industrial relations system, but
recognition too may proceed in stages: first the right to representation, then the
right to consultation, and finally the right to negotiation. The social dialogue has
played some role in enabling unions to gain the initial stages of recognition at
EC-level, but the right to representation is best thought of at EC level not through
the right to represent employees in individual grievances, but through the right to
information—in other words, the right of unions at EC level to receive relevant
information about events likely to affect their members across the member states
and to represent their views accordingly in the light of it.
 HUSSEIN KASSIM AND DAVID HINE 221

Recognition is not static however; once recognition has been granted by

employers for certain defined purposes, it may become relatively easier for its
boundaries to be spread further. For this reason, the mere fact that social
dialogue has taken place at all is an encouraging sign for those who believe that
labour market regulation should proceed on a voluntary, flexible basis. The
problems encountered so far, including employer resistance, inadequate
structures, lack of resources and economic recession, are not different in kind
from those encountered during the process of national recognition processes, but
they do inevitably mean that there will be no uniform or homogeneous legal
pattern of collective bargaining and collective agreement throughout the
Community (Weiss 1991:64).

The role of the Commission

A second consideration which emerges from the preceding chapters is that the
Commission’s capacities for action in the realm of social policy do not depend
solely on the national governments which define its legal and regulatory power
and policy reach. They also depend on its own independent capacity to act as a
central focus for the activities of a range of interested potential allies among
parties, unions, employers, social policy agencies and professionals…and some
national governments. Moreover, it is a capacity in which the Commission can,
within the limits of its resources, do much for itself in sensitising elite and expert
opinion to the possibility of problem-solving action at EU level, and assembling
a critical mass of favourable opinion, especially if it is able to occupy the moral
high ground in an area of policy debate where attitudes and values vary
considerably within as well as between the member states. Inevitably such a
capacity is greatly influenced by major variations in national circumstances, and
is liable to substantial changes over time. However, time is often on the
Commission’s side. It will still be there when a particular national government
has gone, and if it can extract concessions from that government’s more
sympathetic successor, they can be built in to the acquis in ways that are difficult
if not impossible to reverse, even if there is a reversal in the state in question.
An important part of this capacity, as we have seen, is the Commission’s
ability to create networks, observatories and agencies, to commission research,
and to publicise findings etc. This process of bureaucratic expansion and mutual
learning absorbs apparently rather modest resources but enables the Commission
to frame issues, design packages and structure the sequence of proposals that
eventually reach the visible policy agenda. The range of such bodies is
formidable. It covers employment policy, equal opportunities, public health,
health and safety at work, ‘social protection’ (i.e. pension regimes,
unemployment insurance, health insurance, and other forms of social assistance),
and social partnership and social rights. Many of the programmes established
under these headings are co-financed by the European Social Fund. Some of the
most significant are EURES—the European labour market network; NOW (New
222 CONCLUSION

Opportunities for Women); the main public-health networks covering AIDS,

cancer, and drug abuse; the various working parties of the study group on the
modernisation of social protection, covering disability, family policy, ageing
policy, and social exclusion; and the range of framework agreements on part-
time work, labour law, migration policy and action on racism.
Hand in hand with this semi-concealed role is a parallel declaratory one which
may be said to have reached its most developed form at the 1996/7
intergovernmental conference on institutional reform. The latter, though
originally convened to deal mainly with problems of decisional effectiveness in
advance of enlargement of the Union to central and eastern Europe, was,
conveniently for the Commission’s agenda, to a large degree overtaken by the
abrupt change in policy climate provoked by the election of a left-wing
government in France, and by mounting EU-wide concern about the political
consequences of rising unemployment. The result was the inclusion in the draft
Amsterdam Treaty (at the time of writing in 1997 still, of course, unratified)
apparently at a late stage in discussions, not only of the social protocol hitherto
excluded from the formal Treaty by the British opt-out (renounced by the
incoming 1997 Labour government) but also of a separate employment chapter,
another on public health, and another on consumer protection. The contents of
the employment chapter are, to say the least, pregnant with ambiguity, and the
extent, if at all, to which it can, for the time being, constrain national
governments, or be justiciable by the ECJ, remains doubtful. What it does do,
however, is create new forums for policy discussion in these sectors, and in the
case of employment this involves annual resolutions by the European Council,
on the basis of a joint annual report from the Commission and Council of
Ministers. These reports may, by qualified majority (and in consultation with the
Economic and Social Committee, the Committee of the Regions, and the
Parliament) be used to draw up guidelines which member states are required to
take into account in their own national employment policies. Member states are
also required to provide Council and Commission with an annual report on their
policies in this connection, and, again by QMV, the Council can make specific
recommendations to member states about employment policy.
Certainly, in view of the ‘recommendatory’ rather than mandatory framing of
such procedures, a sceptic is likely to remain unconvinced that the chapter
contains any real and immediate constraints. What is clear, however, is the long-
term thinking in the chapter: the aim is to influence the context and the debate on
employment, and to foster the creation of employment policy networks at the EU
level. This is especially evident in article 5, which allows the Council to

adopt incentive measures designed to encourage cooperation between

Member States and to support their action in the field of employment
through initiatives aimed at developing exchanges of information and best
practices, providing comparative analysis and advice as well as promoting
 HUSSEIN KASSIM AND DAVID HINE 223

innovative approaches and evaluating experiences, in particular by

recourse to pilot projects.

The EU has frequently been said to have proceeded in areas like social policy by
the creation of ‘soft’ or indicative law and in the new draft Treaty the
employment section is clearly towards the ‘soft’ end of EU constitutional law
too. But once employment has been placed on the agenda, the Commission has
greater administrative opportunities and considerably more legitimacy to build
more solid foundations, gradually drawing into its orbit a range of sympathetic
actors from the national level—including, most importantly, national
administrations.

Social policy in comparative perspective

Since the relaunching of the European project in 1985 in the form of the 1992
programme, the scope and intensity of EU action have increased considerably
The Single European Act extended Community responsibilities along the social
dimension to include social cohesion and the environment. It also made policy
development easier in certain areas of social policy by changing the decision rule
in the Council of Ministers from unanimity to QMV By establishing a
Community treaty base for European political co-operation, the member states
signalled their intention of making the EC a more influential actor on the
international stage, while a future commitment to economic and monetary union
in order to underpin the single market and to strengthen European currencies was
also undertaken. The Treaty of European Union further expanded the social
policy competences of the Community and extended QMV It brought justice and
home affairs within the scope of the Union, transformed EPC into the CSFP, and
set out a detailed schedule for realising EMU. The Amsterdam Treaty, as noted
above, has continued this expansion.
Although the EU has expanded its activities both within existing competences
and into new fields and new domains, its impact on the autonomy of the member
states has not been uniform either between or within policy domains. This volume
has found that even though action at the Union level has had significant
consequences for national social policy, the impact has been greater in some
areas than others and it has differed from member state to member state. In the
areas of health and safety, women’s rights, environmental policy, training and
some aspects of industrial relations, EU-level action has been a major stimulus to
policy change and development at the national level, while in employment,
consumer affairs and with respect to some aspects of health policy, the EU has
exercised a more limited degree of influence. By contrast, in the traditional areas
of social policy, namely, social security, health service provision, welfare, and
unemployment benefits, member states have been relatively unaffected by
Brussels. In these latter areas, national governments have not been prepared to
cede control, and although falling within the ambit of permissible action on the
224 CONCLUSION

part of the Union, unanimity ensures that member states are able to prevent
policy development in these areas.
The differential impact that EU action has had on member states results from
the differences in social policy that they have historically pursued, reflecting the
differing legacies of past social conflicts and social coalitions, as well as the
influence of differing political cultures, state traditions and balance of political
forces. Governments in western Europe have developed different types of
welfare regime: the Scandinavian, the Germanic, the Anglo-Saxon and the
southern European. National social policies reflect different conceptions of
social citizenship and of the family (see chapter 8 in this volume). Moreover,
certain countries, such as Germany and the Nordic states, have instituted
relatively high levels of environmental protection, while other member states
have shown rather less willingness to take action in this domain (see chapter 10
in this volume). Beginning from different starting points, it is not, therefore,
surprising that the impact of EU action has produced different outcomes in
different member states.
Differential impact along sectoral and national lines is not, however, unique to
social policy. The impact of EU action in the industrial domain also betrays a
similar pattern (see Menon and Hayward 1996). In some sectors, such as air
transport, telecommunications and energy, policy development in Brussels had a
very considerable effect on national policy, not only forcing changes in the
substance of the policies pursued by governments, but also depriving states of
the use of policy instruments that they had traditionally deployed (see Kassim
1996, Thatcher 1996 and McGowan 1996). In other sectors, such as aerospace
and research and development policy, EU action at the Union level has had a far
less significant effect on the member states (see Jones 1996 and Peterson 1996).
The contrasting experiences of these industrial sectors could not be explained
in terms of reference to a single key factor, but were rather the outcome of the
interaction of a number of factors influencing the likelihood and direction of EU
policy development, as well as the impact of Union action on national policy.
These include the following: the extent of EU competence under the treaties; the
institutional arrangements governing the division of responsibilities and powers
between EU institutions, and the decision rule operative in the Council of
Ministers; the preferences of the member states; the orientation and calibre of the
relevant Directorates-General within the European Commission; interest group
mobilisation, organisation and strategy; intervention by the European Court of
Justice; the nature of the international and regional regimes governing the sector,
and its domestic organisation; the role of technology in the sector and the
consequences of technological advance; the political salience of the sector; and
the strategic importance of the sector. It was not possible to establish any
authoritative hierarchical ordering of these factors, since the relative importance
of each changed over time and there was constant interaction between them.
As we have seen, some of these factors are also at work in social policy and
may help to account for the differential impact of EU action in the various areas
 HUSSEIN KASSIM AND DAVID HINE 225

of the social policy domain. Constitutional and institutional differences, for

example, have made it easier for policy to be developed at the Union level in
health and safety, where QMV has been the decision rule in the Council since
1987, than in areas where unanimity is required. Also, entrepreneurship on the
part of the Commission has played an important part in the development of
environmental policy. However, there are also differences in the importance that
certain of these variables have had in the social policy field. For example,
technological change is much less relevant to social policy. There is no case
comparable to energy or the audiovisual sector where technological change has
undermined the traditional rationale for organisation into national markets,
operated by state-owned monopolies and regulated by national authorities, and
opened the possibility to European-level regulation.
The same point applies equally to national differentiation. Factors such as the
differences between state traditions, political culture and the balance of political
forces can help to explain the differential impact of EU action between member
states in all policy domains in general. However, additional country-specific
features are also relevant. Thus, whilst conceptions of social citizenship, the
nature of the welfare state and official concern for the environment must be
invoked in order to explain patterns of national differentiation in social policy, the
differential impact of EU action in industrial policy from member state to
member state can only be explained with reference to natural resource
endowment, the history of trading relations, the organisation of policy networks,
and industrial strength and competitiveness. In macroeconomic policy, by
contrast, the differences in national experience result from differences in the
openness of the economy, in economic structure and in economic performance
(Menon and Forder 1998), while in defence they relate to geography, the strength
of Atlanticism and military tradition (Freedman and Menon 1997).
The experience of social policy bears close comparison with industrial policy
in terms of two other important aspects concerning the effects of EU action on
state autonomy: the first is the magnitude and nature of the impact of the EU, and
the second is the relative importance of the impact of the EU. With respect to the
first, the consequences of Union-level action have undoubtedly been
considerable in the social policy domain, sectoral and national differentiation
notwithstanding. This has also been the case in industrial policy, where member
states have been compelled to adapt their existing policies in a significant
number of sectors. The same is not true, however, in the areas of macroeconomic
and defence policy. Despite appearances to the contrary, in macroeconomic
policy, national autonomy has not been significantly affected as a result of EU
action (see Menon and Forder 1998 from which the following extensively
draws). Firstly, although there is an apparent convergence between economic
policies within the Union, this tendency should not be attributed to action on the
part of Brussels. It is not the ERM that has convinced states to believe in the
centrality of lowering inflation as a means of achieving economic success.
Rather ERM and EMU are the outcome of this consensus. Moreover, even when
226 CONCLUSION

states have joined the ERM, it is not necessarily their participation that is
responsible for the fall in inflation that they may experience. Secondly, although
the ERM does impose limits within which exchange rates can be set by
governments, membership is not compulsory and participating states can decide
to exit. In addition, the tools by which EMS obligations are met remain
exclusively in national hands. Moreover, the ERM does not legally bind member
states in the same way that the social chapter compels governments to
recognise certain rights and to meet certain obligations. If the autonomy of the
member states is circumscribed by membership of the ERM, the constraints are
not legal, technical or practical, nor are they imposed by Brussels, rather they are
of a political nature and self-imposed by national governments seeking the
benefit of credibility for their economic policies. Finally, it is important not to be
misled by the rhetoric of governments who may either refer to EU requirements
in order to legitimate policy choices or use Brussels as a scapegoat when taking
unpopular decisions. This applies generally and not just to macroeconomic
policy.
Likewise in defence, action by the EU has not directly led to shifts in national
policy, nor has the Union placed major constraints on state autonomy (see
Freedman and Menon 1997). This runs counter to expectations that the end of the
Gold War would bring an end to the dependence of West European governments
on the US, which was institutionalised through NATO. However, US
detachment from Europe has failed to bring about an increased role for the EU.
Firstly, governments have shown a consistent preference for co-operative,
intergovernmental arrangements which do not threaten national decision-making
competence, rather than EU-style integration. Secondly, despite the efforts of
supporters of a European defence capability, NATO is, and appears likely to
remain, the principal framework for multilateral action and co-operation in the
field of defence. Thus, the prospects for the EU’s development as a security
community seem distinctly limited. At most, hitherto, the EU has exercised a
modest influence through indirect means, such as the pressures placed on public
finances by efforts to meet the Maastricht convergence criteria, the intrusion of
industrial policies, increased links between states in non-military areas and
broadening conceptions of security.
Although social policy is closest to industrial policy in terms of the magnitude
of EU impact, there are both similarities and dissimilarities in the way in which
the member states have been affected. In both domains, action at the Union level
has exercised direct and indirect influences. Direct impact has taken the form of
sectoral policy development by the EU which has necessitated policy adaptation
at the national level (telecommunications, energy and air transport on the one
hand, environmental policy, health and safety, and workers’ rights on the other).
The rulings of the European Court of Justice have also led directly to the
abandonment, introduction or modification of existing national rules (air
transport, women’s rights and workers rights). EU action has also indirectly
affected the member states. For example, industrial and social affairs ministries
 HUSSEIN KASSIM AND DAVID HINE 227

have presided over cuts in public expenditure that have been imposed by
national governments attempting to reduce budget deficits in order that they can
meet the criteria for convergence and proceed to the third stage of EMU.
Beyond these similarities, however, there are important differences. This may
result from the fact that, while industrial and economic objectives have always
been at the centre of the European project, social policy has generally been of
secondary importance. This is reflected by the energies that have been
respectively devoted to the two policy domains, the powers granted by national
governments to the European Union and the decision-making procedures
instituted, as well as the greater powers exercised in Brussels by the Commission
directorates dealing with producer interests. Firstly, although there have been
numerous action programmes in the social policy domain, none has galvanised
the Community to a degree comparable to the extent to which the 1992 project
mobilised governments and business actors towards the realisation of the single
market, generating a momentum that spilled over into virtually all areas relating
to trade in goods and services. Secondly, in social policy, there has been no
equivalent to the competition rules, which in the domain of industrial policy have
proved powerful tools in the hands of Commissioners eager to liberalise sectors
historically characterised by protectionist and collusive policies (energy,
telecommunications and air transport). In social policy, changes have come
about largely as a result either of sectoral policy developments at the EU level or
of rulings laid down by the European Court of Justice, and not as a consequence
of the application of general rules. Thirdly, in social policy, the impact of the EU
on the member states has otherwise been exercised less directly and through
different means. For example, soft law in the absence of tougher regulatory
instruments has played a much more important role in EU social policy Also, the
action of networks, observatories and research projects sponsored by the
European Commission has been very significant. These activities enable
domestic interests to exchange information, to articulate common concerns, and
to facilitate the formation of coalitions, as well as permitting direct
communication with interested officials from EU institutions. The ideas which
are floated or developed as a result can shape policy agendas in the member
states, confronting governments with unpalatable policy options, modifying
‘policy frames’ (see chapter 9 in this volume) and subjecting them to unwelcome
pressures. The autonomy of national government may thereby be restricted in
ways that are more subtle than the implementation of EU regulations or
interventions by the European Court of Justice. In these circumstances, the
national government loses control of the policy agenda, it confronts transnational
coalitions and it no longer acts as a gatekeeper for domestic constituencies that
want to ensure that their interests are represented. Finally, in some industrial
sectors, certain countries have sought to export their domestic policies to other
member states through the adoption of EU rules. In the social policy domain,
there is less evidence that member governments have attempted to impose their
228 CONCLUSION

national models on their European partners in this way. A more pressing concern
has been to avoid competitive disadvantage (see chapter 3 in this volume).
Not only does social policy bear comparison with industrial policy in terms of
the magnitude of EU impact, but there are also similarities in terms of the
relative importance of the Union as an influence on national policy and policy
change. In industrial policy, Menon and Hayward (1996) have cautioned against
exaggerating the role of the EU (see also Kassim and Menon 1996). Although
EU action did exercise a considerable influence on policy in the member states,
other factors, both internal and external, were significant too. Within the state,
changes of government as well as government action remained key determinants
of policy. Financial pressures constitute an additional domestic policy influence,
preventing, for example, the state from offering high levels of financial support
freely to its national champions. Also, the action of domestic lobbies can
maintain or lead to the alteration of state preferences. Externally, governments
find themselves subject to constraints imposed by economic interdependence, as
the French Socialist government discovered in 1983. Technological change can
also affect policy, rendering traditional policies obsolete or infeasible. Thus, for
example, the revolution in telecommunications has forced governments to revise
policies concerning the movement of capital, while the advent of satellite
television has made it increasingly difficult for countries to maintain control over
broadcasting.
If the continued influence of these internal and external factors on shaping
national policy warns against overestimating the importance of the EU, the limits
on what EU action can achieve should also be borne in mind, as Menon and
Hayward (1996) note. Surveying a range of industrial policies, they observe that
even in the area of competition policy where the European Commission disposes
of extremely powerful instruments and enjoys considerable autonomy, its rulings
on state aid have not prevented governments from directing funds to publicly
owned companies. Also, in some key instances, the source of policy change can
ultimately be traced to responses of governments to the pressures of
internationalisation and the attempts to ensure that their economies are
competitive rather than to initiatives launched by Brussels. Indeed, even where
EU action antedates domestic policy adaptation, the stimulus may lie elsewhere.
Finally, in some sectors, aerospace, for example, tightly organised domestic
policy networks have been able to resist attempts to develop policy or policy
capabilities at the European level.
Similar conclusions can be drawn from social policy. While the effects of EU
action have been pronounced, the limitations are also worthy of note. Firstly, the
traditional areas of social policy have remained largely untouched by Brussels
and have been safely insulated by the member states. Governments have largely
retained their sovereignty over health, welfare, social security and the treatment
of the unemployed. Secondly, domestic constituencies and national governments
have continued to exercise an important influence on the direction of policy (see
chapter 3 in this volume). Thirdly, although it has played a significant role, the
 HUSSEIN KASSIM AND DAVID HINE 229

European Court of Justice, like other similar courts, is not capable of developing
comprehensive policies. Its interventions may be decisive, but they are also
episodic.

References

Cram, L. (1993) ‘Calling the Tune without Paying the Piper? Social Policy Regulation:
The Role of the Commission in European Community Social Policy’, Policy and
Politics, 21, April 1993, 136
——(1997) Policy Making in the EU: Conceptual Lenses and the Integration Process,
London: Rout-ledge
Esping-Andersen, G. (1990) The Three Worlds of Welfare Capitalism, Cambridge: Polity
Press
De Swann, Abram (1992) ‘Perspectives for Transnational Social Policy’, Government and
Opposition, 27, Winter 1992, 33–52
Fraser, M.W. (1996) ‘Television’, in H. Kassim and A. Menon (eds) The European Union
and National Industrial Policy, London: Routledge, 204–25
Freedman, L. and Menon, A. (1997) ‘Conclusion: Defence, States and Integration in
Europe’ in J. Howorth and A. Menon (eds) The European Union and National Defence
Policy, London: Routledge
Jones, C. (1996) ‘Aerospace’, in H. Kassim and A. Menon (eds) The European Union and
National Industrial Policy, London: Routledge, 88–105
Kassim, H. (1996) ‘Air Transport’, in H. Kassim and A. Menon (eds) The European
Union and National Industrial Policy, London: Routledge, 106–31
Kassim, H. and Menon, A. (1996) ‘The European Union and state autonomy’, in H.
Kassim and A. Menon (eds) The European Union and National Industrial Policy,
London: Routledge, 1–10
Lange, Peter (1992) ‘The Politics of the Social Dimension’, in Alberto M. Sbragia (ed.)
Euro-Politics: Institutions and Policy-Making in the ‘New’ European Community,
Washington DC: The Brookings Institution, 1992, 225–56
Marginson, P. and Sisson, K. (1992) ‘The Structure of Transnational Capital in Europe:
The Emerging Eurocompany and its Implications for Industrial Relations’, in R.
Hyman and A. Ferner (eds) Industrial Relations in the New Europe, Oxford:
Blackwell, pp. 15–51
McGowan, F. (1996) ‘Energy Policy’, in H. Kassim and A. Menon (eds) The European
Union and National Industrial Policy, London: Routledge, 132–152
Menon, A. and Hayward, J. (1996) ‘States, Industrial Policies and the European Union’,
in H. Kassim and A. Menon (eds) The European Union and National Industrial
Policy, London: Routledge, 267–290
Menon, A. and Forder, J. (1998) ‘Conclusion: State, the European Union and
Macroeconomic Policy’, in A. Menon and J. Forder (eds) The European Union and
Macroeconomic Policy, London: Routledge
Moravscik, Andrew (1993) ‘Preferences and Power in the European Community: A
Liberal Intergovernmentalist Approach’, Journal of Common Market Studies, 31,
473–524
230 CONCLUSION

Peterson, J.(1996) ‘Research and development policy’, in H. Kassim and A. Menon (eds)
The European Union and National Industrial Policy, London: Routledge, 226–46
Pierson, P. and S. Leibfried (1995), ‘The Dynamics of Social Policy Integration’, in S.
Leibfried and P. Pierson (eds) European Social Policy: Between Fragmentation and
Integration, Washington DC: The Brookings Institution, pp. 432–65
Salamon, M. (1987) Industrial Relations: Theory and Practice, Hemel Hempstead:
Prentice Hall
Thatcher, M. (1996) ‘High Technology’, in H. Kassim and A. Menon (eds) The European
Union and National Industrial Policy, London: Routledge, 178–203
Weiss, M. (1991) ‘Social Dialogue and Collective Bargaining in the Framework of a
Social Europe’, in G. Spyropoulos and G. Fragniére (eds) Work and Social Policies
in the New Europe, Brussels: European Interuniversity Press
 INDEX

Acquired Rights Directive 101 Bonn Convention (1979) 198

Action Programmes 5, 7, 17, 40, 74, 88, Bonneton, P 119
99, 161, 163–1, 164, 184–1, 190 Bowles, S. and Gintis, H. 53
Administrative Procedures Act (APA) Boyer, R. 51
(1946) 32–3 Bremen Conference (1985) 201
Adnett, N. 9 Bretherton, C. and Sperling, L. 148
Advisory Committee on Vocational Brewster, C. and Teague, P. 114
Training (ACVT) 176–4 Bridges, W. 103, 107
Agence Europe 116 Bulmer, S. et al 110
Agency for Health and Safety at Work 32 Caillods, F. 173
agency theory 22–3 Carley, M. 109
Agreement on Social Policy 6 Cassis de Dijon ruling 17, 18, 26
Allen, D. 178 CEDEFOP 169, 173, 174
Alter, K.J. and Meunier-Aitsahalia, S. 17, Centre for Research on European Women
18,26 (CREW) 146
Amsterdam Treaty 6, 187–4, 221, 223 CEREQ 169, 170, 174
Andersen, S.S. and Eliassen, K.A. 1 Cerny, P. 54
Anderson, J. 160, 178 CFDT 44
Anglo-Saxon model 40, 47 citizenship 4–6, 39, 41, 224, 225
audiovisual policy 17 Closa, C. 45
autonomy see state autonomy Coase, R. 20
Balfour, C. 170 Coffield, F. 161, 172
Ball, C.A. 44 Coldrick, P. 130
Bamber, G.J. and Lansbury, R.D. 127 COMETT 163–1, 164, 177
Bastian, J. 93, 94, 95, 98, 104 comitology system 14, 23
Baumgartner, F. and Jones, B. 142 Commission of the European Communities
Bean, C.R. 69 (CEC) 30, 60, 163, 164, 166, 174, 175,
Berne Convention (1979) 198 227;
Beveridge, W. 38 role of 220–18
Bew, P. and Meehan, E. 148 see also European Commission
Bispinck, R. 171 Committee of Permanent Representatives
Blackburn, M. et al 63 (COREPER) 13, 23
Blanpain, R. et al 125 Committee for Proprietary Medicinal
Blyton, P. 94 Products (CPMP) 29, 29–30
Boehmer-Christiansen, S. 199 Committee for Women’s Rights 136
Bonn Agreement (1983) 200

231
232 INDEX

Common Agricultural Policy (CAP) 3, 5, Eichener, V. 23–4, 26

19 employment 221–18;
Communication on the Implementation of and centralisation 50;
Community Econvironmental Law 193 changes in composition of 63;
Community Charter of the Fundamental and competitiveness 53–4, 90;
Social Rights of Workers (1989) 4, 6 domestic/EU policy making 51–6;
Confederation of British Industry (CBI) flexibility in 50–1;
122, 172 increase in skilled 63;
Conseil d’Etat 16, 20 and technology 63–4;
consumer protection policy 16 see also labour market;
Continental Can (1973) ruling 25 unemployment
Convention on Antarctic marine living Employment Act (1980) 125, 218
resources (1980) 198 Employment in Europe (1993) report 83
Cooke, P. et al 50 Employment Protection Act (1975) 102,
COPA 123 125, 218
Council of Ministers 8, 187, 190–8 environmental policy 12, 16, 17, 18, 181–
Cox, S. 45 9, 203–204;
Cram, L. 135, 143, 161 Action Programmes 184–1, 190;
Crouch, C. 160, 161, 168, 169, 170, 171 and doctrine of parallelism 181, 200;
cultural policy 17, 18 international aspects 200–7;
Cunningham, S. 146 and international trade 201–9;
De Muth, C.C. 27 legal bases for 185–6;
De Swann, A. 216 nature protection 197–4;
Defrenne case ruling 142–1, 144–3 origins of 182–80;
Dehousse, R. 17 policy implementation 201–9;
Delors, J. 113 politics of 190, 194–3;
Department of Employment 150 and Precautionary Principle 187;
DGB-Bundesvorstand 161 and role of EC institutions 190–93;
Due, J. et al 109 scope of 197–7;
eco-labelling 202–9 and sustainable development 184;
Economic and Social Committee (ESC) water 198–6
25, 111 Equal Opportunities Commission 149
ECU 195 Equal Pay Directive 145
Edinburgh European Council (1992) 199 Equal Treatment Directive 145
‘Education and Training in the 21st ERASMUS 163–1
Century’ (1991) 173 Esping-Andersen, G. 40, 47, 49, 54
education and training 5, 11, 38, 75, 158– Essen Summit (1994) 60, 92, 167
7; Euro-optimism/pessimism 36, 51, 55
bottom-up/top-down approach 177–5; EUROFORM 164
Commissioner nominated for 164; European Agency for the Evaluation of the
divergent policy styles 176–5; Medicinal Products 32
impact of EC policy on 176–5; European Agricultural Guidance and
and importance of higher education Guarantee Fund (EAGGF) 19
161–9; European Central Bank 32
neo-corporatist vs neo-liberal approach European Centre for the Control of Drugs
to 160, 161–60, 169, 171, 176; and Drug Addiction 32
policy on 17, 163–5;
and vocational training 166–4, 168–73
 INDEX 233

European Centre of Public Enterprise European Women’s Lobby (EWL) 136,

(CEEP) 110, 113, 115, 116, 117, 123–2, 147, 148
126, 128, 177, 218, 219 European Works Councils Bulletin 122,
European Commission 8, 140, 141, 153, 126, 219
227, 228; European works councils (EWCs) 56, 88,
and environment 192–90, 195; 89, 104–3, 115, 119–20, 126;
role of 220–18 Directive 121–20
see also Commission of the European European Year of Lifelong Learning
Communities (1996) 167, 173
European Community Services Group 123 EUROTECNET 163–1
European Company Statute (1989) 115 Exchange Rate Mechanism (ERM) 68–8,
European Council 190–8 225–1
European Court of Justice (ECJ) 8, 9, 11, experts, networks of 8, 136, 140, 141, 147–
17, 31, 43, 44, 98, 221, 224, 226, 227; 6, 153, 221
and environment 189, 194, 195, 196; Falkner, G. 54
importance of 217; Farnham, D. and Pimlott, J. 128
role of 100–102, 228; Feldhoff, K. 18, 26
and sexual equality 149–8 feminist movements 135
European Environmental Agency (EEA) Ferner, A. and Hyman, R. 109
32, 193–90 Ferrera, M. 40, 47, 48
European Industrial Relations Review 118, Financial Times 83, 173
124 fiscal policy: automatic stabilisers 71;
European labour market network (EURES) debt condition 70;
220–17 harmonisation 71;
European Monetary Institute 32 Structural Funds 70–71
European Monetary System (EMS) 68 Flynn, P. 48, 81, 89, 99
European Monetary Union (EMU) 61, 61– Forbes, I. 137, 149, 150, 151
2, 105, 126–5, 129–9, 131, 153, 225, FORCE 163–1, 177
225–1, 226 Francovich ruling 101
European Network of Women (ENOW) Freedman, L. and Menon, A. 225, 226
136 Frfllesdal, A. 39
European Parliament (EP) 8, 25, 31, 182, Garrett, G. 17;
187, 192 and Weingast, B. 17
European Social Fund (ESF) 5, 38, 160, Gatsios, K. and Seabright, P. 21
161, 220 General Agreement on Tariffs and Trade
European Standardisation Committee (GATT) 201–9
(CEN) 29 George, S. 14
European Standardisation Committee for German model 40, 47
Electrical Products (CENELEC) 29 globalisation 35, 49–51
European Trade Union Confederation Gold, M, et al 129;
(ETUC) 16, 44, 110, 113, 114, 115, 116, and Hall, M. 116, 119;
123–2, 126, 128, 218, 219 and Matthews, D. 110
European Trade Union Institute (ETUI) ‘Growth, Competitiveness, Employment’
115, 122, 123 (1993) 60, 89, 98
European Union (EU); The Guardian 151
impact on social policy 223–23; Haas, E. 14
impact on state autonomy 216–18 Haas, P. 148
Hague Conference (1990) 201
234 INDEX

Hall, M. 110, 112; challenges to 45–51;

et al 119 changing nature of 48–9;
Hanover Council (1988) 163 comparison between OECD and EU
Hantrais, L. 38, 48, 141, 151, 152 countries 63–7;
harmonisation policy 18, 29, 41, 71, 72, 73– competition in 53–4, 72–2, 90, 129;
3, 90, 99, 154, 177 and de-jobbing 103–2;
health and safety at work 5, 118, 144, 217; and employee involvement 104–3;
Directives 99–8; equality Directives 144–4, 148–8;
policy 17, 18, 26, 45 EU policies 98–102;
Hepple, B. 124, 125 flexibility of 69–9, 82, 90, 91, 99–8,
Holloway, J. 38 102, 104, 105–4;
Honeyball, S. and Shaw, J. 149 high- cost/high-productivity vs low-
Hooghe, L. 41, 45 cost/low- productivity model 90;
Hoover 80, 82–2, 90 insider-outsider problem 49;
Hoskyns, C. 136, 138, 143, 145, 149, 155; and legislation 73–3, 88–7, 99–102;
and Luckhaus, L. 150 and minimum standards 91–92;
industrial policy, impact of EU policy on mobility of 88;
197, 224–23 national level policies 93–6;
industrial relations; and part-time work 99, 107;
and collective bargaining 114, 116, position of women in 136, 137–9;
124–30, 218; and positive action programmes for
and EWC Directive 121–20; women 146–5;
and joint declarations 118; and private sector activities 79;
procedural/substantive agreements sexual equality in 141–41;
126–5, 219; and tax 74–4;
and voluntary arrangements 119–19 and wages 62, 71–2, 74, 75, 78–8, 82–
Industrial Training Boards 171 3, 85, 90–9;
Institut für Europäische Politik 23 and worker protection 101–102;
Institute of Employment Studies (IES) 169 and working hours 99–8, 105, 129,
interest groups 40 154, 217–14;
intergovernmentalism 36, 37 see also employment;
International Labour Organisation (ILO) unemployment
125–4, 143 Lange, P. 43, 216
International Maritime Organisation 201 Lange, T. 171
International North Sea Conferences 201 Layard, R. et al 69
James, P. 45 legislation: and collective bargaining 218;
Jones, C. 224 on environment 188–6, 194–3;
Kassim, H. 224; on sexual equality 144–4, 148–8, 152;
and Menon, A. ix, 1, 227 see also policy making;
Katz, L.F. and Murphy, K.M. 63 regulation
Kaufer, E. 30 Leibfried, S. and Pierson, P. 9, 43, 45, 163
Kearl J.R. 28 Leonardo 177
Kennett, P 6 Lester, Lord, of Herne Hill 149
Kent, S. 103 Lewis, J. 138
Keohane, R.S. and Hoffman, 17 Lindley, R. 87
Kingdon J.W. 24, 25 LINGUA 163–1
Krugman, P. 63–4 Local Employment Initiatives for Women
labour market 39, 220; (LEIs) 146
 INDEX 235

‘Loi Roudy’ 151–50 NATO 226

London Conference (1987) 201 neo-liberalism 11, 41, 52, 53, 160, 161–60,
Ludlow, P. 23 169, 171, 176
Maastricht Social Protocol and Agreement New Opportunities for Women (NOW)
54–5 146, 221
Maastricht Treaty (1992) 27, 80, 108, 110, Nielsen, R. and Szyszczak, E. 110, 164
187, 194, 195, 223; Observatory Report 104, 107
convergence criteria 61–2, 226; OECD 63, 77, 85
debt condition 70; Office of Veterinary and Phytosanitary
fiscal policy 68–71; Inspection and Control 32
social chapter 4, 6, 11, 73, 75, 130, 219– ‘Opportunity 2000’ campaign 151
16 Oslo Commission 201
McGowan, F. 224 OSPAR Treaty (1992) 201
MacRory, R. 181, 196 Ostner, I. 140;
McWilliams, D. 85, 91 and Lewis, J. 45
Majone, G. 20, 21, 22, 28, 39–1 Pact for Confidence and Jobs 98
male-breadwinner model 36, 54, 140, 141 parental leave 108–8, 124, 217
Manacorda, M. and Petrongolo, B. 66 Paris Convention (1974) 200
Manpower Commission 171 Paris Summit (1972) 143, 182
Marginson, P. 121; Paugam, S. 48
and Sisson, K. 121, 127, 219 Peacock, A. 21
market-building policies 7 Pelkmans, J. 29
Marks, G. 160, 176, 177 Peters, B.G. 24, 143
Marsden, D. 129–9 Peterson, J. 224
Maurice, M. and Sellier, F. 169 PETRA 163–1, 164, 175
Mayhew, D.R. 22 Philip Morris ruling (1987) 25
Mazey, S. 143, 145; Pierson, P. and Leibfried, S. 39, 44
and Richardson J. 143, 154 policy making 217;
Meehan, E. 143; and advocacy coalitions 138;
and Collins, E. 149, 150 and agreed welfare floor 56, 57;
‘Memorandum on Vocational Training’ among ‘semi-sovereign’ welfare states
(1991) 161, 177 40–6;
Menon, A., and Forder, J. 225; and budgetary constraints 19, 27;
and Hayward, J. 224, 227, 228 changing international and European
Merger Control Regulation (1989) 25 context 152–1;
Milner, S. 160, 176 and cost/benefit analysis 30–1;
Mitchell, D. 176 and creation of networks above and
Moe, T. 22, 23 beyond nation state 44;
Montanari, B. 40 and direct-expenditure programmes 19;
Moravcsik, A. 22, 43, 44, 216 and diversity of regimes 40;
multi-state drug application procedure on education and training 163–5, 176–
(MSAP) 29 5;
Mundell, R.A. 69 and employment 51–6;
NAFTA 80 and entrepreneurship 24–6, 30;
nation state 44, 45, 51 and environment 188–6, 197–9;
National Bureau of Economic Research 80 framing 138, 227;
National Vocational Qualifications and government change/action 227–3;
(NVQs) 172–70, 176 impact of EU on 223–23;
236 INDEX

and importance of Brussels arena 141– positive/normative implications 26–31;

41; process of 21;
initiation of 23–4, 27; responsibility for 30, 32;
joint decision making as complex and social dialogue 112, 122–l;
process 43–4; ‘soft’ 48;
model of 19–22; technical bias in 28–9, 32;
and national vocational training 168– and welfare-state reform 45;
73; see also legislation;
and proposals by member states 20, 27; policy making
and regulatory failure 20–1; Rehbinder, E. and Stewart, R. 14, 18, 189,
and sexual discrimination 144–6, 153– 191
3; Rehfeldt, U. 119
and technological change 228; Rein, H. and Schsn, D. 135, 138
and welfare state 51–6; retirement see work-share/early retirement
for women 137–9, 150–50; model
see also legislation; Rhine Chemical Convention (1976) 201
regulation Rhodes Declaration 191
political spillover 3, 14, 20 Rhodes, M. 37, 41, 43, 44, 47, 49, 50, 51,
Porter, M. 161 53;
Priority of Compatriots 39 and Mény, Y. 39, 49;
public choice theory 26 and van Apeldoorn, B. 41
qualified majority voting (QMV) 38, 44–5, Ricardo, D. 14
112, 115, 221, 223, 224 Richards, I. 147
Quandt, R.E. 28 Richardson, J. 136
Rainbird, H. 160, 171 Rifkin, J. 103
regime shopping 53 Riker, W. 26
regional policy 16 Roberts, B.C. 125
regulation 9–10, 217; Rome, Treaty of 4, 17, 25, 38, 160–8, 182,
acceptance of 13, 16–17; 185–2
areas of policy development 16–18; Rose, R. and Page, E.C. 170
of competition 17; Ross, G. 37
complexity of 28, 31–2; Ruggie J.G. 49, 50
and decentralisation 30; Rutherford, F. 147
and decision-making procedures 32; Sabatier, P. 138
deepening of 30; Salamon, M. 125, 126, 127, 218
dynamics of delegation and control 22– Scandinavian model 40, 47
4; Scharpf, F.W. 49, 54, 55, 97
and employer/trade union differences sexual equality 5, 81, 135–5, 217;
41; difficulties concerning 137;
and environment 189; Directives 45, 136, 144–4;
failure in 20–1; and EC action designed to eliminate
growth of 13–16; discrimination 144–6;
and institutional reform 31–3; importance of Brussels policy arena
neo-voluntarist 44; 141–41;
over- regulation 13, 16, 27–8, 31–2; institutional developments at EU level
and policy entrepreneurship 24–6; 147–6;
and policy innovation 13, 14, 17–19; international and European-level
policy making model 19–22; context 152–1;
 INDEX 237

and labour market policies 137–9; as problem for the future 85–5;
limited impact of policies on 136–6; size of problem 81–1;
and national policy styles 148–8; and social dimension 87–9
and national welfare policies 137–9; social exclusion 6
policies at critical juncture 153–3; social pacts, competitive corporatist 52–3,
and policy hinterland 150–50; 55–6
and positive action programmes for social policy ix;
women 146–5 ambiguous nature of 5;
Shonfield, D. 85 comparative perspective 223–23;
Sigg, R. et al 54 development of 10;
Single European Act (SEA) (1987) 17, 30, and DG V 4–5, 45, 161;
38, 41, 45, 112, 114, 185–2, 223 different models of 3–4;
Skocpol, T. 38 effect of neo-liberal economics on 6–7;
Social Charter 6, 114, 115, 164 impact of EU on 4, 216–23;
social contracts 35; and industrial policy 225–3;
and solidarity dilemmas 47–9 as market-driven process 3;
social dialogue 9, 217, 219; secondary importance of 226–2;
as approach to social and labour policy and spillover 3
111; social protection 40
and collective bargaining 125–30; social rights 11
company-level developments 119–20; Sorge, A. 170
as consultative process 110; southern European model 40, 47
defined 109–9; sovereignty 36, 40, 50, 204
implementation and enforceablilty 124– Spicker, P. 109, 176
3; Standing Committee on Employment 111–
implications of 117–17; 11
intersectoral developments 112–17; state autonomy 49, 227;
lack of impact of 115; erosion of 7–9;
objectives 113–13; impact of EU on ix–1, 216–18, 225;
origins of 110–11; reduction of 44–5
and parental leave 108–8, 124, 217; Stirk, H. 85
prospects for 122–1, 128–30; Stockholm Conference (1972) 182
and regulation of terms/conditions of Strasbourg Summit (1989) 114
workers 109; Streeck, W. 36, 37, 41, 44, 45, 48, 53
relaunch of 115–15; Structural Funds 70–71, 164–3
and representational status of the Stuttgart European Council 191
parties 123–2; subsidiarity 13, 45, 54, 109, 167, 176, 181,
sectoral developments 118; 186, 189, 192, 199
and social protocol 116–17, 218; Sullerot, E. 145
as twin track approach to social policy supranational states 27, 36, 37
114 Task Force for Human Resources,
social dumping 4, 10, 17, 35, 49, 53, 74, Education, Training and Youth 161
80–81; ‘Teaching and learning: towards the
and company investment 84; learning society’ (1995) 167
and European Commission 87–9; Teague, P. 127, 130
and intentionality 90; TEMPUS 163–1
and legislation 91–92; Ten Hours Bill (1846) 81
limits of 82–3; TEU 166, 176
238 INDEX

Thatcher, M. 224 vocational training 118;

Threlfall, M. 44 access to 177;
Trade Union Research Unit, Oxford 129 Advisory Committee on 176–4;
trade unions 10, 51, 71, 73, 104, 121, 123, EC initiative in 166–4;
129, 130, 219–16 in France 173–3;
Trades Union Congress 126, 177 in Germany 170–8;
training see education and training; national policies 168–7;
vocational training and the Rome Treaty 160–8;
Training and Enterprise Councils (TECs) in UK 171–70;
171 see also education and training
Transfer of Undertakings (Protection of Vogel-Polsky, E. 142
Employment) (TUPE) 101–102 Von Moltke, K. 191
Transport and General Workers’ Union Vredeling Directive 45
129 Warner, R.H. 136
Trubeck, D. 35 Washington Convention (1973) 198
Tsoukalis, L. and Rhodes, M. 43 Weiss, M. 127, 220
UEAPME 123–2 welfare families 47–8, 55
unemployment 48–9, 106; welfare state 217;
benefits and income support 62, 75–7, and absence of societal prerequisites
106; 39–1;
challenge of 92–2, 99; challenges to 45–51;
effect of macroeconomic requirements and domestic/EU policy making 51–6;
on 61–2, 68–71; national embedding of 39;
effect of unions, wages and legislation and nationhood 38–39;
on 62, 71–4; policy making among ‘semi-sovereign’
and fixed exchange rate 68–9; 40–6;
growth in 10, 60, 65–5; reasons for not having federal 37–40;
and inflation rates 70; reform of 45
long-term 75–5; Wessels, W. 1
main factors 66; Wildavsky, A. 22
regional 69; Wilson, J.Q. 22, 30–1
responsibility for 60–1; Women’s Information Service 148
as structural 94; women’s rights see sexual equality
treatment of 66, 68; Women’s Vocational Training Schemes
see also employment; (IRIS) 146
labour market work-share/early retirement model 10, 93–
UNEP 201 3;
Union of Industrial and Employers’ and active job replacement 94;
Confederations of Europe (UNICE) 44, and demographic time-bomb 97;
110, 113, 115, 116, 117, 123–2, 126, and political/social institutions 97–6;
128, 130, 177, 218, 219 and reduction in work time 97;
Val Duchesse initiative (1985) 110, 113 strategies of 95–5;
Vallance, E. and Davis, E. 143 support for 94–4
Vilrokx, J. and Van Leemput, J. 117 works councils see European works
Vocational Education Certificate (BEP) councils (EWCs)
173, 174 World Trade Organisation (WTO) 80, 181,
Vocational Proficiency Certificate (CAP) 182, 201–9, 204
173, 174 Youth for Europe programme 164