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The European Social Model - Pros and Cons
Issue 6
November 2012
The European Social Model - Pros and Cons
Laura Timofei, Academic of Economic Studies,
Bucharest, Romania, [email protected]
What is the European Social Model?
Initially, the European integration program focused on economical
matters: free trade agreement through the removal of various obstacles
and restrictions and the consolidation of national economies and their
competitiveness. Economical problems have represented the primary focus of
European politics while social matters were evidently less important. European
social politics have long been limited to simply avoiding the misrepresentation
in competitions – created because of different social standards – and an
increase in employee mobility.
Ever since the establishment of the unified market and the creation
of the economic and monetary union by the European Union, the relative
importance of social matters inside the EU policies have considerably increased,
extending the socio-political responsibilities even farther. Nowadays, the
economic growth and the social stability and cohesion are complementary
inside the European model and accept the finality of transfers or social
cohesion as a strategic component along with the performance component.
Many think that the European Social Model is not really a “model” or
“social” and certainly not only “European”. And yet what is the European Social
Model (ESM)?
The concept is frequently met in the academic environment as well
as in the political discourse and is used to describe the European experience
gathered in the attempt to simultaneously promote economic growth and
social cohesion and also to draw a line between the European model and the
American model. The term “European Social Model” was initially used by Jaques
Delors in the mid 90s in order to define an alternative to the pure American
capitalist form of market. The fundamental idea that the ESM is based on
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November 2012
Journal of Business Management and Applied Economics
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is that the social and economical progress should go hand in hand, in other
words, the economical growth should be combined with the social cohesion.
Although a decade has passed since that moment, the term continues to be
debated in the academic environment as well as in the political environment
thus still maintaining a vague meaning.
One of the first definitions for the ESM can be found in the “White
Book of Social Politics” (European Commission, 1994) and refers to it in a
normative form. Thus, the term is defined by a set of common values which
need to be followed: the fight for democracy, personal freedom, social
dialogue, equal opportunities for all, expressed solidarity and social security
for underprivileged individuals in society.
Among the most transparent official definitions of the term is the one
mentioned in the European Council Presidency Conclusions from December
2000 in Nice, Annex 1, in which the description of the European Social Agenda
states: ”The European Social Model is particularly characterized by a system
that offers a high degree of social protection, social dialogue importance and
general services that cover vital activities for the social cohesion. Despite the
diversity of the social systems of the Member States, it is based on a common
value foundation.”
ESM is mentioned in different environments throughout the
specialized literature and can be identified through distinct presentations that
do not exclude one another. Thus, we will find ESM presented as being a model
which incorporates certain common characteristics (institutions, values) that
are inherent to EU state members and is perceived as a regulatory model of
society and competitive economies. Another set of definitions present ESM
as being included in a variety of different national models, some of which
representing good examples for the others. Most authors and political decision
makers identify the ESM as a European political project with the purpose
of modernizing and adapting society to permanently changing economic
conditions. The essence of these changes is depicted by specialists through the
expression “society based on knowledge/information”. According to this point
of view, the ESM is an ongoing phenomenon that takes place at a transnational
level. ESM is also presented as a cohesion instrument throughout EU country
members but which does not exclude new European social models that may
appear.
A newer approach to ESM brings forward the idea of productive social
policies that apply to divers’ social models in Europe and which promote
The European Social Model - Pros and Cons
Issue 6
November 2012
partnerships, attracting the active work force etc. A different concept points
social and political orientations to encourage the individual to survive in
an economy that is becoming more and more dynamic rather than using
the individual's capacity to use this as a reason for action in order to correct
market forces. Also among the newest approaches to the ESM is the European
discourse which is based on a European model of society or otherwise
expressed as a socio-economic model, as long as the models and reforms are
related not only to social issues, but also regulatory incentives and innovation
system. The socio-economical model is viewed by certain authors as society's
responsibilities for the welfare of the individual. The three basic characteristics
are: responsibility, regulation and redistribution - showing that ESM is more
than a strict social model.
The characteristics of the European Social Model
One of the primordial objectives of the EU has to be the creation of a
more equitable society: to end poverty and subsistence wages, to guarantee the
fundamental human rights, essential services and wages that allow a decent
living for any individual. At this point, five essential elements have been
identified:
• The fundamental social rights, including the right to free association,
the right to strike, protection against unjustified dismissal, fair and decent
work conditions, equality and nondiscrimination.
• Social protection offered through well developed universal systems
and the redistribution of welfare measures such as minimum wages and
progressive taxation.
• Social dialogue with the right to reach collective agreements when
representing and consulting employees.
• Social regulations in regard to employment covering, for example,
health and security, limiting the number of work hours, vacations, job security
and equal opportunities.
• The State responsibility for full employment, for providing services
of general interest and economic and social cohesion.
Every country has its own social model but even so, all EU member
states social models are based on the same common values: market economy,
the eradication of unemployment, access to public services, social protection.
These values make it possible to create and approach a single European Social
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November 2012
Journal of Business Management and Applied Economics
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Model. In any country, the ESM translates into different regulations regarding
the labor market, different ways of providing health services, education and
other public services as well as different tax and welfare systems. In the ESM,
economic growth and social progress are closely related. Competitiveness
requires effective social systems, but any effort to expand social action
regardless of the specific way of life of each Member State ultimately leads to
a decline in the economy and undermines society's capacity to support social
measures.
"The European Social Model can be defined as a unique model that
can be applied in the same way in all regions and countries of Europe, all of the
definitions should be based on diversity and by considering different traditions
and needs. Therefore any European action in this area must respect the principle
of subsidiarity", states Stig-Erik Westmark, president of the Committee for
Social Cohesion, Social Policy and Public Health of the Assembly of European
Regions (AER), at a conference dedicated to the future of the European Social
Model in October 2005. For this purpose, a joint settlement has been adopted
calling on all Heads of State and Government of the EU to fully recognize
and respect the diversity of social models in Europe, applying the principle
of subsidiarity both at European and national levels. At the same time, a set
of principles and values have been defined such as solidarity, social justice,
social inclusion, equal access to employment, with a particular focus on young
people and people with disabilities, gender equality, equal access to health and
social safety, universal access to education, health and social services.
Critique of the European Social Model
Lively debates have been generated ever since the emergence of the
European Social Model concept. A simple Google search of the term brings
3.940.00 results. Refining the search by associating it with the term “success”
brings 83.800 results, the term “failure” brings 1.050.000 and with “rethinking”
- 107.000 results. Even these figures are sufficient to show that, at this point,
there is a full consensus on the effectiveness of the European Social Model.
At the “European Social Model” conference in Bruxelles, on the 14th
of February 2008, the European Council member, Vladimír Spidala, states that
the model is a well-balanced system from which all Europeans benefit, while
member states give an equal level of importance to all economic aspects as well
as social aspects through extensive protection systems, strong social cohesion
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November 2012
promotion policies and well developed health and education systems. In this
context, nowhere else in the world is the role of social partners and social
dialogue as important as in Europe. In addition, a third dimension model
has been added recently: environmental protection and, more generally,
sustainable development. By giving equal importance to economic, social and
environmental concerns in the EU development strategies (especially Lisbon
Strategy), the EMS has become a model for China, Brazil and even the USA.
Another supporter of the model, Anna Diamantopulou, highlights its
merits in the article “The European Social Model – Myth or Reality?” saying
that it is quite “alive and healthy”. The EMS is institutionalized at a European
level, it is pragmatic, and it takes into account national differences and tries
to establish the minimum standards for common sense and is prepared to
implement necessary reforms in the constantly changing economic and social
environment both in Europe and outside it.2
However, according to many opinions the model has, if not completely
failed, at least encountered serious problems. In the book “Beyond the
European Social Model”, the authors show that instead of helping, the model
puts an even greater burden on the poorest citizens of Europe through the
drastic decline of incomes and poor public services. Martin De Vileghere
compares the apparent success of the fiscal easing policy in Ireland to the one
in Scandinavia thus showing that the general level of prosperity has increased
in the first one and decreased in the second one.
Lorraine Mullally wonders if this so-called social model is truly
“social” ever since poor people's income has increased 8 times more in AngloSaxon countries than in Scandinavia and the unemployment rate in Europe is
six times higher than in the U.S., despite the claims that Europe has a better
society than the U.S.
Munkhammar Johnny states that despite the initial euphoria of the
Scandinavian model, other European countries should not copy the model
because it actually means lower economic growth, unemployment and state
dependency.
Chresten Anderson totally rejects the idea of a common ESM.
”Imposing a unique welfare state model is economically unjustifiable and
politically undesirable.” He says that if Europe wants to reduce unemployment
levels, it should cease to talk about creating new jobs and focus on how to
“grow the pie” that it wants to share with others.
Malgosia Kaluzynska writes that the EU is committed to a program
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November 2012
Journal of Business Management and Applied Economics
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of better regulations. This program must radically change in order for it to be
successful. The current approach known as “the standard cost model” focuses
too much on administrative costs of regulation but fails to truly provide good
regulations.
An analysis conducted by the BBC shows that debates tend to heat up
when it comes to the ESM but talks fail to go too far for two reasons. First, the
EU has limited power in terms of social policy and labor use and because of
this any call to European change and modernization will reach “deaf ears” and
for the fact that each country has its own way of addressing health, education,
pension systems, unemployment and social assistance issues. Basically, there
is no single European social model. Secondly, one cannot speak of a consensus
at EU levels. For a long time, heated debates on economic social policies have
been dividing Member States in to two camps: on one side, are those that want
markets for liberal and flexible activities, less regulated, but with a higher
competition; on the other side, are those that want a higher standard of life,
regulated markets, protected labor market, more rights for the workers1.
Cecile Robert mentions the problems that appeared in the context
of EU enlargement, especially in case of the accession of Central and EastEuropean countries, accusing their governments of having refused to face
discuss the difficulties they faced, for fear of raising suspicions regarding the
„health” of their national economies. Even the European Court of Justice, in
the Viking and Laval case, discusses certain principles of ESM.
The researcher Fritz Scharpf from Max Plaug Institute analyzes the
capacity of ESM to face the challenges of diversity, mentioning that starting
with 1950, a fundamental asymmetry between the countries that promote
economic efficiency and those that promote social protection and equity
has been created. In the process of European integration, the economical
policies have been “progressively Europeanized”, while the social policies have
remained national2.
The necessity to rethink the European Social Model
It is obviously necessary to rethink the European Social Model, as
Europe has common values, but it must also face common challenges. The
cause of the current problems of the ESM is not the social legislation or the
1 Cora, Maria, Vasilescu, Bogdan, „Modelul social, subiect de controversa in Uniunea Europeana
2 Scharpf, Fritz, “The European Social Model: Coping with the Challenges of Diversity”
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November 2012
insufficient public spending, but the difficulty to adapt to the social and
economical development, thus the present ESM has been put to a hard test,
especially during the last ten years:
• Economic development lacks transparency: one of the conditions for
ESM to work is the high level of productivity that is reflected into the economic
growth. However, the productivity growth declined in the mid 90s and the rate
of economic growth in the EU has fallen below 2%. Many European economies
have lost their dynamism and the courage to assume the risk that they had in
the miracle of economic growth after the Second World War.
• The structural unemployment: a significant proportion of the
European workforce cannot adapt to the speed of the economic changes and
technological development. Of 300 million citizens fit to work, 20 million
citizens from the 25 EU member states are unemployed, 10 million are longterm unemployed.
• Demographic Bomb: the percentage of working population of
Europe is increasingly reduced, so that the social protection systems are the
first to suffer.
• There are political, economical, and social reasons for this review of
the social policies:
• All the European Union countries are states of law. In varying degrees,
with different perspectives and using different methods – the feeling of social
and national responsibility for the social needs of the citizens. They all use
national means to guarantee and develop the social rights of the citizens. This
general belief is continued in the European Union. EU is linked to the idea of
a European Social Model - as well as its member states taken individually.
• Due to economic globalization, the competitively among
the European countries becomes a categorical imperative. Enhancing
competitiveness and social rights protection are not mutually exclusive. On
the contrary, innovative social policy plays a key role in the protection and
enhancement of the competitiveness of European companies in the global
economy. High educational standards (including general education and
vocational training), an effective and efficient protection against risks such as
illness, accidents, unemployment, as well as protection of the living standards
of older people that contribute to the existence of a high social stability and
internal security in a society are key factors for the competitiveness of a
technological and global economy.
• Due to unequal social standards from each EU member state, there
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November 2012
Journal of Business Management and Applied Economics
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are unequal competition conditions in the Single Market. If the Single Market
becomes reality, the differences between social standards will have to be
balanced. This is one of the important objectives of the Treaty of Maastricht.
A true European Union shall be only when all its citizens enjoy similar social
security. Only then, shall a borderless market become a reality for Europe.
• Finally, it is more and more obvious that economical and political
integration will fail if people do not have the feeling that their social situation
has improved. A simple union of trusts will have no political success. However,
a union of citizens needs practical social policies.
References
[1] Cazes, Sandrine, Nesporova, Alena, “Flexicurity: A relevant approach in
Central and Eastern Europe”, International Labour Office, Geneve, 2007.
[2] Cora, Maria, Vasilescu, Bogdan, “The social model, subject of controversy in
the European Union”, Curierul Naţional, 21 November, 2005
[3] Diamantopoulou, Anna, “The European Social Model – myth or reality”
– paper presented at the conference of Labour Party Partidului Laburist,
Bournemouth, UK-29 September, 2003.
[4] De Vlieghere et all, “Beyond the European Social Model”
[5] Marin, Dinu, Socol, Cristian, Marinaş, Marius, “European Economy –
synoptic presentation”, Ed. Economică, Bucharest, 2004
[6] Marin, Dinu, “Globalization and its approximations”, Ed. Economica,
Bucharest, 2004
[7] Marin, Dinu, “Contemporary Economy – What is transition?”, Ed.
Economica, Bucharest, 2000
[8] Scharpf, Fritz, “The European Social Model: Coping with the Challenges of
Diversity” MPIfG Working Paper , 02/8, July 2002
[9] Spidla, Vladimír, “European Social Model”, intervention, European Social
Model Conference European Parliament, Brussels, 14 February 2008
[10] Tănăsescu, Mihai, “Is the European social model a competitive barrier?”,
Ziarul Financiar, 06.11.2006
[11] www.aer.eu “The European Social Model must be grounded in diversity”
report on AER conference on the future of the European Social Model, held in
‘s-Hertogenbosch (Noord-Brabant, NL) on 13th October
[12] www.euractiv.com – “European social model challenged by Court rulings”,
Wednesday 27 February 2008
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November 2012
[13] www.shiftmag.eu Robert, Cécile, “European Social Model: the missed
rendezvous with enlargement”, 31 mar 2009
[14] www.europa.eu.int
[15] www.etuc.org
[16] www.mie.ro