Building social Europe through the open method of coordination

Table of Content:

1. Introduction

2. Welfare-State Diversity under changing Conditions
2.1. Three Idealtypes of Welfare-Regimes in Europe
2.2. The Impact of Europeanisation on National Welfare-State Regimes

3. OMC as a Means to develop Social Europe?
3.1. The Open Method of Co-ordination (OMC)
3.2. Concept and History European Employment Strategy (EES)
3.3. Intermediary Results and Prospects of the EES

4. Résumé: Building Social Europe through the Open Method of Co-ordination?

5. References

1. Introduction:

The negative votes in the referenda adopting a Constitution for Europe in May and June 2005 by the peoples of France and Netherlands were, inter alia, motivated by a denial of a so called “neoliberal Europe”. Following the line of argument of many Constitution-critics, there should be rather intensified efforts to develop the social dimension of Europe (see, e.g., Kittel 2002) instead of promoting a more and more market-oriented integration. Claims like these lead to the controversial scientific debate about the necessity and capability of an economically integrated Europe to take part in solving the diverse socio-political challenges which national welfare-states are actually facing (Ferrera et al. 2000; Scharpf 2002, Kittel 2002). Originally built up for the purpose of common market-creation on a supranational level while leaving the social obligations to the member states, the European Union (EU) is facing mounting requests for a more assertive role in co-ordinating social policies since the early nineties (Goetschy 1999). This is in part due to increasing constraints on national wealth-redistributing arrangements, being on one hand confronted with external pressures like enhanced trade competition, internationalisation of finance, the European Monetary Union (EMU) and liberalisation of public sector industries, on the other hand internal challenges like ageing, unemployment and low growth. These circumstances and a growing extent of interdependence between the economies of the member states, being rooted in the integration of markets, laid the foundation for a smooth extension of EU competencies in the field of social policy since the Treaty of Amsterdam (Schmid 2002: 60ff.). With respect to the distinctiveness of European welfare-regimes regarding norm-dispositions and procedural as well as institutional structures (Esping-Andersen 1991), the question remains open how to achieve an adequate level of effective implementation and democratic accountability for such a co-ordination. Therefore the European Council of Lisbon framed in 2000 a new^[1] mode of governance to cope with this challenge: The Open Method of Co-ordination (OMC) (European Council 2000: 2).

As there is no commonly agreed on definition of the OMC but rather an official collection of measures constituting this mode of governance (European Council 2000: 11), one needs to look for a useful substitute. Accordingly, the author takes up a proposition of Louis Michel, former Belgian Foreign Minister, modified by the “Social Europe” working group in the Assembly for a European constitution. Therefore OMC is a form of policy co-ordination “consisting for Member States, at their own initiative or at the initiative of the Commission, with due respect for national and regional diversity, in setting joint objectives and indicators on a given topic, and, on the basis of national reports, enabling these states to improve their knowledge, develop exchanges of information, experience and practice, and, in accordance with the objectives set, to promote innovative approaches likely to result where appropriate in guidelines, recommendations or other forms of European legislation” (de Búrca and Zeitlin 2003: 3).

With respect to the continuing integration of politics, polities and policies in Europe, there is an increasing scientific as well as political relevance assessing the democratic accountability and effectiveness of multilateral modes of governance like the open method of co-ordination. With regard to its relative novelty, the epistemic community as well as the scientific literature is growing rapidly (govecor 2004; Heritier 2001; Radaelli 2003). The objective of this paper is to assess, whether the Open Method of Co-ordination has the capacity to contribute to the development of a social dimension in Europe under the conditions of severe European-level induced impediments to the viability of national welfare-statehood. In order to answer these questions, the work will at first deal with the existing welfare-state diversity in Europe, working out a functional definition of welfare-statehood itself, and then resuming to the path-breaking typology of Esping-Andersen’s “Three Worlds of Welfare Capitalism”. Following, there will be an analysis of the impact of EU-level induced challenges to national welfare-statehood, clarifying thereby incentives and necessities for enhanced co-ordination on a European scale. After this there will be a theoretical assessment of the concept of the Open Method of Co-ordination, its properties and expected outcomes. The ensuing part will then examine the prototype of OMC in the field of social policy, the “European Employment Strategy” (EES), and assess its intermediary results. At last the work will deal with the question, whether the OMC is principally capable of contributing to a social dimension of Europe under the shadow of EMU and the single market.

2. Welfare-State Diversity under Changing Conditions

2.1. Three Idealtypes of Welfare-States in Europe

In order to understand the challenging nature of Europeanisation to the modern welfare-state, one has firstly to address the subject of examination itself. Therefore, it will be necessary to define the term “welfare-state” and then turn to apply an adequate concept of theorising the divergent wealth re-distributing arrangements in Europe.

With respect to the variety of welfare-state regimes in Europe, it is hard to find a commonly agreed on definition of welfare-statehood in the relevant literature. This is in part due to different historical, political and cultural developments of European (welfare-)states, which all reflect distinctive normative understandings of the relationship between market, family and state. In addition, it is noteworthy that social policy and wealth re-distributing regimes are political and ideological battlegrounds, which further complicates dealing with the subject scientifically (Schmidt 2002: 32f.). However, there is consent on one core-principle of welfare-statehood, namely social citizenship. This so called social citizenship (Marshall 1950) constitutes the core idea of the welfare-state, because it counteracts on one hand liberal property-rights, and ascribes on the other hand an inviolable duty to the state for guaranteeing the realisation of basic social rights, regardless of individual market performance (Esping-Anderson 1991: 21).^[2] The idea of social citizenship grants particular rights to its proprietor and thus emancipates him partially from pure market dependence by moderating the individual reliance on the market to maintain a livelihood. This is in fact what Esping-Andersen calls de-commodification, signifying the prevention of work being treated as a bare commodity (ibid.: 22). Notwithstanding the different degrees of de-commodification in European welfare-states, this does not indicate a deviation from the core-principle itself.

Another deduction from the principle of social citizenship is, equally important, the manner in which wealth re-distribution takes place. In this sense the welfare-state is, “in its own right, a system of stratification” (ibid.: 23). Stratification thereby depends on the prevailing arrangements of wealth re-distribution, that is the relationship between the market, the state and the family in generating welfare. In this regard it is possible to differentiate on one hand between the quantitative intensity of wealth re-distribution, on the other hand the qualitative aspect of who benefits from particular welfare settings and who is being discriminated. The results are different forms of social stratification for distinct welfare-state regimes. Bringing now all the before-mentioned aspects of welfare-statehood together, an appropriate definition could be as follows: A welfare-state is a distinct form of statehood, which grants fundamental and inviolable social rights to its citizens, thereby constituting a particular system of de-commodification and stratification through the determination of the relationship between market, state and family in generating welfare.

Resuming to the established definition, the work will now take up an adequate concept for theorising the diversity of welfare-state regimes in Europe. The most scientifically influential and fruitful theory in this respect is without doubt the typology of the “Three Worlds of Welfare Capitalism” (ibid.), clustering welfare-state regimes into three distinctive categories. Even if there are numerous critics concerning the particular arrangements of the theory (Offe 1993: 83f.; Kohl 1993: 73f.), the work was a starting-point for many refinements and developments^[3] and remains still as an outstanding foundation for research (Scharpf 1999; Ferrera et al. 2000).Combining quantitative analysis of huge amounts of data with historio-sociologic considerations and the normative foundations of welfare-state regimes, Andersen worked out a model of regime-clusters regarding welfare-statehood. The independent variables in this setting are the three factors de-commodification, stratification and state-market-family relationship (Esping-Andersen 1990: 21ff.). The core-result of his examination is a typology, consisting of three ideal-typical clusters of welfare regimes.

The Liberal Welfare-State:

The liberal welfare-state, also known as the beveridgean type, puts the main emphasis of welfare-production on the market. In this function he is actively supported by the state, i.e. through subsidising private, voluntary and actuarially insurance contracts. The state itself has in this setting a rather marginal role by guaranteeing only minimum and means-tested flat-rate benefits to the needy. The intended effect is on one hand a setting of incentives to participate in the market-process, so that negatively spoken the “limits of welfare equal the marginal propensity to opt for welfare instead of work” (ibid.: 26). Hence this type of welfare-regime leads to a considerable degree of commodification and, because of the means-testing nature of state-assistance, to a stigmatisation of the needy. On the other hand the referred arrangements establish a relatively high degree of stratification between equally poor state-welfare recipients and wealthier market-based insurance proprietors, thereby generating a “class-political dualism” (ibid.: 27). The role of the family in generating welfare is amongst other things, due the individualist legacy of liberalism, marginal in the ideal-typical form of this welfare-state regime.

Examples for this ideal-type are Ireland and the United Kingdom .

The Conservative Welfare-State:

The conservative welfare-state, being ideologically rooted in the bismarckian Sozialgesetzgebung and the Papal Encyclicals Rerum Novarum and Quadrogesimo Anno, concedes an only marginal role to the market while stressing the role of the family and, to some degree, the state in generating welfare. The distinctive conservative character is made up mainly by binding social benefits and replacement incomes to equivalent insurance-based contributions, thereby preserving status differentials through attaching the extent of benefits to the social class. Following this scheme, it is obvious that the existing social stratification is intended to be retained, originating partly in the conservative ideology of natural hierarchy and social role differentiation (ibid.: 38ff.). Furthermore, it was an explicit objective of conservative politics to nurture differentiated social strata and bind them with exclusive privileges to the authority.^[4] Because of the status-preserving attitude of the conservative welfare-state, the re-distributive impact is negligible. It must however be noted that the insurance-system provides a mediate level of de-commodification, because the employees earn legal entitlements for social assistance equivalent to their contributions. Moreover, there is also a special catholic impact on this model of welfare-statehood, mainly based on the principle of subsidiarity. According to this, the “higher and larger level of social collectivity should only intervene when the families capacity for mutual protection is rendered impossible” (ibid.: 61). This principle explains three important properties of conservative welfare-statehood: First, why the family as an institution providing welfare is paramount to state-help, as soon as insurance-protection is exhausted. Secondly, why there are strong incentives for women to stay out of labour markets and preserve therefore the capacity of the family as the primary institution providing welfare and maintaining gender specified role-relationships. Third, the corporatist organisation of the conservative welfare-state, originating in the above-mentioned Papal Encyclicals as well as continental guild-traditions (ibid.).

Examples for this ideal-type: Germany, Austria, France, Spain, Greece, Netherlands e.a..

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^[1] It is arguable to what extent OMC constitutes in fact a “new” form of governance. There are actually existing procedures of multilateral surveillance used by the OECD and the IMF. Compare for this point Schäfer, 2004.

^[2] See article 20 and 28 of the German Grundgesetz, which constitute the right of the state to intervene actively into the development of society with the aim to achieve “social justice”. Compare further Meyers Enzyclopädisches Lexikon: Sozialstaat/Sozialstaatsprinzip, Mannheim, 1978

^[3] See i.e. the feminist refinements and critics of his theory (Sainsburry: 1999; Pfau-Effinger: 2000)

^[4] compare on this point i.e. the German Beamten-modell and its origins.