European Trade Union Institute’s General Secretary, Esther Lynch, with Research Director, Bart Vanhercke, provide a detailed look at the ongoing quest for Social Europe
The new impetus for Social Europe over the past five years has led to important and long-awaited policy initiatives, including minimum wages, platform work, and corporate due diligence. However, progress in this field remains both fragile and fragmented. The key question now is whether this social paradigm shift can be upheld in the face of the high risk of an austerity reload and in a context of continued “polycrises”.
The mandate of the von der Leyen Commission
The mandate of the von der Leyen European Commission (2019-2024) has been an exceptional phase for European integration as it has strengthened the social fundamentals of the European Union (EU) in many ways. The most important embodiment of this development is undoubtedly the advancement in the implementation of the European Pillar of Social Rights (EPSR), which was unanimously endorsed in 2017 and paved the way for both legislative and policy initiatives. This led to the proposal and adoption of important legislative initiatives, including the Directive on Adequate Minimum Wages in the European Union, the New Pay Transparency Directive and the Platform Work Directive.
Also, important improvements for the occupational health and safety of workers were introduced, as well as the Directive on Corporate Sustainability Due Diligence and the Forced Labour Regulation. The social aspirations of the EU also shone through, to some extent, in the handling of several unexpected events, such as the COVID-19 pandemic. This not only led to the launch of NextGenerationEU (with the Recovery and Resilience Facility at its core) and the SURE mechanism, but also to the temporary loosening of the EU fiscal framework and state aid rules.
At the same time, in the context of the unceasing threat of climate change, the European Green Deal acknowledged that it was necessary to make the transition ‘just and inclusive for all’. However, the trade union movement is pushing for legislative initiatives to make this commitment a reality. These renewed social ambitions stand in considerable contrast with the austerity-driven response to the Great Recession, which has harmed European citizens over the last ten years.
European macroeconomic policies amidst shifting priorities
Each of these drivers – the EPSR, a novel approach to EU spending and temporary relaxation of the EU fiscal framework and the commitment of the European Green Deal to just transition – has been important in relaunching the process of a more social European integration.
The red thread is the (re)balancing of priorities, from enhancing social resilience and cohesion and ensuring a just green transition (which had taken precedence in the early years of this EU political term) to tackling challenges such as public debt sustainability, which regained precedence in recent years. In contrast to what happened in the aftermath of the 2008 financial crisis, the fiscal stimulus following the COVID-19 crisis not only temporarily paused the application of the fiscal rules but was also supported by monetary policy tools, the relaxation of EU state aid rules, and EU borrowing to finance an ambitious recovery strategy for the EU.
The EU stepped up efforts towards climate neutrality by 2050, with the pledge of ‘leaving no one behind’. However, as the war in Ukraine led to an energy price shock, skyrocketing inflation and a cost-of-living crisis, macroeconomic policy expansion was partly reversed from 2022, despite the energy support measures deployed by Member States.
More ominously, the newly agreed rules for multilateral fiscal surveillance point to some backtracking among Member States in favour of fiscal sustainability at the expense of allowing more space for governments to handle common EU priorities such as climate change and social resilience. It would appear that the review of the EU’s fiscal rules will turn out to be a missed opportunity to achieve a more meaningful balance between fiscal, green, and social objectives and increase the risk of a return to austerity.
That is why the ETUC is calling for Member States to meet the requirements through progressive taxation instead. The EU should also put in place a permanent investment mechanism to ensure that Member States still can meet social and green goals.
The quest for strong job recovery
Against the backdrop of ongoing structural transformations in the labour market – new technologies, the green transition, and the rapidly ageing workforce – employment in Europe is at a high following a successful approach to supporting jobs and workers during the COVID-19 pandemic, aided by necessary spending. The differences between countries and regions across the EU have declined over time.
At the same time, job quality remains a challenge – with many workers still subject to problematic contractual arrangements and precarious work under bad conditions, low pay and low collective bargaining coverage in many countries and sectors. Crucially, many jobs still entail health risks to workers, and there is a growing consciousness of the importance of psychosocial risks related to work.
The quality of jobs needs to be monitored thoroughly, and actions must be taken to ensure that the changing labour market provides decent work opportunities for all. The recent adoption of the Platform Work Directive – which includes key trade union demands about the presumption of employment and the reversal of the burden of proof – demonstrates that the EU can effectively provide minimum wages, sick pay, and other forms of employment protection for vulnerable workers and stamp out abusive practices.
The Adequate Minimum Wages: A game changer
On the one hand, tight labour market conditions marked by low unemployment and persistently high labour shortages have increased trade unions’ bargaining power to obtain better wages and working conditions for workers in the field of wages and collective bargaining.
On the other hand, modest economic growth and continuing geopolitical tensions have had the opposite effect: They have made it more difficult for trade unions to negotiate wage increases to compensate for the loss of purchasing power. The adoption of the Directive on Adequate Minimum Wages in the European Union in October 2022 marked a turning point. It is the first-ever piece of EU legislation that explicitly aims to establish an adequate minimum wage floor and strengthen collective bargaining.
Not only this, but it is also one of the most significant expressions of the shift in the discourse on the EU’s social dimension, previously dominated by the neoliberal paradigm of market liberalisation, which put existing industrial relations and social systems under pressure. Its positive impact on the development of minimum wages can already be seen in various countries even before its formal transposition into national law, which is due in November 2024. However, the actual ‘bite’ of the directive will also depend on effective transposition by the Member States, which in some cases may be hard- fought and will require trade union mobilisation.
Towards an eco-social model
EU policymakers have demonstrated more openness and sensitivity to the social dimension during the past five years, which in turn provides a helpful basis from which to tackle the social impacts of climate change and the green transition. However, for all the positive rhetoric and good intentions, the current patchwork of policies – the Just Transition Mechanism, the Social Climate Fund and the repurposed Recovery and Resilience Facility – is far from the holistic, comprehensive approach that was supposed to be the basic principle of just transition policies. The EU does not have any policy tools (yet) that would provide collective risk coverage for climate and extreme weather-related risks.
Also, a Just Transition Directive is needed to ensure anticipation and management of change based on social dialogue and collective bargaining, as well as actions at the EU level to ensure the right to training for all workers without costs and during working time. Most of the transformation still lies ahead: decarbonisation efforts need to be stepped up significantly throughout the coming decades, and the EU needs to significantly speed up the green transformation, not only to meet its climate policy targets but also to preserve European competence in key sectors.
On the other hand, keeping ambitions high will also intensify the social effects of this transformation. An industrial policy for high-quality jobs with strong public and private investments and social conditionalities will be needed, as well as legislative and policy actions to ensure a just transition.
A crossroads in terms of promoting collective bargaining
In addition to the transposition of the Minimum Wage Directive (targeting 80% coverage of collective bargaining) and of the Gender Pay Transparency Directive, further initiatives by the EU institutions to promote collective bargaining remain a key objective for the following years. Amongst others, it will be necessary to revise EU public procurement rules to ensure that public money goes to organisations that respect workers and trade union rights, which negotiate with trade unions and whose workers are covered by collective agreements.
Considering negative developments in certain countries, it will also be of paramount importance to defend and strengthen trade unions and workers’ rights, including the universal right to organise, union access to workplaces, the right to bargain collectively, and the right to strike. It is important that the recent interinstitutional La Hulpe Declaration recognises the importance of these fundamental worker and trade union rights.
Also, the recent advancement in EU policy has affected worker information, consultation and participation at the company level in various and ambiguous ways. Worker rights should be extended and strengthened if Europe is to build a sustainable, innovative and democratic economy and society amid global competition and overlapping crises.
The effective exercise of democracy at work by involving trade unions and workers in strategic decision-making helps to protect workplace rights, quality jobs and working conditions, thereby ensuring companies’ sustainability as well as reinforcing the basis of a democratic society. In this sense, the ongoing discussion on the revision of the European Works Council Directive is the first important opportunity that cannot be missed to reinforce workers’ information and consultation rights. The strengthening of information, consultation and the participation rights of worker representatives and trade unions across Europe should remain a top priority.
The heart of the Social Europe Model
Europe is experiencing a social justice emergency. High-quality jobs, social progress, the improvement of working and living conditions, social dialogue and collective bargaining are at the heart of the European Social Model. The reinforcement of these key pillars and the full implementation of the European Pillar of Social Rights must be at the forefront of the work of the EU institutions in the next term, in line with the La Hulpe Declaration on the Future of the European Pillar of Social Rights.
All these matters are explored in depth in the publication Benchmarking Working Europe 2024: The ongoing quest for Social Europe published by the European Trade Union Institute (ETUI).
