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The Balance Between Economic and Social Objectives in the European Treaties

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The Balance Between Economic and Social Objectives in the European Treaties The Balance Between Economic and Social Objectives in the European Treaties Olivier De Schutter* Viewed in its historical dimension, the construction of social Europe pre- sents two main characteristics. First, over a long period social Europe was less an objective in its own right and rather an accompaniment to economic integration between member states of the European Community and later European Union. Second, it has developed gradually through recourse to a variety of legal methods and has involved a wide range of actors. At present it is primarily the result of certain provisions in the Treaty of Rome, of legislative measures, and of the case-law of the European Court of Justice (ECJ). But it has also resulted from the adoption of political declarations with no legally binding effect – such as the Community Charter of Funda- mental Social Rights of Workers (1989) and the Charter of Fundamental Rights of the European Union (2000) – as well as from European social dia- logue and “open” coordination between member states over employment and combating social exclusion. In these conditions it is not easy to provide an overall diagnosis. However, it is possible to identify the successive his- torical stages in the construction of social Europe, and to relate these stages to a theoretical framework so as to reveal the logic that links them together. It is on this condition that we can attempt to make an assessment of the new situation created by European Union enlargement with ten – and shortly twelve – new member states, and the unprecedented challenge now facing the internal market in its social dimension. I The Beginnings (1957-1974): the Common Market The Ohlin Report of 1956 had identified the question exactly (International Labour Office, 1956). Would the creation by a small group of six states of an organization dedicated to economic integration have an impact on the protection of social rights within these states, and if so, would it call for compensatory measures? This question received a generally optimistic ans- wer at the time. The ILO experts were confident that international competi- tion within a Common Market would not be an obstacle to a gradual rise in living standards, related to the productivity increases that should result from the more efficient allocation of resources through free movement of * Professor at the University of Louvain (Belgium) and Global Law Professor, New York University. 119 RFAS No 1-2006 the factors of production. For the future European Economic Community to be attributed competence in social matters was thus neither necessary nor recommended. Improved living and working conditions would result auto- matically from productivity gains in each state, notably through pressure from trade unions. Given the productivity differentials of workers in each state, it would be artificial and hence undesirable to establish a uniform level of social protection across the Community. The authors made two exceptions to this general conclusion. They noted the distortions of compe- tition that could result from inadequate protection in some states for the principle of equal pay for men and women for equal work, which could give them an unfair comparative advantage in industries employing a large pro- portion of female labour. The same remark applied with regard to fixing weekly working hours and paid holidays – for the authors, the inadequate degree of organization of the workforce in some states could lead to a lower level of protection for workers in these states, to the detriment of healthy competition. Nonetheless, the Ohlin Report did not deem necessary the har- monization of protection levels within the European Economic Commu- nity. Its authors argued that the same result could be achieved by the member states signing up to the same international conventions on these matters, negotiated within the ILO or the Council of Europe – the first pro- ject of the text that in 1961 would become the European Social Charter was already known at the time. The Ohlin Report is known to have considerably influenced the Spaak Report presented to the Messina intergovernmental conference, and via that the Treaty of Rome of 25 March 1957 (Barnard, 1996; Davies, 1993; Dea- kin, 1996; Kenner, 2003: 2-6). The latter does not enumerate any social rights. It attributes the European Community no legislative competence in this area. Article 118 EEC provides merely that “the Commission shall have the task of promoting close co-operation between member states in the social field”, particularly in matters relating to employment, labour law and working conditions, vocational training, social security, health and safety at work, the right of association and collective bargaining between employers and workers. The same provision provides that “to this end, the Commis- sion shall act in close contact with member states by making studies, delive- ring opinions and arranging consultations both on problems arising at national level and on those of concern to international organizations”. However, the Treaty of Rome contains a clause on the principle of equal pay for men and women for equal work – in Article 119 EEC (now Article 141 EC, after amendment) – and a provision relative to paid holiday sche- mes – in Article 120 EEC (now Article 142 EC). In addition, the European Social Fund was set up, with the task of improving employment opportuni- ties within the Common Market by encouraging occupational and geogra- phical mobility among workers and “thereby contributing to raising the standard of living” (Article 123 EEC). Lastly, Article 51 EEC (now Article 42 EC, after amendment) laid down that measures would be adopted to secure for migrant workers and their dependants aggregation, for the 120 The Balance Between Economic and Social Objectives in the European Treaties purpose of acquiring and retaining rights to social benefits and for calcula- ting their amount, of all periods taken into account under the different natio- nal laws, and payment of benefits to persons resident in the territories of member states. The latter provision formed the basis for the adoption of the first regulation in 1958, 1 and the successive regulations issued thereafter were consolidated in Council Regulation (EEC) No. 1408/71 of 14 June 1971, on the application of social security schemes to employed persons and to members of their families moving within the Community, 2 which despite repeated modification is still today the applicable legislative frame- work. But Article 51 EEC and the regulations for its implementation, deci- sive for making the free movement of workers effective by avoiding them being penalized by the diversity of national laws on social security legisla- tion, made no attempt to harmonize these laws. On the contrary, Regulation No. 1408/71 organized their diversity. 3 The considerable debt that the Treaty of Rome’s authors owed to the philo- sophy of the Ohlin Report is apparent in the subordination of the social objectives of European unification to the creation of the Common Market. While the elimination of barriers to the Common Market constitutes the instrument, social progress appears as its by-product. Thus Article 2 of the EEC Treaty (now Article 2 EC, after amendment) provides that “the Com- munity shall have as its task, by establishing a Common Market and pro- gressively approximating the economic policies of the member states (...), an accelerated raising of the standard of living”. In the same vein, Article 117 of the EEC Treaty (now Article 136 EC, after amendment) states that “member states agree upon the need to promote improved living and wor- king conditions for workers so as to make possible their harmonization while the improvement is being maintained”. The second indent states that such a development “will ensue not only from the functioning of the Com- mon Market (...) but also from the procedures provided for in the Treaty and from the approximation of provisions laid down by law, regulation or administrative action”. 4 The essentially programmatic character of these social provisions of the original Treaty of Rome – in the sense that these 1 Council Regulation No. 3 on social security for migrant workers, OJ, No. 3 of 16.12.1958, p. 561/58. 2 OJ L 149 of 5.7.1971, p. 2. This regulation has been amended many times, and most recently by Regulation (EC) No. 647/2005 of the European Parliament and of the Council of 13 April 2005 amending Council Regulation (EEC) No. 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, and Council Regulation (EEC) No. 574/72 laying down the procedure for implementing Regulation (EEC) No. 1408/71, OJ L117 of 4.5.2005, p. 1. 3 Hence what follows contains no discussion of social security for migrant workers. 4 Article 136 EC includes an additional clause referring, among other things, to “the need to maintain the competitiveness of the Community economy”. Some formulations of Article 117 of the EC Treaty have also been amended, but the principle according to which the member sta- tes (now: the Community and the member states) believe that improved living and working conditions making possible their balanced progress “will ensue not only from the functioning of the Common Market, which will favour the harmonization of social systems, but also from the procedures provided for in this Treaty and from the approximation of provisions laid down by law, regulation or administrative
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