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The European Pillar of Social Rights Meets the Nordic Model Caroline De La Porte*

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The European Pillar of Social Rights Meets the Nordic Model Caroline De La Porte* January 2019:2epa EUROPEAN POLICY ANALYSIS The European Pillar of Social Rights meets the Nordic model Caroline de la Porte* Summary The ‘European Pillar of Social Rights’ (EPSR), consisting of 20 principles, was adopted as a solemn declaration by EU institutions in November 2017. This paper examines how the EPSR changes the EU social policy regime and how it could impact the ‘Nordic model’, focusing on Sweden and Denmark. The paper has four main conclusions. First, the EPSR principles build on and adapt previous EU initiatives, to be implemented mainly via soft law, including policy coordination and social benchmarking, but also updates to directives. Second, although the social partners, especially unions, generally support the EPSR, some fear that certain legislative updates – particularly those to work-life balance and on precarious workers – could undermine the Nordic collective bargaining model. To avoid this, a solution to this could be to introduce clauses in these directives, respecting the autonomy of Nordic social partners. Third, the EPSR mimics the main policies of the Nordic welfare model, which reveals the long-term diffusion of the Nordic model to the EU level. Fourth, due to the EPSR’s strong reliance on soft law, its success ultimately depends on ownership in member states. * Caroline de la Porte, Ph.D., Professor in European and Comparative Social Policy, Copenhagen Business School, Department of International Economics, Government and Business. www.sieps.se EUROPEAN POLICY ANALYSIS January 2019:2epa 1 Introduction1 Both have welfare states that are universal and tax- The European Union promotes high social standards, financed and social partners that decide on labour but welfare is organized within the boundaries of market issues, including wage formation, through nation-states (Ferrera 2005). Following the principle collective bargaining. The findings for Denmark of subsidiarity,2 member states decide on financing, and Sweden are, therefore, likely to be valid for governance, organization, access and generosity, as other countries with a Nordic model – Finland, well as the delivery of social and labour market but also Norway and Iceland – that follow EU policy. There are, however, zones of legal uncertainty, legislation in social policy, since they are part of the where the division of competences between the EU European Economic Area. and the national levels is blurred. “Key actors in the Nordic The European Pillar of Social Rights (EPSR), adopted in a solemn declaration by the European countries are thus concerned Parliament, the European Commission and the about whether the EU could Council of the European Union in November […] potentially undermine the 2017, embodies this legal uncertainty (European Parliament, Council of the European Union, Nordic model of collective European Commission 2017). While the bargaining.” declaration is not legally binding, the principles are to be implemented by various instruments, The primary data from the EU level includes particularly social benchmarking and policy official documentation about the EPSR from the coordination, but also directives, which are legally European Commission, the Council of Ministers, binding (Rasnaca 2017). the European Parliament and relevant Council Key actors in the Nordic countries are thus con- formations. At the national level, the paper draws cerned about whether the EU could, through the on national parliamentary debates and positions by social partners on the EPSR. In addition, six EPSR, develop policy and law that might influence 4 national welfare states and labour markets and po- in-depth, semi-structured elite interviews with tentially undermine the Nordic model of collective social partners have been conducted (five with bargaining. MPs in Sweden and Denmark disagree union representatives and one with an employer about the potential effects of the EPSR and its organization). Throughout the report, the data are principles, which is to some extent because of the analysed qualitatively and triangulated to ensure lack of clarity regarding its legal status. The Danish validity of the findings. 3 and Swedish social partners covered in this study This paper is organized as follows. declare that they are, in principle, supportive of the EPSR, but only if it is implemented through soft • In the second section, the paper briefly presents law. Unions see the EPSR as an important signal at the EU’s social policy regime, including the the EU level that citizens and workers are a priority, long-term influence of the Nordic model on EU while employers argue that the EPSR should be social policy. an opportunity to reaffirm ‘flexicurity’ ((Danish) • In the third section, it analyses the instruments LO, FTF & AC 2017; Preisler 2017; (Swedish) that the EPSR entails compared to previous LO, TCO & Saco 2018; DA, EK, NHO, Svenskt initiatives. Näringsliv 2017). • Fourth, it presents the features of the Nordic model and the reactions to the EPSR in To understand the EPSR, this paper analyses national parliamentary debates and among what it means for the EU social policy regime social partners. and whether it could impact the ‘Nordic model’. • The fifth section analyses the significance of the The Nordic model refers to policies to maintain EPSR for EU policy and the Nordic model. economic competitiveness, social cohesion and • The final section concludes the paper. It welfare and autonomous decision-making by discusses the possibility of the EPSR being social partners on labour market issues (Kvist implemented in the current political context et al. 2012). This study focuses on Sweden and and argues that political leaders in the Nordic Denmark, as ‘typical cases’ of the Nordic model. countries should support the EPSR. www.sieps.se 2 av 22 EUROPEAN POLICY ANALYSIS January 2019:2epa 2 The EU’s social dimension and the influential at the EU level. When Allan Larsson6 influence of the Nordics was director of Directorate General 5 in the Commission (now DG employment, social affairs Labour market and social protection policies in and inclusion) from 1995 to 1999, he developed the European Union (previously the European an EU approach to employment and social policy. Community, EC) are organised within the This was proposed following the institutionalisation boundaries of national member states (Ferrera of the Economic and Monetary Union (EMU), 2005). Citizens working in member states other when member state economies and by extension, than their own are covered by the social protection public policies, became more interdependent (Begg systems of the host countries through coordination 5 & Nectoux 1996). At EU level, Larsson advocated of social security systems. However, the EU can for ‘social protection as a productive factor’, which propose social policy and labour market initiatives was inspired by the Nordic model, but was also but must respect the principle of subsidiarity. The congruent with the New Left approach supported EU therefore cannot undermine member state by Tony Blair in the UK and Gerhard Schröder in sovereignty in the organization and financing of Germany. welfare states. In the early years of the EC, there were legal initiatives, particularly in health and Under these circumstances, member states adopted safety at work and gender equality, but they did a common European Employment Strategy (EES) not touch upon core redistributive policies (Streeck in an ‘Employment Title’ of the Amsterdam 1995). Treaty through (non-binding) policy coordination in 1997. In the EES, the features of the Nordic “[…] the EU can propose social model that were transferred to the EU included policy and labour market the dual-earner model, unemployment benefits in case of unemployment and an active labour market initiatives but must respect policy to facilitate (re)entry into the labour market. the principle of subsidiarity.” These features, and a flexible labour market, were later conceptualised as ‘flexicurity’, based on the This section presents four main phases of the Danish labour market model. As an extension of development of EU social policy from the mid- this, ‘social investment’ is also characteristic in 1990s, following Swedish and Finnish membership the Nordic countries. Social investment centres to the EU. on human capital development throughout the life course and includes not only an active labour • The first phase started in the late 1990s, when market policy, but also high quality early childhood Nordic countries were forerunners in developing care, education and life-long learning (Kvist 2015). a common approach to labour market and social policy, at the EU level. • The second phase, from the mid-2000s, was “At EU level, Larsson characterized by a more liberal approach advocated for ‘social to economic and labour market policy, in protection as a productive conjunction with the eastern enlargement, whereas social policy was not central. factor’, which was inspired by • The third phase began in 2008, following the the Nordic model […]” financial crisis, when fiscal consolidation was a central concern. Building on the EES, social investment policy • The fourth phase, which started in 2014, became a centrepiece of the EU’s socio-economic marked the end of the focus only on fiscal strategy, ‘the Lisbon Strategy’, in 2000, which consolidation and added a focus on social rights. identified an ambitious strategy for the EU to It was during this phase that the EPSR was become a competitive and inclusive knowledge- launched in 2016. based economy
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