Jean Monnet Center at NYU School of Law


6) Overall Assessment: Creating New Governance Mechanisms and Preserving the European Social Model

In this final section, we ask two basic questions: how successful has the EES been in constructing a new form of governance, and to what degree is it likely to contribute to efforts to preserve the European Social Model?

Assessing a new governance mechanism

If we are going to assess the success of the EES as a new governance method, we must create standards against which it should be measured. The standards we use are our own: there is no single, authoritative statement on this issue from the Council or the Commission and some evidence of continuing debate about the role in the EU of methods for "open coordination" like EES. Moreover, there are features to the EES process that have not been highlighted at all by the EU's official organs but which may be of great importance for governance of the Union (see Sharpf, 2001).

From our viewpoint, the EES process embraces five major governance objectives: promote learning; enhance coordination among levels of government; integrate separate policy domains; enhance participation; and promote convergence while allowing diversity. We have already analyzed the first goal in Section 5, supra. Here we comment on the others:

a) Coordinate actions of multiple levels of government. Effective labor market reform, and other aspects of a successful employment strategy, must be implemented at local and national levels, which in turn must be aligned with European level programs and policies. Thus an effective strategy should include ways to engage multiple levels of government in a common enterprise.

The very existence of the EES, with its national plans and Europe-wide guidelines, is evidence that efforts are being made to integrate the several levels. Seen as one of many approaches to multi-level integration, EES has several cardinal features. First, most of the policies must be carried out at the national or local level: there is relatively little direct action by the EU organs themselves that is aimed at reducing unemployment. The exception is the modest use of structural funds to support the EES. Second, the EU's primary role in the System is to construct the broad strategy, develop specific guidelines, monitor performance, and call for periodic adjustments. To the extent that institutional or legal reform is needed, and money must be spent, these are to be done largely at the national or even the local level.

It is clear that the EES has created a formal mechanism to coordinate the local, national, and Union levels. The issue is how effective this coordination is in practice. We know it is far from perfect: some Member States have failed to respond to Union-led efforts to change national policies and there is concern that regional governments have not been adequately integrated into the process. But we have also seen that some change is occurring at all levels, thus suggesting that the new machinery offers promise for the future.

b) Cut across policy domains. A major feature of the employment problem, like many other social issues, is that it involves several policy domains and cuts across institutional boundaries. For example, to create more jobs, it is necessary both to foster entrepreneurship and upgrade workers' skills. And these efforts should be coordinated. But traditionally enterprise promotion and worker training have been handled by different agencies and operated independently. And as the guidelines themselves demonstrate, there are many other areas where boundary crossing efforts are needed.

Even a casual look at the guidelines and the NAPs shows that the EES has successfully identified a number of important areas where agency and policy domain boundaries must be crossed, and set forth policies that require cooperation of several agencies at the national level. These include such key areas as:

What is less clear is whether the agencies are actually cooperating in all areas to the degree necessary. Thus, in 2000, the Commission felt it necessary to point out that in some countries ministries other than the labor ministry were not doing all that was needed. In the Commission's view, "there is, however, a risk, that the Luxembourg process is considered to be an agenda driven solely by the ministries of labor, whereas the strategy is an integrated one, committing the whole government (European Commission, 2000, p. 89)."

c) Enhance participation and ensure functional representation. Since the development and effective implementation of successful policies will require the cooperation of, and action by, employers and worker representatives, and since policies will require public support at the national level, any successful employment strategy-making process needs to ensure broad public participation of the public and effective representation of the social partners.

Initially, this was a problem in the operation of the EES. There is evidence that in the early years, there was little participation by the social partners in the shaping of the guidelines and the NAPs. Recently, however, some efforts have been made to ensure broader and more effective participation at the European Level. At the national level, some unions report favorably on their participation in the process of writing the NAPs, but many still complain of having only very minimal input (ETUC, 2001). Several national union confederations report having less than two weeks to provide input into complicated plans or report that no real effort has been made at obtaining their input. At present, the EES still remains heavily driven by a bureaucratic core in the Commission and the national labor ministries.

d) Encourage partial convergence while accommodating diversity. Although all EU Member States share some common problems, the extent of the problems varies from state to state. Because the legal rules and institutional structures in industrial relations and social policy of the fifteen Member States are extremely varied yet deeply embedded any effort to demand uniformity would be unrealistic. Nonetheless, the Commission and the European Council have made clear that the EES is designed to produce convergence at least in some areas. But what is sought at least so far is partial convergence on a partial strategy. As we have noted, the EES only covers some aspects of employment policy and many areas remain exclusively within the province of the States. Further, even in areas that are covered by EES, the Strategy does not always demand convergence: many of the guidelines leave the States with substantial discretion in how to deal with issues. Moreover, to the extent that the EES does seek convergence, it is often a convergence of outcomes, not of policies. Many of the guidelines set targets for results and let the States chose the best means to reach those results.22 Finally, the Strategy is designed more to encourage States to change than to force them to do so and there are no hard sanctions for failure to follow the guidelines.

The EES, the politics of the welfare state, and the future of the European Social Model

The final question to look at is the potential effect of the EES on the debate now raging in Europe over the future of the European Social Model. Views on this issue range from calls to deregulate labor markets and roll-back benefit systems to demands that existing systems be maintained largely intact. In between lie those who support the Social Model but recognize the need for some change. Modest reformers of this type accept the need to reallocate funds to serve previously excluded groups, rethink strategies to increase employment, find ways to accommodate new types of work and workers, combine security with flexibility, and recalibrate benefits to avoid fiscal crises. The agenda of those individuals and groups in this category overlaps with the strategy of the EES. (Levy, 1999). The issue is: to what degree will the presence of the EES help the efforts of the modest reformers in political struggles over the future of the welfare state?

This question will largely be decided at the national level in each Member State. Despite major moves toward a limited form of Europeanization in social policy, most of the final decisions on the future of the welfare state will be taken by national governments. The EES and other EU-level social policy initiatives are designed to influence decisions that must ultimately taken by national governments. So the question really is: what are the prospects that this mechanism will have a significant impact on the outcome of national debates?

The EES cannot significantly affect the balance of power in a given Member State. True, States make some tentative commitments to a modest reform agenda by accepting the guidelines but that would not stop a powerful right-wing government intent on rolling back the welfare state. In other political configurations, however, ideas and strategies developed at the European level through the EES process can help bring about significant change in national laws, policies, and budgetary allocations. In the easiest case, the EES may point to strategies that improve conditions for everyone and thus can gain very widespread support. But the EES could also have an effect in cases where there are some divisions on welfare state issues. Thus, in a country where political support for the welfare state is strong, but supporters are split between those who accept the need for recalibration and those who oppose any change whatsoever, the EES can strengthen the hand of the moderate reformers. Similarly, in situations where the dominant political actors accept the need for some reform, the EES can help shape the strategies that are selected.

Where the EES is more likely to have most impact is in cases where there is support for the welfare state and the political choices are between the status quo and modest "recalibration". The EES encourages states to redirect existing resources to women, the unemployed, and other groups previously not well served. It promotes efforts to preserve the fiscal base needed for a generous welfare system by policies that will increase the percentage of working age adults who are in the workforce and paying into the system, rather than out of it and drawing heavily on state resources. It encourages efforts to get more people in the workforce by upgrading skills across the board but with special emphasis on new entrants, the unemployed and those in low skill jobs. While all of these measures have substantial support, they will also meet resistance from those who are afraid that any change is likely to lead to more radical cuts, as well as those who may lose from a redirection of welfare state services and resources. In such situations, the EES can provide domestic leaders and other domestic political actors in favor of moderate reform with arguments for the necessity of change as well as showing that other countries have successfully made these changes without having the whole system unravel.23

The EES can be especially effective if it were to lead to more efficient ways to use existing resources or provide guidance to people who accept reform but are unsure of how to proceed. Policy learning might produce win-win situations in which some can benefit at no cost to others, or where gains are so large than modest cost increases or losses to some can be accepted. And ideas contained in the EES can channel reform efforts when there is genuine doubt as to how best to accomplish reform goals and reformers are uncertain how to proceed. In a situation of policy uncertainty, mandates from the EU can shape change by supplying already articulated solutions.24

22 There is evidence of a relationship between the quantification of guidelines and the degree to which convergence is occurring; thus, the more the guidelines have been reduced to numerical targets, the more movement towards a common strategy can be seen. Since the Council must approve these guidelines, and has frequently resisted quantification, quantification is being used in those areas where the policy consensus is broad and political support for the strategies that lie behind the guidelines is strong.

23 For an example of the EES dovetailing with domestic moderate reform efforts, note how the EES' emphasis on increasing the employment rate of older workers reinforces the controversial arguments in favor of reducing early retirement in the "Plein emploi" report to the French government on French employment policy by Jean Pisani-Ferry (2000).

24 For example, the guidelines' emphasis on active and preventative unemployment policies shaped change not by creating support for better unemployment systems where it did not exist but by channeling how the desire to improve unemployment systems would be carried out.




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