The European Union's social failure

During the current economic crisis, the European Union has focused its efforts on building a financial union – while making next to zero progress on a political or social one. If there is really no alternative on the table, then democracy becomes a façade (“Fassadendemokratie”).

Wolfgang Kowalsky
4 December 2012
A protest against youth unemployment in Europe. Demotix/Frederik Enneman. All rights reserved.

A protest against youth unemployment in Europe. Demotix/Fredrik Enneman. All rights reserved.

The democratic and the social questions have become European questions because an adequate national response is no longer possible. It is vital for our future that we understand this ongoing process of change.

Although social movements and trade unions have grasped this change, I’m not sure that the financial sector has. The financial industry should realise that it is in its own interest to declare its support for Social Europe. Indeed, there is a lot of talk about how the financial markets can regain confidence in the euro and regain the confidence of the Member States. However, the people of Europe must also regain confidence. The public’s decline in trust for political institutions, politicians and banks has been steep – an unavoidable consequence of the crisis. People want to see a change in the behaviour of financial markets.

They are angry at austerity policies and at a financial industry which is trying to carry on with business as usual. This sector has to understand the need to convert to a social and democratic Europe. A public debate on democracy has started at the European and national level: will the crisis shape the future architecture of Europe and, if so, who will the new key players be? Following the debate on the future of Europe, one could get the impression that the most important challenge is to save failed banks and the euro.

In recent policy papers, the European Commission, together with the European Council, has proposed to make euro states sign binding contracts, committing them to strict fiscal consolidation, and has pushed for a European banking union with a European finance minister, inviting the seventeen Member States of the eurozone to go for closer economic coordination. These papers have outlined preliminary proposals for more financial integration, effectively transforming the European Commission into an European government.

Unsatisfying reforms…

How much sovereignty should be transferred to a supranational institution which will determine economic, budgetary, and fiscal policy? Will democratic control go hand in hand with these steps? The question of a real European government, European democracy, a European Constitution is back on the table. What would be a suitable trade union response?

In his "State of the Union 2012" address, Commission President Barroso presented what he calls, the "decisive deal for Europe”: a) Economic union and b) Political union. “This is our political horizon. […] I call for a federation of nation states. […] Creating this federation of nation states will ultimately require a new Treaty. […] The speed will not be dictated by the slowest or the most reluctant.” Full stop – nothing on social union, more and better jobs, more democracy or more fundamental rights. Instead, Barroso is calling for a banking union in the shadow of the markets.

A transformation of the EU into a “banking union”, transferring the powers to an executive body without parliamentary control, should not be acceptable for European citizens.

Another initiative, the four building blocks proposed by Van Rompuy, also completely ignore the social dimension of the European project. The social dimension (wages, collective bargaining) simply becomes an adjustment factor. Competitiveness as a guiding principle replaces cooperation.  National democracies are hollowed out by the transfer of national competences to the European level where decision-making is dominated by automatic rules outside of any democratic control.

… and an unsustainable status quo

The current institutional structure of economic governance does not work well. De facto, a two-speed Europe is already in place - the Council takes decisions that only concern the seventeen euro countries. This shift has created the problem of diminished democratic control.

Shouldn't the European Parliament adapt to this new economic governance architecture by allowing MEPs from these seventeen countries to discuss, negotiate and vote on legislation relating to Eurozone governance – with social partners closely involved? Perhaps it would be useful to build up a eurozone budget which could be used to fulfil the objectives of EU2020, in particular fighting the dramatic increase in youth unemployment and implementing the youth guarantee. If no progress is made, there should be sanctions.

The debate will broaden and deepen in view of the upcoming European elections. It is inconceivable that politicians will base an election campaign on vague ideas of a financial or banking union without sketching out a vision for a future political union - but up until now, no clear vision has been identifiable. Only a few elements of the future European architecture are being debated, when the debate should also encompass the objectives, the instruments, and the vision.

The limited scope of the current discussion might be due to the fact that the priority, right now, is to get European economies moving. But the economy and finance aren’t everything. There is a – less visible – discussion on what kind of future architecture could make a political (and social) union work. In most Member States, a minister can be forced to resign and while there are no plans at present to enable the forced resignation of Commissioners, this should be made possible.

Instead of going in that direction, some governments think that the role played by national Parliaments has to be reduced in order to better implement European policies of austerity and structural reform. Parliaments are seen as an obstacle – as are trade unions. This view is a step towards widening even further the current democratic deficit.

Where to now?

There are two ways of driving forward: either via parliamentarisation (a shift towards a stronger European Parliament): in other words, strengthening the European Parliament by giving it the power to choose and elect the President of the Commission; or via presidentialisation, i.e. an election that would give direct democratic legitimacy to the President of the Commission. The presidentialisation (a shift towards a more presidential system) has one important side effect: if, before the next European elections, an European party or a European list of federated parties were to agree on a candidate to lead their list, then this person would become the President of the European Commission if the list wins. This is the European People's Party intention.

However, there are a few problems with going down this route. If the European Union gets a directly elected president, this new feature would shift the power from the EP to the Commission. It would be nearly impossible for the EP to force a directly elected President of the Commission to resign.

If, on the other hand, the EP gets the power to choose and elect the President of the Commission, it can effectively supervise and control a future European government. If a presidential system is established, the EP will never get this power, as is the case in many continental systems. Even if the Council is transformed into a second chamber or the President directly elected, all these institutional changes cannot outweigh the importance of a strong EP.

"More Europe": the only way to go?

All major political parties and influential European actors subscribe to the slogan “more Europe”. Although some want it to be more communitarian (following the so-called Community method), some more intergovernmental.

The triangle of institutions (Commission – Parliament – Council) will have to be readjusted. Since the crisis, the intergovernmental pole of the triangle has become more and more dominant. The EP has lacked visibility against some strong national leaders and in the period immediately after the outbreak of the crisis, the Commission was in a state of paralysis.  Muddling through has become the dominant governance modus operandi of the crisis, the apparent lack of vision a major problem.

The current debate does not address the asymmetries of a strong economic and fiscal integration and the lagging behind of social and political integration; on the contrary, the proposals increase the asymmetries instead of closing the gap. It is no longer possible to support the ongoing integration process and its unilateral direction towards more financial and economic integration without flagging up an alternative vision with a comprehensive design for a social and political union.

In the “golden” Delors years, social Europe made some progress in a few areas such as equal pay, health and safety, information and consultation, but that was decades ago: since the beginning of the new millennium, the regulation of labour and employment law at the European level seems to have come to a dead end (with a few exceptions). The fiscal treaty on stability, coordination and governance which is interlinked with austerity policy is normatively contrary to the European policy commitments for more welfare, full employment, social cohesion, social security, solidarity, social market economy, social partners’ involvement etc…

It’s a common concern that the new economic governance structures do not strengthen but instead weaken parliamentary participation and the participation of the social partners. It is undisputed that the EU system needs more democracy. However, real projects for strengthening democracy are yet to be put on the table.

A democratic façade is not enough

A more federal European system makes not only centralisation but also a new balance between centralisation and decentralisation necessary. The muddling through and the new economic governance procedures risk undermining national democracy; however, the national parliaments must play a decisive role. There is a choice to be made between a model of Europe driven by competition and muddling through, and an alternative model of Europe driven by stronger political cooperation, industrial policy, industrial democracy, fiscal rules, social legislation and more democracy. 

Democracy is a forum for discussing alternative solutions - and there are always at least two alternatives to be discussed. The usual argument - there is no alternative - is the symptom of a dangerous crisis of democracy. The EU should be a defence against the markets, cushioning their effects, but in the financial crisis it seems to humour them, by constructing a system that is marginalising national parliaments and social partners without transferring democratic power at the European level. If there is really no alternative on the table, then democracy becomes a façade (“Fassadendemokratie”). The fight for democratisation is a crucial one for the future of Europe. Those who continue to say that Europe is a project for elites are undermining both democracy and Europe.

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