The summit on the sustainability of the EU’s “social model” that Britain’s Prime Minister Tony Blair hosted at Hampton Court last October ended rather inconclusively. Both. admirers and critics of the “European social model” seem to share the same shaky assumption that Europe has – or ought to have – one social model. Beware of euro-speak. Which “Europe”? Is there only one model? And is it really a “model”?
By “Europe”, some politicians mean the EU’s founding continental nations, while others extend it to include Scandinavian welfare states. And Europeanists see in it common values enshrined in the EU Charter of Fundamental Rights, to which Britain and the new member states also adhere. But what about Europe’s different national traditions, homegrown institutions and diverse cultural understandings?
If the social landscape varies across Europe, then the EU’s model represents no more than an intergovernmental compromise. Can it then really be the prescription for all its members? Moreover, a “model” implies a master plan as well as the ability of its architects to plan such a house. Although politicians may aspire to this, it has taken decades to establish today’s social order and the political tussles it involved are far from over.
Who would not agree with Paul Hofheinz that economic growth is the basis for providing social security? Europe’s exceptional post-war economic boom freed the resources for steady welfare state expansion. But this economic success was built upon an implicit “social pact” between capital and labour that advanced the welfare of workers in return for their acceptance of the market economy. Certainly, the welfare state has grown to its limits and faces many concurrent challenges – structural unemployment, an ageing society and increased economic and tax competition. But are we really “stubbornly refusing to adjust our social systems to reflect this dramatic change”, as claimed by Hofheinz? Are welfare states flawed “politics against markets”?
Could we do without the welfare state? Without social protection, how could Europe achieve broad social acceptance for the massive changes being forced upon us by global markets, technological advances and socio-demographic changes? Europe’s most open economies, notably the Scandinavian ones, built the most advanced welfare states and provided long-term unemployment benefits accompanied by active labour market policies to help displaced workers find suitable jobs. For decades, early retirement also allowed companies to restructure their workforces in socially acceptable ways. Even though we now realize how costly this strategy has been, employers find it difficult to adapt to economic changes without such “politics for markets”.
Another example: how can the EU’s goal of increasing female employment be fulfilled without providing appropriate childcare services? We need to reform our social protection systems to become more employment-friendly, and to tailor them to address new social risks and become more sustainable in an ageing society. Policies for generations unborn should thus seek to renew the inter-generational social contract, not abandon it under the pressure of economic rationality.
Globalisation is often used as the rationale for reductions in wages and social benefits. No wonder workers have sleepless nights about it. Politicians tend to call in their speeches for radical reforms that they say are needed to confront the “globalisation threat” and “demographic time-bomb”, yet they only enact short-term welfare cuts and incoherent partial solutions that just address current fiscal problems. In other words, although reforms are already moving ahead far too slowly, radical reforms have rarely proven politically feasible in democratic societies. The social contract cannot be re-written overnight, but it does need to be supported by the people, not just for democratic reasons but because otherwise we are unlikely to see successful adjustments to Europe’s economy.