speri.comment: the political economy blog

A clash of two projects: fundamental rights and the European Monetary Union

The EU could re-introduce fundamental rights into the governance of the Eurozone merely by holding to commitments it has already made

Robbie Pye, Doctoral Researcher, Department of Politics, University of Sheffield

Pye-Robbie-100Over the last five years the response to the Eurozone crisis has given rise to a framework of governance that has become increasingly hostile to domestic social standards.  Yet, in the decade prior to this, the EU went through a phase of constitution-building as attempts were made to move beyond economic integration and create a more socially balanced, state-like polity.  These included supposedly robust mechanisms to protect fundamental rights.  An EU Charter of Fundamental Rights was drafted and contained such rights as the right to collective bargaining and action (Article 28), protection in the event of unfair dismissal (Article 30), fair and just working conditions (Article 31) and social security and social assistance (Article 34). Various reforms to the policy-making process were also introduced in order to implement the Charter: mainstreaming rights in impact assessments, procedures for consultations with relevant parties, inter-institutional dialogue, rights check-lists and explanatory memorandums.

However, the response to the Eurozone crisis has been marked by a failure to respect social rights, despite clear evidence that the policies deployed have impacted on rights.

The primary problem is that the governance of the Eurozone has become increasingly obsessed with economic indicators, with policy areas previously concerned with attaining high social standards being re-appropriated to pursue a neoliberal conception of macroeconomic competitiveness.  Collective bargaining, for example, is now conceptualised as a barrier to labour market flexibility, seen as a necessary component of competitiveness and targeted with policies explicitly aimed at decentralisation of trade-union bargaining power to ensure wage moderation.  Enforcement mechanisms have also come to be underpinned by economic indicators: the Excessive Deficit Procedure is activated according to measures of debt and deficit and the Macroeconomic Imbalance Procedure is based on an array of indicators on macroeconomic balance, including current account deficit and export market share.  For any Eurozone state suffering economic problems, these mechanisms are used to enforce the specific policy recommendations issued by the European Commission, nearly all of which have lately focused on austerity and macroeconomic restructuring.

So, what do social rights have to say about the types of policies being proposed?  As I’ve already mentioned, the rights mechanisms within the EU have not been utilised, largely due to institutional peculiarities associated with EU integration.  We have instead to look outside the EU for examples: at expert bodies such as the European Committee on Social Rights (ECSR).  As a committee that exists outside the EU, the ECSR is unable to comment directly on policy proposals at the EU level.  However, it does have a large body of relevant case-law and has had the chance to pass judgement on the implementation of policies stipulated by the EU in countries such as Italy and Spain.

The example of collective bargaining is especially relevant because both Italy and Spain have been told to decentralise bargaining in order to constrain wage increases.  Both countries were also subject to the Excessive Deficit Procedure and the Macroeconomic Imbalance Procedure and both also received letters from the European Central Bank that stipulated specific policy conditions (including decentralisation of collective bargaining) in return for the purchase of government bonds.

The ECSR found that decentralisation forced on trade unions without their consultation in Spain constituted a violation of rights on the basis that bargaining frameworks should be voluntary.   As regards the outcome of decentralising collective bargaining, laws passed in Spain allowing employers to derogate unilaterally from collective agreements have also been found to be a violation.  Similarly, concerns have been raised about the impact on workers’ conditions of allowing company-level agreements to derogate from sectoral and national level agreements in Italy.

Collective bargaining also has a knock-on effect on wages, in relation to which the ECSR has established that a minimum threshold of 50% net of the average wage must be met for wages to be satisfactory.  Findings of non-conformity have been issued in Spain in this regard, whilst the ECSR has requested information to check if company-level derogations in Italy breach this threshold.  It should also be noted that, when commenting on Spain, the ECSR explicitly rejected the notion that the economic crisis allows the state a free hand to reduce the protection of rights.

In addition to these specific violations, states are also under an international obligation for the progressive realisation of social rights.  For the right to collective bargaining, the ECSR has specified that bargaining should ideally be on a voluntary basis and take place at the national, regional and sectoral level.  This suggests therefore that the EU policy of decentralising collective bargaining to constrain wage developments is not compatible with the fundamental right to collective bargaining in that it violates specific elements of this right and runs counter to its progressive realisation.

Although the example above is limited to the right to collective bargaining, the ECSR has commented further on a great variety of rights and has an extensive body of relevant case-law.  In addition to this, there are numerous reports from other sources highlighting the impact on rights of the EU’s official response to the Eurozone crisis, including publications by the Council of Europe’s Commissioner for Human Rights and the United Nations High Commissioner on Human Rights.

If the fundamental rights mechanisms developed in the 2000s had been properly utilised, these issues could have been picked up on.  Indeed, the cases highlighted above provide some insights into how social rights could function in practice in the governance of the Eurozone. The fact is that expertise provided by bodies like the ECSR could be used to inform impact assessments on how policies will affect rights; procedures for consultation could ensure that trade unions and other affected parties have a say in policies that affect them; and explanatory memorandums could detail what considerations have been taken into account in justifying any interference with rights deemed necessary.

All of this would strengthen the hand of the more socially-orientated actors within the EU, helping to pull the dominant trend of policy away from an obsession with neoliberal economics and back towards social considerations.  These changes may not entail the level of overarching paradigm shift that many scholars have suggested is necessary to address the problems of the Eurozone.  But they would at least have some immediate effect and alleviate some of the worst social impacts of current policies.  By holding the EU to commitments it has already made and by building on governance mechanisms already in existence, fundamental rights could be introduced to the governance of the Eurozone with minimal hassle.

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