Introduction
The welfare state originated in the 1942 Beveridge Report, which famously defined it as comprehensive protection ‘from cradle to grave’.Footnote 1 It included not only social insurance but also the goal of ‘full employment’. Social policies had existed beforehand in Britain and elsewhere, but they formed an uneven network of laws on working conditions and incomplete social insurance that post-1945 policies in Western Europe extended in a comprehensive manner. In most European countries, those reforms had also included the extension of workers’ rights in the company, the correction of regional imbalances through financial transfers to the poorer areas, and, later on, environmental policy measures. To sum up, a ‘welfare state’ aims at mitigating the hardships of life and the detrimental effects of capitalism via three sets of measures: (a) laws protecting the weakest or compensating for the negative externalities of capitalism, (b) social insurance and redistributive measures (to benefit the elderly, the sick, etc.), (c) and macro-economic policies focusing on full employment.Footnote 2
This article claims that a peculiar sort of ‘flanking welfare state’ emerged at the international level in the framework of the European Economic Community (EEC), later superseded by the European Union (EU), between 1969 and 1993. During this period, it covered up to twelve European states, from 1986 onwards, including all the largest Western European states (Germany, Britain, France, Italy and Spain). While the slogan ‘European welfare state’ was not used explicitly in those days, this article contends that this expression is useful to capture the wide scope of policies aimed at correcting market imbalances that were promoted from 1969 onwards regarding regulations on work, gender equality, environmental protection and targeted regional redistributive policies, even if they do not cover all welfare state policies (such as health, education and housing, which remained national). Ultimately, the whole process ended as a complement to the single market programme, which eventually opened up as a border-free zone in 1993, i.e. a ‘flanking’ policy aimed at correcting the detrimental effects of the free-market dynamic.
Identifying the creation of a ‘European welfare state’ between 1969 and 1993, just at the time of the rise of neoliberal policies, is useful to gauge to what extent European integration was not just about integrating markets.Footnote 3 Its convoluted history offers an interesting example of the dynamics and the difficulties of a successful transnational social mobilisation in such a complex institutional framework as the EEC/EU. In terms of international relations, it also shows the opportunities and pitfalls of developing social policies within international organisations, an ambitious undertaking which started with the foundation of the International Labour Organisation (ILO) in 1919.Footnote 4
The European welfare state was ‘flanking’ the main part of the European integration process, namely the setting up of an integrated market. Hence, it was not comparable to its national counterpart. In theory, the transfer of redistributive policies at the federal level is justified only to address cross-border issues (especially those producing harmful externalities such as pollution or unfair competition) and to generate economies of scale.Footnote 5 In contrast, the pooling of sovereignty is pointless in the case of wide discrepancies of preference and high logistical costs. In the case of European integration, social policies were primarily designed to flank the main perceived added value of the Community, namely the common internal market. They were focused on the implementation of common norms. On the contrary, the European welfare state was far less redistributive than the national one, as it hardly covered health, retirement and family benefits, areas where strong national idiosyncrasies remained and where huge administrative costs exist. Only in regional policy was a European dimension developed, as it was directly linked to the aim of correcting imbalances generated by the setting up of the common market.
An academic debate has erupted over the possibility of the development of a ‘social Europe’. For certain scholars, such as Fritz Scharpf, EU institutions are inherently hostile to the development of positive integration, and are thus more conductive to free-market policies.Footnote 6 On the contrary, Stefano Giubboni argues that the EEC/EU is built on an ‘economic constitution’ consistent with the development of social policies, not only at the national level, as Alan Milward famously argued in The European Rescue of the Nation-State, but also at a supranational level, even if they do not exactly mirror the national welfare state.Footnote 7
This article adopts the second approach and substantiates that claim with an empirical innovation: recourse to a vast series of original material in archives of the three most powerful national governments (in Britain, France and West Germany) and of the European Commission, i.e. the four main actors in the EEC decision-making process. It will also build on recent, and expanding, historical literature in this field, as well as on studies by political scientists who lacked access to archival material.Footnote 8
A first section will trace the burgeoning developments of many projects for a ‘European welfare state’ in the 1970s, followed by a second section examining the neoliberal backlash and the weaknesses of the welfarist coalition. A third section will envisage the redefinition of this endeavour solely as a supplement to the single market in 1985, and its subsequent implementation until the opening up of the border-free internal market in 1993.
A Blossoming and Innovative European Welfare State (1969–1979)
While welfare state policies existed only at the national level for the first two decades of European integration, a piecemeal and diversified European welfare state emerged between 1969 and 1979 in specific areas, usually new fields of public policies and/or issues deemed particularly relevant at the European level. At the start, the Treaty of Rome, signed in 1957 to create the EEC, contained one rather general article promoting the ‘improvement of the living and working conditions of labour so as to permit the equalisation of such conditions in an upward direction’ (Article 117 EEC). However, it required a unanimous vote of all the member-states’ representatives at the Council of Ministers.
The only common social policy was to be found in a field already ripe for international agreements: the migration of workers. The Italian governments and commissioners successfully lobbied to obtain European-wide welfare rights for migrant workers, the vast majority of whom originated from southern Italy in those years. European measures included the harmonisation of law (for example, regulation 1408/71, which facilitated the attribution of social security rights) and the funding of vocational training through the European Social Fund.Footnote 9 However, this policy was not a pure innovation of the EEC. It built on initiatives already taken by the European Coal and Steel Community (ECSC) and by the International Labour Organisation.Footnote 10
From 1969 onward, the context became more conductive to the development of European social policies for two reasons. From an ideological point of view, the 1968 progressive movements supported both the extension of the welfare state towards new areas (notably, gender equality and the preservation of the environment) and its internationalisation. From a political point of view, in terms of European integration, 1969 marked the departure of the French conservative leader Charles de Gaulle – one of the main obstacles to the development of European integrationFootnote 11 – and the advent at the helm of the West German government of the ambitious Social Democrat Willy Brandt. The new chancellor enthusiastically supported the development of new European policies, notably in the social arena.
German archives contain numerous documents showing the government's commitment to promoting a European social agenda. In 1970, Bonn proposed to work on the creation of a ‘European social budget’ and to take a first step towards the harmonisation of national social security provisions, an arguably very complex endeavour due to the sheer diversity of insurance systems.Footnote 12 In 1973, the German Minister of Labour, the Social Democrat and former trade unionist Walter Arendt, wrote to the European Commissioner for Social Affairs (at that time, it was the Irish Patrick Hillery who was in charge) to request more initiatives from the Commission, in particular with regard to codetermination and to European negotiation between social partners.Footnote 13 In those years, West Germany was in the midst of a fierce debate over the extension of its codetermination system, a system which ensured significant participation by workers in the management of certain companies.
Brandt's project was supported by various other decision-makers, such as the Italian Minister of Labour Carlo Donat Cattin and the European Commissioner for Social Affairs Albert Coppé, a former Belgian trade unionist.Footnote 14 He could also count on the support of a new actor, the European Trade Union Confederation (ETUC), formed precisely during the very same years, namely in 1973. This demonstrated a growing interest in the EEC of the majority of non-communist trade unions.
The project of an EEC ‘social action programme’ took shape in 1973. The German Minister of Labour and Social Affairs nevertheless complained to the European Commission that the debate remained too nebulous, especially with regard to workers’ rights in companies, the coordination of wage negotiations within companies, and the provision of significant funding for European social policies.Footnote 15 Tellingly, the two other major leaders of the EEC, British Prime Minister Edward Heath and French President Georges Pompidou, both of whom were conservatives, worried about Brandt's ambitious plan for social Europe when they met.Footnote 16 In January 1974, the European Social Action Programme was adopted, but it remained vague and ambiguous.
European social policies took off progressively in the 1970s. The European Commission multiplied the initiatives, but the British Permanent Representative remarked in 1976 that ‘in most cases the legal form of the instruments to which he referred was unsettled’.Footnote 17 In other words, the Commission multiplied reports and proposals but secured few binding laws, since unanimity was still required in the Council of Ministers for every piece of legislation in those years, and few member-states, including West Germany, wanted to delegate sensitive areas of sovereignty such as social affairs to Brussels.
Overall, a European welfare state gradually materialised in a piecemeal fashion when three conditions were met: (1) a problem deemed transnational, and hence of community competence, surfaced; (2) a coalition of actors emerged in several states and at the European Commission; and (3) the core constituents of the national welfare states (i.e. its provisions on healthcare, pensions and unemployment) were not affected. For example, when the new Commissioner for Social Affairs Henk Vredeling wanted to promote an EEC action in health in 1977, the British government sternly opposed any discussion in this field. According to Whitehall, useful discussion on international cooperation in health was already taking place within the framework of the World Health Organisation (WHO), rendering any specific EEC action redundant.Footnote 18 An additional and unspoken reason was also probably the sheer pride of the British in their National Health Service (NHS).
A first logical field of action was the harmonisation of working provisions, as they were directly linked to the optimal functioning of the common market. Since it was impossible to harmonise the costliest aspects of these provisions (such as working time: see below), the Commission concentrated, from the 1970s onwards, on a string of legislation on dismissals and on health and security at work (with an action programme in 1978 followed by sectoral directives – for example on asbestos in 1983).
The path was even more promising in the area of gender equality, which was a relatively new and secondary field of action in welfare policies at the time. Provisions on gender equality existed in most European states, but their implementation varied vastly. Paradoxically, in 1957 the French government had insisted on inserting in the Treaty of Rome article 119 on ‘the principle of equal remuneration for equal work’ between men and women not out of a feminist thrust but for economic reasons, since it estimated that its female workers received a higher wage than in other EEC countries. Paris quickly lost interest in this article, but it was then taken over by feminist activists such as Belgian lawyer Eliane Vogel-Polsky, who used it to promote gender equality.Footnote 19 She successfully used the European Court of Justice in the 1970s to promote a broad interpretation of article 119 thanks to favourable decisions. This judicial activism was thus completed by directives issued by the Commission. Nevertheless, the issue remained contentious. In 1974, the British Treasury complained that an extensive implementation of article 119 EEC would entail important additional costs for British companies. Whitehall underlined that EEC legislation was more constraining than the ILO conventions on equal pay already ratified by London.Footnote 20
Another new field of action was the environment. The first UN convention on the environment, held in Stockholm in 1970, was parallel to the setting up of the first ministries of the environment in most of Western Europe. Since no mention of the environment was made in the Treaty of Rome, the Commission proposed to take action in several specific transnational issues, as it was easier to find a legal basis for a Community action for a cross-border phenomenon. Hence, the Community protected birds in a far-reaching 1979 directive, since they were a migratory species that crossed borders.Footnote 21 In 1976, after the Seveso disaster – a dioxin leak that affected tens of thousands of Italians – Henk Vredeling, the European Commissioner for Social Affairs, prioritised the adoption of a directive on security in chemical plants despite reservations by many member-states about the cost of such measures.Footnote 22 The ‘Seveso’ directive was finally adopted in 1982, and was upgraded regularly thereafter.
Even a limited redistributive welfare scheme was created in the 1970s, i.e. regional policy. It aimed at subsidising development schemes in the poorest EEC regions. It was a response to Italian, British and Irish calls for more solidarity towards their poorest regions (notably, the Italian Mezzogiorno and the British Rust Belt). During the enlargement negotiations, British Prime Minister Edward Heath requested the creation of a fully-fledged regional policy.Footnote 23 It materialised with the creation of the European Regional Development Fund (ERDF) in 1975, a rather modest redistributive scheme at first, not least because the new British Labour government was much less enthusiastic about the EEC than Heath, and remained sceptical about it as it entailed new expenditures, and new delegation of power to the Commission.Footnote 24 With the advent of Thatcher in 1979, the opposition grew.Footnote 25 At the same time, the German government led by Helmut Schmidt, a Social Democrat with more free-market views than Brandt, insisted on the need to limit EEC expenditures by defining rigorous criteria of management to avoid any waste of money.Footnote 26 In Paris, the reluctance was real too, even if less vocal, since the French government officially supported the development of EEC social policies, which was one of the priorities of the 1979 French presidency.Footnote 27 Paris wanted to limit as much as possible the Commission's leeway in the management of the ERDF, and to preserve the integrity of French regional policy. The position remained the same even under the Socialist government: in 1983, Paris aligned with Bonn on the refusal of the Commission's proposal to vastly increase regional policy funding in order to take into account the enlargement to poorer countries (Greece in 1981, and Portugal and Spain due to join soon).Footnote 28
Last but not least, the European Community even strived to shape the macro-economic framework underpinning the welfare state – namely, the commitment to full employment. After 1973, ETUC leaders met regularly with EEC institutions and promoted a concerted stimulus, that is to say a coordinated policy among European countries to reflate the economy, and hence address the rising tide of unemployment.Footnote 29 The idea gained traction among left-wing leaders and among the countries who experienced the failure of their national stimulus launched after 1973, most of which led to more inflation and deficits, but hardly less unemployment. In 1978, Western Europeans and North American leaders agreed on a so-called ‘locomotive’ package promoted by the OECD, the EEC and the G7. This was a bold attempt to organise a concerted reflationary plan, with the countries in surplus (West Germany) spending more than those in deficit (the UK). Hence, the latter would benefit from the higher level of spending of the former.
The 1979 second oil shock shattered this attempt of concerted stimulus. It even triggered a temporary deficit of the German balance of payments, traumatising the German Bundesbank, which feared a ‘crisis of confidence’ in the deutschmark in early 1981,Footnote 30 a bleak reminiscence of the monetary turmoil of the 1920s (even if the West German rate of inflation had always remained under control and below the European average in the 1970s). The only agreement that Bonn was ready to commit to was the European Monetary System (EMS), a zone of monetary stability predicated upon the convergence towards German stability-oriented policies.Footnote 31
On the whole, a piecemeal welfare state developed at the European Economic Community level in the 1970s, mainly in areas considered as secondary even though they brought concrete benefits to the weakest Europeans. But the grandest schemes all failed due to the weakness of the welfarist coalition.
The Weaknesses of the Welfarist Coalition Facing the Crisis (mid-1970s–early 1980s)
The project of setting up a European welfare state came too late to be fully implemented for two reasons: first, a context of economic crisis (with the so-called ‘global shock’ from the mid-1970s to the early 1980s),Footnote 32 which fuelled a neoliberal backlash, and second a heterogenous and largely ineffective European welfarist coalition, as the debates about the reduction of working time and the democratisation of companies illustrates.
To begin with, the crises of 1973 and 1979 led to a tenfold rise in the price of oil, the most important source of energy, and a raw material for many industries (chemical, synthetic textile, etc.). Mechanically, it led to more deficit, less growth and more unemployment. Therefore, a major feature of postwar welfarist policies, the Keynesian macro-economic management typical of the 1950s–1960s, based on the government keeping the balance between growth and inflation, became untenable: each time a government launched a stimulus package, inflation and the deficit were fuelled, but unemployment remained high. Higher deficit forced rich countries, such as the United Kingdom in 1976 and Italy in 1977, to the shameful call to an IMF rescue package. As a result, Western governments progressively shifted their priorities: they abandoned the goal of full employment in the short term, and prioritised instead low inflation in order to restore full employment again later on.
In due time, this economic crisis fuelled the rise of alternative economic recipes, notably neoliberal ones. Neoliberal policies are defined precisely by their willingness to radically reduce the welfare state, by greatly expanding market forces, and more generally by moving far beyond the moderate vision of classical liberals such as Adam Smith.Footnote 33 With the arrival of Margaret Thatcher at the helm of the British government in 1979, a clear neoliberal agenda aimed at retrenching the welfare state was enacted and implemented. Other EEC states followed the same path, albeit in a less radical way – especially, Belgium (Maertens government in 1981), the Netherlands (Lubbers, 1982), West Germany (Kohl, 1982), Denmark (Schlüter, 1982) and France (in 1983 but mostly in 1986 with the Chirac government). The British neoliberal inspiration was not exclusive and hegemonic, as many national idiosyncrasies remained. But Britain clearly represented a model for some. For example, the French leader of the right Jacques Chirac expressed his admiration for Thatcher's economic policies during a visit to the Chancellor of the Exchequer in late 1983, and he even regretted that she did not go further on tax reduction.Footnote 34 In addition, some neoliberal thinkers took a stronger interest in European institutions that they had disregarded as too protectionist in the 1950s and 1960s.Footnote 35
On top of that, the welfarist coalition itself was divided. The communists, who were the most important part of left-wing parties and trade unions in several European countries, notably France, Italy and Spain in those days, were hostile or lukewarm to European integration. Even for the Italian PCI, which had a more moderate position than the hard-line French PCF (who defended the invasion of Afghanistan in 1979), it was still impossible for most communist voters to support a comprehensive increase of EEC competences. Conversely, the alliance of the French Socialists with the old-fashioned PCF drew a wedge between the two left-wing leaders Schmidt and Mitterrand.Footnote 36 Tellingly, communist trade unions did not take part in the ETUC at first.
Even among the non-communist trade unions and parties, many actors remained highly sceptical of European integration – a project usually associated with centre-right Christian Democrats. The most hostile to European integration were the British trade-unions (the TUC) and the Labour Party. The willingness of the majority of Labour's delegates to adopt a motion to leave the EEC even provoked a split with the creation of a dissident pro-European Social Democratic Party in 1981 led by, among others, Roy Jenkins, a former president of the European Commission.Footnote 37 In France, the Socialist Party was in theory pro-European but in practice overwhelmingly focused on internal affairs.Footnote 38 When it came to power in 1981, the Socialist Party focused on a nation-centred economic and social policy, side-lining pro-EEC leaders such as Jacques Delors, the Minister for Economics and Finance between 1981 and 1983. After 1983, the French Socialist Party took a keener interest in the EEC, but it remained divided. Equally, in West Germany, the ambitious vision of Brandt (chancellor 1969–74) was overshadowed by the more cautious and managerial approach of Schmidt (chancellor 1974–82), who was not eurosceptic but who prioritised, above all, value for money: the need to avoid any superfluous increase in EEC expenditures and competence.Footnote 39
This balance of power is visible in the failure of the most ambitious projects of social Europe: the reduction of working time, and the democratisation of companies. With the rise of unemployment after the oil shock, many trade unionists and politicians took a growing interest in limiting working time. It was one of the top priorities of the new commissioner for social affairs appointed in 1977, the Dutch social democrat Henk Vredeling.Footnote 40 However, the left-wing British and German governments were reluctant both for reasons of competitiveness (they did not want to increase their labour costs) and for fear of handing over too much power to Brussels.Footnote 41 A Europeanisation of working-time negotiations was especially difficult in West Germany, where this matter was devolved to decentralised negotiations conducted by trade unions and business representatives on a sectoral and contractual basis.
Surprisingly, some support for the Commission's aim existed in the centre-right French government. The Labour minister Robert Boulin was interested in promoting ‘social Europe’, one of the two priorities of the French presidency of the first semester of 1979, together with energy policy.Footnote 42 Paris advocated a much more cautious position than the trade unions: reduction of working time should be achieved by promoting more flexible arrangements and should not be compensated by higher wages.Footnote 43 In those days, French internal studies showed that the French working time was one of the highest in the Western world, with 1,900 hours per year (against 1,820 hours in the United Kingdom, 1,750 hours in West Germany and in Belgium, and 1,700 hours in the United States).Footnote 44 Boulin was relatively ambitious since he envisaged the conclusion of a framework directive at the European level, which would then be negotiated by trade unions and business representatives in each sector.Footnote 45 By contrast, Vredeling adopted a maximalist position by aiming at a European-wide 35-hour workweek.Footnote 46
The French initiative drew a cautious response from the German government.Footnote 47 Even the British Labour government opposed it.Footnote 48 A few months later, Thatcher came to power and reinstated the British refusal more vigorously. In the end, only a non-binding resolution was adopted on 22 November 1979.Footnote 49
Even the advent in 1981 of a French Socialist government keen on reducing working time did not rekindle the debate. Many French Socialist officials considered that social policy was the exclusive remit of governments.Footnote 50 As a result, the French memorandum on Social Europe released at the end of 1981 called only for the implementation of the resolution of November 1979 on working time.Footnote 51 In May 1983, during an ETUC meeting, the Minister for Industry Laurent Fabius, a close collaborator of President Mitterrand, explained that the reduction of working time in France led to unanticipated difficulties, so any European initiatives on this front should be limited.Footnote 52
The same reluctance of national governments, including left-wing governments and even some trade unions, was visible in another major battle of those years: the democratisation of multinationals.Footnote 53 This proposal lay at the confluence of two left-wing projects: the control of multinationals and the democratisation of companies. The first one was linked to the growing power of multinationals since the late 1960s, when the globalisation of trade and of capital flows resumed.
The debate on the democratisation of companies originated in West Germany, with the codetermination laws of 1951, which gave half of the supervisory board's seats to employee representatives for certain companies. The debate was rekindled in the late 1960s: the new German Social Democratic government aimed at enlarging codetermination, and eventually passed a new law in 1976. Meanwhile, high level committees were set up in 1975 in France (the Sudreau Committee) and in Britain (the Bullock Committee) to examine its implementation in both countries. Chancellor Schmidt was quite supportive, encouraging German-British talks on the issue in 1975.Footnote 54
But left-wing parties and trade unions were divided on the issue. For the most radical, including most of the British TUC and the communist organisations, codetermination equalled class collaboration. In the 1970s, the French Socialist Party preferred autogestion (workers’ self-management) to codetermination; and, moreover, the personal relationship between Mitterrand and Schmidt was difficult.Footnote 55 In the end, only the German law was passed.
In 1980, the Dutch social democrat commissioner (and former trade unionist) Henk Vredeling proposed a draft EEC law directive aimed at democratising large companies by improving the representation of workers on the board. Dubbed the ‘Vredeling Directive’, it was strongly supported by the ETUC, which was disappointed by the failure of similar attempts in other international organisations such as the UN, where non-binding texts with negligible impact had been adopted.Footnote 56 By contrast, EEC law was binding.
The ‘Vredeling Directive’ stirred major controversy at the European Parliament, where its supporters were overwhelmed by the lobbying of business organisations. US companies were particularly irritated by an extra-territorial clause that allowed European workers of a European subsidiary to appeal directly to the US headquarters. In 1981, Oskar Vetter, the leader of the German trade union confederation DGB (and former leader of the ETUC from 1974 to 1979), criticised the pressure of big business on the European Parliamentary debate.Footnote 57 In 1982, he denounced a ‘destructive campaign of the Capital on both sides of the Atlantic to stop this directive’.Footnote 58
But apart from the ETUC, the mobilisation of the left-wing actors remained subdued. The German Social Democratic government (in power until 1982) and the French Socialist government (in power after 1981) gave only cautious support.Footnote 59 Of course, the stern opposition of the Thatcher government left very few chances to the directive, but the absence of positive mobilisation from left-wing leaders is nevertheless daunting. Eventually, in 1985, the draft directive was buried in the sand after the committee of national representatives stated that the differences of views were too great to be overcome.Footnote 60
A Flanking Welfare State under Neoliberal Pressure (1985–1993)
Faced with such an adversarial context, the supporters of a European welfare state refashioned their ambition around the flagship project of European integration in those years, namely the ‘single market’, which aimed at the removal of frontier controls within the Community. Launched in 1985, it was to become effective on 1 January 1993. Hence, the European welfare state became a flanking policy, designed to complement and ease the transition to the setting up of a unified market. This is visible both in the division of European leaders and in the subsequent implementation of the ambitious plan of Jacques Delors, the President of the Commission (1985–95), who managed to develop a heterogeneous European welfare state covering many fields.
First, while the internal market programme unified a broad coalition of actors, this was not the case for welfare policies. Neoliberals such as Thatcher defended a single market based on ‘deregulation’ – i.e. the harmonisation of rules by adopting the lowest possible standard so as not to impose ‘burden on business’, to borrow her expression.Footnote 61 The Dutch government of Rudd Lubbers also used the term ‘deregulation’ as an objective to promote in 1985.Footnote 62
By contrast, left-wing governments were interested but were generally wary of handing over too much power to the Commission. Besides, they had different priorities depending on their national interests: the French Socialist governments under the presidency of François Mitterrand (1981–6 and 1991–3) usually defended an upward harmonisation of rules to compensate the high French labour cost. The Spanish Socialist government of Felipe Gonzales (1982–96) was more interested in regional policy, and more cautious against any measures that might dent his country's competitiveness. The Greek Socialist prime minister Andreas Papandreou was hostile to any move towards more supranational procedures, despite being very vocal in his call for more funds for the poorest region.Footnote 63 During the ‘relaunch of Europe’ in 1984–5, he joined the United Kingdom and Denmark in the ‘Luxembourg Compromise Club’, the group of countries that refused an enlarged use of qualified majority voting.
Conservative governments were more reluctant toward welfare policies, but some were genuinely supportive of more European integration, such as the German government of Helmut Kohl (1982–98).Footnote 64 Kohl himself was close to Delors, despite their disagreements over many economic issues. The German government in particular was especially concerned (notably, under pressure from the Länder and the Bundesrat) by the necessity to preserve high standards, which it thought to be possibly threatened by a downward European harmonisation.Footnote 65 The German, Dutch and Danish governments were generally supportive over most regulation supporting environmental protection, and hostile to any increase in EEC funding, notably over regional policy.
At the crossroads of these leaders stood Jacques Delors, the president of the European Commission from 1985 to 1995, who managed to establish a flanking European welfare state.Footnote 66 A Social Christian trade unionist himself, at the European Commission he could count on the support of left-wing commissioners, but he had to face bold neoliberal commissioners intent on promoting a ‘deregulation’ agenda, such as Peter Sutherland and Leon Brittan.Footnote 67
Soon after his arrival at the helm of the European Commission, Delors unveiled a comprehensive project during a famous speech delivered before the European Parliament on 14 January 1985.Footnote 68 The speech is often remembered for Delors's plea to create a unified internal market without borders by 1992 thanks to the streamlining of European institutional procedures such as the adoption of qualified majority voting instead of unanimity at the EEC Council of Ministers. But it is often overlooked that this programmatic speech had an obvious social dimension. The new president called for a ‘minimal harmonisation of social rules’ to avoid ‘social dumping’. This harmonisation needed to be achieved both by the classical method of adopting directives and regulations in the Council of Ministers, and by a new innovative tool: the signing of ‘European collective agreements’ by trade unions and business representatives. Here, the background of Delors as a trade unionist was visible. He also wanted to promote a stronger regional policy.
The implementation of Delors's programme began with the single market programme, which was transformed into a binding obligation by the 1986 Single Act Treaty. It was now possible to use qualified majority voting for all texts related to the single market, most of them being various norms that needed to be harmonised to allow for the free movement of goods. The social dimension was present in the Single Act's Article 18, according to which laws concerning health, safety, environment and consumer protection should be harmonised in order to ensure a ‘high level of protection’.Footnote 69 But qualified majority voting was not extended to the rights of employed persons or to their movements, nor to social policy in general. Hence, it devised a targeted European welfare state flanking the single market.
The programme of the welfarist coalition was implemented quickly if only in specific areas. The most well-known development is the flurry of legislation which originated in Brussels because the removal of border controls required at least 300 pieces of legislation to be adopted before 1 January 1993 in a wide range of domains, from the security of toys to the value-added tax. In some of these texts, a welfare element exists, notably in those related to health and security,Footnote 70 to the movement of people (such as the Erasmus programme adopted in 1987), and to environmental protection. Progress was difficult, since many states resented the creation of ambitious supranational social and environmental policies. The opposition of Margaret Thatcher was the most famous, but other leaders hid behind her. When German Chancellor Helmut Kohl met his Italian counterpart, Prime Minister Ciriaco De Mita, in 1988, both expressed their hostility to the creation of ‘social-democrat bureaucracy’ at the European level.Footnote 71 On the whole, however, legislation progressed. The EU even appeared to replace the United States as a world leader in environmental legislation, albeit from lack of serious contenders.Footnote 72
In addition, Delors and some trade unions promoted a European social dialogue between the Commission, the European trade unions (ETUC) and the European business organisation (UNICE). As a former trade unionist himself, Delors was keen on relaunching the tripartite talks that had existed in the 1970s by focusing them on the adoption of European collective conventions, rather than by holding general discussions.Footnote 73 He convened a first tripartite meeting as early as 31 January 1985, a few days after he took office.Footnote 74 Delors garnered support from some major European trade unionists such as the Italian Bruno Trentin (CGIL) and the Frenchman André Bergeron (FO).Footnote 75 Others were more sceptical, such as the German Breit (DGB), who underlined the impossibility of limiting the national right of social partners to establish national collective conventions. The ETUC remained divided on the issue.Footnote 76
Delors managed to get the social dialogue inserted in the Single Act (article 22) and, to a larger degree, in the Maastricht Treaty, whose protocol on social policy (not signed by the United Kingdom) allowed social partners to conclude agreements among themselves. Those agreements could then be transformed in EEC legislation by qualified majority voting at the Council. Framework agreements were thus subsequently concluded on parental leave (1995), part-time work (1997) and fixed-term work (1999).
Those various piecemeal initiatives were brought together under a wider umbrella, the 1989 Community Charter of Fundamental Social Rights of Workers.Footnote 77 It was aimed at giving a specific impetus to social policies. Interestingly, a senior German diplomat referred to it as an ‘important milestone on the road [to creating] a social flank to the internal market’.Footnote 78 Nevertheless, it was just a set of principles, without any binding features. Moreover, the British government even refused to sign it until Labour returned to power in 1997. The 1992 Maastricht Treaty brought about an improvement, since it authorised the use of qualified majority voting for all areas of environmental policy (and not only for those related to the single market), but most social legislation remained governed by the unanimous approval of all member states’ representatives at the Council of Ministers.
Regarding regional policy, the new member states, Greece (which joined in 1981), Spain and Portugal (in 1986), wanted to steadily increase the fund devoted to regional policy, but Thatcher and even Kohl remained adamantly hostile to any large redistributive mechanism in the mid-1980s.Footnote 79 Later on, in 1988, Kohl and Thatcher eventually accepted a massive increase in cohesion funding, the so-called ‘Delors package’. Chancellor Kohl explained to his cabinet that this was in Germany's political interest, and that the president of the Commission insisted on it.Footnote 80 Under the Delors presidency, the share of the European Community budget nearly tripled (from 12.8 per cent in 1985 to 32.3 per cent in 1993) at the expense of the Common Agricultural Policy.Footnote 81 At the same time, the EEC budget slightly increased, even though it remained modest (from 0.92 per cent of GNP in 1985 to 1.2 per cent in 1993). Overall, Delors managed to redirect the European budget towards a more social orientation.
More surprisingly, even the whole debate on the European Monetary Union intersected with welfare state policies. A major milestone in this regard was the 1989 report on European monetary integration written by central bankers under the chairmanship of Delors. The report requested an increase in the Community cohesion policy to avoid the detrimental consequences of a monetary union, since ‘Transport costs and economies of scale would tend to favour a shift in economic activity away from less developed regions, especially if they were at the periphery of the Community, to the highly developed areas at its centre’. Footnote 82 Besides, those regions would not have the possibility to devaluate anymore. Therefore, they had to be assisted in order to converge, but not at all costs. According to the report: ‘The principal objective of regional policies should not be to subsidise incomes and simply offset inequalities in standards of living, but to help to equalise production conditions through investment programmes in such areas as physical infrastructure, communications, transportation and education so that large-scale movements of labour do not become the major adjustment factor’. Footnote 83 Therefore, it is clear from the report that some form of European welfare state should flank the single market, and deepen its social wing, rather than represent a tool for redistribution per se. This report was endorsed by the heads of states and of governments in 1989.
On the whole, however, the European and Monetary Union shaped by the 1992 Maastricht Treaty demonstrated a clearer ordoliberal influence than a welfarist approach. Delors's calls to increase the common budget in order to fund ambitious policies of convergence (he envisaged a common budget of 3 per cent of GDP around 2000) were ignored.Footnote 84 Besides, the neoliberal camp remained vigorous. The replacement of Margaret Thatcher by John Major at the helm of the British government was a change of style rather than of substance. The 1992–3 economic and monetary crisis, as well as the huge cost of German reunification for the whole Community (through high German interest rates), cast a shadow on the newly-born European Union. The rejection of the Maastricht Treaty by Danish voters in June 1992, and its near rejection by French voters in September 1992 (the ‘yes’ commanded 51 per cent of the voters) added to the gloom.
The welfarist project was still vivid in Brussels, where the Delors Commission released a last ambitious memorandum in 1993, the White Paper ‘Growth, Competitiveness, Employment’, which was largely influenced by the German and Nordic experiences.Footnote 85 The memorandum promoted a plan of investment in European transport and communication-infrastructure networks, new environmental measures, and a massive investment in training the unemployed through an ‘active’ employment policy. Cohesion policy was explicitly called a ‘joint flanking policy’ to the single market programme.Footnote 86 Job creation needed to be encouraged in a ‘new social economy’ to take care of children and the elderly, to renovate housing, to develop public transport and to better protect the environment, but the White Paper remained noncommittal on the tools to be used.Footnote 87 The European welfare state in development was still designed to flank the borderless internal market, which had just opened up in 1993.
Conclusion
A ‘flanking’ European welfare state progressively emerged between 1969 and 1993 under a different guise than a national welfare state. As it was focused on complementing the internal market, it ignored social insurance and redistribution, except for targeted intra-regional transfers (as opposed to redistribution to specific groups of people: the elderly, the sick, the unemployed, etc.). It hinged more on the implementation of common norms, especially in areas related to cross-border trade (basic labour standards and portable rights for migrants), and in new domains such as gender equality and the environment. It didn't include macro-economic coordination for full employment, despite regular discussions about this feature, notably in 1978 with the ‘locomotive’ attempt and with the setting up of a European monetary union in 1989–92. This omission is logical as nation-states themselves struggled to find the right policy to reinstate full employment after the oil shocks.
This development is quite remarkable in terms of international history, as it represents a partial implementation of the global social movement's aspirations, beyond the pioneering action of the ILO. It also revisits the history of the 1968 years, which is often told in a national and in a transnational fashion, but rarely in terms of European cooperation. The 1968 movement did not translate into a fully-fledged post-materialist project, but rather into a complex set of old (redistribution towards the weakest) and new (gender equality and environmental) provisions enmeshed with the neoliberal backlash. Market dynamics remained at the centre of European integration but were not exclusive.
The compositive character of the European welfare state is explained by the consensual nature of the EEC/EU decision-making process, which produces protracted compromises, and by the heterogeneity of the welfarist coalition. Those policies were promoted by prominent national left-wing leaders such as the German chancellor Willy Brandt, and by European commissioners such as the Dutchman Henk Vredeling and the Frenchman Jacques Delors. Left-wing groups were divided between a small pro-European group and a sizeable majority who were either indifferent or hostile (Labour, PCF) to the EEC for most of the period. Moreover, those left-wing groups did not capture the entire debate about the European welfare state, which was also fanned by pro-European moderate centre-right figures.
The major structural limitation was the discrepancy between the strong market-oriented origins of the EEC – visible in the relative paucity of welfare state provisions in the 1957 Treaty of Rome and the persistent use of unanimity voting – on the one hand, and the belated move of pro-welfare actors into the European arena on the other hand. Since they were latecomers in the EEC, they experienced difficulty in coordinating their actions, understanding how European institutions worked, and targeting the relevant legislative provision. The adversarial economic context of the 1970s compounded their mobilisation. The neoliberal challenge came later, at the national level from 1979 onwards with the advent of Margaret Thatcher in London, and with neoliberal reforms in various governments in the 1980s. It put a definitive end to the most ambitious welfarist projects, such as the reduction of working time or the control of multinationals. However, it is doubtful that those ideas would have materialised quickly even without the stern opposition of the new British leader, as many supporters of welfare state policies were more attached to national rather than to European provisions. Setting up a European welfare state was a tall order as it could disturb the country-specific compromises between competitiveness and social cohesion that had been shaped over decades. Since the European Community could not, as the nation-state does, rely on a sense of shared identity and on a unified public space, its welfarist dimension had remained piecemeal.
Eventually, the multiple European welfare state projects morphed into a ‘flanking’ policy (to borrow an expression used in 1989–93) designed to shore up the single market programme, with difficult negotiations over the harmonisation of pieces of legislation in an upward direction, over each environmental standard, and over the increase in cohesion funds. The European welfare state has not replaced the national welfare state. It has remained contentious, subject to the market dynamic, but it has continued to gradually expand, as the recent common distribution of vaccines during the COVID-19 pandemic has demonstrated.
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