Exit of the avant-garde? The European social union at a crossroads

Can the European Pillar of Social Rights underpin a social union—or must social rights end at national borders?

Under the rule of Viktor Orbán, Hungary has not been Europe’s model student. On March 30th, the Hungarian pandemic emergency law gave the prime minister worringly comprehensive executive powers, including access to rule by decree. A few days later, the European Court of Justice ruled that Hungary’s decision not to participate in the European Union relocation scheme for refugees between 2015 and 2017 had breached EU law.

As to Europe’s social dimension, Orbán has a non-relationship with the European Pillar of Social Rights (EPSR). In 2017, he was among those who most fiercely rejected its proclamation.

Since then, he has worked against its effective implementation. Hungary is the only member state without a ministry of labour and social affairs; tripartite consultations with the social partners belong to the past too. Unfair-dismissal protection and public services have been seriously weakened. Unemployment benefits are limited to 90 days, while child allowances have been allowed to fall behind inflation for eight years.

Great hopes

In light of the declining social rights and public services in their country, Hungarian trade unions pin great hopes on the EPSR. They believe the EU should use the pillar to put pressure on the Orbán government to shift its position on decent working conditions, statutory wage requirements and the rights of young people.

The local elections of October 2019 were a ray of hope. For the first time since Orbán came to power in 2010, the opposition ‘won’ an election: 10 of 23 metropolitan areas, including Budapest, were conquered by democratic opposition parties. Given that rural areas remain a stronghold of Orbán’s Fidesz party, the opposition’s result was unexpectedly good yet no landslide.

It remains to be seen if the opposition will be able to profit from its new urban power bases. Since he has been in office, Orbán has considerably reduced the competences exercised and budgets expended at the local level. Hence, the opposition will have a hard time strengthening social rights via its new footholds—already the prime minister has used his emergency powers to corral it.

Nordic welfare

In the Nordic countries, by contrast, social rights are part of the national DNA: Sweden, Denmark and Finland share the social-democratic tradition of a strong and generous welfare state. Consequently, their perspective on the status quo in the EU is quite different. In their view, the ‘economic freedoms’ guide capital to the most prosperous countries; in consequence, the European labour market fragments with a ‘brain drain’ towards wealthy member states. Both Denmark and Finland thus use their well-developed social-security nets and education systems to attract young and highly qualified employees.

Eastern-European member states fully rely on European upward convergence to participate effectively in the internal market and become competitive: Hungarian gross domestic product currently amounts to just 68 per cent of the EU average. While the statutory wage was raised to €464 per month in 2019 and shall be further raised by 8 per cent in 2020, Hungary is still among the four countries with the lowest minimum wages in the EU.

According to Swedish and Danish representatives, Europe suffers from a further divide, opposing the universalism of Nordic social-security nets to the contributions-based social-insurance schemes of the other member states across the continental mainland. This is reflected in the dispute over a European framework for minimum wages.

The idea behind the framework is to create a level playing field for national minimum wages, fixed at 60 per cent of the national median. The fact that Scandinavian countries strongly oppose the creation of social minimum standards—perceived as undermining trade union collective bargaining—increasingly hampers the implementation of the EPSR.

From the Nordics’ point of view, European social integration is still lacking its essential aspect: Europe has no clear guidelines as to how to make economically weak member states, such as Hungary, meet common policy goals on social rights. The financial crisis of 2008 has shown that member states with strong social-security systems are better prepared for economic downturns than those with weak social protection. The coronavirus crisis is but another alarming example.

Double-edged sword

To the Nordics, the EPSR is a double-edged sword. On the one hand, the pillar is ambitious and aims to create a welfare regime at the EU level. On the other, there is neither a sufficient legal basis nor the necessary budgetary means to implement it. In addition, it is questionable whether the declared goals are adequate, given the failure of the EU 2020 strategy for growth and jobs. As long as the member states decide freely on the interpretation of standards and the sufficiency of services, those goals are not very helpful for Europe as a whole.

Sweden and Denmark consider the principle of universalism as the core of their welfare regimes. In Denmark, for instance, social services have always been open to all citizens, regardless of contributions. Before the financial, economic and so-called refugee crises, neither the EU (after the wobble over the Maastricht treaty) nor access to social security were subject to debate in Denmark. But in the years of crisis things have changed drastically: we can observe a ‘welfare chauvinism’ which treats foreign workers—be they European or from third countries—as a serious threat to Danish jobs.

Since European citizens in Denmark are entitled to social services regardless of contributions, their presence is represented as dangerous competition. So a dual system has been put into place which favours Danish nationals over non-Danish citizens, with additional and tailor-made services for the former (social security, unemployment benefits and child allowances). And Denmark is very reluctant to accept proposals for increased European competences in this field.

Globally, the Nordics see a major risk in the ‘convergence narrative’: European convergence could turn out to be a ‘race to the bottom’. Hence, the most important threat to the European project nowadays is the possible exit of the avant-garde.

Sustainable renewal

The exit scenario is however far from being the only perspective. On the contrary, if implemented wisely, the EPSR could become a driving force for a sustainable renewal of the European project. Democratic legitimacy plays a huge role here: the more a measure is supported by the citizenry, the more it is likely to be realised. Common action will be easier to achieve in fields that are genuinely European: financing support for refugees from European budgets, for instance, would be a good starting point.

The German trade union movement proposes an ambitious and positive vision for the implementation of the EPSR. The departure of the United Kingdom from the EU was admittedly a strong warning signal. Nevertheless, ‘Brexit’ also strengthened solidarity among the other member states. This momentum can become incredibly useful: it allows us to advocate European minimum standards in labour and social law, which can reinforce cohesion among members states—to the benefit of all Europeans.

Under international law, the EPSR is a legally binding declaration, signed by the European institutions and all member states. Successfully implemented, the pillar is a great opportunity to weaken the centrifugal forces at work. Eventually, it could become a strong shield against an untamed internal market.