This piece explores how Juncker can use ‘The European Pillar of Social Rights’ to convey a strong message: that the EU champions dignity, autonomy, and social justice.
Claire Kilpatrick (EUI), Elise Muir (Veni Fellow, Maastricht) and Sacha Garben (College of Europe, Bruges)
The EU has faced skepticism from its citizens about its commitment to prosperity and better living and working conditions, especially since the financial crisis and the subsequent implementation of austerity measures in various countries. The recently introduced ‘European Pillar of Social Rights’ aims to address these concerns. This piece posits that for the Pillar to be effective and restore the EU’s legitimacy, it must contain binding and highly visible pledges on minimum wage and income.
The ‘European Pillar of Social Rights’ is a policy initiative launched by the Commission in March 2016. This analysis examines the policy process and proposals put forward so far. It highlights the significance of the late January 2017 High-Level Conference on the Pillar, viewing it as a critical step. It proposes ways to orient the Pillar initiative towards ensuring dignity, autonomy, and social justice within the EU. Additionally, it evaluates the constitutional implications, especially regarding EU competence, of the commitments to introduce EU measures on minimum pay and income, and to restrict the Pillar to euro-area states. The Pillar initiative appears likely to be incorporated into the Commission White Paper on the Future of Europe launched in March 2017. This paper will be followed by a series of reflection papers, the first of which focuses on advancing the social dimension of Europe. Consequently, this represents a significant new policy juncture for Social Europe that merits analysis and input.
The Pillar represents an open process with impressive participation from civil society and EU institutions.
The High-Level Conference on the European Pillar of Social Rights, organized by the Commission on January 23, 2017, demonstrated that the initiative is as intriguing as it is significant. Numerous stakeholders, along with at least ten Commissioners, including President Juncker and Vice-President Dombrovskis, representatives of various EU institutions including President Tajani of the European Parliament, and government ministers convened in Brussels to share their perspectives on the European Pillar of Social Rights.
The diverse range of interventions made it clear that the precise legal structure and policy content of the Juncker Pillar are yet to be finalized and remain open for debate. Therefore, instead of approaching the Pillar consultation document and its draft list of ‘principles’ as a near-final text with only its legal status and scope to be determined, it is more accurate to view the Pillar consultation as a platform for a wide array of proposals on revitalizing Social Europe.
Viewed through this lens, the Pillar consultation has been successful. Over 16,000 individuals and organizations responded to the consultation questionnaire, and approximately 200 written contributions were submitted to the Commission. Autumn 2016 saw national consultation events held throughout the EU Member States. The significant presence of NGOs and unions at the High-Level Consultation underscores the engagement and investment of civil society in the Pillar consultation. The Social Policy Platform deserves particular recognition in this context. Bringing together over 30 different social NGOs since 1995, including Age Platform Europe, PICUM (Platform for International Cooperation on Undocumented Migrants), EAPN (European Anti-Poverty Network), Housing Europe, ILGA-Europe, European Youth Forum, and the European Disability Forum, it possessed a heightened legitimacy and voice in the process. The platform disseminated well-defined proposals for the Pillar. Following Juncker’s announcement in his closing speech, the platform put forward its most impactful proposals: a minimum income directive and a proposal on minimum pay through the European Semester.
The discussion frameworks did not prioritize EU social rights and values as central to the Pillar.
The European Pillar of Social Rights initiative comes after a decade that has shifted the perception of the EU as a positive force for social justice in Europe. Sovereign debt and EMU governance are significant factors in this change. Concerns stemming from free movement after the 2004 and 2007 enlargements also play a role. Given these political developments, it is crucial for the EU to utilize the Pillar to reaffirm its dedication to pursuing social justice as a core element of its mission. However, the urgency and importance of re-emphasizing the EU’s social justice roles and responsibilities were not fully acknowledged by many participants at the High-Level Consultation. There is a danger of not doing enough.
Establishing the correct analytical frameworks is crucial for guiding the Pillar, along with the decisions and actions related to its implementation. The frameworks, or narratives, that were prominent during the High-Level Consultation included:
Social Europe was desirable as long as EMU debt and deficit limits were respected;
Social Europe, the EMU, and the internal market can and do coexist harmoniously;
Social Investment serves as the guiding framework for the Pillar of Social Rights and is compatible with social rights as human rights;
Adapting to emerging technologies and work platforms is the primary objective for Social Europe.
In our view, these frameworks should not be the guiding principles for the Pillar process or its implementation. Instead, it is essential to explicitly state that the driving force behind legal and policy changes is the commitment to safeguarding the dignity and autonomy of individuals, along with social justice.
Dignity acknowledges the inherent and equal worth of every human being, while autonomy demands that political institutions refrain from depriving individuals of significant choices in areas fundamental to their lives. If the Pillar lacks such a clear message, or if this message is obscured by economic arguments, made contingent on economic conditions, avoids difficult trade-offs between economic and social considerations, or attributes Social Europe’s challenges solely to new technologies and platforms, the message and its delivery will be compromised.
The protection of individuals, their dignity, and autonomy has a strong basis in EU law, further strengthened by national constitutional and international human rights law. Dignity is the fundamental principle underpinning the EU Charter of Fundamental Rights, and many of its rights are specific expressions of those foundational commitments. For example, the Charter ‘recognises and respects the right to social and housing assistance so as to ensure a decent existence for all those who lack sufficient resources’ (Article 34(3)) and ’the right to working conditions which respect his or her health, safety and dignity’ (Article 31). Most relevant to the concept of autonomy in Social Europe are the EU Charter’s commitments to the right to work and pursue a freely chosen occupation, as well as the freedoms of association (Article 15), expression, information, and consultation (Articles 11 and 27), and to engage in collective bargaining and take collective action (Article 28).
Beyond the EU Charter and commitments to human and constitutional rights, the EU’s objectives of social justice and progress feature prominently in the Treaties. The TFEU’s preamble highlights the resolve to ensure the ‘social progress of their States by common action to eliminate the barriers which divide Europe’. Article 3 TEU defines the EU as ‘a social market economy’ aiming for full employment and social progress, and stipulates that it ‘shall combat social exclusion and discrimination, and shall promote social justice and protection’. These objectives should be integrated into all EU policies according to Article 9 TFEU, which states that ‘in defining and implementing its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion’.
A European Pillar of Social Rights must be built upon these values and prioritize their promotion and guarantee within a changing EU membership and EMU context.
EU constitutional implications of a Eurozone-focused pillar and minimum income and pay guarantees
The Commission President made two key announcements: an initial focus of the Pillar on the Eurozone, and a dual guarantee for minimum pay and income.
We strongly support the proposals to prioritize minimum pay and income for those residing and working in Europe. These proposals not only address the concern that the EU has jeopardized these safety nets but also enshrine the values of dignity and autonomy within the EU. However, for these values to be truly realized, minimum pay and income instruments must be applicable to all EU Member States, not just those within the Euro area. Sovereign debt arrangements have applied to three non-euro area states, and anxieties about enlargement impacting the social safety net are not limited to euro area states either. Minimum pay and minimum income are fundamental social guarantees that should be applicable across the EU. Indeed, the social acquis, apart from the brief opt-out by the UK between Maastricht and Amsterdam, has always applied to all individuals living and working in Europe, and this should continue to be the case.
Moreover, to make them tangible, these EU minimum income and pay guarantees must be embedded in visible and effective instruments. In both cases, legally binding Directives are preferable. These directives should be supplemented by soft law commitments within the European Semester and program commitments in sovereign debt loan states.
This raises questions about the EU’s competence to enact such legally binding measures.
For minimum income, we agree with the Social Policy Platform that Article 153(1)(h) TFEU, which allows for the adoption of binding measures using the ordinary legislative procedure for the integration of individuals excluded from the labor market, is appropriate.
It is widely believed that the EU cannot adopt a minimum pay directive because Article 153(5) TFEU explicitly states that the social policy legal base ‘shall not apply to pay’. However, the Commission may be considering a creative literal interpretation of the interaction between Article 153(5) and Article 352 TFEU (the ‘residual powers’ clause of the Treaties). Article 153(5) TFEU could be interpreted as solely prohibiting the adoption of a minimum pay directive under the Social Policy Title of the Treaty, without excluding other potential legal bases.
Subsequently, Article 352 TFEU could be explored as a possible legal basis for a minimum pay directive. Article 352 can be invoked ‘where the Treaties have not provided the necessary powers’ but cannot be used to harmonize Member States’ laws or regulations ‘where the Treaties exclude such harmonization’. However, this exclusion of harmonization could be understood as applying only in cases where the Treaties explicitly prohibit harmonization, such as in the areas of vocational training (Article 166 TFEU) and culture (Article 167 TFEU) (both permitting legislative measures to be adopted ’excluding any harmonization of the laws and regulations of the Member States’). Therefore, it would not apply to Article 153(5) TFEU. Under this interpretation, a minimum pay directive could be adopted with unanimous Member State support, as required by Article 352 TFEU. Whether the EU legislator would accept this line of reasoning remains to be seen.
The question arises as to whether the internal market legal basis of Article 115 TFEU could be used to adopt a minimum pay directive (Article 114 TFEU cannot be used since Article 114(2) TFEU prevents reliance on Article 114(1) to safeguard the rights and interests of employed persons). There is an argument that such a measure, even if it maintains some variation in minimum pay levels among EU Member States, would help reduce distortions of competition. Not only would it simplify the implementation of the Posting of Workers Directive in cross-border service provision, but having a minimum pay level in all Member States could more generally help limit wage competition. Whether the anticipated reduction in competition distortions would be sufficient to meet the conditions for utilizing the internal market legal basis is an open question, and would depend partly on the (relative) level at which the wage is set and whether this significantly reduces existing wage disparities among Member States.
However, even if deemed legally permissible, there are compelling reasons why Article 115 TFEU would not be the most advisable approach. If the objective of the directive is to achieve genuine social goals, relying on an internal market legal basis is ill-advised. This is because, in cases of conflict between ’the social’ and ’the market’, the Court is more likely to interpret the measure in a market-friendly way (which arguably occurred in the case of the Posting of Workers Directive, as well as the Collective Redundancies Directive). Since Article 115 TFEU, like Article 352 TFEU, requires unanimity, there is little strategic advantage in employing it.
Subsidiarity concerns would evidently be addressed by establishing pay and income levels that are appropriate for each state. The EU’s respect for the Council of Europe and its commitment to social rights can be demonstrated by using the Council’s European Social Charter commitments and its elaboration of the right to fair remuneration (Article 4(1)) and social assistance (Article 13) as benchmarks.
The former provision requires states ’to recognise the right of workers to a remuneration such as will give them a decent standard of living’. The European Committee of Social Rights has ruled that the lowest net wage must exceed a minimum threshold set at 50% of the net average wage, and state conformity will be assumed above 60% of the net average wage. The latter provision deems assistance adequate if the monthly amount paid to a single person is not significantly below the poverty threshold (50% of median equivalised income as determined by Eurostat).
If, for temporary or political reasons, it is deemed necessary to proceed with the nineteen euro area states or another subset of EU Member States, this raises further questions about the legal basis for minimum pay and income measures. This is because the legal bases mentioned previously apply to all Member States. While the Lisbon Treaty introduced a new legal basis, Article 136 TFEU, for measures specifically targeting euro area states, we believe this is an unsuitable basis for legislative proposals on minimum income and pay for two reasons. Firstly, although (questionably) used to create measures that impose EMU sanctions on euro area states (see C. Kilpatrick, ‘The New Economic Component of EMU: A Lawful and Effective Design?’ EUI Working Paper, ADEMU Horizon 2020 Project Series, 2016), its primary focus is on strengthening coordination and surveillance within the European Semester. Secondly, legislative proposals on minimum pay and income, grounded in the principles of dignity, autonomy, and social justice, should not be based on a macroeconomic competence.
What, then, are the alternatives for legislative measures on minimum pay and income that cover only a select group of EU Member States? One option is enhanced cooperation, a process through which some Member States adopt EU law without the participation of unwilling Member States (see Article 20 TEU and Articles 326-334 TFEU). This can only be used as a last resort when the Council determines that the desired objective cannot be achieved within a reasonable timeframe by the EU as a whole. This could provide an alternative route for minimum income and pay proposals if EU-wide agreement proves unattainable.
Another possibility is to operate ‘outside’ the Treaties through an international agreement on these matters between only the participating euro area states, or those states and other willing participants. The former was the model adopted during the sovereign debt crisis to establish the European Stability Mechanism in 2012 and its predecessor, the European Financial Stability Fund, in 2010. The latter was the path chosen for the Fiscal Compact Treaty of 2012. However, such parallel integration raises significant concerns about legitimacy: see S. Garben, ‘Restating the Problem of Competence Creep, Tackling Harmonization by Stealth and Reinstating the Legislator’, in: S. Garben and I. Govaere (eds.), The Division of Competences in the EU Legal Order: Reflections on the Past, the Present and the Future (2017, Hart Publishing).
This is not to dismiss Mr. Juncker’s welcome acknowledgement that the constraints imposed by EU macroeconomic governance justify special attention to incorporating social considerations into the European Semester. Furthermore, EU legislative commitments can undoubtedly be complemented by actions within the European Semester. The next section outlines our proposals for achieving this.
Beyond Juncker’s announcement: the Pillar must strengthen and expand the social acquis and integrate social considerations into the European Semester
As we commemorate the 60th anniversary of the Treaty of Rome, it is worth remembering that the TFEU allows for the adoption of EU legislation on a relatively wide range of social issues. For instance, Article 153 TFEU enables the enactment of legislation concerning workers’ health and safety, working conditions, and information and consultation of workers. A substantial body of social legislation has been adopted at the EU level and requires modernization. As mentioned earlier, the Charter of Fundamental Rights of the European Union, which has held the same legal value as EU primary law since the Lisbon Treaty came into effect, also contains provisions on solidarity that have so far been underutilized.
Surprisingly, the EU’s capacity to intervene through legally binding instruments received limited attention during the High-Level Conference. Consequently, there are concerns that the Commission may hesitate to put forward concrete legislative proposals. We wish to emphasize the importance of anchoring the Pillar in EU social policy and giving effect to the social provisions within the Charter. This is essential to guarantee that the Pillar effectively enhances the protection of individual dignity and autonomy across Europe.
We have previously suggested ways to broaden and strengthen the EU social acquis (see S. Garben, C. Kilpatrick, and E. Muir, Towards a European Pillar of Social Rights: Upgrading the Social Acquis, College of Europe Policy Brief #1.17). Our suggestions included the adoption of: (1) a Directive for the Protection of Dependent Workers, ensuring that existing EU social and labor law measures apply to all dependent workers; (2) a Directive on Protection against Precarious Work; (3) a Directive for the Enforcement of Workers’ Rights. We also advocated for (4) a Declaration safeguarding the integrity of the social acquis as an EU baseline for worker protection.
Further re-centering EU competences in the social domain could lead to the re-adoption of Directives such as the Collective Redundancies Directive and the Directive on the Transfer of Undertakings based on social legal grounds. These Directives are currently based on EU internal market competences, which is unusual. It would be remiss to ignore the potential for tension between the economic and social dimensions of these instruments, as demonstrated by the recent AGET case before the CJEU (freedom of establishment vs. domestic rules protecting against collective redundancies). Therefore, the social character of these legislative instruments should be reinforced. Asserting such an autonomous mandate for social rights would allow for better articulation of economic and social concerns in cases of conflict.
Meanwhile, existing economic governance tools could be modified to create more space for genuine social priorities. In this regard, the social platform has made a valuable suggestion: to utilize the existing structures of the European Semester to counteract the current trend of pushing Member States towards downward wage adjustments. The Commission could promote the inclusion of references to adequate minimum wages in the Annual Growth Survey and the Country Specific Recommendations, and monitor wage level developments. This would strengthen the employment policy aspect of the European Semester.
To this end, it is important that Country Specific Recommendations continue to be adopted on the dual legal bases of Articles 121(2) (economic policy) and 148(4) TFEU (employment policy). Therefore, key players at the European level are not only those responsible for economic and financial affairs but also those in charge of employment and social policy. The latter are more likely to ensure that employment and social concerns are given due consideration. Mark Dawson has astutely observed that the involvement of the latter group could be further enhanced within the Macroeconomic Imbalance Procedure (MIP; see M. Dawson, ‘The European Semester: Displacing Social Policy in the New ‘New Governance’’ in C. Kilpatrick (ed.), The Displacement of Social Europe (forthcoming). On file with the author).
Indeed, if this procedure leads to suggestions, or even mandates, for changes in domestic social and employment policies as part of the Country Specific Recommendations, the decision-making process leading to their adoption needs to be adjusted. This should involve greater participation from actors specializing in these areas, such as the Council configuration on Employment, Social Policy, Health, and Consumer Affairs. For example, see the Report from the Council Employment Committee and Social Protection Committee on ‘Assessment of the 2016 Country-specific Recommendations (CSRs) and the implementation of the 2015 CSRs’ on labor market aspects (p. 10) and social protection and inclusion (p. 21).
Currently, the Juncker Commission may be considering focusing on, or strengthening, the emphasis on minimum pay (and income) in recommendations specifically for Euro area members. While we believe that focusing solely on Eurozone members would be regrettable, if this approach is adopted, it becomes even more crucial to cite Article 148 TFEU (employment policy) as a legal basis alongside Articles 136 (Eurozone) and 121(2) TFEU (economic policy). This is necessary to ensure adequate representation of social actors and interests.
Conclusion
Undoubtedly, the most concrete pieces of information emerging from the Conference are the announcements made by Commission President Juncker. It is important to state clearly that sending a message that the EU guarantees (directly or indirectly) minimum income and wages would be highly welcomed, and substantiating such guarantees through tools available within the context of EU economic governance is understandable. However, this should be framed using appropriate conceptual and legal tools that place individual protection at the heart of the process. To be effective, it should be supported by a concerted effort to modernize the EU social acquis.
In this sense, we hope – as hinted at by President Juncker himself – that the European Pillar of Social Rights initiative will reach the standards set by the ambitious social agenda advocated by Commission President Delors in the late 1990s. This agenda led to the proclamation of the Community Charter of Fundamental Social Rights by eleven of the then twelve Member States and provided a significant impetus for the adoption of new legislation (point 28 of that Charter). In the context of the new EMU and enlargement, the legislative focus should be on creating an updated and more comprehensive EU baseline for social rights. This should be accompanied by proposals to integrate social considerations into both the process and substance of the European Semester.
Barnard & Peers: chapter 20
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