EU social and labour law (1) Regulatory rationales, competences, policy areas and processes - Lecture 15 - EU Law

From the EEC traditional perspective under the Treaty of Rome, what has social/labour law got to do with the EU and the EU single market?

According to the EEC traditional perspective under the treaty of rome - the answer is limited, since there was a focus on the internal market as opposed to focusing on labour rights and social rights, since labour laws are conducted at a national level whilst the EU does the integrating components and managing the common market - however the EU’s role has evolved over the years, including both a social dimension and in other trade agreements such as the Withdrawal Agreement the UK has with the EU.

What is the evolution between the social and single market regulation in the UK?

Link between social side and single market construction has evolved historically -

• It was hidden within the treaty of rome.

• In the process of creating the EU social dimension as per Jacque Delors’ statements, tensions emerged historically, such as member states contesting this and tension between labour versus capital, including compromise. 

• Recently, there is active re-negotiation of labour and social law, since the EU now is shifting its focus towards military and defence spending.

What were the 5 key phases/periods of the relationship between the common/single market and EU social law in general?

1. Treaty of Rome: The mirage of ‘market autopoiesis’ and social minimalism (i.e. little or no social regulation – with the exception of equal pay)

2. The 1970s: The emergence of a (limited) ‘level playing field’ rationale, minimum harmonization measures, market functioning/corrective rules

3. The Delors Commission (1980s-1990): A European ‘social profile’, market legitimizing and corrective measures, ‘social progress’

4. 2007-2015: ‘Turbocapitalism’ and the ‘Death of Social Europe’ ?

5. 2016 – nowadays: The European Pillar of Social Rights, a new distributive agenda, and an uncertain future

The formation of the Treaty of Rome was a key phase/period regarding the relationship between common/single market and EU social law, what did the Treaty of Rome include?

• Social minimalism → The first pillar is about social minimalism, which focuses on social progress, not just level playing fields. The CJEU outlined that minimum harmonisation doesn't mean the law is standard, but there are good standards, such as decent working standards. The second pillar is ‘market regulation’, free movement of person, services and workers are a component of social law - in terms of free movement of services, there is no requirement for parity of salary and working conditions for competing member state companies wishing to complete services in another state, which will be discussed in the next lecture. The third pillar is not discussed in the module. 

• National differences reflected different levels of productivity/efficiency → Spaak report outlined that social law was not required and that the economy would propel us forward for the economic benefits that will arise from European integration and these benefits will trickle down, if the EU focused on the market, and the GDP will increase, then redistributed through taxes and the member states will afford its economic sector and efficiency and raise the standards overall. The idea was not that market integration led to market growth and retribution of wealth, but that some economic conditions were different with Germany and Italy such as salaries and making a single market, will German business move to Italy to pay Italians less, but they said no since it reflects the level of productivity and Germany was more capital intensive, generating a higher salary and performance, therefore it evens up automatically - high and level wages reflect productivity and german companies can be incentivised by low wages in italy.

• No need to harmonise (automatic convergence? Note: similar economies) → There is no need to harmonise EU wages since removal of trade barriers wouldn't mean companies would flee to less wealthier countries (neoclassical economics dominated the landscape as per Catherine Barnard).

  • Exception: Equal pay law A119 EEC Treaty → Though … the treaty of rome established one fundamental right which was ‘equal payment for men and women’ as per Defrenne case, and the French which had a constitution of equal pay clause but the Italians didn’t properly monitor, the French discovers in Italian sectors especially textile was overwhelmingly dominated by Italian women who were underpaid in comparison to men, but there will be sectors where low pay generated by discrimination can produce a competitive advantage for certain countries and sectors, and the french could not protect their textile industry by imposing a custom duty, therefore they had to manage the playing field, therefore Article 119 was implemented to ensure the social law prevails. There was an argument that lower social standards would lead to an unfair competitive advantage for countries, therefore the social right of Article 119 was implemented.

  • There are 3 pillars between market and social policy, these social standards have evolved since the equal pay directive. In 1970s and 1990s, we had more directives, which harmonised certain areas of social policies amongst EU member states which introduced a level playing field.

• But: winners and losers 🡺 some ‘structural funds’

The 1970s was a key phase/period regarding the relationship between common/single market and EU social law, what did the 1970s include?

• Industrial restructuring, single market social distortions, level playing field and minimum harmonization → Economic crisis ensued around 1970s, and this displaced the neoclassical approaches to markets and economy that wealth would continue to grow and be redistributed. The EU found that various companies’ behaviour varied based on national legislation, such as it being cheaper to lay-off/trigger redundancies in other countries where it is cheaper than in other nations. However, decisions of companies were being reshaped by member states national labour laws, which incentivised the equal pay directive, harmonise minimum standards especially in cases of collective redundancies, insolvency or transfers. 1970s consisted making a level playing field, not a integrated social market.

• E.g. Directive collective redundancy processes (Directive 1975/119)

• [Note ‘common market’ legal basis] → Market integration produces winners and losers, therefore we must continue to compensate the losers if they wish to continue to play the market integration game and therefore the winners must place funds into investments to incentivising losing states, the fund was the european social fund which consisted of industrial funding for countries which suffered under market integration. The removal of trade barriers would contribute to weaknesses, such as Greece entering EEC, it could no longer impose duties on German technology and trade barriers to protect their industries, Greek technology couldn’t compete with others due to the expense and technology. And the competition results to unemployment, generating a depression, but the winning countries place money into the social fund to encourage innovation and business within the losing countries. Member states cannot conclude trade agreements with third countries, only the EU can. 

• Note: also first Equal Pay Directive 75/117

The 1980s-90s (The Delors Commissions) was a key phase/period regarding the relationship between common/single market and EU social law, what did the 1980-90s include?

• A European ‘social profile’, market legitimizing and corrective measures, ‘social progress’

• A quid pro quo → Social acceptance of speedier market integration → 1980s led to the arrival of Delors, this led to a greater appreciation that economic/market integration would falter unless there is a heightened social integration need, and in spite of these directives, there were concerns regarding the common market project and euroscepticism amongst the left-wing political spectrum and trade unions, whilst the conservatives/margaret thatcher were in favour of the common markets and market integration during the time of UK’s referendum on whether to be in the EEC or not. However this quickly changed …  Delors pushed for market integration, and encouraged the trade unions of having more voice, representation and protections. And for trade unions, the EU could be a boundary at the deregulation level of national member states (as demonstrated by deregulation by Margaret Thatcher in the UK in regards to unions), and trade unions relied on this belief of market integration and social Europe, and this was achieved as per the Community Charter of Workers Rights and the Treaty of Maastricht 1992 and Social Policy Protocol.

• Three key promises:

  • Social Dialogue

  • A Community Charter of Workers Rights (1989)

  • A new season of EU law making in the labour law sphere

• Treaty of Maastricht 1992 and Social Policy Protocol (new macoreconomic framework for the Euros + new legal bases) → Treaty of Maastricht = there was a strong push of monitored integration, discussions of a new single currency (the euro) and the requirement of a monitor system to ensure that the currency does not suffer a reduction in value due to inconsistencies across member states. And the macroeconomic framework of requirements of certain member states having debt, or deficit to a certain percentage, however this is not respected by member states and doesn’t lead to countries following through it, but it can drastically impact the member states negatively especially in 2000s-10s during austerity.

• Treaty of Amsterdam 1997 – Employment Policy/Strategy → Treaty of Amsterdam = introduced the european employment strategy, the issue wasn't economic growth but a jobless growth, therefore member states had to coordinate certain policies to reach a certain threshold

• CFREU Nice Treaty 2000

• New ambition of market integration package with the adoption of harmonisation directives in various fields, being alert to the race of the bottom of the Cassis De Dijon, and introducing regulatory areas, such as chemical standards, but integration of the common market required social forces and that integration must be tracked by national and social labour standards, creating the idea of a social profile to bring forward law making competences for the EEC which would later be the EU. There weren’t many fundamental rights within countries and organisations, which approached human rights as fundamental rights.

The 2007-2015 was a key phase/period regarding the relationship between common/single market and EU social law, what did the 2007-2015 include?

• Turbocapitalism’ and the ‘Death of Social Europe’

• There were conflicts between cuts to public spending for the sake of macroeconomic frameworks, introduction of the new currency (euro) and deregulation of industries, which leads to a downwards spiral in the later decades of 2000s-10s

What are the 5 key legal bases and rationale for EU social and labour law?

• Article 153 TFEU - This provision outlines the EU may adopt in a number of fields (on working conditions, such as non-discrimination) may adopt directives that are adopted for introducing minimal requirements for gradual implementation = the idea is to progressively bring the level up and give member states flexibility in achieving the same progress. It also contains coordination competencies, the EU has the power to encourage cooperation between member states relating to knowledge, exchange of information and etc. EU’s competence is partly through directives, and encouraging cooperation between member states. THOUGH … Article 153(5) has excluded topics of harmonisation

• Article 151 TFEU: ‘harmonisation while the improvement is being maintained’ (non-regression clauses)

• Article 153(4) TFEU: ‘shall not prevent any Member State from maintaining or introducing more stringent protective measures compatible with this Treaty’ (shared competence)

• Mostly through majority vote/standard regulatory procedure (some unanimity in some areas and some excluded competencies) → There are certain areas that are outside the competence of the EU, such as freedom of association, strikes and other facts, which was the core of the case that Denmark brought against the EU when it came to wages.

• UK v Council ‘minimum harmonization’ does not limit Community action to a ‘minimum common denominator’ → UK challenged the directive, and the court concluded that community action is not limited to minimum common denominator (this demonstrates a social progress aspiration, and introducing minimum standards which may be higher or lower member states does not give others the excuse to regress, they can maintain or increase their standards to a strict manner, but others having lax rules does not mean they have an excuse to regress in their standards and lower them.)

What are 2 examples of ‘law making’ process in the EU social policy domain - particularly social dialogue?

• Article 154-155 TFEU: ‘European social dialogue’ and the role of Social Partners

• Framework agreements and EU Directives → (as in Parental leave 96/34, Part-time work 97/81; Fixed-term work 99/70; (Telework agreement of 2002)

How does institutionalisation of EU through charters and directives cause tension?

The institutionalisation of the EU through charters and directives and the tensions between those who did not share those values, who did not wish to have them at a national level, but must remove them at the EU level - otherwise when the member states fall short of that threshold for protections against discrimination, the CJEU will enforce these criterias in adherence to the EU law. However, values have a unifying potential, and have a divisive discourse too

What are 2 examples of labour rights being a fundamental rights discourse?

• Charter of Fundamental Rights of the EU (see the Solidarity Chapter IV, but also the Equality Chapter, and provisions such as Article 12, referring to both the political and social dimensions of ‘freedom of association’). 

• Directives in the domain of race discrimination (Dir. 2000/43) and other grounds of discrimination (religion or belief, disability, age or sexual orientation, Directive 2000/78).

What are some important key commitments outlined in the social field - particularly within Title XI – Level Playing Field and Fair Competition and Sustainable Development?

• a non-regression clause (Article 387); 

• the respect and promotion of a number of ‘multilateral labour standards’ (in A 399); and

• a dedicated dispute settlement and enforcement process (in Chapter 9), which also includes a ‘rebalancing procedure’ in case of future ‘significant divergences’.

How does the UK relate to the Title XI – Level Playing Field and Fair Competition and Sustainable Development, and the UK’s dealings with the EU? How is their trade agreement, and how do the following commitments (specifically relating to Article 387 and Article 399) stipulated in Title XI important in relation to this?

The relationship between EU and UK dealings → This is in regards to the UK’s dealings with the EU. There is a minimalist approach to a trade agreement, there is no maximalist approach and you cannot insist the same social standards of the remaining member states, and due to duties and checks existing, we have a minimalist level playing field.

Title XI – Level Playing Field and Fair Competition and Sustainable Development includes -

• A non-regression clause (Article 387) → There is a non-regression clause such as not being allowed to reducing social standards, there is no dynamic alignment requirement (such as the UK being up to date entirely with the EU), but a static alignment requirement. And there is also specific provisions as per Article 399, where they have to uphold multilateral labour standards. And a dedicated dispute settlement and enforcement process.

• The respect and promotion of a number of ‘multilateral labour standards’ (in Article 399) → There is a level of reciprocity, respect for fundamental core conventions by the international labour organisation, these are 8 conventions (international treaties) and the UK has signed up and committed to following the conventions such as equal treatment, forced labour and child labour. 

What are the tangible commitments that Article 399 in Title IX adhere to in respect of three sets of social standards and instruments?

• The 8 Fundamental ILO Conventions (namely those referred to in the 1998 ILO Declaration on Fundamental  Principles and Rights At Work protecting: – freedom of association and the effective recognition of the right to collective bargaining; – the elimination of all forms of forced or compulsory labour; – the effective abolition of child labour; and – the elimination of discrimination in respect of employment and occupation. (A 399(2))

• ‘to implementing all the ILO Conventions that the United Kingdom and the Member States have respectively ratified’ and ‘the different provisions of the European Social Charter that, as members of the Council of Europe, the Member States and the United Kingdom have respectively accepted’. (A399(5)).

•  ‘to promote…. The ILO Decent Work Agenda’ in a number of areas.

How does the UK relate to the adherence of these 3 sets of social standards and instruments outlined in it’s trade agreement (TCA) with the EU and Article 399 Title IX? And has the UK violated any of these?

The UK has accepted that they must implement any convention that they must ratify and commit to implementing them as the EU does. And implement and respect those social provisions contained within the EU charter that the UK has signed up to and the same is said for the EU towards the UK based provisions.

The UK’s strike legislation has been found to be violating the secondary industrial action/solidarity actions, so there is no immunity for workers if they go out on solidarity actions (such as striking with others, despite it not being your industrial setting and withdrawing your labour).

• The UK has also violated the EU social charter, despite committing to certain standards in cooperation with the EU. = but this does not mean the UK is in breach of the withdrawal agreement with the EU, but can be brought to court based on the breaches and agreements which the UK has signed with the EU. But sanctions can be implemented, such as changing legislation or otherwise threaten to revoke trade and stop doing trade with them.

How does the EU retain compliance of their MS and other third parties they trade with (such as the UK) to comply with remaining Title IX requirements and especially the social standards/instruments outlined in Article 399 Title IX?

These are clear, binding legal instruments, which are monitored and enforced by autonomous bodies and the European Committee for social rights.

What is the historical development and transition of the EU - what do we have either an open market economy or a social market economy?

The EU originally embraced the neoclassical economic beliefs, and over the years, the EU does not just have a common market, but a highly competitive social market economy as outlined by the Lisbon treaty and the charter of fundamental rights which crystallises these social rights and values. However, this answer remains contentious as in 2010, austerity can differ drastically from policy.