The EU accession states And the European Social Model

Introduction: from 15 to 27 The background of accession states (CEE) –communist legacies and new challenges –processes of transformation –social policy developments The reception of the accession states Future welfare trajectories: ESM or liberal? Future EU expansion. From the Balkans to the Urals: the end of the ESM?

Map of EU in 2007

Size:600 × 423 Type:85KB JPG.

Foundations of welfare: structure of lecture Historical legacies Post-communist experiences: the triple division Southern EU accession states (no welfare), CEE states have established welfare systems Main influences on transformations –International agencies –Macro-economic strategies –Political strategies Outcomes

Historical legacies 1 – pre 1914 Central European states formed part of Austro-Hungarian Empire –Bismarkian tendencies Romania – Bulgaria were part of Ottoman Empire Baltics part of Tsarist Russian Empire

Historical tendencies 2: communist legacies Post-1945 communist states extend welfare –To foster industrialisation –To sustain support for new systems –Universal cover incl. collective agriculture State as sole employer: no unemployment 1950s and 1960s: extensive female employment (extensive child care facilities)

Historical legacies 3: post The causes of collapse –economic inefficiency + inability to change –ideological failure The collapse of communist rule –precedent Hungary,1956: Czechoslovakia, 1968 –Poland’s organised opposition (Solidarity) –GDR + Czechoslovakia: mass mobilisation –Hungary: reform wing of CP

Economic legacies CP systems: –large enterprise: vertical integration: fixed price –employer-based (state) welfare legacies –fragile financial services (state bank debt) –high levels of systemic risk –paradox: strong state needed to remove state

CEE states: one block or many? ‘Visegrad’ states (Poland: Hungary: Czech Republic: Slovakia: Slovenia) ‘New Baltic’ (Latvia: Lithuania: Estonia) South East (Romania and Bulgaria) Candidate (Turkey: Croatia: Macedonia) Other (Belarus: Ukraine: Georgia etc.)

Common challenges of 1990s: the slow retreat of the state Liberalise: – markets (trade policy + currency controls) – prices + wages (result: inflation + wage cuts) Cut state expenditure: partial results as initially social expenditure rises Two-tier banking (predates 1989): Wage bargaining (incomes policies) Privatisation (slow) + property reform

Drivers of institutional welfare innovations International – IMF: World Bank: –Liberal privatisation of pensions, health care, elder care, child care –Social assistance as safety net –Reinforced by investment funding for modernisation EU – emphasis on social protection and social inclusion (next slide)

EU Accession criteria (social policy) Copenhagen Criteria (1993) include –market economy and political democracy –rule of law and involvement of social partners 1995 EU White Paper: social policy chapter –health and safety at work / labour law –equal opportunities for men and women –social security protection for migrant workers Lisbon Social Policy Agenda 2000 (EES)

Macro-economic strategies Visegrad: ‘embedded’ neo-liberal –capital import (foreign investment) product export –post-war continental welfare: social insurance Baltic: straight neo-liberal –deregulated labour markets (cheap) –low taxation / social assistance South East: mineral / primary product export

Social Policy development in CEE states Major gain: democracy and social rights Influence of market-making –World Bank (et al) liberal pension policy –EU influence gender equality + social exclusion EU influence: institutional capability (promise of joining Eurozone: Slovenia and Slovakia join)

Reception of CEE states Problems of migration (German and French constraints) Fear for future (the experience of GDR) CEE states and Americanisation Issues of EU borders: – Bulgaria and Romania join EU (2007) –Croatia pending –Turkey (?): Ukraine? Belarus?

Future Social Europe

The Crash: CEE states and crisis Legacy of private capital investment in economic slowdown –Subsidiary western banks in trouble: local banks face bankruptcy: loss of public confidence will create run on banks –E.g. Latvia: loan from IMF: welfare cuts, public protest, contracting economy. –Poland, Czech republic, Slovakia OK: Hungary & Baltics in severe difficulty (also Greece) Richer EU countries are stingier (face own economic issues): –Italian, Austrian and Swedish banks exposed as shareholders take fright at weak loan books –Initial risk of currency collapse in non-Euro pegged currencies (forint, zloty) = ballooning Euro debt repayments ? A re-emerging division between old and new member states? –March 1 st 2009 CEE members hold mini-conference before EU summit –Renewed demand for EU structural funds and for ECB to rewrite rulebook

Turkish candidacy?