The European social model or the creation of a europen social identity

European social model

Philippe Garabiol


10 October 2005

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Garabiol Philippe

Philippe Garabiol

Leading Civil Servant, Lecturer on Social issues at the Institute for Political Studies in Paris (Sciences Po).

The results of the referendum of 29th May on the Treaty Establishing a Constitution for Europe were the consequence of the synthesis of a "nationalist desire for sovereignty" and social disquiet. Although the choice of "sovereignty" represents an ideological choice in favour of a token Europe founded, at best, on a confederate vision, the "social" issue however is typified by the attachment to a social model that does not necessarily marry with specific institutional, nor geographic institutions. The supporters of the "NO" vote succeeded in convincing a number of voters that the protection of this social model was incompatible with further development in the construction of Europe.

France has however enjoyed the benefits of the European lever, notably in the agricultural domain, but the growth brought by the internal market has given way to other thoughts. After the austerity watershed in 1983 European integration was put forward as the grand French ambition that was to promote long term growth. The Single European Act, the Maastricht Treaty, the creation of the European Central Bank (ECB) and the introduction of the Euro were all accepted in exchange for the promise for renewed growth.

It is felt the construction of Europea has not produced what was expected of it. In a context of low growth, unstable employment and a global economy, the enlargement to ten new Member States where labour costs are clearly lower than in EU15 were perceived as a real call for companies to relocate. The European Union has become synonymous, in the countries of "old Europe", with "social dumping."

For this reason the informal meeting of Heads of State and Government of the European Union on 27th and 28th October in London will be focussed on the issue of the social model; this is the first stage in a collective study – made necessary by the failure of the draft Constitutional Treaty. However since the announcement of this summit by the British presidency on 1st July scepticism has been prevalent. There is growing concern that the pooling of ideas will simply result in an apology for diversity which would then signify a true aporia for the European social model. At the beginning of September Günter Verheugen, Vice-President of the European Commission already set the tone by saying: "There is no European social model. Each country has its own customs." [1]

But a change in dialectics could modify this view: it is possible to say that the European social model does exist and far from promoting social regression it emerges as the generator of a European social identity.

The European Social Model is not an expression void of meaning

In the Union's objectives as laid down in the draft Constitutional Treaty it is said in article 1-3-3 : "The Union shall work for the sustainable development of Europe based on balanced economic growth (...) It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of children's rights. It shall promote economic, social and territorial cohesion, and solidarity among Member States."

The European Confederation of Unions hence defined the European social model: "the European social model comprises a vision of society that associates sustainable economic growth along with living and working standards that are constantly being improved. This vision implies full employment, quality jobs, equal opportunities, social protection for all, social inclusion and citizens' participation in the decisions that affect them. Social dialogue, collective negotiation and the protection of workers represent vital factors in the framework of promoting innovation, productivity and competitiveness." It adds: "it is this aspect that distinguishes Europe where post-war social progress followed economic growth from the American model where some individuals benefited to the detriment of the greater number. Europe must continue to support this social model so that it serves as an example to other countries elsewhere in the world."

The European Union claims the inheritance of the German Chancellor Erhard's growth model, the founder of the Mark and the "father of the German economic miracle," for whom financial policy could not be understood without a constant concern for social issues. The market remains the cornerstone of European construction but can no longer be the Commission's only aspiration for the future.

The Social Will of Union Governments are Questioned

The will to undertake a European social policy became clear during the European Council of Lisbon in March 2000 during which the Union "established a new strategic objective for the next decade: " to become the most competitive and most dynamic economy of knowledge in the world, with a capacity for sustainable growth along with both a quantitative and qualitative improvement in employment and greater social cohesion.".

European leaders then adopted a decennial programme aiming to boost growth and sustainable development across the entire European Union. They noted the challenges that had to be faced due to globalisation, the ageing of the population and the rise of the information society on a world scale. They decided that economic and social reforms had to take place within the context of a "positive strategy that combines competitiveness and social cohesion" and maintained once again that the European social model, with its developed system of social protections, was to support this strategy. This objective was to be reached via macro-economic choices that encouraged high growth rates, via the completion of the internal market, an improvement of individual professional qualification and a policy to fight against social exclusion. They committed themselves to aim for full employment and defined specific goals that were supposed to be reached thanks to an open method of co-ordination :

An overall employment rate of 70 % by 2010;

An employment rate of over 60% amongst women;

An employment rate of 50% amongst older workers;

An annual economic growth rate of around 3 %.

The report presented to the Council and the Commission by former Dutch Prime Minister Wim Kok "Rising to the Challenge" in November 2004 highlights disappointing results and especially a lack of ambition and coherence in the policies undertaken nationally. It concludes that it is highly unlikely that the Union will achieve these goals by 2010 [2], due in the main, to a lack of political will. It accuses an overburdened agenda, poor co-ordination and contradictory priorities. It observes that governments have not invested sufficiently in workers' competence and productivity and that sometimes they persisted, under the pretence of structural reform, in deregulating the labour market.

The merit of the Lisbon Strategy was that it rendered the ambitions of European governments for "social growth" more tangible. This was confirmed during the European Council last March. However in the event of failure, the establishment of specific, calculated objectives would only lead to the loss of credibility of European social ambition. The European social model was therefore attractive.

The European institutions have been criticised for establishing a type of competition that plays against the best protected and best paid workers; this criticism has been directed towards the directives concerning "services" and "working hours". It has also been confirmed that labour market reforms in Member States lead towards negative effects on social issues. Henc,e for example, the creation of the "new employment contracts" in France were directly inspired by the Hartz IV reform adopted in Berlin in December 2003 whereby unemployment benefit was replaced by a modest, fixed sum for the long term unemployed with an obligation to take up the first offer of work – but this also abolished the rights of the newly employed in companies with less than ten employees that usually protected them if they were made redundant ; in a more subtle way it did away with the edict made by the British government in 1985 that involved modifications in the length of time a person was employed in order for that person to benefit from protection against wrongful dismissal. By imposing direct competition and without the slightest protection from States whose level of social protection is still low the Union will inexorably move towards the destabilisation of the German and French social models.

Such a conclusion would be hasty and misjudges the final aim of the policies undertaken by the Member States. The governments in Europe are concerned about facing the demands of globalisation for their populations. There is a true European concern take on board and master the effects of globalisation by promoting the complementarity of European regions and by offering those excluded by the changes, as far as it is possible, satisfactory living standards and a new start with work that is partly paid by State aid. The fight against social exclusion represents a part of the European social model that distinguishes the European Union for example from the countries in Latin America. There is no room for "favelas" in Europe. The concern about undertaking a policy of social inclusion is asserted to the full by the Union: the fight against social exclusion has featured amongst the Union's objectives since the Amsterdam Treaty (articles 136 and 137). The European Council of Lisbon in March 2000 invited Member States and the European Commission to take steps in order to produce a decisive effect in terms of eradicating poverty by 2010; it was also decided that Member States should co-ordinate their policies to fight against poverty and social exclusion by using 'an open method of co-ordination'. [3] Within the context of globalisation that can lead to phenomena of national disaffection, the accepted choice of solidarity towards the weakest social categories represents a certain burden for public funds and is a point in favour of the European social model.

In search of the specific features of the European social model.

However the fight against social exclusion and the interplay of complementarity on a continental level are far from being the exclusive features of the European social model. Other countries in North America for example can claim to have similar concerns. This is part of the Western social pact.

This also applies to the principle of equality that filters down into the professional domain via the fight against discrimination. The European Union has spearheaded a policy to fight discrimination notably in favour of the equality between men and women. France was for example condemned for maintaining the ban on night-work for women in the manufacturing industry since this represented a direct obstacle to employment [4]. The European Union enabled a major improvement in trades which excluded one of the two sexes. The European judge pays great attention to the issue of discrimination since he also examines any matter related to indirect discrimination [5], including the definition provided in the directive 2002/73 of 23rd September 2002 [6]. The freedom of the employer is therefore closely monitored in how he manages his staff; hence in the way he employs and dismisses as well as in the choice he makes in designating a post or how he promotes those under his care in the company; this is the case as soon as an individual who belongs to a group, considered to be socially exposed and determined by sex, age, skin colour or handicap who may find themselves discriminated against in the workplace for these reasons.

This restriction on the employer's freedom to manage his company as he sees fit is not at all clear. The control exercised by the State in the name of the protection of its weakest citizens who might be the victim of unjustified differences in treatment is totally unaccepted in the most States of the world where the employer exercises discretionary power with regard to his employees. However and even then the desire to apply the principle of equality both in the public sphere and that of the company, ie in a private domain is mitigated both in Europe and North America.

The specific nature of the European social model lies elsewhere. We find its trace in the Kok report which, in its conclusions, defends the maintenance of the European social model and advises the promotion of social partners and a deepening of social dialogue, both on a national and European level in order to achieve the Lisbon objectives. But the most complete form of social dialogue finds expression in collective agreements.

The debate about renegotiating directive 2003/88/CE relative to the organisation of working hours [7] is interesting from this point of view. The USA does not have a federal law imposing a maximum limit on working hours. This also applies to Japan. The Commission therefore suggested the maintenance of the principle of a weekly time limit of 48 hours but also the permission to enjoy a certain amount of flexibility for European companies in the face of their direct competitors and in order to safeguard employment. In addition to this the Commission noted the consequences of the changes made to the Union's boundaries. A certain number of new Member States have climatic features which lead to an imbalance in the yearly work load. The Commission also suggested the extension of the reference period from four to twelve months in the calculation of the average working week of 48 hours maximum. Moreover the Commission noted the diversion tactics employed by the United Kingdom via the opt-out clause that allowed Member States not to apply the maximum limit of 48 hours on the basis of free individual agreements concluded with the workers. [8] In the UK, one contract in five set down an exemption clause on the maximum duration of working hours. The person looking for work often has to suffer the diktat of his/her potential employer. The proposed directive does not aim to abolish but to reduce this exemption. The employer will of course be able to suggest an exemption clause but never in an employment contract. This means that the employee will be able to refuse this proposal or to negotiate it fairly. Finally the Commission proposed that inactive periods of duty should not be counted as work even if the worker has to be available in the workplace itself, and even though over the last five years three major decrees delivered by the European Communities Court of Justice [9] confirmed that duty time –ie the time when a worker must be available at his place of work – should be considered as working hours.

The Commission's proposals were the source of lively debate. With regard to this the position adopted by the EESC (the European Economic and Social Committee) should be highlighted. It wants to maintain the existing four months period of reference but accepts the principle of a longer period that might extend to 12 months on the basis of collective negotiations or additional legal conditions or guarantees which guarantee information and consultation with workers and/or their representatives as well as adequate protection of their health and security. As far as duty time is concerned the EESC is in favour of applying the jurisprudence of CJEC and believes that balanced solutions are possible on the basis of balanced collective negotiations guaranteeing workers the right to appropriate rest periods. However it demands the progressive abolition of the opt-out regime.

In May 2005 the European Parliament adopted the amendments modifying the Commission's original proposals notably those relative to the opt-out clause and to duty time during working hours.

Hence the collective agreement appears to be the keystone to the European social model. The collective agreement enables a balance in the interplay between employers and employees and ensures a certain amount of foresight to all players involved in human resources. Instead of making the contract individual something that remains the norm in Anglo-Saxon countries the European social model prefers to place emphasis on the collective nature of guarantees. The principle of the collective agreement makes the sectorial or regional inequalities linked to economic constraints socially acceptable.

In Estonia and Austria the guaranteed rights of workers can vary between the various branches of the building trade or the metal industry if the social partners sign agreements. The collective agreement has the same power to allow the legislator to intervene. Hence this is why there is only a minimum wage in eighteen of the twenty-five Member States. The principle of the minimum salary has not been included either in German nor Italian legislation.

The collective agreement established the principle of subsidiarity in the social sphere; it allows for unity in diversity. It is founded on the idea of the collective protection of workers and not on individual or contractual protection; it also contributes, and this is not greatly highlighted, to the social market economy. Indeed the fruits of growth are not simply distributed in terms of additional revenue or time available: collective agreements aim to draw on growth and technical progress to improve working conditions within the company. The collective agreement is associated with a certain idea of dignity in the workplace.

It is not surprising then that the Treaty Establishing a Constitution for Europe includes in article I-47, under the heading of "Social Partners and Autonomous Social dialogue", that the "European Union recognises and promotes the role of the social partners at Union level, taking into account the diversity of national systems; it shall facilitate dialogue between the social partners, respecting their autonomy." It is true that the regime of European collective agreements represents a major element if we accept that these agreements might be, in the light of national experiences, instruments to equal out competition between European companies. [10]" The agreement on Social Policy a result of the agreement made on 31st October 1991 between the EESC and European employers organisations, the UNICE and the CEEP is also included in the EC treaty under articles 138 and 139; this agreement provided social dialogue with a position of prestige in the definition of Community social policy [11].

The institutionalisation of social partners in the community's decision making process leads to priority being granted to social dialogue in the elaboration of community social standards. This primacy is revealed by the Commission's obligation to consult with social partners before making any proposal in the domain of social policy. The latter can then suspend the legislative procedures and oblige the Commission to withdraw whilst they decide on initiating collective negotiations. The agreement on social policy also plans for an original means to establish collective agreements in the wake of these negotiations. Those signing the agreement may ask the European Commission to present a proposal of decision to the Council taking up the entire contents of the agreement that if adopted by the Council is transformed into a Community Act of a regulatory nature. This procedure was used to launch the framework agreements on parental leave, part time work and fixed contract work. According to S. Laulom and C. Vigneau, they believe that, "from being the word of rule in the community social policy, social dialogue has now become the manager of it." However the European collective agreement does not itself have a normative power and in order to become effective it has be integrated into a community instrument of a regulatory nature on the initiative of the Commission's or it has to be the subject a national mediation undertaken according to "procedures and customs that are particular to the social partners and the Member States." [12]

The European social model finds it roots in an old determination to fight against exclusion and discrimination that distinguishes the European model from developing countries. It has adopted a new, misunderstood, internalised form in a Europe of industrial redeployment caused by the globalisation of the economy. Its keystone lies in the principle of the collective agreement that alone can make unequal situations socially acceptable. There is no social market economy without social partnership and therefore without collective agreements and as a result without employers' organisations and union who are able to negotiate. The collective agreement represents a strong cultural choice that distinguishes Europe from the USA.

In this way European identity finds one of its most authentic bases in the European social model. European social identity expresses itself thanks to values such as solidarity, social partnership and subsidiarity. The acceptance of this identity depends largely on social and national culture of the workers. If this model perfectly suits German workers, French workers who are rather more attached to social uniformity imposed by law might be slightly more reticent. As for the UK the question of it adhering to this continental model is put knowingly.

It would suffice to strengthen the feeling of European social identity via the adoption of a series of measures that show European social spirit; in terms of procedure for example the creation of a specific regime for collective negotiations on a community level enabling the start of negotiations that are independent of the Commission's initiatives thereby completing the imperative automatic effect of acts born of social dialogue or if an agreement appears to be possible this might lead to a directive on the establishment of a minimum growth salary across the Union.

[1] Interview with Mr. Günter Verheugen in Le Monde dated 3rd September 2005.
[2] The employment rate was 63.3% in EU25 in 2004, the employment rate of people aged 55 to 65 lay at 41%, the employment rate of women was 55.7% but was only 31.7% for women aged 55- 64 versus 50.7% for men. Press Release Eurostat : survey on the labour force in 2004, n° 112/2005, 8 September 2005. As for the growth of the real GDP, this lay at 2.4% in EU25 and 2.3% in EU15 (source Eurostat).
[3] Each State establishes a national action plan for social inclusion in order to apply the objectives established by the European Council of Nice. In France the first plan covered the period of 2001-2003, the second 2003-2005.
[4] The Stoeckel decree of the CJEC delivered on 25th July 1991 believed that article L 213-1 of the Code du travail as the text was then applied making it illegal to use female labour at night was contrary to the European directive of 9th February 1976 that established the principle of equality of treatment between men and women in terms of access to employment, professional training and working conditions.
[5] CJCE, 21st March 1981, case n° C-96/80, Jenkins.
[6] Indirect discrimination is defined in the directive 2002/73 of 23rd September 2002 modifying the directive of 9th February 1976 that established the principle of equality of treatment between men and women in terms of access to employment, professional training and working conditions : “a situation where a measure, a criteria, or a practice that is apparently neutral is to the disadvantage particularly of those of one sex in comparison with another, unless this measure, this criteria or practice can be objectively justified by a legitimate end and the means to reach this goal are appropriate and necessary.”
[7] Directive 93/104/CE concerning the organisation of working hours, JOCE L 307-13/12/93 – recently modified by the directive 2000/34/CE, JOCE L 195-01/08/00 was replaced by directive 2003/88/CE of the European Parliament and the Council of 4th November 2003 involving some aspects of the organisation of working hours, JOCE L 299/11-18/11/2003.
[8] Article 18 of the directive on working hours 1993 (93/104/CE). Dispensation of the 48 hour weekly work limit is allowed under two conditions: workers must sign individual opt-out agreements and it is prohibited to penalise them if they refuse to do so.
[9] CJEC, 3rd October 2000, case C-303/98, Union of State-Employed Doctors (Simap) ; CJEC, 9th September 2003, case C-151-02, Jaeger ; CJEC, 5th October 2004, case C-397/01, Pfeiffer.
[10] S. Laulom et C. Vigneau, « Actualité du rapprochement des législations en matière de relations professionnelles », in Droit social, n°5, May 2005.
[11] The agreement of 31st October 1991 was included in an agreement signed on 7th February 1992 by all Member States except for the UK, and was annexed to the Maastricht Treaty in the form of a protocol. After the UK joined in with the agreement it was incorporated into the EC Treaty when it was revised by the Amsterdam Treaty.
[12] Article 139 line 2 of the EC Treaty.

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