The Social Dimension of the European Union is Weak in Comparison to Market Oriented Policies - Essay Example

? Topic: Lecturer: Presentation: Introduction European countries have been moving towards economic integrationinto a single market with a single currency as medium of exchange. This was to water down the effects of competition arising from capitalism. In the process, the states realised that for them to achieve the desired goals, they have to take care of the social dimension of the union as it affected the integration. As Archer (2000) puts it, a weaker welfare system in one state could undermine the common market. Issues such as labour conditions for women and the disabled, the poor states, vocational training among others were thus top of the agenda in economic integration. However, most of these policies have not borne fruits due to various reasons such as lack of commitment by some states. This calls for an evaluation as to whether the social dimension policy of the European Union is weak in comparison to market-oriented policies. The Social Dimension The social dimension of the European Union was as a result of the 1989 social charter which had been agreed upon by various European states. Advocates of economic integration like Polanyi argue that free markets are unable to perform efficiently without the intervention of the state hence the need to have a regulatory body to formulate policies, implement and monitor their effectiveness (Healy & Link, 2011). At the height of capitalism, the European states thus sought to establish a single market which would be regulated by a common body to counter the competition from outside markets. As a result, the European Union was created and formulates policies on different issues such as trade, agriculture, industry, and commerce. Later, the need to address social policy arose during the treaty of Rome (Archer, 2000). The social policy touches on various issues on how to develop workers by improving their work conditions and living standards. The issues discussed included; harmonization of social systems, labour laws, working conditions, occupational health and safety, formation of trade unions and collective bargaining (Archer 2000, p. 99). Vocational training was also of importance as they impact directly on the labour market. The social policy also aimed at ensuring equality in pay and increased mobility of workers within the single market. These issues were to be achieved through the use various social action programmes and a social fund which was to be operated at European Union (EU) level. However, Geyer (2000) observes that most nations did not apply the contents of the social policy in reality but opted for state based policies to curb any effects in the market such as recession or depression. Furthermore, the conservative government of Britain which was very much opposed to trade unions was not willing to endorse the policy or what was referred as the social charter. To counter the dissatisfaction with the social policy, amendments were made to the social charter and new issues addressed so as to make it appealing and enhance economic and social cohesion. According to Archer (2000), the social dimension of internal market was to be achieved through various ways. First, it was to foster mobility of labour within the EU member states. To achieve this, the member states had to establish a standard form of hiring practices thus the qualifications one gained in his/her state was to be recognized by all members. Members were also to avoid all forms of discrimination in its labour activities especially for women and the handicapped. Vocational training was to be given to ensure all workers had the skills needed to enter the job market. According to Gold (1993), a social fund and a regional fund was to be maintained to assist the poor and the needy such as the handicapped, women and the poor so as to set up small businesses to improve their standards of living and as a source of employment. The final charter thus included such issues as; equality between men and women, formation of worker associations, collective bargaining, freedom of movement, vocational training, health and safety, protection of children, disabled and the elderly and was to binding to all EU members and is the basis of social dimension. The employment policy is an important tool in the social dimension as most of the issues concern employment relations. The responsibility of the policy is shared by the EU and the member states and is aimed at fulfilling various functions. Gold (1993) identifies the role of the employment policy which is; to make labour functions better by equipping people with appropriate skills and improving the quality of jobs; to promote sharing of best practices in areas such as employment, poverty reduction, pensions and social exclusion; governing implementation of social security schemes among other roles. Shortcomings of Social Dimension Though the social dimension intentions were great and led to improvements in the workplace, it had various shortcomings which render it ineffective compared to market-oriented policies. Cini (2007 p. 264), noted that implementation of the various elements in the policy depends on the willingness of the states as no judicial instrument is in place to enforce the rights and obligations of the single market to ensure the states are enforcing and complying with the charter. Most states thus opt to use own policies to solve problems moreover, the welfare policies of some states and social legislation are not upto the expected EU standards while some other states lack resources to enable them to comply with the requirements of the charter. The willingness to implement the social policy is also affected by the government in place. For example, the conservative government of Britain was not a signatory to the charter as it was opposed to labour regulation but the labour party assented to the charter as it is inclined towards trade unions and collective bargaining (Marchington et al. 2004). The French government also signed a deal with a Belgian investor without due regard to the charter requirement for an employer to negotiate with employee associations before such a deal could be made (Archer, 2000). This undermines the spirit of the charter. Archer (2000) on the other hand, observed that the population of the European states was ageing at a high rate thus imposing a burden on the already stretched funds. Furthermore, the policy does not make it clear as to whether the rich states would help the poor states with funds to cater for the ageing population or if when faced with economic and social difficulties. There is no clear line as to who is responsible for such eventualities; whether it is the EU level or the members. This makes the policy weak as a result of not addressing such issues. The social charter also fails to cater for most of the important labour issues choosing to enforce others. For example, it stresses on the working conditions while at the same time leaving some issues such as welfare benefits to the states thus limiting its effectiveness. Moreover, some states are not satisfied with the way the social policy issues are handled at EU level as they were expecting a strong policy (Archer, 2000). By ensuring improved standard of living, its aim was to create employment and provide social security. One way of ensuring this is by improving agriculture hence the common agricultural policy which aimed at stabilizing prices, increased productivity and reasonable prices for consumers among others. However, the consumers and taxpayers ended up paying high costs for the maintenance of the policy and in food prices which they could have otherwise bought as low price if it was market-oriented. The financial crisis of 2008, followed by economic crisis of 2009 and the public debt crisis of 2010 did not leave much to be desired of the social policy according to Degryse and Natali (2011). The members of EU parliament in addressing the issue did not take the welfare of the workers into consideration. Instead, they proposed various measures aimed at worsening the conditions of workers such as increment in retirement age which was to be linked with life expectancy, reduced overprotection of permanent workers and making labour markets flexible for wages to reflect on market conditions. They argue that the measures were dubbed as new economic governance as they saw it as an antisocial monitoring process to weaken labour rights of the workers, pensioners, unemployed and the unhealthy. According to Degryse and Natali (2011), the economic crisis also led to mistrust among member states and also between the members and the EU. The problem was on how to handle the crisis. Besides, the union lacked a common vision therefore losing its acceptance within its members and this makes it weak. If it was market-oriented, where the market is open to competition, the various states would have been able to handle the crisis in a better manner by use of their fiscal and monetary policies. A free market has a way of correcting itself as labour markets are allowed to stabilize. Another issue that makes the social dimension weak is the insistence on trade unions and collective bargaining in a global competitive environment (Edward, 2003). Trade unions are meant to ensure the terms and conditions of work are favourable to the employee by bargaining for labour contracts with the employer. The trade unions also enforce this role by use of strike action if the management refuses their terms and conditions. They came into existences in Britain during the age of craftsmen who formed guilds which later became worker organizations. Today, most unions are operated nationally with local unions implementing the elements of collective bargaining at local level (Hyman, 2001). The social charter required states to allow workers to form associations and also the use of consultation between various players in employment relations before making such decisions as restructuring, mergers, and lay offs among others. These trade unions have lost relevance in market-oriented economies due changing nature of work and working environment which is more demanding and dynamic. Most EU members are thus opposed to use of unions as intermediaries and prefer individualistic approach to employee relations which is based on commitment. Britain is such a country which has embraced such developments. According to Marchington et al (2004p.36), Britain has a labour force participation rate of 74% and compared to other countries such as US, its GDP per capita ranked in the lower half. The two dominant parties in Britain determine the success or failure of trade of unions since the conservative party is opposed to unions while the labour party with its roots from trade unionist movement is sympathetic to them. These parties are supported by different groups of people who they have to take into account when they resume power. The conservative party is popular with business people and rural population while labour party is popular with urban working class (37). This explains why different parties formulate different policies on employee relations once they assume power and their attitude towards the social dimension. There also exist employer organizations that negotiate with trade unions on behalf of employers and represent them in industrial courts. The American government on the other hand, is market oriented in its social policies. It only has a 13.5% of its workforce as members of trade unions due to the fact that many corporations are large multinationals who operate in a very dynamic environment thereby rendering the role of the unions’ invisible and increasing use of individual oriented employee relations (Eaton, 2000). Its collective bargaining is through national union under the umbrella of labour movement and no employer organizations exist to negotiate on behalf of employers but some do exist to discourage the spread of trade unions in workplaces. The American economy compared to British economy which is a member of EU is far better because of allowing market forces to operate the market and use of individualistic approach to employment relations. The EU single market constraints the government from recruiting employees outside the Euro zone or from employee working in other countries outside (Moens & Trone, 2010). This limits the capacity of workers and hinders technology transfer and acquisition from different parts of the world. The American government on the other hand is vary liberal and takes advantage of international trade and globalization to move its factories to countries with cheaper labour thus economic growth. According to Katz and Wheeler (2004), American labour market structure which is market oriented eliminates the role of the union. There are well-defined job progressions, pay and fringe benefit policies and structured high pay employment practices. As such, the terms and conditions are better than in the market and are clearly defined hence no need for unions to negotiate for better conditions. For Britain, the charter requires negotiations with trade unions and this may limit its competitiveness with the rest of the world. In market-oriented dimension such as US, workers are allowed to participate in decision making in issues that affect them and this fosters unity in the workplace. They are thus able to deal with economic crisis because they can talk to workers directly and explain to them the situation and since they are partners, they understand (Blyton & Turnbull, 2004). Due to the weaknesses of social dimension in meeting the needs of the market, some states like Britain have embraced the use of human resource management approach to employee relations, though trade unions still exist. This involves use of direct communication, team working, incentive pay, training and development among others. It has thus disbanded work councils in 1993 and since arbitration is not legally binding, the Advisory, Conciliation, and Arbitration Service (ACAS) have lost its importance (Eaton, 2000). This view is supported by Moens and Trone (2010) who observed that the conservative government of Thatcher initiated policies to reform industrial relations thus making the working environment competitive. The labour government also initiated efforts towards market-oriented policy by encouraging performance related pay and employee involvement. The market-oriented policies increase the commitment of workers by focusing all energy towards one goal which is the organizational goal. This leads to improved productivity, job satisfaction, job enrichment, improved quality and organization success. In this way, the organizations are able to meet customer demands and foster a good relationship with them (Healy & Link, 2011).They are also able to show returns for their investment to shareholders hence get their approval and more funding hence create more employment. This will lead to improved standards of living and if performance is linked to pay, then equal pay for equal work which is the main aim of the social policy will be achieved. Besides, if one is paid according to performance, then discrimination is minimised. The social policy which is market oriented also allows workers and employers to contribute to social security funds. Unemployment is reduced hence reducing costs on unemployment compensation among other benefits (Katz & Wheeler, 2004). Conclusion The social dimension of European Union is weak in comparison to market oriented policies. The social dimension touches on various issues that impact on the welfare of employees and aims at improving the working conditions and living standards of workforce by ensuring equal pay for equal work. It has made progress in ensuring the betterment of women and the disabled, it has also ensured labour mobility within member states, and health and safety standards are maintained, good working conditions by setting hours of work and minimum wage, among other achievements. However, it has failed to convince some of the nations of its effectiveness especially by not being able to tackle the economic crisis. It’s further weakened by lack of judicial intervention to ensure compliance and mostly by the changing work climate which has made it inevitable for some states to disregard the role of unions and turn to individualistic approach to employment relations. The EU should thus consider turning to market-oriented policies to enhance competitiveness and success. References Archer, C. (2000). The European Union: Structure and Process. 3ed. New York: Continuum Blyton, P., Turnbull, P (2004). The Dynamics of Employee Relations. 3rd edn. Basingstoke: Palgrave Macmillan. Cini, M. 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