Economic Sustainability, Changing Labor Market through the EU Policies - Literature review Example

Literature Review 1. Introduction This aspect of the research aims to present various literatures relating to the subject under study. It provides the context by looking at the relevant previous works already undertaken on similar subject. This literature review covers discussions pertaining to the policies and legislation undertaken by the European Union as a region that needs to govern its own domain, which includes expansion and legislation, requirements for membership, economic benefits that a member-state can gain, and how law changed the labor market in relation to major impacts in a rapid transition-recognized process. The knock-on-effect-changing model will likewise be utilized in this realm. Likewise, literatures on the concept of labor and employment will be used, alongside those pertaining to migration, low pay, and shortage of employees. The labor market dynamics model will be discussed in synergy to these. Literatures that bear discussions on sustainability as investment policies will be tackled by this review, along with strategic and long-term developments in the EU region. It shall also be relevant to cover literatures addressing the purposes of EU and the common interests upheld by its member nations. This will be connected with literatures on the multiplier effect model. The resources found for this realm are mainly books, which have been appropriate materials that enabled achieving the objectives of presenting and discussing concepts related to the study. 2. Policies and Law in European Union 2.1 Policies and Legislation of European Union The European Union (EU) creates an impact on national political and administrative systems, as well as domestic politics and policies. The research perspective of “Europeanization” brings into focus that Europe plays a significant role in the usual bouts of political life of politicians, national bureaucrats, and the wider public, blowing fresh air into old debates of European integration, policy-making, and European governance (Lenschow Andrea 2004, p. 56). The shift of political responsibilities and possibly, public loyalty to the European level has implied a relative weakening of national state structures, while there are some debates claiming that European-level arrangements have strengthened national governments (Lenschow 2004, p. 56). The separate treatments of European and national politics were ended by the concept of multi-level governance in which the multitude of political and societal actors is considered potential parts of a dynamic network while the vertical levels of governance are interlinked in the concept of multi-level governance. The EU governance structure has a top-down process, which produces an impact on the domestic structures of EU member states (Cowles, et al., 2001 in Lenschow 2004, p. 57). The top-down impact of the EU on its member states suggests reorienting the direction and shape of politics in a way that EU political and economic movements and dynamics become a part of the larger organizational process of policy making (Lenschow, 2004, p. 58). There also appears a horizontal transfer of concepts and policies between member states of the EU, in which EU plays a facilitating role for inter-state transfers. Although an inter-state transfer or diffusion exists among states through horizontal, state-to-state transfer processes taking place independently of the existence of the EU, the EU provides the arena for inter-state communication or facilitation of such horizontal processes. It assumes that the EU is the direct or the indirect provider of a necessary impulse for domestic change in that it represents a set of rules and a discursive framework leading to domestic change. Hence, the EU serves as a facilitator of discourses and rules in the political arena of the region between and among member states. The EU policies follow a new regulatory method based on possibilities for derogations, non-binding recommendations, and compulsory minimum standards, aiming to combine community and autonomy (Falkner, et al. 2005, p. 1). Several EU policies and laws pursue objectives that reach beyond the immediate policy context, affecting intergovernmental relations in the member states (Marks 1993, in Lenschow 2004 p. 62). There exist procedural environmental policies, such as permitting procedures to the formulation of public rights to information, which pose challenges for patterns of interest-intermediation and administrative structures. The dimensional construct of Europeanization brings an indication of EU as not just hierarchical “rule-producing machinery,” but an interlinked system of governance carrying out a facilitating and a governing task. 2.2 . Membership in European Union Joining the EU would require a nation to pursue a stable democracy with a competitive market economy, alongside demonstrating willingness to take on all EU policies. These rules are essential in reassuring present EU states that the Central and Eastern European countries will not bring instability, authoritarianism, or economic collapse in the Union (Lieven and Trenin 2002, p. 77). However, what constitutes a market economy or a stable democracy is very general, would merit one to conclude that readiness to join the EU lies in the eye of the beholder – the EU itself. There was neither a checklist of clear objectives in the conditions established by EU in1993, nor a specified means to achieve stated goals, showing a lack of clear guidelines in membership requirements (Lieven and Trenin 2002, p. 78). Diversity is a key feature of the Union, and this feature allows previous non-democratic states to embrace a uniform model of capitalism or democracy as a requirement for integration. (Lieven and Trenin 2002, p. 78). The fact that member states should pursue democracy, which is almost made compatible with capitalism, suggests that no member state should be trailing the path of Communism in its expression to solicit integration and membership with EU. Absolute conformity is what is demanded by EU from Eastern European candidates, particularly on areas seen as essential to the functioning of the region. The EU poses a non-negotiable regulatory alignment with the Single Market, and nation-applicant must remove all trade barriers alongside meeting EU product and process standards. Would-be members should sign up everything, including unclear conditions before and after accession (Lieven and Trenin 2002, p. 79). The Functionalism model is seen as the Union's model of integration, prompted by the waning of ideological and the differentiated structure of advanced capitalism, providing the framework for the process conditions of integration (Caporaso and Keeler 1995, p. 31). Further cooperative venues are offered by EU since Europe is an area of dense economic change, capital flows and trade, technology, communication, and tourism. Functionalism as a membership approach creates efforts towards task expansion, such as monetary policy (Caporaso and Keeler 1995, p. 31). Advanced liberal capitalism and a theory of action are the ones put forward by functionalism, surging back to the notion of neo-liberal laissez faire. As a pure sociological theory of modem industrial capitalism, functionalism is constructed on the essence of the differentiation of societies into a subsystem, which allows a greater role for the expert, and hence, greater autonomy (Caporaso and Keeler 1995, p. 32). The EU, functioning like a mediator, facilitates this capitalist objective, in which membership is a gesture of reclaiming capitalist interests. The rational choice approach to integration is another model that is contemplated to integrate nations to EU, particularly the organizing principle of the internal market as the dependent variable, treating outcomes as results of rational instrumental calculations (Caporaso and Keeler 1995, p. 48). The integration of member-nations to EU suggests a so-called “knock-on-effect changing society” model in which a radical change necessarily takes place in the policymaking process of these countries, in congruity with that of the EU policies (Fossati and Hutton 1998, p.60). It would thus mean a corresponding change in the domestic policies of these nations, particularly on their market activities and objectives. Countries in Eastern Europe apparently feel the essence of this model in the radical change happening not only in their economic policies , but also in their political processes as they transform from authoritarianism to democracy. Certainly, a corresponding change awaits the economic lives of people as national governments take on EU guidelines in their domestic policies. 3. Economic Sustainability in European Union The sustainability of European Union relies on a free market economy, aiming to create a community of nations that adheres to and addresses capitalist economic policies while pursuing political policies to its own end. The surging heights of globalization prompt the Union to restructure its competitiveness towards the demand of the market through unified efforts of all state members. EU’s sustainability is one geared towards trade liberalization and capitalist laissez faire in which member nations are encouraged to pursue a free market economy and leave the trails of protectionist policies used to be pursued and adopted by previous Communist regimes. In order to pursue and sustain these objectives, the EU is unified towards constructing legislations that support this end. It may be posited that the primary goal of EU in its functioning is ascertaining the dynamism of economic activities within the region, framed within the construct of the growing capitalist competitive market. Liberalizing one’s market and trade would mean participating in the capitalist life cycle that needs elimination of surpluses and purchasing other needed products, which are both possible by opening one’s domestic market. The notion of (re)democratization aids tremendously in this attempt, with its ideals of economic and political freedom extended in one’s governance. The purpose of EU is hence, towards this - protecting the common interest of its own region in order to bind against potential economic and political threat, while developing its domain towards the capitalist model of production. The use of economic multiplier effect model explains the economic activity and policies of the Union, springing from the concept that a region must earn income in order to survive by producing goods or services that the outside world will purchase (Hughes, 2003). It is likewise in synergy with multilateral agreements that member-nations join, basically addressing the context of the input-output construct of the multiplier effect model. It hence arrives to an inference that the Union needs a strong consolidation in order to address the economic activities within its region and its competitiveness in the global level. 3.1. ) Economic Impacts A topic of political debates and legal reforms in European Union during the 1980s and 1990s has been the labor market, leading to the embankment on policies of deregulation of labor markets by member states of EU based on the neo-classical concepts of the market economy and reduction of minimal welfare states (Schomann and Rogowski 1998, p. 1). When a powerful presence is pursued in the European Council by organized interests, support for integration and supranationalism is not its reasons, but rather to find additional channels through which to defend their interests (Kohler-Koch, p. 60). Trade union bodies are subsidized by the Commission and are even granted the opportunity to take part in working groups and committees or are offered a social dialogue, a fact that does not alter the relative power of capital and labor. The trade union has however weakened as badly as the growing differentiation of the labor force because of the strength of international competition, which drives national governments towards deregulation and “lean production” (Kohler-Koch 1997, p. 61). Drawing on the assumption that governments can act as mediators, autonomy would help in responding to problems as they arise alongside the notion of public interest. The entanglements in European decision-making networks resulted in the loss of freedom of action by governments, which have a paradoxical outcome of autonomy (Wallace and Young 1997, p. 61). Several EU rules and regulations are non-negotiable due to their vital position in the functioning of the Single Market. This would lead to the inference that product and process standards are already established and changing them would jeopardize free competition (Lieven and Trenin 2002, p. 77). Integration to EU is viewed to benefit the member states in terms of improving economic opportunities and Structural Funds Spending. Postponing membership for a long time would mean making this reform incentive less powerful for candidates (Black 1997, p. 319). The movements of goods and services as an outcome of removal of trade barrier is also seen to benefit member nations in terms of making their surpluses available to the ready markets in the liberalized trade. However, critical literature posits that European nations that opt not to pursue membership with EU would end up in a sub-optimal Nash equilibrium with inefficient subsidies or protection (Black 1997, p. 319). It is also viewed that EU membership would help stabilize democracy and build prosperous market economies. The view of the establishment and strengthening of democracy suggests a corresponding economic outcome of a more competitive market. Catching up with the West politically is a civilizational choice that also prompts a nation to join EU, which would directly affect its economic stability, such as in the case of Poland whose reason for membership is geared by political notions (Columbus 2002, p. 164). The liberalist policy within EU indicates a free movement of goods, services, and capital in Central and Eastern Europe, but free movement of people from East to West is not allowed immediately, suggesting double standards in the rule. Likewise, access to the major Common Agricultural Policy Funds is not guaranteed to East European farmers. There are certain rules that new members should observe once accepted in EU, such as employing a German-style border control, a British-model civil service, and a Nordic concern for environmental standards (Columbus 2002, p. 164). 4. The Changing Labor Market Through EU Policies Social policy in the EU jargon refers to policy that relate to labor relations, which was the subject of the Protocol to the Maastricht Treaty signed by all member states except Britain. The then UK government did not accept it, but when the Labour government was elected in 1997, it accepted it as a scion of the Amsterdam Treaty (Pinder and Usherwood 2007, p. 97). The EU social policy is focused on areas such as working conditions; improvement of the working environment in order to protect workers’ health and safety; consultation of workers; and integration of people who are no part of the labor market. This is undertaken through legislation, support, and coordination of national policies. Employment policies are monitored through annual report on their employment policies by the member states to the Council and Commission, which in turn draw up reports for the European Council. The next step to this is the issuing of guidelines to the states, which is to be taken into account in their employment policies, in which the Council is entitled to make recommendations to governments. In co-decision with the Parliament, the Council may decide to use the budget in order to encourage best practices and information, as well as promote innovative approaches, provide comparative analysis and advice, and fund pilot projects within the EU objectives (Pinder and Usherwood 2007, p. 99). Taking into consideration the mentioned above, the EU is benchmarking on the classic concept of laissez fair in its attempt to address unemployment problems within its region, as well as create a dynamic and a competitive economy. The rise of globalization prompts EU to maintain competitiveness even more and address problems pertaining to labor productivity. Inclusion in the European Union should suggest strengthening of legal grounds while allowing inputs to be absorbed from economic analysis of the labor market. This should promote convergence of labor standards in the enlarged Europe, which is a by-product of integration (Bermann 2004, p. 161). Currently, the aftermath of the oil crisis resulted in an understanding of the connection between developments in economic policy and labor market policy alongside the need to combine employment policy with labor market policy. A more active labor market has been in line with the recommendations formed by OECD and the EU Commission, implying a key role as agenda setters in terms of approaching certain strategic decisions in national contexts (Addison 2003, p. 374). Since high unemployment creates strong pressures on social security systems, the link between social and labor market policy throughout Europe forces an increased understanding of this link. This is in connection with the increase in poverty and deprivation prevailing from long-term unemployment, which has become a growing concern in Europe, developing a shift from income maintenance towards active market policy (Addison 2003, p. 374). The EU plays an n active part in terms of expenditures in national active labor market policies as regional support to selected areas, such as paying 65 percent of certain programs. There also appear changes in female participation rates in relation to the larger number of persons in the labor market, recording an increase for the need of training, which puts additional pressures on the systems. Job creation schemes and a variety of initiatives to create new jobs were also implemented by different countries especially in the service sector, such as France, Germany, and United Kingdom (Addison 2003, p. 374). 4.1. Low Pay and Shortage of Employees Poor working conditions combined with low pay cause the emigration of health care and social workers to EU. In a study conducted by Vaughan-Whitehead (2005, p. 2), he indicates that an evaluation of working and employment conditions in new member states is directed towards an inference showing their generally strong responsiveness to change and an initiative in adaptation by developing innovative practices and policies. However, this adaptation to difficult circumstances resulted in several excesses that reduced extreme behavior, observable in a wide range of areas of working conditions such as employment status, occupational health and safety, working time, and remuneration systems (Vaughan-Whitehead 2005, p.2). The shift to a free market economy of previous communist regimes characterized by very low wages but a guarantee of life-long employment has produced radical changes in working conditions and patterns of behavior of workers. New forms of employments and working-time arrangements were established in order to better adapt to the newly competitive, replacing former corporate models (Vaughan-Whitehead 2005, p. 2). Temporary contracts are on the increase among EU member states, although they did not exist in their early years of transition. From nothing, the share of this type of contract has increased to more than 10 percent in the 10 new EU member states (Vaughan-Whitehead 2005, p. 3). The use of interim employment agencies also appeared in the new member states, aiming to provide employers with a constant supply of labor force, alongside a growing proportion of work contacts that are generated from such agencies. These are more widespread in around ten percent of the labor force of Latvia, Malta, and Slovenia and remain limited in the other newcomers (Vaughan-Whitehead 2005, p. 3). 4.2. The Labor Market Dynamics Model in European Union The content of quality initiatives of EU are based largely around raising awareness and dissemination of information rather than positive action; the liberal rather than the radical. There appears to be a lack of challenge to the status quo within the UK policy framework, which is highlighted as a significant weakness. There suggests no changes in the patterns, values, and priorities of the mainstream in order to accommodate a more diverse workforce, which is contrary to the onus of allowing people to change and adapt in order to fit in with the dominant status quo (Kirton and Greene 2001, p. 255). Equal treatment suggests being equal on the perspective of the male norm, since the emphasis of norm of employment of policies is on dominant white, male, full time, non-disabled, and aged 25-40. The patterns of paid and unpaid jobs are not attempted to for change, as the ECJ has claimed that it is not its task to change the patterns of family norms nor to invade the private, family sphere or alter the balance of domestic responsibilities (Kirton and Greene 2001, p. 255). Thus, there exists an unequal work treatment prevailing between the genders, rooted in restrictions on the women’s freedom to enter into the labor market, as well as and education and training. Another criticism in EU policy in terms of labor market dynamics is its almost exclusive emphasis on equality between the sexes, in which the legislative policies are primarily designed towards this direction. In its emphasis to this, other sectors of society that need attention are overlooked and ignored in the Treaty of European Union, such as the disabled citizens and senior citizens. As legislative measures are restricted to areas referred to in the treaty, this fact limits the European Council to non-binding measures (Kirton and Greene 2001, p. 255). 4.3. Migration and the European Union The importance of understanding migration decision making as an ongoing process that evolve over the life course is seemed to be overlooked and is instead viewed generally as a single, atemporal decision by member states of the EU. There appears to be a limitation of mainstream migration theory along with its tendency to identify a single, typically economic, determinative factor central to the molding of migration decisions. This approach can be seen in the intermittent complexity of many decisions as individuals weigh up a wide range of economic factors and other factors pertaining to quality of life (Ackers and Dwyer 2002, p. 163). There appears to be not much available jobs for immigrants as compared to native citizens in countries within the Union, suggesting non-protection of immigrant workers. In many cases, however, it was claimed that the initial migration is not the one responsible for restricted career trajectories. Post-migration experience is determined by pre-migration employment status, which is a key factor of the former (Ackers 1998, p. 183). The effects of migration vary according to the country of immigration, despite their being governed by the EU. The member states of the Union have developed elements of a joint policy in the domain of migration as well as asylum policies. The impact of immigration to Europe is seen to continue and increase to counter the rising dependency ratios. It is also viewed to tend to reduce, rather than increase European cultural cohesion (Ferguson 2004, p. 252). Australia, Denmark, Germany, Netherlands, and Sweden admitted the largest numbers of migrants relative to their population in the years 1990 to 2000 (Ferguson 2004, p. 252). A system of multiple barriers to entry is structured in the attempts to control the new immigration of asylum seekers in Europe (Overbeek 1995, p. 30). The main instruments of this system are the Schengen Treaty of 1985, the Dublin Convention, and the introduction of the concept of “safe third countries.” Similar restrictive measures have been implemented pertaining to immigrant workers in Western Europe, particularly with respect to marrying spouses from the country of origin, and their rights to ‘family reunification.” Member-states undertake a process of continuous erosion pertaining to immigrants, which have resulted to an intensification of ‘stop policies’ intended to reduce immigration (Overbeek 1995, p. 31). These actions are undertaken by member-states because the influx of refuges and migrants has been one of the pressing and potentially destabilizing political challenges facing Western Europe (Overbeek 1995, p. 15). [Word Count: 3793] References Ackers, Louise, 1998. Shifting spaces: Women, citizenship, and migration within the European Union. The Policy Press. Ackers, Louise and Dwyer, Peter, 2002. Senior citizenship? Retirement, migration, and welfare in the European Union. The Policy Press. Addison, John T., 2003. Labor markets and social security. Germany: Springer-Verlag Berlin – Heidelberg. Bermann, George A., 2004. Law and governance in an enlarged European Union. Hart Publishing. Black, Stanley, W., 1997. Europe’s economy looks east. Cambridge University Press. Caporaso, James A., Keeler, John, T. S., 1995. “The European Union and Regional Integration Theory,” in C. Rhodes and S. Mazey (eds) The State of the European Union. Lynne Rienner Publishers. Columbus, Frank, 1002. European economic and political issues. Nova Science Publishers, Inc. Cowls, M. G., Caporaso, J. and Risse, T. (eds) 2001. Transforming Europe. Ithaca, N. Y.: Cornell University Press. Falkner, Gelda, Treib, Oliver, Hardapp, Miriam, and Leiber, Simone, 2005. Complying with Europe. New York: Cambridge University Press. Ferguson, Niall, 2004. Colossus: The price of America’s empire. New York: The Penguin Press. Fossati, Amedeo and Hutton, John P., 1998. Policy simulations in the European Union. Routledge. Hughes, David W., 2003. Policy uses of economic multiplier and impact analysis. Choices: The Magazine of Food, Farm, and Resource Issues. Retrieved on August 31, 2008 from [http://www.choicesmagazine.org/2003-2/2003-2-06.htm] Kohler-Koch, Beate, 1997. “Organized Interests in European Integration: The Evolution of a New Type of Governance?” In H. Wallace and A. Young, Alasdair (eds) Participation and policymaking in the European Union. Oxford University Press. Lieven, Anatol and Trnin, Dmitrii, 2002. Ambivalent neighbors: The EU, NATO, and the price of membership. Carnegie Endowment for International Peace. Marks, G., 1993. “Structural Policy and Multilevel Governance in the EC,” in A. Cafruny and G. Rosenthal (eds), The state of the European Community. Harlow, Longman. Lenschow, Andrea, 2004. “Europeanisation of Public Policy,” in J. Richardson (ed), European Union. Routledge. Overbeek, Henk, 1995. “Towards New International Migration Regime: Globalization, Migration, and the Internalization of the State.” In R. Miles and D. Thranhardt (eds) Migration and European integration. Associated University Presses. Pinder, John, and Usherwood, Simon, 2007. The European Union. Oxford University Press. Vaughan-Whitehead, Daniel, 2005. Working and employment conditions in new EU member states. International Labor Organization. Read More