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

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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- 1989

• 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

Liberal model ESM

Stronginstitutionalcapability

Privatisedsocial policy

Catch up(more socialfunds)

Weakinstitutionalcapability

Chaos Drive to thebottom

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 1st 2009 CEE members hold mini-conference before EU summit– Renewed demand for EU structural funds and for ECB to rewrite rulebook

Turkish candidacy?