The European Social Model and Eastern Enlargement of the EU

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and some of the instruments' of the European Social Model (Ferge 2002a). ..... Sources: Ferge 2002b; United Kingdom 2003; Potucek 2002; EU Commission. 2004. .... Major elements of this change included the rise of the statutory retirement ..... The long list of missing competences does not give full explanation for the.
Exporting or Pulling Down? The European Social Model and Eastern Enlargement of the EU Gábor Juhász

Abstract This paper hypothesises that public support for the economic and political transformation in east-central Europe in 1989 was fuelled by enthusiasm for the reception of the (west) European Social Model, where the capitalist mode of production was combined with a high degree of social protection. In the first part of the article the author identifies the basic values of and the challenges to the European Social Model. Them he analyses the impact of the European Union on the transformation of east-central European social policy in the 1990s, and concludes that the negotiations concerning the accession of post-communist east-central European countries to the EU hardly contributed to the reception of the core values of the European Social Model in the new member states. Giving an overview of he social situation in the accession countries, the third part of the article calls the reader’s attention to the alarming differences regarding the quality of life between the EU Fifteen and the new member states. In the final part, the author raises questions about the European Union’s capacity to preserve the European Social Model, taking reactions of the members states to post-enlargement fears of social gaps between the east and west of Europe into consideration.

Introduction In 1990, after forty years of proletarian dictatorship being associated with antidemocratic political practices, massive violation of human rights, and economic inefficiency, east-central European citizens enthusiastically declared their commitment to political democracy, the rule of law and the market economy. Enthusiasm concerning the introduction of the market economy was fuelled by a perception of west European capitalism where solid economic growth and a high degree of social protection mutually 82

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supported each other, and solidarity between workers and citizens mitigated the harsh competition between enterprises. This feature of Welfare State development led scholars and politicians to conceptualise a ‘European Social Model’ (ESM), even though this model was being built up at national rather than European level. From this perspective the entry of eight postcommunist countries in the EU in 2004 raised concerns about the future of the ESM with regard to the previous ‘Americanization’ of the provision of welfare in the 1990s in east-central Europe (Kovács, 2002). There are other arguments for the uncertain future of the ESM since there is still a considerable welfare gap in terms of the quality of life, benefit levels and often benefit structures between east and west which leads to fears of welfare migration from the new member states to the EU fifteen countries (Kvist, 2004). Identification of welfare state deficits in the new member states reflects the other side of the same coin (Dauderstädt, 2003). In this respect, the success of the open method of coordination (OMC) in the field of social protection and social inclusion has crucial importance since these are the very components of the Lisbon Strategy that serve for the reinforcement of the European Social Model at a pan-European level.

The European Social Model The European Social Model is a vague concept used to identify the difference between ‘humanised’ European and the ‘rest of the world’ forms of capitalism. It is often referred to in political documents and speeches but has not been consensually defined yet. As a concept, it started to evolve in European politics in the mid-1980s, perhaps as a reaction to the New Right’s ideological attack on the welfare state, and moved to the EU’s political agenda in the mid-1990s (EU Commission 1994). In a previous volume of this journal, Zsuzsa Ferge tried to recapitulate ‘the core values and some of the instruments’ of the European Social Model (Ferge 2002a). Using Ferge’s interpretation, I will study policy changes in the old and the new member states in context of the countries’ commitments to the basic values and building blocks of the European Social Model. The Nature of the European Social Model

According to Ferge, the European Social Model is based on respect for the values of the ‘trinity of enlightenment’: freedom, equality and fraternity. Thus solidarity between different members and groups of society is a core value of the European Social Model along with a great concern with (in)equality. Thus, the European welfare states are characterised with EUROPEAN JOURNAL OF SOCIAL QUALITY

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‘highly developed social protection systems’ to promote the core values (Ferge 2002a: 9) by means of policies aiming at the redistribution of incomes and opportunities. The model is based on strong and enforceable social rights, even though they seem to be the most vulnerable element of the model. Finally, the making of social policy is supported by an institutionalised dialogue with the social partners and the involvement of organisations of civil society. EU documents emphasise the same features. In the Social Policy Agenda the Council describes the European social model as a phenomenon ‘characterised in particular by systems that offer a high level of social protection, by the importance of the social dialogue and by services of general interest covering activities vital for social cohesion, is today based, beyond the diversity of the Member States’ social systems, on a common core of values’.1 However, focusing on the performance of this ideal type model one can find that it has its own deficits. As Ferrera puts it, the European Social Model functionally provides ultra-protection for the elderly at the expenses of protection in other stages of life. It also has a deficit in its distributive nature being based on labour market segmentation and thus, reinforcing the ‘split between insiders and outsiders’. Concerning its normative nature, the European Social Model tends to create ‘social rights in response to the pressure brought to bear by the strongest social groups instead of in response to the needs of the most vulnerable’ (Ferrera 2004). These shortcomings warn us to the need to modernise the ESM. Although some steps of the process of modernisation could be painful, proposals for reform do not necessarily call in question the underlying values and constitutive elements of the model. The contract between the generations should be rewritten but this move could be in favour of groups who are in greater need (lone parents, overburdened working women, children living in poverty) and thus, it could strengthen solidarity and could contribute to the reduction of inequalities. The recalibration of the distributive nature of the model by lowering the guarantees for workers ‘who almost own their job’ (Ferrera ibid, p. 4) parallel to expanding the protection for those who are at the margin of the labour market could also have a positive effect on the reduction of social inequalities and such measures surely would enhance solidarity. In the context of social rights, such moves could undoubtedly weaken the legal protection of privileged groups in the welfare state (workers with typical work contract, pensioners in their own right), in exchange for improving the social rights of those at the margins of the labour market and, consequently social security schemes (non-typical workers, working caregivers, elderly without adequate contribution records, children and young unemployed). Thus, the modernisation of social protection in Europe could shift the balance in a way leading to a better equilibrium in 84

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terms of equality and solidarity (Scenario A). Both the latest measures in the member states and the guidelines of the European pension and social inclusion strategy have the potential to lead to such favourable results. There are, of course, some dangers in following this strategy. It opens the door to restricting the rights of traditional beneficiaries of social security using the rhetoric of modernisation without the introduction of effective measures to expand the scope of the schemes to include new or marginalised groups in a second phase (Scenario B). Regarding the communist legacy and the highly contested nature of the concept of social citizenship in east-central Europe (Lemke, 2001), eastern enlargement is another risk factor. The reader must keep in mind that communist states linked the right to social support to employment rather then citizenship, and that countries of the region had a considerable poor law tradition before the second World War. During the transition period many of them declared social rights as individual rights but most states were generally too weak and/or negligent to guarantee them. Their legacies and new financial constraints related to deficit cuts could predispose East-central European governments to choose the second option (Scenario B). Certainly, the Social Policy Agenda supports the other strategy (Scenario A) but one cannot assume at this phase of its implementation that the OMC has the potential to support EU’s objectives effectively. Pre- and Post-Amsterdam European Social Policy in Context of the European Social Model

In the first thirty years of European integration, the EU lacked the competences to make common social policy which could have reflected the parallel evolution of the European Social Model at a national level. The core of European social legislation (articles 48 to 51 of the Treaty of Rome and regulations 1612 to 1668 and 1408 to 1471 concerning the free movement of workers and the co-ordination of social security schemes) had little to do with solidarity and equality. Forbidding discrimination on the basis of nationality, European law extended the personal scope of nationally guaranteed economic and social rights instead of strengthening them. Harmonisation of labour laws from the 1970s had a similar nature: Directives were based at the lowest common standards in all member states. Consequently they could not deepen solidarity and equality nor could they contribute to the development of social rights. Gender issues were an exception to the general framework of traditional European social policy, being dominated by formal technical rules. Legislation on gender addressed important aspects of equality and solidarity. European legislation and case law was highly influential in the promotion EUROPEAN JOURNAL OF SOCIAL QUALITY

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of equality between the sexes in terms of pay, career opportunities and their access to social security benefits. Gender legislation incorporated solidarity between the sexes by allowing the preferable treatment of female workers with regard to maternity and childcare. In this context, European legislation contributed to the individualisation and thus, the strengthening of the social rights of women. On this basis we can assume that the gender dimension of the European integration was the first field where the basic values of the ESM were transformed from national to European levels of policy-making. Institutionalisation of social dialogue which came in the Delors era, signalled a clear commitment of European institutions to set up mechanisms at a Community level which made policy making an integral part of the ESM at a national level. The Treaty of Amsterdam assigned new competences to Union agencies in fields of social policy previously having been in the sovereignty of the member states. In contrast to the old rules limiting the scope of the Union’s authority to regulate technical aspects of the free movement of persons, the open method of coordination, albeit nonbinding in nature, empowered the Union to have an indirect impact on the substance of social policy guidelines addressing issues closely related to the core of the European Social Model. For example, guidelines in the field of social inclusion are concerned with the access to social services by the most vulnerable, the redistribution of incomes in the national welfare state, improving the situation of the least well-off and so forth. The pension strategy also relates to questions about the sustainability of pension systems under the pressure of population ageing, maintaining solidarity between generations, and guaranteeing the right to a decent life in old age. To sum up, the European Social Model started to evolve at a national level, in national welfare states, and had almost no impact on the development of European social policy in the first two decades of the integration process. It was in the 1970s that basic values of the ESM (equality and solidarity) started to get built into the Community’s legislation on the gendering of labour and social security law. It was reinforced by the institutionalisation of social dialogue in the 1980s and the introduction of the open method of co-ordination in various domains of European social policy. ‘European social model’ got to be a term of reference in the making of social policy at a European level by the millennium. Preserving the European Social Model in the EU Fifteen Member States

As I previously mentioned, the European way of building the welfare state was being used as a model in the mid-1980s. This was a time when the 86

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ageing of the population, the steadiness of high level unemployment and the New Right’s ideological attacks challenged the stability of the model, paralleled by the accession of ‘Latin rim’ countries with less developed welfare state institutions to the European Community. Economic globalisation also increased the pressures on the ESM and had a stimulating impact on EC member states to shift their systems of provision of welfare towards a uniform monetarist model. Despite of the great variety of terms having been used to describe the changing nature of European welfare states,2 evidence is not convincing for making a claim for the decomposition of the European model of welfare. EC member states followed a careful way of reforming their welfare regimes: they tightened access to and trimmed the amount of several benefits, revised the generosity of social protection schemes, introduced new controls on the recipients of welfare by making them contract with public authorities, and privatised some elements of social services. However, these changes did not affect the structure of welfare arrangements of the EU fifteen member states (Ferge 2002a: 12). Despite previous expectations, public expenditure on social protection did not decline significantly in the EU, and some convergence could be observed between the member states. During the 1990s cuts mainly occurred in high spending Scandinavian countries and the Netherlands, while continental welfare states stagnated and countries of the Latin rim tended to increase their expenditure on social protection. Ireland radically cut its social expenditure while cuts in the United Kingdom were much more moderate. The decade between 1993 and 2003 when negotiations on the accession of candidates from east-central Europe took place can be divided into two periods. In the first period social expenditure decreased in most of the EU fifteen member states with the exception of Germany, Greece and Portugal. The second period (between 1998 and 2003) is characterised by stagnation (Austria, Belgium) or slight increase (Italy, Germany, the United Kingdom, Greece and Portugal) of social expenditure in many of the countries. In sum, the expenditure on social protection has declined by 0.3 percent in average in the EU fifteen member states in the last decade (Table 1). It suggests that European welfare states preserved their highly developed systems of social protection. An analysis of the change in the Gini coefficient in selected member states supports the view that the commitment of old Europe to equality has not been changed much during the 1990s (Table 2). Difficulties encountered by national governments in attempting to overcome trade union (and public) resistance in order to introduce changes in the pension system show that ideas about solidarity and the social duties of the state are deeply rooted in European societies, and public support for them has proven strong enough as yet, to defend the basic institutions of the European Social Model. EUROPEAN JOURNAL OF SOCIAL QUALITY

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Table 1 Social protection expenditure in % of GDP in EU 15 member states Sweden Denmark Finland Nordic average

Italy France Germany Austria Belgium Luxembourg Conservative av.

1980

1993

1998

2001 / 2002

18.4 21.1 20.3 23.3 24.2 23.3 21.8

26.4 30.7 28.4 29.1 29.3 23.3 27.9

25.0 30.5 29.3 28.3 27.6 21.7 27.1

25.6 30.0 29.8 28.4 27.5 21.2 27.0

29.0 29.1 18.5 25.5

38.2 31.9 34.5 34.9

32.2 30.2 27.2 29.9

31.3 29.5 25.9 28.9

Holland

27.3

32.3

28.4

27.6

Greece Portugal Spain Mediterranean av.

11.5 11.6 15.8 13.0

22.0 21.0 24.0 22.3

24.2 22.1 20.6 22.3

27.2 23.9 20.0 23.7

United Kingdom Ireland

EU 15 average

Source: Ferge, Z. (2002b).

18.2 16.9

20.4

29.0 20.2

27.8

26.9 15.4

25.0

27.2 14.6

27.5

The European Social Model and the Transformation of Welfare Regimes in East-Central Europe

Having neglected political freedoms and individual rights, the performance of Soviet satellite states lacked any ground for comparison with European welfare regimes where the efforts of the state to guarantee equality and solidarity were connected to the respect for human rights. State socialist social policy had a mixed character. ‘Despite formal similarities, the liberal and emancipating dimensions of the Scandinavian model were entirely absent from this model, which formed an anti-liberal, statist, hierarchical, socialist mix, with conservative elements thrown in’ (Ferge 2002a; Ferge 1992). A decade and a half after the start of the transformation process when eight post-communist countries entered the 88

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Table 2 Change of Gini coefficient in old and new member states Belgium Denmark Germany Greece France Finland Ireland Italy Luxembourg Holland Austria Portugal Spain Sweden United Kingdom* EU 15 average Czech Republic Estonia Latvia Lithuania Hungary Poland Slovakia Slovenia ECE 8 average

Mid-1980s

1995

2000

20.0 28.0 26.0 26.0 23.0 28.0 19.0 21.0 23.9

26.0 33.0 33.0 34.0 25.0* 33.0 25.0 25.0 29.2

2001/2002 26.0 35.0 34.0 32.0 22.6/29.6** 30.0 31.0 22.0 29.0/30.0

25.9 22.9 26.5 – 29.6 21.2 – 30.6 – 23.4 – – – 21.6 – –

29 22 29 35 29 22 33 33 29 29 27 37 34 22 30 31

29 22 25 33 28 24 30 29 26 25 24 36 32 24 32 29

*1997 data ** 1999 data calculated by the Hungarian Central Statistical Office contrasted with the calculations of TARKI (an independent social research center). The Hungarian National Action Plan on social inclusion (2004) indicates both data. Sources: Ferge 2002b; United Kingdom 2003; Potucek 2002; EU Commission 2004.

EU, we still have not had a clear cut view about the types of welfare regimes of the newcomers (Ferge 2002a). It is still difficult to assess the performance of east-central European countries in the context of their adjustment to the European Social Model. Lacking the political preconditions served for the ground for comparison EUROPEAN JOURNAL OF SOCIAL QUALITY

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previously, one can interpret each step of the new democracies as getting their welfare system closer to the European Social Model. Taking other factors (inequalities, social spending, the respect for social rights) into consideration we should give more complex answers. Inequalities started to grow rapidly at the start of the transformation process and they seem to stagnate in the early years of the new millennium. In the Millennium, indicators of income inequalities in most of the East-central European member states were similar to their Western counterparts. Their dynamic also followed the Western pattern with a substantial growth of inequalities between the mid-1980s and the mid-1990s followed by a slight reduction in the late nineties. However, the intensity of change was much bigger in the east than in the west of Europe. Income inequalities measured in the Baltic states were much higher than elsewhere in Europe, regardless of the method of calculation (see Tables 2 and 3). Data on social protection expenditure in the region is partly missing and confusing (Table 4). Thus, we do not have a solid basis to come to well established conclusions about the dynamics of social spending in countries of east-central Europe. However, available data calculated according to the ESSPROSS method show that the new post-communist member states are among the lowest spenders on social protection with the remarkable Table 3 S80/S20 quintile share ratio in the new member states Czech Republic (2001) Cyprus (1997) Estonia (2002) Hungary (2002) Latvia (2002) Lithuania (2001) Malta (2000) Poland (2001) Slovakia (2002) Slovenia (2001) EU 15 average PCC-8 average ECE-5 average Baltic states average

3.4 4.4 6.1 3.2 (4.5)* 5.5 4.9 4.5 4.5 5.4 3.1 4.4 3.8/3.9* 4.0/4.??? 5.5

*The first data is provided by the Hungarian Statistical Office, the second is measured by TARKI. Source: National Action Plans on Social Inclusion 2004 (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia, Slovenia). 90

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Table 4 Social expenditure in percentage of GDP in the new member states 2001/2002 Czech Republic Cyprus Estonia Hungary (2002) Latvia (2001) Lithuania (2001) Malta (2002) Poland Slovakia (2001) Slovenia (2001)

1980 n.a n.a. n.a n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Sources: Ferge 2004; Potucek 2004.

1993 19.8 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

1998 20.3 n.a. n.a. 20.7 n.a. n.a. n.a. n.a. 20.2 25.3

2001/2002 21.4 n.a n.a. 19.8 15.0 15.2 18.5 n.a. 19.1 25.6

exception of Slovenia, a country spending slightly less than the EU fifteen average. Despite the assumed Scandinavian impact on their social policy regimes, the Baltic States spend significantly less on social protection than the other new member states. The low level of social spending is perhaps compensated by mutual support in the informal sphere but all in all it suggests that vertical solidarity has weaker foundations in the new (post-communist) member states than in the older ones. The introduction (and the popularity) of private pension schemes in several east-central Europe countries is another sign of shifting the balance between solidarity and individualism at the very heart of the national welfare systems. Regarding the complexity of rules and proceedings of social administration and the lack of information on the enforceability of social provision, it is hard to assess the strength of social rights in east-central Europe. However, we have some indirect evidences showing their vulnerability in the region. For example, postponement of signing and/or ratification of the Council of Europe’s Social Charter can be interpreted as an indicator of problems with guaranteeing social rights in the new EU member states. (By May 2004, only five out of the eight post-communist member states had signed the Revised European Social Charter in contrast to fourteen out of the EU fifteen member states.)3 Pension systems were reformed in a highly controversial way without effective public debate in Hungary and Poland. Deficits in social dialogue prevented the social partners to have a major influence on social legislation. Fragmented and quarrelling trade unions could not become strong defenders of social rights. EUROPEAN JOURNAL OF SOCIAL QUALITY

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The Impact of the EU on East-Central European Social Policy Strangely enough, it was not the European Union but the World Bank which played an active role in the shaping of East-central European social policy during the 1990s. This was an inevitable consequence of the divergent approaches they applied. The Bank focused on substantive issues of national social policies, particularly on the import of the second pillar mandatory private saving schemes into the pension systems of the countries of the region (Ferge 2002a). But the Bank gave advice in other fields of social policy as well, emphasising the need to weaken ‘public responsibility in social matters’, to target social ‘assistance on the truly needy’, to scale ‘down social insurance to assure work incentives’, and to abolish universal benefits (Ferge 2002a). Although lacking the competence to influence substantive issues, the EU was active in modernising procedures in social policy in east-central Europe (Potucek 2004). Thus, the EU restricted its activity to influence ‘institution and capacity building (e.g. the PHARE projects) in the development of the instruments of labour-market policy; reform of social services; the development of policies on human rights and equal opportunities (especially of and for minorities); collaboration in the field of education (Potucek 2004: 257). In previous research examining the EU’s influence on Hungarian social policy we made a distinction between three types of influences on the making of social policy: procedural, institutional and administrative, and substantial changes (Ferge and Juhász 2004). I will use this framework for the analysis of the EU’s influence on the making of social policy in the region. Procedural Impacts

As far as procedural aspects of policy making are concerned, it is social and civil dialogue what makes European (social) policy distinctive. Social dialogue has serious deficits in the new east-central European member states. While in the ‘old Europe’ social dialogue at a national level is based on effective bipartite sectoral consultations and collective bargaining in the enterprises, it is mostly restricted to national level in east-central European countries. Social dialogue is dominated by governments at national level, frequently using their legislative power to reshape the structure of social dialogue. Another problem is that their favourable market situation gives no incentives to employers to engage in any (enterprise, sectoral or national tripartite) level of the social dialogue (Tanasescu and Bédoyan, 2004). Trade unions (as well as employers’ associations) are fragmented and they have a representative deficit in the region. Despite continued support from 92

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Union agencies – to strengthen the position of the social partners via PHARE programmes, to stimulate the national governments in order to develop a meaningful social dialogue, and the support of the European Trade Union Conference for central and east-European trade unions – there is still a considerable gap between the quality of social dialogue in the east and west of Europe. This leads to worries concerning the inability of social partners from east-central Europe to participate effectively in social dialogue at a European level which in turn could undermine pan-European efforts to preserve the European Social Model. Civil movements had a crucial role in overthrowing communist dictatorships in the region. This strengthened public respect for civil organisations. International organisations including the European Union provided them with substantial support which, combined with efficient use of newly acquired civil liberties, led to a mushrooming of various organisations of civil society. Facing deficits of the state budget, east-central European governments realised quite early the potential of civil actors in the provision of social services where they could substitute the state. Despite the relatively strong development of their organisations, dialogue with civil society was slow to get going in the region. It was perhaps a consequence of the glorious start of civil movements in the late 1980s, when the activities of civil movements often substituted or overlapped those of the political parties. The financial dependence of civil organisations on government support enabled governments to recompense them on the basis of their political preferences. For instance, until 2004 in Hungary only 16 percent of the total support to the civil sector was distributed and controlled by Parliament, and 62 percent was allotted to the organisations by the government (Kuti 2004). By now there are many hopeful signs concerning civil dialogue in the post-communist new member states. The academic community and non-profit organisations have been involved in the elaboration of the Social Doctrine of the Czech Republic in 1999 (Potucek 2004), and in 2004 the Hungarian government announced plans for publishing a Green Paper on the reform of the social assistance system.4 The new pattern of European wide multi-level governance having been introduced in the field of employment, social inclusion and pension policy requires governments to institutionalise civil dialogue. All the new member states indicated the involvement of civil organisations in the elaboration of their National Action Plan on social inclusion. Institutional and Administrative Changes

The accession process had a minor impact on the restructuring of the institutional and administrative framework of social policy in east-central EUROPEAN JOURNAL OF SOCIAL QUALITY

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Europe for at least two reasons. First, state socialism bequeathed a relatively well-developed system of social institutions and social administration to the new democracies, and the social consequences of the economic transformation had to be answered prior to setting the Copenhagen Criteria. Second, the requirements for accession in the field of social policy were not concrete enough to have direct influence on institution building in the region. The set-up of the management, monitoring and controlling bodies of the national authorities of the European Social Fund, and the equality bodies required by Directive 2000/43/EC were the rare exceptions to this general pattern. Substantive Policy Changes

Each country in the region had a compulsory social insurance system covering the total population at the end of the 1980s. Due to the sharp decline of the GDP, double figure inflation rate and growing figures of unemployment concomitant with transformation of the economy, post-socialist countries were constrained in restructuring their social insurance systems. Major elements of this change included the rise of the statutory retirement age, rendering the calculation of pensions more stringent, the gradual individualisation of pension rights by bounding pensions strictly to the contributions paid, and by the introduction of second and third pillars into the pension system. Universal health care systems in most of the countries were transformed into contribution-based ones, and patients are required by the law to pay charges for several treatment. Unemployment benefit schemes and the institutions of active employment policy had been set up in the early 1990s as well as means-tested social assistance systems. As a result of these changes, social protection systems of the new member states became fairly similar to those in the old member states. However, this was the consequence of the processes of ‘cognitive Europeanisation’ rather than a conscious strategy of Union agencies. Official documents of the European Union did not pay much attention to the substance of policy changes concerning social protection. Building new components in social protection systems of east-central Europe meant that they were getting rather similar to their Western counterparts. However, compared to the still evolving European pension strategy, pension and health care reforms in some of the new member states were extraordinarily radical. The implantation of similar methods in other fields (social assistance, unemployment benefit schemes) was a rather a consequence of ‘cognitive Europeanisation’ than the impact of the social policy of the European Union. What was then the reason for the weakness of the European Union in influencing the renewal of social policy in the candidate countries? For a 94

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decade when the negotiation process was going on, social policy was considered subsidiary to the main requirements determined in the Copenhagen Criteria, which were: (i) consolidated political democracy, (ii) a relatively strong market economy and (iii) the incorporation of the Community ‘acquis’. Even though, at the turn of the century when there were clear signs of a paradigm shift in European social policy, Accession Reports, the most important EU documents dealing with the preparedness of the candidate countries to enter the Union, paid very little attention to the social dimension (Ferge 2002a). Giving ‘priority to economic, political and legal conditions of the accession’, the Copenhagen criteria set a very different agenda for the negotiations compared to the political message of the Lisbon Strategy ‘with a clear shift to priorities towards employment, education and social cohesion as the necessary preconditions of economic competitiveness’. The Lisbon Strategy was presented to the accession countries as exemplary only in 2002 when ‘the preparation of the new member states – organised within the logic of the Copenhagen criteria – to enter the EU had just finished’. This could imply ‘that the new member states will enter the European Union with persistent social deficits’ (Potucek, 2004).

The Social Situation in the New Member States of EastCentral Europe Describing the social situation in the new east-central European member states of the European Union is a fairly difficult task. There are big differences between individual member states as well as the regions inside the countries. Statistical data are incomplete and often inconsistent, thus their analysis often leads to misleading conclusions. There are several reasons for this. First, the dataset is imperfect, as it is evident from the Joint Inclusion Memoranda and the National Action Plans (NAPs) on social inclusion of the new member states. ‘There is no regional data on poverty, no gender statistics, … no or unreliable data is available on social assistance beneficiaries or social service users’ (Lendvai 2004: 4). Second, some indicators commonly used in the EU fifteen member states are not appropriate for the new member states. This problem mainly concerns the measuring of poverty in the NAPs on social inclusion: ‘We believe that the Laeken indicators do not give a realistic picture on poverty in Hungary’ (Hungary 2004: 9); ‘Using the EU relative poverty line may, however, lead to an underestimate of the extent of poverty in Estonia, as well as on some other acceding countries’ (cited by Lendvai, 2004: 10). Polish and Lithuanian NAPs mention similar problems. EUROPEAN JOURNAL OF SOCIAL QUALITY

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The Hungarian NAP indicates the difference in the results of the household survey done by TARKI (an independent social research centre) from the ‘official’ results provided by the Central Statistical Office. Ironically, the Commission was reluctant to take these comments into consideration in its synthesis report on the Joint Memoranda in June 2004 and thus, using a poverty line inadequate for the new member states it concluded that ‘the relative income effect of social protection systems on poverty levels is comparatively greater in new Member States than in the EU as a whole’ (SEC(2004)848, p. 13). Third, statistical methods used by the EU are often divergent to those in use its member states. Despite these difficulties, we can make a good use of the available dataset to indicate the main trends of social policy in east-central Europe during the transformation/accession process. Demography

Most of the new post-communist member states share unfavourable demographic developments with the EU fifteen. The only exception is Slovenia where the increase of population is the result of immigration. Fertility rates are low and they are declining in the region while mortality rates are above the EU fifteen average. There was a substantial outward migration from Poland and the Baltic states during the 1990s but this trend has been slowing down by now. After a decline in the early 1990s, life expectancy started to grow and it is expected to continue after enlargement. Combined with low fertility rates it accelerates the ageing of the population, and causes the raise of the old-age dependency ratio putting pension and health care systems under pressure in the region. Employment and Employment Policy

On average, employment rates in the new member states (59.25 percent) were lower in 2003 than in the pre-accession Union (64.3 percent) (Table 5). The entry of countries with low employment rates into the European Union reduces the chance for the successful achievement of the Lisbon targets. It is astonishing, that gender gaps are smaller in the new member states than in the EU fifteen countries. To look at the other side of the coin, older people have much less chance to be in work in the acceding countries (31.6 percent) than in the old member states (40.1 percent). Unemployment affects more the working force in the accession countries (11.2 percent) than in EU 15 member states (8.1 percent). Comparing this figure with the rapid growth of domestic product in each countries of eastcentral Europe, we can conclude that economic growth is not yet labour intensive in the region. Differences between east-central European 96

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Table 5 Employment rate in accession countries (2003) Czech Republic Estonia Cyprus Latvia Lithuania Hungary Malta Poland Slovakia Slovenia EU-15 average ECE-8

Total

Male

Female

55–64 age group

64.3 59.25

72.6 66.3

56.0 53.7

40.1 31.6

70.4 62.6 69.2 61.8 50.8 57.0 54.5 51.2 57.6 62.6

78.2 74.5 … 66.0 56.2 63.4 76.0 56.5 63.0 72.8

62.5 58.2 60.2 57.8 46.3 50.9 32.8 46.0 52.2 55.6

42.3 52.1 50.2 12.6 41.6* 29.0 32.5 26.1* 24.6 24.5*

*In 2002 Source: National Action Plans on Social Inclusion 2004 (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia, Slovenia) – http://www.europa.eu.int/comm/employment_social/news/2001/jun/napsincl2001_en.html.

countries are also striking: unemployment is most severe in Poland, Slovakia and the Baltic states with figures double the EU fifteen average unemployment rate, and much lower in Hungary, Slovenia and the Czech Republic. Unemployment rates are slightly higher among women than men in the region, but the gender gap is smaller on average than in the EU 15. There is a big east-west gap in terms of average long-term unemployment: it is almost two times higher in the East (6.1 percent) than the West (3.1 percent) of Europe. There is a smaller gap in terms of total youth unemployment rates (Table 6). Analysing the data provided here, we should keep in mind that each of the new member states has an extended shadow economy, which distorts labour statistics. It is not at all heartening that research findings show the expansion of the shadow economy all over East-central Europe in the final period of the accession process (Table 7). The detrimental effects of the informal economy are clear: it makes the collection of taxes and social insurance contributions incomplete, reduces the size of anyway low-rated trade union membership and weakens the labour and social rights of workers. This requires the new member states to increase their efforts on the prevention and elimination of illegal employment, including the reduction of taxes and social insurance contributions burdening the wages of low income EUROPEAN JOURNAL OF SOCIAL QUALITY

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Table 6 Unemployment rates in accession countries (2003) Czech Republic Cyprus Estonia Hungary Lithuania Latvia Malta Poland Slovakia Slovenia EU-15 average ECE-8

Total

Male

Female

8.1 11.2

7.4 11.0

9.0 11.6

7.8 4.1 10.0 5.8 12.4 10.7 8.2 19.2 17.1 6.7

6.2 … 10.2 6.0 12.7 10.7 8.0 18.6 17.2 6.4

9.9 4.6 9.9 5.5 12.2 10.5 6.9 20.0 17.7 7.1

Long-term Youth 3.8 3.3 4.6 2.4 7.4 4.7 3.5 10.9 12.1 3.0 3.1 6.1

23.9 15.0 20.6 11.9 21.4 18.5 – 14.8 37.3 29.2 15.1 22.2

Source: National Action Plans on Social Inclusion 2004 (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia, Slovenia) – http://www.europa.eu.int/comm/employment_social/news/2001/jun/napsincl2001_en.html.

Table 7 The size of the shadow economy in post-communist accession countries

Czech Republic Estonia Hungary Latvia Lithuania Poland Slovakia Slovenia

Shadow economy labour force (% of working age population), Average for 2000–2001 Average for 1998/99 18.4 34.3 24.4 39.6 29.4 27.4 18.3 26.7

12.6 33.4 20.9 39.6 20.3 20.9 16.3 21.6

Source: Schneider, F.: The Size and Development of the Shadow Economies of the 22 Transition and 21 OECD Countries. Bonn: IZA, (2002) in: Study on the Social Protection Systems in the 13 Applicant Countries. Synthesis report, Second draft. GVG, Köln (2002). Cited in: EU Enlargement and its Impact on the Social Policy and Labor Markets of Accession and Non-Accession Countries. Slovak Republic, Draft Country Study. Bratislava, May 2003. 98

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Table 8 Expenditure on active labour market policies 2002/2003 (as % of GDP) Czech Republic Estonia Hungary Latvia Lithuania Poland Slovak Republic Slovenia EU average EU maximum (Denmark) EU minimum (Greece, Portugal)

0.10 0.09 0.48 0.15 0.12 n.a. 0.23 0.36 0.92 1.64 0.25

Source: National Action Plans on Social Inclusion 2004 (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia, Slovenia), MSZOSZ www.mszosz.hu

groups. According to the National Employment Strategies and the National Action Plans on social inclusion such measures are either now being implemented or being planned. Adjusting their employment policies to the European Employment Strategy, each of the new member states started to shift resources from passive to more active labour market policies, and to modernise the public employment service (EU Commission 2003). However, they still have a long way to go through since average expenditure on active labour market policies as percent of GDP in east-central European countries is only a quarter of the EU fifteen average (Table 8). Even Hungary, the greatest spender devotes much less of its GDP (0.48 percent) on active labour market policies compared to the EU 15 average (0.92 percent). In 2003, eastcentral European countries started to participate in the European Union’s social inclusion process requiring them to extend active labour market policy to those groups most distant from the labour market such as the longterm unemployed, minorities (particularly the Roma), disabled persons, older workers and others. However, these steps are blocked by the rigidity of the labour market in terms of access to part-time and temporary jobs impeding the access of the most vulnerable groups to jobs. Income Levels

There is a considerable income gap between the old and new member states of the EU. Average per capita income is slightly more than half of EUROPEAN JOURNAL OF SOCIAL QUALITY

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Table 9 Per capita income in the accession countries (EU-15: 100%) Czech Republic Estonia Latvia Lithuania Hungary Poland Slovakia Slovenia ECE-8

PPS (2003)*

PPP (2004)**

50.5

54.6

63.0 44.0 39.0 42.0 56.0 42.0 47.0 71.0

68 48 36 35 64 45 56 85

Source: *EUROSTAT, Statistics in Focus, Economy and Finance (Theme 264/2003, 27/2004); **Dauderstädt, 2003 p. 2 citing: UN-ECE, Economic Survey of Europe, No. 1 (2002), p. 183.

the EU average in the new, post-communist member states. There is a fear in the west of Europe that the ‘poor post-communist competitors’ with their ‘large pool of low-wage labour’ can ‘affect employment, growth and income distribution through import competition, investment flows, relocation of production and migration’ (Dauderstädt 2003). Such fears have some base in reality, but we have to take the big differences between the new member states into consideration. Slovenian per capita income is comparable with the Greek and Portugal figures, and the lag between the poorest old member states and the better-off east-central European new member states (the Czech Republic and Hungary) is not wide. Per capita incomes in the better-off east-central European countries are significantly higher than, for example, in Poland or Slovakia, and 1.5 to 2.5 times higher than in the Baltic States (Table 9). Thus, the problems of concern in the context of east-west relations can, are relevant in relation to east-central European countries as well. Poverty and Social Exclusion

The average at-risk-of-poverty rate, calculated by the common European method (expressing the share of individuals living in households where the income is less than 60 percent of the national equalised income) is somewhat lower in the new post-communist member states (14.4 percent) than in the EU 15 (15 percent) (Table 10). However, in interpreting the data we must keep several facts in mind. First, the amount of risk-of-poverty threshold in Euros is a fifth in east-central Europe of that in the West of Europe 100

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Table 10 At-risk-of-poverty-rate in % (expressing the share of individuals living in households where the income is less than 60% of the national equalised median income)

Czech Republic (2002) Cyprus (1997) Estonia (2002) Hungary (2002) Latvia (2002) Lithuania (2003) Malta (2000) Poland (2002) Slovakia (2002) Slovenia (2001) EU-15 average (2001) ECE-8

Total (after social transfers)

0–15 years of age

+65 years of age

15 14.4

19 18.1

19 11.6

8 16 17.9 10 16 15 15 17 21 10.6

12 12 18 16 19 20 21 21 30 9

6 58 16 9 10 12 20 6 13 21

Before social transfers 36 – – 44 43 24 – 48 43 37 39 45

Sources: National Action Plans on Social Inclusion 2004 (Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovakia, Slovenia) – http://www.europa.eu.int/comm/employment_social/news/2001/jun/napsincl2001_en.html, SEC (2004) 848.

(and it is still a third or a half when we use purchase-parity for comparison) (Table 11). For example, a Hungarian family of two adults with two dependent children is above the poverty threshold with a disposable income of ten Euros per day. The corresponding income is 47.9 Euros on average in the EU fifteen member states. It indicates much lower standards of living of east-central Europeans and a much more difficult situation for the poor compared to similar groups of poor people in EU fifteen countries. Second, as I have already mentioned it, such results are due to the use of the Laeken indicators which are often inadequate to measure poverty in the new member states. As some National Action Plans put it: ‘In Hungary, the minimum income threshold is well below the minimum subsistence level’ (Hungary 2004: 9); ‘In Slovakia, the median income of citizens in risk of poverty is 34% lower than the risk-of-poverty threshold’ (Slovakia 2004). The use of inadequate indicators for measuring at-risk-of-poverty in east-central Europe leads to the inappropriate result that on paper social protection systems in the east performed better in comparison to their western counterparts. In this comparison social transfers reduce the risk of EUROPEAN JOURNAL OF SOCIAL QUALITY

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Table 11 Risk-of-poverty threshold (illustrative values) 1 person household

Czech Republic (2001) Estonia (2002) Latvia (2002) Lithuania (2001) Hungary (2001) Poland (2001) Slovenia (2000) Slovakia EU 15 average

Euro

1897 1327 1215 1124 1641 1742 4180 n.a. 8319

PPS

2 adults with 2 dependent children household Euro PPS

8253

17469

4045 2440 2301 2346 3369 2859 6295 n.a.

3984 2787 2552 2360 3446 3658 8778 n.a.

8494 5124 4883 4926 7075 6004 13219 n.a.

17332

Source: Eurostat Second Round Updated 2004 of Laeken indicators in: EU Commission, 2004.

poverty less effectively in the EU fifteen than in the new member states (Table 10). On the other hand this is partly the consequence of the relatively good performance of post-communist pension systems in reducing the average risk of poverty among the elderly to 8 percent compared to 19 percent in the EU fifteen. In contrast to the relatively good situation of the elderly, the poverty rate is especially high among children (18 percent) and young people (16 percent) in the new member states. Poverty is particularly widespread among the Roma: the Slovak JIM estimated that ‘up to 80 percent of Roma are dependent on social assistance benefits’, Hungary noted that the ‘prevalence of poverty is five to ten times higher among the Roma than with the rest of the population’. The situation is similar in Poland, where 95 percent of Carpathian Roma families are dependent on social welfare (EU Commission, 2004: 13). Poverty has a regional aspect as well in the new member states, for example in Lithuania ‘more than half of people living below the poverty line are rural dwellers’ (EU Commission, 2004: 14). Regional disparities of poverty rates are noted in the Czech, Hungarian, Polish and Slovakian NAPs on social inclusion. Social Spending

Social protection expenditure in terms of percentage of the GDP is significantly lower in the new post-communist member states than in the EU fif102

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teen countries. However, taking the state of their economic development and their level of income into consideration, they still spend relatively high on social protection. In fact, none of the countries of east-central Europe spend less on social protection than Ireland, and social spending as a percentage of GDP in the better-off countries is almost as much as in Luxembourg and Spain. Between 1992 to 2002, the Czech republic increased social spending by 1.6 percent. On the other hand, social spending had decreased in some of the new member states (for example in Hungary and Slovakia) just prior to entering the EU. All in all, it is difficult to assess the direction of social spending in the new, post-communist member states. They have the potential to follow a similar ‘catching-up’ strategy to the older Mediterranean member states as well as giving preference to compensate their competitive handicaps with keeping social spending low.

Pre-Accession Inaction and Post-Enlargement Fears The long list of missing competences does not give full explanation for the lack of action of community agencies to influence effectively the design of social protection systems in post-communist candidates. The EU’s negligence is far more interesting in context of how its member states reacted to the entering of east-central European countries just before finishing he accession process. The east-west welfare gap raised fears in the EU fifteen member states concerning welfare migration and inspired governments to introduce in preventive measures. As a consequence a majority of them (Austria, Belgium, France, Finland, Germany, Greece, Italy, Luxembourg, the Netherlands, Portugal and Spain) restricted the applicability of community rules regulating the free movement of workers preventing the entry of employees from East-central Europe to their labour markets for a transitional period. This move is genuinely used for the protection of national social protection systems from social tourism, social dumping and other forms of welfare migration.5 Three of the four countries opening their labour markets to migrant workers from east-central Europe implemented another set of measures in order to protect their national welfare systems. They opted to ‘curb the social rights of migrant workers from the acceding countries’ (Kvist 2004: 302). Denmark excluded unemployed migrant workers from the recipients of social assistance, the UK requires two years continuous work to get access to a wide range of benefits and Ireland started to apply similar rules. Welfare and wage gaps between the old and new member states contributed to fears of a start of a ‘race to the bottom’ when member states competing on the internal market are getting to reduce the accessibility and EUROPEAN JOURNAL OF SOCIAL QUALITY

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generosity of benefits in order to obtain a competitive edge. Recent social policy developments, i.e. rendering the conditions of entitlement to various benefits in older member states and opening their labour markets to the workforce from post-communist member states underpin these fears. In this context we should also consider the welfare gap between the new member states, and between them and other candidates from the Balkans (Bulgaria and Romania). There are worrying trends in some of these countries. Slovakia introduced a new flat-rate personal and corporate income tax in 2004 combined with a major ‘restructuring’ of the country’s social assistance scheme in order to increase economic competitiveness of the country and to give incentives to people to get a job. The Slovakian pattern is so attractive that Hungarian and Romanian government are also pondering a move towards a flat-rate tax system. In Hungary, access of even ethnic Hungarian citizens of neighbouring countries to the national welfare system became the subject of heated political debates in December 2004, when the left-wing government argued against offering citizenship to people of Hungarian origin on the grounds that it would overburden the social security system. Meanwhile the Commission is urging the new member states to reduce the overall tax burden, including social contributions on labour, in order to ‘make tax-benefit systems supportive to employment’ (EU Commission 2003: 6). If this tendency continues, and is ‘expanded to include benefit levels we may witness a start to a race to the bottom’ (Kvist 2004: 315). There are counterarguments to the race to the bottom scenario as well. First, massive welfare migration from east to the west is just an assumption that might not necessarily happen. The mobility of the labour force in many of the new member states is low – this is one of the reasons for differences of regional unemployment in the Czech Republic, Hungary and Slovakia. Second, population ageing can turn welfare migration to a brain and labour drain, which could lead to a race to the top even in a short run. Third, successful implementation of the Lisbon Strategy could alleviate pressures on governments to start a race to the bottom.

Conclusion: Does Eastern Enlargement Have the Potential to Improve the Quality of Social Policy in the New Member States? Historically, the basic values and constituting elements of the European Social Model could not be built organically into east-central European welfare systems in the communist era. The Communist state offered a relatively high level of social protection in exchange for keeping wages low, curtailing civil and political freedoms, using the trade unions as a trans104

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mission belt for the politics of the communist party and reducing all voices to silence when addressing the issue of social inequalities. Political and economic transformation in the 1990s made the adjustment of their welfare system to the European Social Model difficult, and the EU had little impact on the shaping of east-central European social policy. Research and public discourse on social inequalities became possible but the focus on the introduction of market economy contributed to a massive growth of inequalities in the region. Social security reforms limited solidarity in pension and health care systems. Economic decline concomitant to the transformation process prevented most governments from increasing social spending. Social and civil dialogue started right after the regime changes in all the countries but it still is not as sophisticated as it was before the eastern enlargement in the EU. Consequently, most of the east-central European member states entered the EU with considerable deficits concerning their adjustment to the ESM and they imported a big welfare gap into the Community. This led to a fear of westward welfare migration in EU fifteen member states of which several countries reacted by restructuring their social protection system. This move can lead to a race to the bottom if changes concern benefit levels as well. Tax and welfare reforms in some of the new member states, in order to increase the competitive edge of the countries, also has a similar potential. Meanwhile, at the end of the millennium, the Union expressed its commitment to give answers to social problems (population ageing with all its consequences, social exclusion and so on) that threaten to undermine the European Social Model. Addressing the welfare gap between the old and new member states is a must when processes of building and maintaining a European common market are going on. The open method of co-ordination in the field of social protection and social inclusion has the potential to moderate pressures stemming from the welfare gap by involving new member states in processes aimed at preserving the ESM. Despite all its shortcomings, the social inclusion strategy helped to address issues such as poverty and social exclusion, which had hardly been on the political agenda in the new member states. OMCs in the framework of the Social Policy Agenda also requires governments in east-central Europe to face up to deficits in their social policy making. They need to improve their statistical dataset; minimum income schemes; the implementation of social rights; co-operation between various units of government, between the government and social and civil partners and so forth. All in all, the contemporary prospects for the development of the quality of social policy in east-central Europe are rather controversial. Successful implementation of the Lisbon Strategy, and the Social Policy Agenda in particular has a crucial importance from this perspective since EUROPEAN JOURNAL OF SOCIAL QUALITY

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the Community has practically no other instrument to promote the preservation of the European Social Model. However, it is not clear if the EU will have the capacity and willingness to stand up for the defence of the European Social Model after the revision of the Lisbon Strategy, which gives preference to (economic) growth and job creation while it reduces the relative importance of measures oriented to improve social cohesion in the Member States, and subordinates the modernisation of social protection systems to employment policy.6 Another communication from the Commission underlines that the EU is still committed to the implementation of the Social Policy Agenda and the Commission intends to develop it further, focusing on the move towards full employment and equal opportunities. Doing this, the Commission initiated the introduction of the open method of co-ordination in the areas of health and long-term care and the involvement of the objectives of the three strands – inclusion, pensions and health – into a single list of objectives. This move would extend the scope of European co-operation in substantive issues of social policy and facilitate the development of the shaping of the national welfare systems in east-central Europe in a way to adjust their welfare system to the European Social Model. On the contrary, the ‘rationalisation and simplification’ of the open method of co-ordination also has the potential to decrease the importance of particular fields. This could weaken EU’s influence on national social policies of its member states and thus, soften the ability of the Communities to protect the European Social Model.

References Dauderstädt, M. (2003) ‘EU Eastern Enlargement: Extension or End of the European Social Model?’, http://www.fesportal.fes.de/pls/portal30/docs/ FOLDER/POLITIKANALYSE/DaudHBS.pdf. EU Commission (2003) Commission staff working paper – Supporting document to Communication ‘Progress in the implementation of the Joint Assessment Paper on employment policies in candidate countries’ COM(2003)37 final. EU Commission (1994) ‘European Social Policy – A Way Forward for the Union: A White Paper’. Luxembourg, COM(94)333. EU Commission (2003a) ‘Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, Joint Report on Social Inclusion summarizing the result of the examination of the National Action Plans for Social Inclusion’ (2003–2005). EU Commission (2003b) ‘Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the 106

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Committee of the Regions, Joint Assessment Paper on Employment Policies in Acceding Countries’ COM(2003) 663 final. Ferge, Z. (1992) ‘Social Policy Regimes and Social Structure. Hypothesis about the Prospects of Social Policy in Central-Eastern Europe’, in Social Policy in a Changing Europe, eds Z. Ferge and J.E. Kolberg, Boulder: Campus and Westview. Ferge, Z. (2002a) ‘European Integration and the Reform of Social Security in the Accession Countries’, European Journal of Social Quality 3 (1–2) 9–25. Ferge, Z. (2002b) ‘Új tagságunk az Európai Unióban – reményeink, kételyeink’ Esély 2004. 2. Ferge, Z. and G. Juhász (2004) ‘Accession and Social Policy: The Case of Hungary’, Journal of European Social Policy 14 (3). Ferrera, M. (2004) ‘Modernising the European Social Model: Sharpening Priorities, Stepping Up Reforms’ http://www.progressive-governance.net/php/ article.php?aid=314. Guillén, A. M. and B. Palier (2004) ‘Introduction: Does Europe Matter? Accession to EU and Social Policy Developments in Recent and New Member States’, Journal of European Social Policy 14 (3). Hungary (2004) ‘National Action Plan on Social Inclusion. Hungary 2004–2006’ http://www.europa.eu.int/comm/employment_social/soc-prot/soc-incl/ nap_incl_2004_hu_en_version.pdf. Kovács, J. (2002) ‘Approaching the EU and Reaching the US? Rival Narratives on Transforming Welfare Regimes in East-central Europe’, West European Politics Special Issue 2 (1): 175–205. Kuti, É. (2004) ‘Kinek a pénze? Kinek a döntése? Bevételi források és döntéshozók a nonprofit szektor finanszírozásában’. (Whose Money? Whose Decision? Resources and Decisions Concerning the Financing of the Non-Profit Sector. Research Group on the Non-profit sector). Budapest: Non-profit Kutatócsoport. Kvist, J. (2004) ‘Does EU Enlargement Start a Race to the Bottom? Strategic Interaction among EU Member States in Social Policy’, Journal of European Social Policy 14 (3): 301–318. Lendvai, N. (2004) ‘The Indigenisation of Social Inclusion Policy in PostCommunist Europe and its Implication for EU Social Policy after Enlargement’. http://www.apsoc.ox.ac.uk/Espanet/espanetconference/papers/ppr.2A.NL.pdf. Lemke, C. (2001) ‘Social Citizenship and Institution Building: EU-Enlargement and the Restructuring of Welfare States in East Central Europe’, Center for European Studies Program for the Study of Germany and Europe, Working Paper series 01.2 (April 2001), http://www.ces.fas.harvard.edu/publications/ Lemke.pdf Powell, M. and M. Hewitt (2002) Welfare State and Welfare Change. Buckingham: Open University Press. Potucek, M. (2002) ‘Enlargement of the European Union, Globalization, and Social Policy in the New Member States’. http://www.martinpotucek.cz/prezentace/ enlargement_tbilisi.pps?10 Potucek, M. (2004) ‘Accession and Social Policy: The Case of the Czech Republic’ Journal of European Social Policy 14 (3). EUROPEAN JOURNAL OF SOCIAL QUALITY

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Protocol No. 7 on the application of subsidiarity and proportionality, annexed to the Amsterdam Treaty 1997 SEC(2004)848 ‘Commission Staff Working Paper. Social Inclusion in the New Member States. A Synthesis of the Joint Memoranda on Social Inclusion’ Brussels 22.6.2004. Slovakia (2004) ‘National Action Plan on Social Inclusion 2004–2006. (NAP/inclusion) Slovak Republic.’ Ministry of Labour, Social Affairs and Family of the Slovak Republic, Bratislava 14 July 2004 http://www.europa.eu.int/comm/ employment_social/soc-prot/soc-incl/nap_incl_2004_sl_en_version.pdf. Tanasescu, I. and Bédoyan, I. (2004) ‘European Social Dialogue after Enlargement’. Paper for the second Annual ESPAnet Conference. Oxford, 9–11 September 2004. United Kingdom National Action Plan on Social Inclusion 2003–5, http:// www.europa.eu.int/comm/employment_social/news/2001/jun/napincl_uk_ann ex.pdf.

Notes 1. Annex I. (Social Policy Agenda) to the Presidency Conclusions of the Nice Summit 2000, 11. The (first) Joint Report on Social Inclusion (2001) repeated this interpretation and added to it the elements; underpinning the European social model, such as ‘solidarity’, ‘social cohesion’, ‘respect for human dignity and fundamental rights’, ‘integration and full participation in society’ and ‘high level of social protection’ (p. 30). 2. Powell and Hewitt identified fourteen expressions used for decribing welfare change: The welfare state has been in crisis, under threat, in transition, resilient or robust, reshaped, refashioned, restructured, residualised, rolled back, recast, recalibrated, transformed and even dismantled (Powell and Hewitt 2002: 2). 3. Later on, in October 2004, Hungary also signed the Revised Social Charter. 4. Due to the resignation of the Prime Minister the reform was stalled and thus the Green Paper has not been published. 5. Kvist makes a distinction between three forms of welfare migration. First he speaks of social tourism when workers move to another member state where they can earn more benefits for their contribution record compared to that which would be provided for them in their home country. Second, he identifies social dumping with a situation when low labour costs attract firms from other member states, or influence workers to offer cheap labour in another member state. Third, he defines social raids when getting work is ‘used as an entry ticket into the national welfare system, sometimes with a view to exporting benefits to the home country’ (Kvist 2004: 306). 6. The Commission no longer speaks of the European Social Model as a value to be preserved. Instead, the Communication from the Commission about the new start of the Lisbon Strategy emphasises the need for ‘modernising’ and ‘promoting’ the ESM. Both expressions could be interpreted in manifold ways. 108

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