by Susanne Wixforth and Lukas Hochscheidt on 4th November 2019
The privileging of economic freedoms over social rights by the European Court of Justice could be reversed by a thorough harmonisation of European social law. In 2014, the European Court of Justice (ECJ) ruled that the obligation to pay minimum wages due to national regulations was an inadmissible economic burden and therefore incompatible with the EU single market. Five years later, the ECJ’s advocate general argued that ‘what is “social dumping” for some is, quite simply, “employment” for others’. Any jobs, anywhere cannot be the summit of social ambition.
Through such case law, the ECJ has contributed for years to the dominance of economic freedoms over social rights in the European Union. But the relation of the court to social regulation is not as straightforward as is often depicted. Apart from all its risks and side-effects, the ECJ poses great opportunities in the arena of social policy, which must be fully understood and eventually taken. If the member states have the political will to realise change, the ECJ can become the guardian of social rights in Europe.
Due to the settled case-law of the ECJ, the economic freedoms—of services and establishment as well as of goods and capital—have a constitutional status against which social rights are to be measured. The latter is anchored in primary legislation through title IV of the Charter of Fundamental Rights but they are hardly ever applied by the court to justify restrictions on the economic freedoms.
This leads to a functional dominance of economics over social issues, which ultimately turns the ECJ into a driver of liberalisation. Referring to national protective rights of workers and consumers as barriers to trade within the single market, actors interested in deregulation use the ECJ to undermine social policies of member states ‘through the back door’ of European law.
Impact analysed
In light of this case law, one could assume that the ECJ is biased towards the economic freedoms of the single market—consciously deciding in favour of economic deregulation and against social protection. To examine this assumption, we analysed the impact of the case law on member states from the different welfare-state traditions within the EU. If the ECJ really did favour economic freedoms structurally, then some welfare models should ‘suffer’ more under its case law than others, depending on how strongly social rights were enshrined in their respective systems.
Taking four member states which each represent one of the four major welfare-state models in Europe—Nordic universalist, core-European insurance-based, market-oriented Anglo-Saxon and minimal southern-European—we tried to identify correlations between welfare regimes and the impact of ECJ case law on social regulation (reported in Soziale Sicherheit, volume 10, 2019, pp 378-82). But a robust, structural correlation between the effects of the case law and the welfare-state regime could not be established.
We, therefore, hypothesised that the decisive factor was the relevant legal field and whether this was harmonised at EU level. To test this new assumption, we compared the case law in areas of social policy which had been harmonised with those where EU harmonisation had been firmly excluded by the treaties.
The non-discrimination principle (regarding nationality, sex, age and so on), the guarantee of claims and benefits of social security for migrant workers, working conditions and occupational safety, as well as the rights of posted workers and the regulation of weekly working time, paid leave and rest periods, are all matters of EU-level regulation.
In each of these areas, the ECJ has proved a stern admonisher and defender of the European acquis against solo national efforts. In particular, on the enforcement of the non-discrimination principle concerning nationality and equal pay for women and men, the judges have made significant contributions to the assertion of social rights throughout Europe.
On the other hand, there are non-harmonised areas of social policy—particularly the rights of association and withdrawal of labour, wages and salaries, and the amounts of social benefits (including minima). As several cases show, here the court acts as a driver of liberalisation where there is insufficient harmonisation at EU level to prevent it from doing so. Therefore, the existence of European minimum standards for social regulation is decisive for the direction ECJ case law will take in this domain.
Sharp weapon
To ‘tame’ or socialise the ECJ, we must introduce European standards in more socially-related legal fields. Put differently, in an EU in which social law is harmonised at EU level, the ECJ can become a sharp weapon against social inequality between member states.
This being said, how can we ensure that any EU-wide harmonisation of social policies does not lead to agreement on the lowest common denominator? From a trade-union point of view, the answer to this legitimate concern is the implementation of a ‘social progress protocol’.
Social rights should not be subordinated to economic freedoms but given priority. This would require that the ECJ no longer consider wage regulations and the protection of social and collective labour rights as a violation of economic freedoms. A requirement for upward convergence would need to be combined with a non-regression clause on social issues, to prevent good standards being downgraded.
The member states and the European Parliament have the possibility to turn this vision of a truly European welfare model into reality. Implementation is a question of political will. If the new European Commission were to adopt this agenda, it could make a historic contribution: the competition between welfare states could turn into a common quest for solutions.
Instead of fighting social dumping, we could then focus on shaping a more socially just union.
(Susanne Wixforth is head of the unit in the Europe and International Department of the German Trade Union Confederation (DGB). Lukas Hochscheidt is a research assistant there.)
