In his chapter, Stefano Giubboni endeavours to show the reasons why, starting from the end of the 1980s, the “external” dimension of the functional autonomy of social law in Europe has gradually experienced a seemingly irreversible crisis due to a deep transformation of the political economy of the European integration process and, following the Treaty on European Union (TEU), of the economic constitution of the European Union. In the last decade, such crisis has worsened due to the transformation of the EU and its Member States into, respectively, a strong Liberalisierungsmaschine and Konsolidierungsstaaten – as Wolfgang Streeck evocatively described such process. In the final section of his chapter, Giubboni argues that, in as much as it is impossible to have a common set of fundamental social standards and a unitary welfare state at European level, an almost unavoidable response to the legitimacy crisis affecting the EU consists in giving back to Member States a higher degree of autonomy and “social sovereignty”.

‘But people loved darkness instead of light.’

John, III, 19

PROLOGUE

For almost fifteen years, the epic of the constitutionalisation of the European citizenship was based on the famous promise of ‘a certain degree of financial solidarity’ among the nationals of different Member States. The idea that a Union citizen could have access to a new ‘status of social integration’, directly defined at the supranational level starting from a fundamental freedom of movement, actually seemed to be able to open up a new constitutional dimension to European citizenship, finally able to transcend the nation States’ particular allegiances in order to revive and expand the universal and ‘omni-inclusive’ promise of a society of free and equal individuals based on the jus-naturalistic foundations of modern citizenship.

Such a process of constitutionalisation of the weak provisions on citizenship introduced by the Maastricht Treaty has been carried out by the Court of Justice along two convergent trajectories, beginning with the path-breaking case of Martínez Sala.

Along the first trajectory a new universal status for transnational access to social rights on an equal footing with the nationals of the host country was progressively attached to the freedom of the (economically inactive) European citizen to move to and establish residence in another Member State. As a result of this, the main feature of this first jurisprudential movement can be identified in the fact that the Court of Justice has progressively extended those same powerful mechanisms of de-nationalisation (and partly of de-territorialisation) of social citizenship rights to every citizen of the Union qua talis.

These mechanisms had originally been reserved by the Treaty of Rome to economically active persons, and to workers in particular, as a fundamental means for the functional integration of the common market. The fragility of this first ideational pillar of such a sophisticated endeavour as making European citizenship the fundamental status of the individual in the European Union's constitutional order is probably due to the intrinsic contradiction pervading the conceptual categories used by the Court for such an ambitious purpose.

This book presents a study of the complex and changing relations that have successively prevailed – in the magmatic development of European integration – between the construction of the Common Market and social rights and policies. In essence, it examines the nature of the space and role that have been, are and are likely to be allocated, in the construction of the Community, to social rights and policies at national and supranational level.

The focus of the analysis is centred on the constitutional dimension of the relations in question. This is reconstructed both (and primarily) from the dynamic perspective offered by an examination of the changes that have effectively remoulded the Community's economic constitution since its beginnings up to the present day, and from the static perspective ensuing from a comparison of the various ideal – or, more accurately, ideal-type – models of that constitution which, although obviously not claiming to explain the historical realities of the changes, nonetheless help to categorize them from a normative point of view.

The book develops a research perspective that could be described as intrinsically interdisciplinary.

Labour law – perhaps more than other legal disciplines – has in fact always found in the interdisciplinary and comparative method one of the features that best connote and specify its identity and its cognitive status, immersed as they are in the reality of more deep-seated social dynamics.

Introduction

The word ‘infiltration’, like (and perhaps even more so than) all the others such as ‘intrusion’, ‘penetration’, ‘corrosion’ and ‘erosion’ that have also become part of the common phraseology used by labour lawyers over the past decade or so to describe the troubled relationship between Community competition and market law and national labour-law systems, immediately evokes the idea of a threat, an insidious danger which originates from outside but is capable of penetrating more or less secretly or subtly to the deepest roots of a system to the point of shaking its very foundations and putting its most solid and ‘internal’ categories in crisis. Consequently, it does not introduce a ‘neutral’ description of the phenomenon but carries within itself a specific and obviously negative evaluation. And although the sheer familiarity of this usage – felicitously initiated by Gérard Lyon-Caen and now become, in its several ‘variants’, almost commonplace – may have to some extent blunted the original negative connotation, it has not altogether lost its intrinsic evaluative, rather than merely descriptive, meaning and so still inevitably contains an unequivocal (dis)value-judgement.

When assessed in terms of the potential for radical and comprehensive effects that is inherent in its asserted function of making social rules conform to market requirements, the infiltration of competition law – as the extreme and purest, and as it were quasi-sublimated, expression of the ‘forced’ deregulation of employment relationships – would appear, in point of fact, to call directly into question the ‘very legitimacy of labour and social-security law’.

‘The main characteristics of what will be the social model of a united Europe’, wrote Wolfgang Streeck recently, ‘are less clear today than they were ten or twenty years ago.’

The welfare states of the Old Continent crossed the threshold of the twenty-first century in a state of profound uncertainty. Despite gloomy predictions of their irreversible crisis and inevitable collapse, they are by no means in their death throes and still enjoy widespread and deep-seated political consensus, as foundational elements of the specific identity of European societies and of the European model of ‘civilizing’ a capitalist economy. Nevertheless, the political-economy presuppositions on which they had been re-established as supporting planks of the social contracts underpinning the post-war reconstruction of the nation-states of Western Europe have altered drastically and definitively.

The state of uncertainty concerns the actual meaning and direction of the processes of restructuring or readaptation, experimentally launched as early as the 1990s, that were imposed by the radical changes brought about by the new political economy, both domestic and international.

More and more commentators are rightly remarking that – although very significant, especially in terms of the future outlook – the challenges arising from the globalization of capital and financial markets and from increasingly fierce international commercial competition are not the only ones that European welfare states find themselves having to confront today, and probably not even the most important and impelling.

A preliminary review of the historical background

Two fundamental processes, at once simultaneous and symbiotic, mark the history of Western Europe from the immediate post-war period onwards and more particularly the years during which the European Community was formed: first, what has been called the ‘rescue’, the genuine rebirth, on democratic foundations, of the nation-state as a welfare state; and second, (participation in) the reconstruction, conclusively overcoming the blinkered nationalistic attitudes that had cast a pall over the inter-war years, of the international economic order. The two processes come together, or perhaps rather find their moment of synthesis, in the establishment of first the European Coal and Steel Community (ECSC) and later the European Economic Community (EEC).

They are identifiable as two separate ‘movements’ only by virtue of the apparent contrasts and contradictions between them; they actually, at least in the extraordinary and probably unique and unrepeatable phase in European economic history coinciding with the hectic thirty-year period of economic recovery in the aftermath of the Second World War known as the Trente Glorieuses, followed a mutually complementary course of development, with each supporting and reinforcing the other.

‘At the end of the period of reconstruction of the national economies shattered by the war’ – as one author has tellingly put it – ‘income redistribution and discretionary macroeconomic management emerged as the top policy priorities of most Western European governments.

This timely book addresses a number of enduring debates regarding the political and legal trajectory of the European Union's evolving constitutional framework, namely the role and nature of social policy. On the one hand, the purse strings of the national welfare states are still firmly guarded by the Member States, which retain the power to tax and grant benefits. On the other, the logic of the liberalisation of markets has placed a number of competitive pressures upon welfare states, upon national systems of labour law, and upon labour markets, which remain largely national in character. Such national systems are, by their very nature, diverse, notwithstanding the competitive pressures coming from intra-EU market liberalisation and, more recently, globalisation and the effects of the WTO. Many have therefore asked the question about the possible nature and character of any putative ‘European social model’, and the position of such a model under the EU's evolving constitutional settlement, in which market integration has played such a central role.

The book takes the story from the beginnings of the European integration process, with the ECSC Treaty, the work of the ILO, and other precursors to the initially minimalist social provisions of the EEC Treaty, right through to the present day. It charts the ongoing pressures for change, and the reactions of various key actors, including the political institutions of the European Union, the European Court of Justice, and the national governments. Different styles of regulation have evolved, with a decisive shift towards soft regulation.

Introduction

The purpose of this final chapter is twofold.

Its first aim is to ‘systematize’, and at any rate analyse organically, a theme that has in a way been a strand running through the entire book: the far-reaching evolution (or considerable transformation) which has taken place, from the entry into force of the founding Treaties to the present day, in the forms of positive integration of national social systems.

The centrality of this theme within the more general discourse on the metamorphoses of the Community economic constitution, and on the different role gradually assumed in such a context by the forms in which European ‘social policy’ has been conceived and given practical implementation, is quite obvious. The transition from forms of social policy centred on the model of ‘hard’ upward harmonization to increasingly light and flexible methods of regulatory intervention somewhat removed from the traditional protective logic, and even more so the use of instruments of co-ordination of the ‘post-regulatory’ type, constitute essential elements of these metamorphoses and therefore need to be focused more carefully.

The second aim of the chapter consists in correlating these changes with the ideal economic-constitution models that they entail. An analytical comparison of the various ideal models of a European economic constitution as viewed in the abstract will serve to highlight the (differing) problems of effectiveness and legitimacy (inevitably) inherent in any given form of supranational intervention in social matters.

The difficult quest for a new balance between negative integration and positive integration of national welfare states

The weakening of the principle of territoriality of national systems of labour and social-security law as a result of the progressive expansion of the scope of the Community freedom to provide services effectively encapsulates the overall sense of the metamorphoses of the European economic constitution as described in the preceding chapter.

Negative integration came to prevail over positive integration, driven by the institutional and normative asymmetry created, in its favour, as a result of the constitutionalization of the Treaties by the Court of Justice. The latter has opted to give primary consideration to the rules underpinning the construction of a completely unified market around the principles of economic freedom, free enterprise and free competition, principles which have in this way acquired a centrality wholly unknown to the original balances. The direct effect accorded to these economic freedoms, elevated – in contrast to what had formerly been the case in most Member State constitutional traditions – to the status of fundamental rights, immediately achieved the object of removing the obstacles and barriers standing in the way of the construction of the single market, thanks to the supremacy of Community law over the rules of domestic law (including those of constitutional ranking).

The institutional limits of positive integration – as prisoner of the joint-decision trap and the political blocks of the ‘intergovernmental method’ – prevented it from adequately counterbalancing the varyingly marked deregulatory effects produced, at the level of national social policies, by the semi-automatic advance of negative integration.