Austerity and the Implementation of the Europe 2020 Strategy in Spain
Re-shaping the European Productive and Social Model: a Reflexion from the South
Summary
These policies of «commodification» and «austerity» are seriously limiting Europe-2020 capacity to foster a smart, sustainable and inclusive productive transition, while adding greatly to the continuous process of precarization and social exclusion that European societies are suffering, especially in Southern Europe.
The book presents empirical evidence on these externalities in areas as diverse as EU foreign policy, entrepreneurship or gender equality. But the special emphasis has been placed in those areas that the Europe 2020 strategy considers crucial such as employment, R&D, climate change and energy sustainability, education and fighting against poverty in Spain.
Thanks to the profuse analyses carried out by a group of leading Spanish academics, the book constitutes a benchmark for scholars, practitioners and the general public interested in European and Spanish economic policy issues.
"Essential contributions on the challenges faced by the Spanish economy when it comes to strengthening the Welfare State" (Valeriano Gómez, former Minister of Employment)
"A most useful collection of contributions addressing Spain’s difficulties in dealing with an indebted economy, and in need of re-shaping its strategic productive and social models within the EU" (Luis Moreno, IPP-CSIC).
"This book provides appealing insights into the evolution of the Spanish productive and social protection systems under austerity, as well as an analysis of crucial aspects of the implementation of the EU 2020 Strategy. A must-read for professionals and students interested on European" (Ana Marta Guillén, Dep Sociology- Oviedo University)
Excerpt
Table Of Contents
- Cover
- Title
- Copyright
- About the author
- About the book
- This eBook can be cited
- Table of Contents
- Introduction (Javier Ramos)
- The EU Facing Globalisation and the Financial Crisis. The Europe 2020 Strategy and the Definitive Triumph of Commodification in Europe (Javier Ramos)
- Designing Scenarios on Inclusive Globalisation. Europe 2020 and the Social Dimension of EU’s External Policy (Cristina Blanco Sío-López)
- The Entrepreneur within the Framework of the Europe 2020 Strategy. The Route of the Entrepreneurial Activation Idea in the European Union (Antonio Santos Ortega / David Muñoz-Rodríguez)
- Gender Inequality in Europe 2020 and Spain (Esther del Campo / Marta Pajarín García)
- The Europe 2020 Strategy in Spain. The Employment Objective (Alberto del Pozo Sen / Borja Suárez Corujo)
- The Spanish Productive Model Facing the Challenge of its Europeanisation (Celso Cancela Outeda / Bruno González Cacheda)
- Science, Technology and Innovation in Europe 2020 Strategy and its Effects in Spain (Armela Dino / Raúl Sánchez)
- Objectives Europe 2020 for Spain: Education (José Saturnino Martínez García / María Fernández-Mellizo)
- The Ecological Transition in the Shade of Europe 2020 in Spain (Rafael Fernández-Font Pérez)
- Social Policy in Spain under Austerity. Assessing EU Leverage for Structural Adjustment and Welfare Reform (Sergio González Begega / Eloisa del Pino)
- The Spanish Half-hearted Pursuit of Europe 2020’s Poverty Target (Ana Arriba González de Durana / Vicente Marbán Gallego / Francisco Javier Moreno Fuentes / Gregorio Rodríguez Cabrero)
- Contributors
- Series index
The EU Facing Globalisation and the Financial Crisis
The Europe 2020 Strategy and the Definitive Triumph of Commodification in Europe
1. The crisis of the “Mid-Century Compromise” and the expansion of Commodification in Europe
A political compromise after the Second War World made a relatively stable coexistence between capitalism and democracy possible in Western Europe. The “Golden Age” of welfare capitalism was highly conditioned by the apogee of certain forms of industrial production (Taylorism-Fordism), social provision (welfare states), public economic intervention (Keynesianism), and family articulation (male breadwinner model) that moulded the entire socio-economic order of what Crouch (1999) has defined as the Mid-Century Compromise.
This compromise basically meant the acceptance of a primary framework of property ownership together with certain rights of citizenship in predominantly industrial and sociologically democratic societies. It was a mutual concession that made possible the institutionalisation of the conflicts that exist between the imbalance inherent in capitalist ownership of property and the idea of equality embedded in the concept of democracy and mass citizenship (Crouch, 1999).
It was a socio-economic model in which social protection played a functional and counter-cyclical role as the nexus between profits and wages. Social protection allowed government to act counter-cyclically by providing the unemployed with additional cash benefits in times of high unemployment, with the subsequent positive effect on aggregate demand. ← 43 | 44 →
When unemployment was low, social protection sought the incorporation of those workers with more problems with labour integration, thus increasing labour supply, reducing the upward pressure on wages, and favouring productive transitions toward more innovative and high-value sectors of production.
However, a profound crisis of state legitimacy started with popular revolts in May 1969 events in France and consolidated with the Oil Crisis in the 1970s. Governments of that time were facing slow GDP growth, high rates of unemployment, soaring deficits and serious concerns about how to finance their welfare systems.
Authors such as Bell (1976) consider that welfare capitalism was not sustainable, due to its innate propensity to create unlimited social expectations, while hindering the functioning of efficient markets. Both progressives (O’Connor, 1973) and conservatives (Crozier, Huntington, Watanuky, 1975) agreed that welfare capitalism was doomed to serious problems of economic instability and financial sustainability that resulted in a crisis of legitimation of the whole system, to use Haberma’s famous expression.
For Habermas (1975), the economic crises of the 1970s turned into a crisis of rationality due to the inability of governments to ensure both better conditions for private investment and financing for rising social demands in a period of crisis. This crisis of rationality simultaneously created a crisis of motivation among citizens who were increasingly disappointed with the way their governments were coping with the crisis. The confluence of these different crises at the same time (economic/rationality/motivation crises) led to a true crisis of legitimation that broke up the “Mid-Century Compromise.”
After the oil crises of the 1970s, the need to maintain profitability under more restrictive economic conditions led employers to focus on achieving real productivity gains, expanding their markets and engaging in organisational decentralisation. These aims made it necessary to have wider and more intensive deregulation and flexibility, which profoundly altered the foundations of employment from the Golden Age.
This new economic scenario was interpreted as a path of no return, which gave way to a new epoch of “flexible specialisation” (Piore and Sabel 1984). A new managerial strategy, defined by Atkinson and Meaguer (1986) as the “flexible firm” emerged, dividing the labour force into a multi-skilled and functionally flexible protected core and a disposable periphery with fewer labour rights. ← 44 | 45 →
Employers developed a parallel systems of production using workers with less favourable job stability, wages, and promotion prospects that resulted in a “segmented labour market” made up of a protected core of workers and a periphery of unprotected ones (Berger and Piore, 1980; Sengenberger, 1981).
As flexibility and segmentation proceed, free-market advocates promoted a held view during the 1980s that countries with high income inequality and more flexible employment conditions showed better labour market performance, resulting in higher employment figures, than those with high income equality and more rigid labour legislation.
The contrast between the “dynamic-unequal” USA and the “fossilised-equal” Europe was used to suggest the existence of a trade-off between employment and equality. Countries with high income inequality and more flexible employment conditions showed better labour market performance, resulting in higher employment figures, than those with high income equality and more rigid labour legislation.
The persistence of rigidities in hiring and firing conditions, a high tax wedge, and considerable varieties of “generous” welfare benefits were presented as major obstacles to employment creation since they raised the cost of production, hindered competition, and limited the prospects for profits (Ellman, 1985; Lindbeck, 1992).
Redistribution via social expenditure was considered as inefficient as a “leaky bucket” to transport water, rewording Okun’s (1975) metaphor. Any deliberate attempt to transfer income to reduce inequality will negatively affect economic efficiency. The social programs needed to reduce inequality create unlimited social expectations that encourage laziness, fraud, and enormous bureaucracies that wipe out the entrepreneurial spirit needed to push economic growth and employment up.
The idea that inequality is good for growth also became hegemonic in economic circles and has provided the theoretical underpinning of globalisation since the 1990s. For neo-liberals, growth and equality are at odds, so gains in equality come at the cost of losses in efficiency and growth. Inequality is thought to be fundamental to the functioning of the market economy because it allows the saving, investment, and personal incentives needed to favour economic growth (Ramos, 2015). ← 45 | 46 →
2. Social Productivism as an alternative to Commodification in the EU: The Lisbon Strategy (2000-2010) and Social Productivism
If social protection was the cornerstone of the Mid-Century Compromise and commodification is the key of neo-liberal globalisation, social productivism has been the European attempt to reconcile economic and social issues that commodification was pulling apart.
Social Productivism does not reject social expenditure as disruptive for the right functioning of the market, but rather a good policy instrument to encourage knowledge-based growth and more and better employment. It is an attempt to conciliate commodification and social protection by subordinating social goals to the domains of productivity in the new context of globalisation (Ágh, 2010).
In this sense, Social productivism is a restructuring of the balance between commodification and social protection that presupposes a sort of highly productive worker in “transitional labour markets” that encourage mobility over the course of his/her life across the range of labour-related statutes, including between jobs, occupations, training, and unemployment (Schmid, 1998; Schmid and Gazier, 2002).
The idea of labour security moves from the traditional idea of “job protection” to a new one of “employment-career protection” especially focused on those groups of workers with more problems with market integration. This implies significant changes in both employment and social policies.
Social policies become “productivist” as well. They seek to actively maximise the productive potential of the population while minimising its dependence on government benefits. The main social priority now is to reduce the employment uncertainty associated with employment transitions and to avoid social duality and the risk of labour market exclusion.
Social investment must be maintained because persistent social inequalities in highly unequal societies invariably produce educational and cognitive inequalities that can make investment in education rather inefficient (Esping-Andersen, 2002: 78). In this productivist logic, low-skilled workers are now the principal target group of employment and social policies, because they need special qualifications and training programs to assist their incorporation into the labour market. ← 46 | 47 →
Governments are required to prioritise educational and human capital programs over other, “passive” public benefits, because the priority now is to avoid long-term unemployment and workers dependency on public benefits. The fact that the British Labour Party led by Blair was a pioneer in the implementation of social productivist policies explains the increasingly commodifying bias of social productivism. Blair’s famous “welfare-to-work” strategic plan and its famous slogan “work for those who can, security for those who cannot” exemplified this.
However, the term that best defines this new attempt to reconcile commodification (capitalism) and social protection (democracy) is what is called “flexicurity.” In many respects, the flexicurity models developed in Scandinavian economies become a benchmark for social productivism and the European policies inspired by it, mainly the Lisbon Strategy and, to a lesser extent, the Europe 2020 Strategy.
Flexicurity was defined as “a policy strategy that attempts, synchronically and deliberately, to enhance the flexibility of labour markets and work organizations on the one hand, and to enhance security – employment and social security – notably for weaker groups inside and outside the labour market, on the other hand” (Wilthagen and Rogowski, 2002: 250).
The central argument of so-called “flexicurity” insists on the fact that workers need extra help to avoid social duality and the risk of exclusion, which is so harmful to the development of a knowledge-based society. It tries to discriminate among those elements of labour security that benefit flexibility (employment protection over job protection, “active” over “passive” policies, lifelong learning and skill upgrading over labour seniority), and vice-versa, those elements of flexibility that benefit security (internal or wages over external flexibility).
Yet, there has always been a certain propensity to enhance flexibility over security and to intensify commodification in social domains. The vital role played by high levels of income retention during any episode of unemployment typical of Scandinavian model of flexicurity, especially the Danish one, was frequently forgotten as the idea was popularised (Keune & Serrano, 2014).
2.1 The European Strategy for Economic and Social Development (Lisbon Strategy 2000-2010)
The Lisbon Strategy has been the European attempt to implement the logic and principals of social Productivism. It was indisputable that the ← 47 | 48 → European economy as a whole was, for quite some time, less productive than that of North America, partly due to Europe lagging in the field of innovation (Pissany-Ferry, 2005).
To compensate for these shortcomings, in the spring of 2000, the European Council gathered to face this productivity challenge by turning the EU into the “most dynamic and competitive knowledge-based economy in the world, capable of sustainable economic growth, with more and better jobs and greater social cohesion” within a decade.
And so, the “Economic and Social Development Strategy” was created as an attempt to compensate for European backwardness in innovation and productivity as the best guarantee for maintaining European welfare states. So, the Strategy initially assumed the logic of “social productivism” (a competitive, knowledge-based economy to maintain European welfare states).
However, the series of propositions that the Strategy laid out excluded a crucial issue: how increasing productivity and competitiveness would guarantee greater social inclusion. The aspects referring to social policy were vague, if not clearly superfluous. The Strategy spoke of rendering social security more accessible to those citizens who live or work away from their native countries, adopting a directive for temporary employment agencies, ensuring the viability of pension schemes, and introducing an open method of coordination in the field of social protection.
There was no specific field dedicated to social inclusion. Only the fourth point of the document1 (“the construction of a more inclusive labour market that strengthens social cohesion”) clarifies the Lisbon Strategy’s position on this topic: to be able to reach sustainable economic and financial welfare systems, the Strategy suggests that inclusion means, above all, that a majority of the active population must have an occupation.
The reality is that the Strategy ended up being a new instrument of commodification that saw growth and employment as the best social policy. Very soon (in 2004) the European Council entrusted Wim Kok with the mission of establishing more realistic objectives for the Lisbon Strategy. ← 48 | 49 → The outcome was the drafting of a document with the 24 objectives that made this subordination of social inclusion to commodification explicit.
The aim was to create open and competitive markets within and outside Europe, increase the attractiveness of the business environment, improve the business climate for small and medium enterprises, ensure that progressions in salaries contribute to macroeconomic stability and growth, and stimulate private initiative to improve regulation.
The list goes on until it reaches twenty-four objectives that interpret social inclusion as a “natural” consequence of growth and employment in an open, competitive, and innovative economy. Social inclusion is the direct consequence of having a job, and employment is highly dependent on the productivity of the European economies. So, the Kok report moved the Strategy away from the logic of social productivism and aligned it with the imperatives of commodification.
Details
- Pages
- 340
- Publication Year
- 2017
- ISBN (Softcover)
- 9782807604360
- ISBN (PDF)
- 9782807604490
- ISBN (ePUB)
- 9782807604506
- ISBN (MOBI)
- 9782807604513
- DOI
- 10.3726/b11422
- Language
- English
- Publication date
- 2017 (August)
- Published
- Bruxelles, Bern, Berlin, Frankfurt am Main, New York, Oxford, Wien, 2017. 335 pp., 38 fig., 18 tables
- Product Safety
- Peter Lang Group AG
