Internationale Politikanalyse Europäische Politik, August 2006 Marius Busemeyer, Christian Kellermann, Alexander Petring, Andrej Stuchlik* Political Positions on the European Economic and Social Model – a Map of Interests Introduction Over the past decades, closer European integration has led to a multitude of supranational structures and organisations. With the enlargement rounds what has also increased is the extent of heterogeneity of members of the Union. The national economies of the twenty-five member states are divergent not solely in terms of performance and size, but also differ significantly in terms of economic constitution or distribution of income. * This is how political parties are faced with increasing demands for producing a Europe-wide consensus on policy measures. The following study concentrates on the positions taken by political parties, trade unions and employers' organisations on the European economic and social model(EESM). The basis of this article is a Europe-wide survey on the main policy fields of the EESM. In the survey, a total of fifty questions were put to more than one hundred leading personalities from political parties, trade unions, ministries, parliaments and employers' organisations. 1 The questions were grouped according to three thematic contexts: a) economic policy, b) social policy and c) competition(amongst the member states). The survey was conducted in a total of seventeen European countries: Austria, the Czech Republic, Denmark, Finland, France, Germany, Great Britain, Greece, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal, the Slovak Republic, * M. Busemeyer: University of Heidelberg C. Kellermann: Friedrich-Ebert-Stiftung, Bonn E-Mail: christian.kellermann@fes.de A. Petring: Social Science Research Center Berlin(WZB) A. Stuchlik: Andrássy University, Budapest 1 This study is based on a research project conducted by the Friedrich-Ebert-Stiftung. The questionnaire, findings relating to countries and the data records are available on this webpage of the Friedrich-Ebert-Stiftung: http://www.fes.de/ internationalepolitik. Concerning the development of questions and economic discussion of the European economic and social model, see Petring/Kellermann 2005. Spain and Sweden. Two key questions formed the primary focus of the research project and of this article: 1) In which areas is consensus/divergence to be found in the positions of the parties and organisations? 2) How can these common standpoints and differences be explained? Based on a brief narrowing down of the broad concept of a European economic and social model, what follows is the explanation of analytical assumptions of the study. Subsequently a description and analysis are provided of the positions taken by the respondent parties and organisations concerning the evaluation of the current economic and social model and concrete proposals for reform. The conclusions are presented in a brief summary. The European economic and social model There is controversy as to whether it is possible to speak of just çåÉ European economic and social model. As a rule, this debate is based on two different benchmarks: advocates of the existence of one model emphasize a socio-political consensus that extends across the whole of society. This is said to prevail in all European countries, and sets the EU apart from the USA. What sceptics see in the numerous nation-state variants of the social models is counter evidence for the existence of a common model. Experience shows that there is particular opposition to the delegating of welfare-state responsibilities. This is reflected in the comparatively underdeveloped socio-political responsibilities of the Union. Nevertheless, these have been broadened incrementally since the inclusion of the

Marius Busemeyer, Christian Kellermann, Alexander Petring, Andrej Stuchlik Political Positions on the European Economic and Social Model – a Map of Interests Europäische Politik (08/2006) 2 Social Chapter in the Amsterdam Treaty. In addition, for a party are reflected in the(government) policy of socio-political coordination has been stepped up within these parties(Hibbs 1977; see also Schmidt 1983; the framework of the Open Method of Coordination Cameron 1985; Budge/Keman 1990; Boix 1998). If the since 2000, even if harmonisation has not(O'Connor 2005). 2 In this way, the European economic and social partisan theory and the hypothesis contained therein of the link between party-political agendas and the model has remained the subject of ongoing political socio-economic interests of their electorate is applicacontroversy(Witte 2004). This controversy runs ble, then a high degree of uniformity would have to be amongst countries or groups of countries and also identified when for example comparing the positions amongst political camps. of social democrats of various countries. With this hypothesis, the assumption must also nevertheless be made that the electorate of the social-democratic parParty-political interests and ideologies ties in Europe are essentially those of the same socioeconomic strata with similar interests. In most studies conducted hitherto on positions taken When responding to the question of uniformity by political parties on European issues, the findings and divergence, what is not insignificant is the degree have supported the hypothesis of the"inverse of abstraction of the subject of the question conU-curve". This hypothesis implies that parties on the cerned. On an abstract and general level, there is a left and right fringes of the party spectrum tend to tendency to expect greater uniformity of positions. On represent Eurosceptic positions, while those at the centhe one hand, this is because there is rhetoric about tre of the political spectrum represent pro-integration agendas rather than real political action. Yet on the stances(e.g. Hix 1999; Hooghe/Marks/Wilson 2002; other hand, what can also be expected is that the Hooghe/Marks 2004). Within the parties relatively more concrete is the subject of the question or the polclose to the political centre, further differentiations are icy proposal under discussion the more prominent are possible. European integration was firstly supported by the differences in the makeup of the current national conservative players as"the creation and opening up electorate groups as well as divergence in interests reof markets"(Marks 2004: 236). Hooghe and Marks flected in the respective institutional environment. assume that progress in integration over the past The following section sets out the positions of partwenty years towards European minimum standards, ties, trade unions and employers’ organisations in infrastructure and effects of redistribution tend to be Europe as regards the three domains of economic polaccepted more by centre-left players(ibid.: 9f.). This is icy, social policy and interstate competition. After a how a change of preferences by parties has progressed short outline of the status quo and key reform proposat the centre of the left-right party spectrum: at the als, the positions of the parties and associations – dibeginning of the 21st century, centre-left parties were vided into the evaluation of the current model and supposed to be more fervent in their preferences for preferences relating to the reform proposals – will be progressive European integration than centre-right parexamined for left-right differences and possible differties. If a uniform position of social democrats were to ences of families of countries. 3 be observed regardless of the various institutional and political preconditions prevailing in the EU member states, then this could be seen as evidence of partypolitical ideologies dominating institutional differences and national interests. This assumption is derived from the hypothesis on party differences("Partisan Theory"). The core of this argument concerns the comparison of positions between the Left and conservative parties. This is explained in that differences in(objective) interests and(subjective) preferences of the voters 3 In order to undertake a subdivision into groups of countries, we addressed the relevant research papers(fundamentally: Esping-Andersen 1996). Five groups were formed: one conti2 The method is orientated towards the employment process nental-European, one Scandinavian, one Anglo-Saxon, one already introduced by the Amsterdam Treaty, and is made up Mediterranean and one Eastern- and Central European group. of the following elements: definition of common goals, plans The key parameter for types of welfare states is the degree of of action at national level, a joint report by the Commission de-commodification, that is, the extent to which areas of life and by the Council about the plans of action, the search for are removed from market regulations and are"de-marketed" best practice, the setting up of indicators. for the protection of the citizen.

Internationale Politikanalyse International Policy Analysis Unit Positions on the European Economic and a symmetrical pin-point target are developed(i.e. of an Social Model equal evaluation of rates of inflation that are too low as well as those that are too high)(Allsopp/Artis 2003) Economic policy or a medium-term pin-point target of 2%(Lommatzsch/Tober 2003). lîÉêîáÉï=çÑ=íÜÉ=ÇÉÄ~íÉ== In the debate on the future of European incomes policy, two different approaches to economic policy Before the findings of the survey are presented, a brief are diametrically opposed. The prevailing supply-side outline is given about the current debate. In all doapproach pleads for wage restraint and at the same mains, the EU has at its disposal various means of time for decentralised procedures in setting wage levpromoting economic growth. In this way, all macroels. Proponents of a demand-oriented approach deem economic instruments to which nation states could no necessary the arrangement whereby wage-negotiation longer resort, or only to a limited degree, can theoretisystems are coordinated at national level and throughcally be transferred to the European level. At present out the EU(Hein/Niechoj 2004). The key strand of critihowever, an EU-wide growth and stabilisation policy cism in this policy field is a lack of coordination of still meets with several obstacles, because proper coorwage settlements, producing the need for a strengthdination of partial domains(chiefly fiscal-, monetary ening of macro-economic dialogue between the ECB, and interest-rate policy) is not taking place, and the fiscal authorities and management and labour, in addioutcomes of growth incentives differ according to retion to the need for the strengthening of organisagion. tional capability of the trade unions, or rather, decenThe Stability and Growth Pact(SGP) is the target of tralisation and differentiation of wage settlements. criticism primarily because of its" çåÉJëáòÉJÑáíëJ~ää Other growth policies are the European Employapproach“, which has often been censured as too rement Strategy(since 1997) and the Lisbon Strategy strictive(especially the 3%-deficit rule). On the one (since 2000). According to the Lisbon Strategy, Europe hand, proposals for solving this problem are directed at should develop into the"most competitive and dyfurther economic integration that aim to curtail various namic knowledge-based economy in the world". There economic cycles. Other proposals consider countryis widespread consensus on the aims associated with specific parameters, starting with the overall deficit of the European employment guidelines and the Lisbon the EU(Buti/Nava 2003). Another point of criticism leStrategy: reducing unemployment, increasing the emvelled against the SGP is that its criteria lead to proployment rate, raising the numbers of women in emcyclical effects. An important approach to reform in ployment, reducing youth- and long-term unemploythis context is the consideration of the type of deficit, ment, creating better quality jobs, improving training, i.e. debts for investments, which are in harmony with extending childcare, etc. In the"interim review" unthe Lisbon Strategy, the evaluation of which is differdertaken by the European Commission in spring 2005, entiated from debts incurred for consumption purthe aims were deemed good and correct, yet they poses. What can also be considered is the national were said to have fallen well short of achievement rates of savings(Weale 2004) or structural household (European Commission 2005). These findings spark off deficits as a reference value(for criticism, see Buti et al. yet more criticism: because of the non-fulfilment of the 2003). The criticism that the SGP is too restrictive is aims, tougher forms of governance have been concountered by a suggestion to abolish the 3% rule and templated instead of the Open Method of Coordinato concentrate instead on the 60% rule(level of intion(OMC). Yet also under consideration is more open debtedness) of convergence criteria(Hishow 2005). discussion through closer inclusion of management Discussion on the monetary policy of the European and labour and national parliaments, modifying the Central Bank fluctuates subject to discretionary powers SGP, in so far as the latter should be an obstacle to the as a result of the strict perception of its mandate for aims, or the linking of quantitative aims with qualitasecuring the stability of monetary value(inflation tartive indicators(e.g. quotas of women employees, wage get below 2%) and of a more transparent orientation differentials and the share of under-employed workto economic- and employment policy goals of the EU. ers/part-timers). A key line of criticism is aimed at the focus of the ECB The question linking all policy fields is of European on price-level stability, from which a new formulation coordination of member states' economic policies. As of its task is derived for targets of price stability and an initial step towards macroeconomic coordination, economic growth(Filc 2005). Also criticised is an unthe"fundamental features of economic policy" have clear inflation target, from which the reform options of been worded since 1993, and in 1999 the"Cologne 3

Marius Busemeyer, Christian Kellermann, Alexander Petring, Andrej Stuchlik Political Positions on the European Economic and Social Model – a Map of Interests Europäische Politik (08/2006) 4 Process" was initiated as part of a Franco-German inieven if the social democratic parties view that with tiative. However, there are no means of imposing sancsomewhat more scepticism. They find fault chiefly with tions, and the dialogue has not yet led to the hopedthe concentration on economic goals after revision in for positive results in the form of a higher growth 2005. On the other hand, consensus prevails again actrend. A reform policy therefore means creating stronross all countries and parties on the evaluation of the ger decision-making powers and binding decisions of poor results hitherto produced by the Lisbon Strategy. the macroeconomic dialogue. A more fundamental Despite this critical evaluation both of the results of the criticism is directed at the economic-theoretical organiEES and also of the Lisbon Strategy, the Open Method sation of the coordination, and demands a neoof Coordination(OMC) is positively welcomed. Keynesian macroeconomic economic policy while preserving existing forms of coordination(Hein/Niechoj 2004). oÉÑçêã=éêçéçë~äë== mçëáíáçåë=çå=íÜÉ=éêÉëÉåí=ÉÅçåçãáÅ=ãçÇÉä= What is presented below are the findings of the survey of leading personalities on which this article is based. There is unanimity in the European countries with regard to the fundamental need for a regulatory framework for fiscal policy in the EU. However, criticism is expressed against the Stability and Growth Pact. The main point of criticism is the lack of flexibility of the Pact; besides this, fault was also found with the dearth of growth incentives emanating from the Pact. With the exception of the liberal parties and some East European parties(esp. in Poland), a problematic procyclical effect is also ascribed to the Pact. Asymmetric economic cycles within the EU are likewise perceived by a relative majority mainly by the social democratic parties and trade unions, as a problem for the Union. Nevertheless, just fewer than 40 percent also view the instrument of national economic policy as widely ineffective. Yet in the group of Scandinavian and AngloSaxon countries, this statement is clearly contradicted, with emphasis instead on the ever-present room for manoeuvre in structuring and governance at national level. The work undertaken by the ECB hitherto is evaluated positively by a clear majority. Critical voices on this are heard chiefly from the trade unionists' camp, who accuse the Central Bank of neglecting the growth target. The European Employment Strategy(EES) is acknowledged as having predominantly little effect on measures taken at national level. With half the respondents, only those in the Mediterranean group of countries answered yes to the question of direct links to reforms in employment policy in their own countries. A picture of division is revealed with regard to the Lisbon Strategy. Overall, most parties consider the aims and measures formulated in the Strategy to be correct, Of all the options circulating in the debate on reform of the SGP, what is cited mostly is the diverse consideration of investment as a means of counteracting inflexibility and of promoting more concentration on economic growth. In some countries however, yet more change is rejected, instead of which pressure is exerted for preservation of the rules applying to all member states(Finland, Poland, the Slovak Republic). All that the East European countries can hope for, in addition to the Netherlands and Spain, taking investment into consideration to arrive at a definition of deficit criteria, is renewed dissent amongst the member states when it comes to the definition. Italy, Greece and Ireland therefore propose linking with the aims of the Lisbon Strategy. With these reform proposals, various positions can be observed chiefly amongst countries or groups of countries, though appreciable differences between parties are not found (see illustration 1). Illustration 1: Reform of the Stability and Growth Pact anglo-saxon continental eastern europe 100 50 0 percent no yes other mediterranean no yes other scandinavian no yes other 100 50 0 no yes other no yes other reform of SGP-criteria?

Internationale Politikanalyse International Policy Analysis Unit The reverse scenario is found with the reform of the ECB mandate. While social democrats(and trade unions) welcome by a majority a new wording of the mandate(similar to the US Federal Reserve), the majority of conservative and liberal parties oppose this proposal. On the question of changing the inflation target, only within the trade-union camp a majority welcomes a higher target value. Nevertheless, roughly over one third of the social-democratic parties are likewise in favour of a higher inflation target, while a clear majority of conservatives and liberals are content with the status quo. In addition to fiscal and monetary policy, wages and salaries are of key economic importance. Therefore, the call was expressed for closer coordination of incomes policy at European level. Although an absolute majority reject this as a matter of principle, around a fifth cannot imagine this as taking place for a very long time. However, this proposal clearly finds more support from the social-democratic parties(over one third) than from conservative parties(under 10%). A majority agreement for EU-wide coordination of incomes policy is found only within the Mediterranean group of countries. On the other hand, this idea is rejected in the Anglo-Saxon and Scandinavian countries. This common ground between Great Britain, Ireland and the Scandinavian countries can be observed against the background of highly diverse wage-negotiation systems. While the protection of sound collective wagenegotiation systems in Ireland and the Scandinavian countries is cited as an argument, social democrats and trade unions in Great Britain are in principle sceptical towards the transfer of responsibility to the European level. Instead, the company level is cited as the one preferred for wage negotiations. On the other hand, the greater majority of social democrats and trade unions in other countries believe that wages should be negotiated at national level, while conservative and liberals argue for further decentralisation of wage negotiation to company level. Similarly, the proposal for closer coordination of employment policy meets predominantly with scepticism. Even if majority opinion considers that the European Employment Strategy has only a minor influence on legislation at national level, a majority is in any case opposed to strictly binding parameters set by the EU. This brings the cluster of countries into even greater prominence. Closer coordination in the realm of employment policy is broadly supported by the Mediterranean countries, with rejection at cross-party level in the Scandinavian countries and in Great Britain. On the question of closer coordination of employment policy, what applies here too is that only the social-democratic parties and trade unions support this measure by majority, while it is unanimously rejected by conservative and liberal parties. Besides the cited reforms to existing institutions, there are also demands for utilising new instruments within the economic policy of the EU. What still comes relatively close to the status quo is the proposal to supplement the"Broad Economic Policy Guidelines" by the prospect of rather short-term coordination. This proposal meets with support and rejection in relatively equal measure, yet in the process clear party differences emerge. It is flatly rejected by conservatives and employers’ organisations, though both trade unions and social democrats are by majority in favour. In contrast to the change and/or supplementing of the"fundamentals", anti-cyclical measures implemented by the EU would be a totally new instrument of economic policy. Here too, the same differences reappear on the left-right axis. Besides the rejection of conservatives, liberals and employers' associations, the trade union camp also is divided on this aspect. Within the social democrats group, it is in turn the Scandinavian parties who express opposition to anti-cyclical measures of the EU. The reason cited was the rejection of a growing EU budget, which would be the necessary precondition for such a proposal(see illustration 2). Illustration 2: Anti-cyclical measures implemented by EU conservatives employers liberals 100 50 0 percent no yes other social democrats no yes trade unions other no yes other 100 50 0 no yes other no yes other anti-cyclical EU-measures? The proposal for macroeconomic coordination within the EU goes one step further. Here too, approval and rejection are on the whole in equilibrium, and the pattern between parties and countries is virtually identical with the positions adopted on anti-cyclical measures: there is unanimous rejection from conservatives, liber5

Marius Busemeyer, Christian Kellermann, Alexander Petring, Andrej Stuchlik Political Positions on the European Economic and Social Model – a Map of Interests Europäische Politik (08/2006) 6 als and employers' organisations, with majority apfor the benefit of all employees and their families who proval amongst social democrats and trade unions on immigrate from within the EU(EEC Directive No. the other hand. The voices of opposition to these 1408/71). 4 The answers to this question fluctuate bemeasures within the social democrat ranks again come tween protectionism and further liberalisation(worker from the Scandinavian countries. A transfer of responmobility). sibility for economic policy(especially fiscal- and inOne possible socio-political measure given this comes policy) to the EU level is flatly rejected, with a background and that of low-wage dumping is the insystem of voluntary coordination of 25 countries on troduction of a European minimum wage, which is the other hand being assessed as unrealistic. demanded irrespective of the question of the level of wage negotiations. While a minimum wage already exists in many countries of the EU, German trade unSocial policy ions in particular have long viewed this as a threat to = tariff autonomy. One European minimum wage level lîÉêîáÉï=çÑ=íÜÉ=ÇÉÄ~íÉ== could for example amount to 50% of a prevailing national average income(Schulte et al. 2005). The basis of the more recent social policy of the EU can One of the central pillars of the European social be found in the Amsterdam Treaty. Social policy comes model is the dialogue with management and labour. under the joint responsibility of the European CommuThe Commission can"develop the dialogue between nity and of member states. European social policy has management and labour at European level, which, if hitherto been a policy field subject to soft regulations, considered desirable, can lead to contractual relations" even if this is demanded from many sides in order to (Article 138 of the EC Treaty). To this end, the Comreinforce the social elements besides augmenting marmission has built up a process of ongoing dialogue ket freedoms through conditions relating to social polwith management and labour, which is conducted icy. While there has since been a recognisable social with the leading representatives of employers' organidimension in the employment laws of Europe(minisations(UNICE and CEEP) and the Trade Union Conmum standards), rules governing welfare payments federation(ETUC). Within the framework of this diaand welfare systems are either wholly non-existent or logue, positions are being developed in the domain of exist only in the form of directives. Hitherto, applying education and training, in the organisation of the lathe OMC has predominated in the realms of social polbour market and in setting directions for economic icy. policy. In the realm of employment, active participation There exist a range of lines of argument in the of management and labour is at the heart of the new realm of social policy. Recommendations and agreed European Employment Strategy. In order to promote targets in the realm of social policy are always an intethe Social Dialogue at company level, the Directive on gral part of the criteria of the SGB and the monetary the European Works Councils(EWC) was finalised in policy of the ECB(Scharpf 2002). Through this, either 1994. This type of committee, devised chiefly for inthe dissolution of the OMC through"hard" regulaformation and consultation, has so far been set up in tions is said to be desirable and/or setting a lower limit approx. 40% of companies, which come under the Difor welfare spending measured by the gross domestic rective(Lecher/Platter 2003). One key strand of critiproduct(Scharpf 1997). Another conceivable idea is cism of the Social Dialogue is an imbalance between said to be the assimilation of socio-political standards management and labour due to an effective right of into the SGP and/or the assimilation of welfare rights veto by the employers. There therefore exists a reinto the Charter of Fundamental Rights. A more exquirement by the Commission to promote more vigortreme position implies that the heterogeneous nature ous socio-political activities in order to motivate emof welfare states would render a common social policy ployers to take more interest in the Social Dialogue. An impossible, with this field having to be organised at additional option is closer involvement of management nation-state level. and labour in decision-making processes. Based on the Migration is another slogan in this context. Eastidea that coordination of the sectoral level comes wards expansion of the EU is arousing fears that miacross as only weak, closer coordination between the gratory movements from the new member states could overburden national welfare systems. This fear is based on the obligation to apply the systems of social security 4 Although reform of rule 883/2004 has already been finalised, it still has no legal force because of the absence of a directive on implementation.

Internationale Politikanalyse International Policy Analysis Unit European Works Councils and sectoral trade unions as the core for building up and expanding a stronger (Keller 2003) is recommended in addition. social Europe. Trade unions tend to judge the findings hitherto of the Social Dialogue more critically than the representatives of parties on the Left. The Social Diamçëáíáçåë=çå=íÜÉ=ÅìêêÉåí=ëçÅá~ä=ãçÇÉä= logue is positively evaluated especially in the new member states of Eastern Europe. The assessments of the current model of a"social Europe" turn out to be highly varied. As has become clear in the preceding section, what has been most oÉÑçêã=éêçéçë~äë= prominent is the clear criticism of the lopsidedness of the economic policy of the European economic and Discontent with the current European economic and social model. In the evaluation of Europe as a sociosocial model(EESM) is virtually mirror-imaged: contrary political entity, the positions taken by the Left range to the views of the conservative and liberal parties and from inadequate(Greece) to positive, though with resemployers' associations, the respondents from the soervation(Denmark). What is noticeable is that those cial democratic parties and trade unions are patently states, in which the welfare state at national level counanimous in the view that the social dimension of Eumes across as relatively weak tend to express greater rope ought to be enhanced. Yet a greater degree of criticism of EU social policy than the political players in non-uniformity prevails as to which path is to be taken the developed welfare states. As expected, the trade for a future EESM. What emerges here is that the apunions' criticism of the model's inadequacy is more seproval on concrete measures, which aim to create a vere than that of the social democrats. Employers' repuniform EESM, are evaluated more critically. resentatives(e.g. the Austrian Chamber of Commerce) In connection with this, the existing heterogeneous even consider the domain of EU social policy as a character of the arrangements for welfare states in Eu"highly developed legal area" which is"virtually derope is not viewed as an obstacle on the road to a cided". common EESM but as a strong point of the EU. RelaOn the other hand, a high level of unanimity pretively clear reference is made, chiefly in the Scandinavailed with virtually all interviewees regarding possible vian countries and partly also in the new member "social tourism" and migration based on differentials states, to the potentially fruitful competition amongst in welfare-state provision. The general assumption is the welfare states for the purpose of mutual learning. that it will be not so much the differentials in welfareIn the new member states in particular, though also in state provision, which trigger migratory movements, isolated quarters in Austria, France and other counbut at most the availability of employment opportunitries, what is also pointed out is that the kernel of a ties and wage differentials. In countries such as Auscommon EESM is said to already consist of the form of tria, which borders the new member states, potential rectified national arrangements. These arrangements labour migration is however viewed as"the numberincluded for example collective labour relations, the one challenge" both by the Left(especially trade unprevention of inequalities, public social-security insurions) and by the Right. In Southern Europe(Spain, ance and the like. A majority of respondents quesGreece, Portugal, and less so, Italy), migration can be tioned therefore reject working towards a European observed chiefly from non-EU countries(in Greece: social model in the long term, or rather regard this at from Albania and other Balkan countries, in Spain: also best as unrealistic. Instead, there is advocacy of social from Latin America and North Africa). Yet this is genminimum standards or social rights at the European erally estimated to be not a problem but a benefit for level. Variations at national level can then unfold as the economy as long as the labour market ensures sufpart of this framework. ficient employment opportunities. Also in the Northern However, it remains relatively unclear at this point European countries(Scandinavia and Ireland), migrawhich social standards could be meant. The fact that tion is not considered to be a problem. even here too there is growing resistance to more conThe Social Dialogue at EU level tends to be positive, crete proposals is shown by the example of the minithough evaluation of the results hitherto has been mimum wage. Approval of the introduction of a Euroxed. Yet there appears to be a fundamentally broad pean minimum wage fluctuates significantly, dependapproval for the institution of a Social Dialogue at naing upon the group of countries in question. Parties on tional or EU level. Collective labour relations are cited the Left and trade unions in the Scandinavian countries by some even as the cornerstone of the(existing) Eurovoice unanimous opposition to this. In these countries pean economic and social model, and by others even the view prevails that regulation of the minimum wage 7

Marius Busemeyer, Christian Kellermann, Alexander Petring, Andrej Stuchlik Political Positions on the European Economic and Social Model – a Map of Interests Europäische Politik (08/2006) 8 should be reserved for management and labour. Statudefinitely mixed. Nevertheless, a broad majority, espetory intervention would weaken the position of mancially social democratic parties and trade unions, advoagement and labour. In the states of continental cate that management and labour should play a greaEurope, approval of the introduction of an EU-wide ter part in the EU in future. However, a certain nonminimum wage is more affirmative, even if trade ununanimity prevails with the question of how strengthions in countries with a strong partnership of manening the influence of management and labour, priagement and labour(Austria, though also France) remarily of the trade unions, can be achieved. It is priject intervention by the legislator or even by the EU in marily from the trade unions' side that the obstructive wage matters."Parliaments have lost nothing in wage attitude of employers' organisations is repeatedly empolicy", according to the trade union representative in phasized. In addition, an interviewee in Denmark Austria. Support for the EU minimum wage is strongcommented on the fact that in a considerable number est in the Southern European states, Great Britain and of EU states employers' organisations do not possess Ireland. In the process, the variant which receives the the organisational resources or the powers to actually greatest support is the one by which the obligation to induce their members to implement policies jointly introduce a minimum wage is agreed at EU level(as agreed on by management and labour. Furthermore, defined by welfare entitlements). This variant is then criticism has been expressed(in Spain and Greece) acimplemented at the national level(for example with cusing the Commission of regarding the obstructive the help of a formula which takes into account the attitude towards the Social Dialogue as"an excuse for economic development of the nation in question) each doing nothing" and of becoming too indolent. Opintime through national minimum wage rates. Therefore, ion is split on how the influence of the trade unions the trend is for the minimum wage to be rejected both could be strengthened. A relative majority of responin Eastern European states and in the states with dedents advocate the Commission's playing a greater veloped welfare systems and with a developed partpart, which should allocate"contracts" for quasi-legal nership between management and labour(continental dealing to management and labour, as well as exerting Europe and Scandinavia). more pressure on employers for inducing a more coAs with other examples from the realm of the ecooperative attitude in the latter. A minority of responnomy, the example of the minimum wage shows that dents, chiefly trade unions with a syndicalist tradition the transfer of responsibility for social policy from naand a strong organisational base, reject the Commistional to EU level continues to be viewed with criticism. sion playing a stronger part: a strengthening of the What fits in with this picture is the fact that in the role and position of the trade unions would have to be realm of social policy a large majority support the use achieved by the trade union movement's own efforts. of"soft" policy instruments like the Open Method of Developing the coordination between European Works Coordination. Councils and national trade unions is advocated chiefly As an interim summary, what can be noted is that by the trade unions, less so by the parties of the Left. the positions of the respondent parties and organisaAlso, as regards the Social Dialogue, the outcome is tions is governed essentially by the degree to which the well-known lines of conflict: plenty of approval on this has been implemented in concrete form. On an an abstract level and plenty of approval of the instituabstract level, approval of a"more social Europe" tion as such, but widespread disagreement on queswithin those on the Left is widespread. This tends to tions of concrete policies and strategies. In this way, support the hypothesis, which assumes that party inpowerful trade unions tend to be less prepared to purterests dominate national-state interests. However, if sue the"supranational route" for strengthening the specific policy solutions(such as the introduction of the influence of the management and labour, where this is minimum wage) are addressed, clear schisms are maniachieved by institutionalising the role of the trade unfested throughout the groups of countries and a greaions and by increasingly involving the Commission in ter reluctance to transfer socio-political responsibilities management of the Social Dialogue. Instead, the conto the supranational level. cern is with strengthening the trade union movement As it has already been made clear, a unanimously through its own efforts. It is chiefly in those states with positive attitude prevails amongst the respondents toa developed partnership between management and wards the institution of the Social Dialogue and of the labour where there is further emphasis on requiring partnership of management and labour, even if judthe workability of national institutions not to be gement of their concrete implementation at EU level is harmed by the European process of integration.

Internationale Politikanalyse International Policy Analysis Unit Competition area of the European Union. Discourse in this policy field is centred on whether the EU should continue to lîÉêîáÉï=çÑ=íÜÉ=ÇÉÄ~íÉ= focus its spending on agricultural policy, where payments should be directed to, and how the increased Despite public discussion on the analogy of the EU funding requirement due to Eastern enlargement with federal states, the responsibilities of the EU reshould be tackled in future. One piece of criticism is main far behind those over which the federation has levelled at the question of CAP efficiency, where it is jurisdiction under federal systems. What's more, Eurosaid to be an inefficient system with the wrong incenpean identity has so far only found scant expression. tives, and for this reason it should be decentralised(reYet both of these factors are important for overcoming nationalisation in accordance with the principle of subthe problem of competition at the nation-state level in sidiarity). The cost argument(especially concerning the key domains relating to distribution, such as agriculEastern enlargement) is matched by proposals for aboltural and structural policy. Tax competition within the ishing the payments over time, for bringing about coUnion is likewise the manifestation of the situation refinancing through the member states or for concenlating to competition at nation-state level, where intrating payments on the"second pillar". 5 centives for investment are created by the undercutStructural policy is an additional key policy field of ting-type of competition. the European Union. The aim of this is to consolidate As ever, taxes form the core fabric of national soveconomic and social cohesion within the Community, ereignty. Taxation policy of the EU has hitherto related and in the process promote special growth and empredominantly to rates of taxation with indirect taxes ployment in the underdeveloped regions("regional (such as VAT and excise duty) in the context of harpolicy"). 6 One significant strand of criticism is directed monisation of the internal market. In addition, the at levels of efficiency of regional promotion. Reforms Community budget is partly financed from VAT reverange from the abolition of subsidies to a clearly more nue, which is why the burden of contribution should stringent selection criteria(per capita GNP< 50% of be justly distributed throughout all EU member states the EU average)(Boldrin/Canova 2003) or on the fothrough a process of harmonisation. cusing on individual projects(without reference to Because of increasing cross-border competition with area) and on metropolitan growth zones(EU Commiscompany taxation, the EU is henceforth becoming insion 2004). More moderate proposals are inclined tovolved with this area also. With the Eastern enlargewards co-financing through national funding(Weise ment of the EU, there has been a further increase in 2003), or to relinquishing the regional approach in fathe number of states with low rates of taxation. Critivour of a national approach with the aim of expanding cism has been expressed now and again by high-tax institutions and investments in research and developcountries against such tax competition as"tax dumpment, education and infrastructure(Sapir 2003). The ing". Findings on tax competition that are standard shortage of funds resulting from the Eastern enlargeand capable of generalisation have been difficult to ment is cited as an argument for increasing the EU work out so far(see Herschel 2005; Ganghof 2000). budget or for intensifying the selection criteria for As possible reform measures, what is demanded neverstructural funds. theless are Europe-wide minimum rates of taxation The aspect of competition emerges very promi(with transition periods), consolidated company taxanently with the creation of a harmonised internal martion for transnational companies(for example,"strictly ket for services. According to the draft of the Commisat-source taxation", see Jarass/Obermair 2005), an EU sion dated 13th January 2004(the"Bolkestein Directax on financial transactions("Schüssel proposal") and tive"), this harmonisation will be achieved initially an EU tax on capital gains("Tobin-Tax"). Because of the perceived problem of inadequate harmonisation, 5 EU agricultural policy of the EU consists of three areas: market transferring tax issues to the majority principle(instead of the rule on unanimity) in the Council of Ministers is being contemplated, along with increasing the responintervention, direct payments and payments for the development of rural areas("second pillar"). With approximately 30% of the EU budget, direct payments constitute the largest budget item. sibilities of the EU for levying tax. 6 Out of the EU budget from 2000 to 2006, EUR 213 billion or Another area of interstate competition is agricultural policy. The agricultural budget is the largest deabout one third of the EU budget was allocated for regional policy purposes. The structural funds serve to satisfy the objectives of structural adaptation of regions that are backward partmental budget of the EU(in 2000 approx. 45% of (objective 1), of economic and social transformation of areas total spending, with a downward trend). The Common with structural problems(objective 2) in addition to adaptation and modernisation of policies relating to education and Agricultural Policy(CAP) is the only wholly communal employment(objective 3). 9

Marius Busemeyer, Christian Kellermann, Alexander Petring, Andrej Stuchlik Political Positions on the European Economic and Social Model – a Map of Interests 10 through the dismantling of national regulations, which Trade unions view this aspect more critically even traded under the name of the so-called country-of- beyond national boundaries. In the new member states origin principle. 7 of Eastern Europe also, where the parties of the Left Europäische Politik (08/2006) In political and scientific discourse there is controsimilarly articulate a cautious position on judging tax versy as to what kind of consequences the introduction policy, trade unions talk of"tax dumping". This also of the Bolkestein Directive could have had for individapplies to trade unions in the Slovak Republic, where a ual member states. Criticism was levelled at a possible competitive flat-tax system was introduced, which was "race to the bottom" on standards relating to work, criticised by other East European countries as distorting welfare, quality and the environment(see Böhret et al. competition. The rift between trade unions and social2005; Matuschek 2005). For this reason there were democratic parties in Eastern Europe therefore exists at calls for eliminating the country-of-origin principle, or present with respect to the effects of tax competition: introducing this only after an extensive process of trade unions fear the"race to the bottom" that could harmonisation. Further criticism was levelled at an unbe detrimental to the common good, while the parties clear concept of services, and accordingly there were of the democratic Left are divided over the consedemands for a positive list and exceptions to health-, quences, viewing competition so far as a legitimate welfare-, and social services(European Parliament, method in the EU-10 states for attracting foreign direct 2005). investment. Another field, which has a bearing on competition and consequently the regulation of competition mçëáíáçåë=çå=íÜÉ=ÅìêêÉåí=ëáíì~íáçå=êÉä~íáåÖ=íç=ÅçãéÉíáJ amongst member states, is the common agriculture íáçå= and structural policy. Spending on agricultural policy is deemed by most parties and organisations in Europe as Not only amongst the European Left but also a clear being too high. In France on the other hand, only mimajority of conservative parties are aware of a general nor criticism is expressed about the level of spending, level of tax competition, and one which is intensified because sustaining European agriculture is of prime due to the Eastern enlargement of the EU. This percepimportance, not least for reasons of safeguarding suption also tallies with the figures. In this way, the curplies at national level and health protection. rent tariff on tax-rate differentials with tax on profits of The opposite position to the French Left(who on private limited companies stands on average at apthis point agree with the general opinion in France) proximately 10 percentage points between the old and comes from Great Britain, where the prevalent view new member states(Büttner 2006: 12). Whether these states that agricultural policy should be integrated with differences actually do cause a postponement of instructural policy, with structural assistance at country vestment decisions, which on balance is at the expense level being provided to mainly the new member states; of the old member states, is disputed and unconfirmed agricultural spending in the narrow sense should be from an empirical point of view, and is not noted unafinanced by the member states concerned. The unaninimously by the social democratic Left in Europe – for mous criticism of the states of Central and Eastern Euexample in Ireland, Great Britain or Denmark the exisrope(expressed by both the parties of the Left and also tence of tax competition is also partially questioned. Or by the trade unions) directed at the structure and level rather, should such competition exist, then its effects of spending of the CAP goes in yet another direction: are considered to be relatively marginal. Accordingly, because of the credit advantage in the agricultural secsupport for tax competition is expressed by countries, tor and successful structural adaptation in past years, which have grown with and within such a form of domestic producers are rated as competitive. A reduccompetition. The new member states too would have tion in direct assistance throughout the whole of the to be given the opportunity for economic development EU would therefore bring additional advantages to even though competition may not be taken too far. farmers of Eastern Europe. Assessment of regional and structural policy of the 7 Where transnational operations are only temporary, service providers would be subject to the rules of the country of oriEU is much more positive. It is rated by a clear majority as efficient. The criticism put forward partly by the new gin, combined with a comprehensive prohibition on restriction in the recipient country. Monitoring and supervision of the providers would depend on the country of origin. The country-of-origin principle foundered on 16th February 2006 member states against the bureaucratic nature of application processes for structural funding can be explained by the essential institutional adaptation payin the European Parliament.

Internationale Politikanalyse International Policy Analysis Unit ments. Overall, parties of the Left in these countries as vians hold no uniform position, East Europeans, the well as trade unions regard redistribution processes as British and the Irish are clearly opposed to this. sensible instruments of cohesion. Amongst the conservative and liberal parties, in addiAnother facet of competition amongst the member tion to employers' organisations, this proposal meets states is the liberalisation of services in general and the with virtually unanimous rejection. Yet no transnaBolkestein Directive in particular. Neither amongst the tional left-wing coalition emerged about this question. conservative and liberal parties nor amongst the parties The reason for this can be traced back to the notion of the Left and trade unions in Europe is there any gethat although such an institutional step provides the neral rejection of liberalising the service market, with option for a minimum standard on tax issues, it is no parties of the Left tending to be more open than the guarantee whatsoever. What could also be undoubttrade unions. Central and East European states in paredly the case is that mutual development can be inititicular view service competition as a necessary process ated and tax competition can be enshrined even more of completion of the internal market for their catchingsecurely by institutions. Trade unions in Europe tend to up process. combine with this step a regulatory integration step, However, within the Left, there was unanimous opwhich is why the majority of them approve of reform position to the country-of-origin principle, where a of the Council of Ministers. Votes of rejection came "race to the bottom" was expected that would be detchiefly from the East European countries, which do not rimental to the common good. Such competition for wish to transfer any further responsibility in tax issues undercutting in the areas of social provision, the envito EU level. Rather, the Visegrád states link this with ronment and labour rights is feared particularly in creeping attempts at harmonisation, especially of the Scandinavia, though also in the Anglo-Saxon, contiold member states. After all, with the expansion there nental and Mediterranean countries. Solely in the Eastis an increased need for consensus in the Council of ern European countries does opinion differ on this, as Ministers, and consequently another argument against became clear also in the most recent dispute about the majority decisions on tax issues. This aspect gives creacceptance of the compromise proposal of the Eurodence to the hypothesis that in terms of ideology it is pean Parliament. With the country-of-origin principle, possible to observe relatively independent clusters of what re-emerged were the limits to a transnational countries when measures taken at EU level involve vaformation of a coalition based on an asymmetric perrious consequences regarding distribution, or rather, ception of the distributional effects of a policy. Yet this are perceived as such. rift divides exclusively the old from the new member On the other hand, there is greater uniformity states, and is not linked to the welfare-state models. amongst the parties of the Left when it comes to the The potential danger of a downwards spiral is seen in question of whether the tax responsibility of the Eastern Europe – if at all – only by the trade unions, Commission should be increased. With a clear majority who although not wanting to remove any sectors still they expressed opposition to such a measure in the argue for common standards in public welfare provicontext of tax competition(this is even more clearly sion. the case with the liberal and conservative parties). In this case, the theorem of decommodification does not appear to apply, as Europeanization is totally rejected. oÉÑçêã=éêçéçë~äë= The position of the Irish parties presents a paradigm: they wholly reject a transfer of responsibility for tax Wide differences exist about the question on correctly policy to EU level, as national governments would othdealing with(perceived) tax competition. The introducerwise no longer possess tax mechanisms during perition of the majority principle in the Council of Minisods of recession(except for spending cutbacks). One ters on tax issues – a relatively pragmatic-institutional exception to this question is the position of Italian sosolution – is not supported by any majority. If the social democrats, which are able to envisage both the cial-democratic parties, such as in the case of Finland, majority principle in the Council of Ministers and the express support for such an approach to reform, then transfer of tax responsibilities to the Commission. they do so with the reservation of drawing clear limits Combined with this is the vision predominating within to responsibility of the EU on tax issues. The change the Italian Left of developing the EU into a federation from the unanimity principle in tax questions to the of states. In Poland on the other hand, trade unions majority principle is supported only by continental and and social democrats hold opposing positions: the South European social democrats. While the Scandinaformer advocate a transfer of responsibility, while the latter oppose it. Yet the picture is predominantly one 11

Marius Busemeyer, Christian Kellermann, Alexander Petring, Andrej Stuchlik Political Positions on the European Economic and Social Model – a Map of Interests 12 of unanimous rejection of this measure, which can be with greater reservation – for accompanying tax comrated as a transnational position of political parties. petition by harmonising the basis of tax assessment, A central reform option in Europe-wide tax compewhich could be achieved via the OMC. On the other Europäische Politik (08/2006) tition is the introduction of a minimum rate of comhand, the notion of an EU tax as standing in direct repany taxation or the harmonisation of the tax-base lationship between the EU and the electorate is viewed principle. A majority expresses support for regulation by the East European parties of the democratic Left as of company taxation, even if there is no clear majority a likely alternative or compensation, while what is dein support of European minimum taxation, as a range manded by trade unions here too amounts to a miniof social-democratic parties and trade unions concenmum company tax. A minimum rate of taxation is retrate on standardising the tax base. jected by the conservative and liberal parties, as also by What is noticeable in the differentiation of answers employers' organisations; also, the idea of harmonising in trade unions and parties of the Left is that trade unthe basis for tax assessment finds support only spoions give preference to a minimum rate of taxation, radically. while the parties of the Left veer more strongly toWhen observing the positions on minimum tax in the wards the tax base(see illustration 3). cluster of welfare states, a supportive attitude is shown in most groups of countries. Critical voices are heard chiefly in Great Britain and Ireland, as well as in the Illustration 3: Europe-wide minimum companyScandinavian countries(see illustration 4). taxation(Left-Right) conservatives employers liberals Illustration 4: Europe-wide minimum company-taxation (welfare state type) 0 20 40 60 80 anglo-saxon continental eastern europe 0 20 40 60 80 percent no yes other social democrats no yes other trade unions no yes other no yes other mediterranean no yes other scandinavian no yes other percent 0 20 40 60 80 0 20 40 60 80 no yes other no yes other european minimum-company taxation? Harmonisation of the basis of tax assessment is often understood as a pragmatic starting point for ongoing integration. The point can then be followed up by way of further development by the introduction of a "band"(margin) – according to the Austrian social democrats, for example. This was likewise put forward by the conservative parties as an argument against a standard tax base. As a rule, regulation on margins is seen as an alternative to specifying a minimum rate of taxation. The Italian social democrats even go so far as proposing financial compensation for the new member states for any tax harmonisation(e.g. via structural funds). In the Eastern European countries, the parties of the Left and trade unions likewise advocate the introduction of tax corridors in order to prevent a race to undercutting. The Slovakian Left expresses support – no yes other no yes other european minimum-company taxation? With regard to the criticism of the status quo of the Common Agricultural Policy(CAP), there are two crude strands of argument amongst the forces of the Left in Europe: on the one hand, the CAP in its form hitherto is regarded as necessary yet relatively inefficient. As a result of this there is support for transformation of agricultural policy towards one which is aimed more vigorously at research and development, landscaping, organic agriculture, and which opposes price subsidies. The other argument addresses the issue of justice and fairness, both within a country, and also how the CAP affects world trade. What is derived from this is that the expenditure over time will diminish, that op-

Internationale Politikanalyse International Policy Analysis Unit erational upper limits will be introduced and that the In most cases the alternative concept of the host"second pillar" ought to be promoted. The latter arcountry principle finds support amongst the parties of gument is cited with emphasis by the trade unions. No the Left. The problem of the country-of-origin principle unequivocal pattern emerges on this policy field: there is not shared, or only with reservation, by the conseris neither a transnational left-wing position, nor can vative and liberal parties, as also by the employers' asclusters of countries be discerned subject to the limitasociations. tion that the countries of Eastern Europe do not wish to lose their claims to structural aid, and are therefore in favour of diminishing payments from structural Conclusion funds to former target regions. After the funding requirement resulting from eastwards expansion has On a very general level(the need for the SGP, risen and prospects for increasing the(structural) budstrengthening the social dimension, approval of the get are relatively poor, this strikes them as a practicaSocial Dialogue, structural policy) unanimity was ble solution. A second reform approach to the CAP is found, both at party level and at transnational level. the strengthening of the"second pillar", i.e. payments Yet on a less abstract level, differences grow wider acfor the development of rural areas instead of direct cording to party or country. Relatively homogenous payments. positions within families of parties can be observed Amongst the parties of the Left in Europe, what with the reform proposals examined, chiefly within the prevails on the one hand is the opinion that the new conservative and liberal parties. This involves mainly East European target regions should receive structural reforms that signify closer integration in the sense of funds, and at the same time(in parallel with the CAP) deregulation. In this way, proposals for closer coordino increase in the overall budget is envisaged as a rule, nation of incomes and employment policy are similarly with old development regions scheduled to drop out rejected, as is a(country-specific) EU minimum wage or of the programme(according to the Swedish social a standard rate of company tax. Anti-cyclical measures democrats, for example). This opinion in turn is exor the concept of macroeconomic coordination, too, pressed primarily from countries that are not closely come up against relatively unanimous rejection from dependent on the structural programme. Only from the conservative and liberal parties. Conversely, there is selected countries such as France, Ireland or Denmark a great deal of general approval of harmonisation of is the position put forward for building up funds for the services market from these families of parties. Not the structural and cohesion policy, among other things only with support for further"negative integration" by increasing contributions from Great Britain. through expansion of the internal market but also with The social democrats and trade unions are unanirejection of"positive integration" through stronger mous in the preference for the regional-specific apmarket regulation by the EU, there is widespread unaproach(with the exception of large-scale infrastructure nimity on the right wing of the party spectrum. tasks, which are to be organised by the state), as this is On the Left of the party spectrum, only in very few said to contribute to"de-politicisation". From the Eascases was any unanimous position discernible. Altern European countries in particular, the criticism has though the perception of problems is often still identibeen expressed that regional and structural policies are cal, as in the case of tax competition or of the asymbased on too a formalised application process, an mertric economic cycles within the EU, with concrete opaque and complicated system, with too little time reform proposals what often comes to light are clear given for sound appraisal. From the position of the differences within the Left amongst groups of counCzech Republic, the financial bottlenecks in structural tries. In the process, further"market promoting" refunding caused by eastwards expansion could be overforms are not rejected unanimously. In this way, some come at the expense of the CAP. Eastern European parties of the Left have supported Concerning the question on alternatives to the Serthe Service Directive in the Bolkestein version. With revices Directive, there is a clear plea for separate treatforms aimed at market regulation or the transfer of ment of public services within the political groupings responsibility to EU level, there is similarly no unanion the Left. These should not be subject to a general mous position of the parties of the Left. Yet in some liberalisation in this area. These include among other cases what is found here are countries with a pattern things the education and public service sector – such a of rejection and approval. In this way, the Scandinavian negative list would have to be standard and would not social democrats are relatively averse to the transfer of be allowed to be specified individually by member staresponsibility to EU level, e.g. in incomes or employtes. ment policy, or in the realm of company taxation. Nev13

Marius Busemeyer, Christian Kellermann, Alexander Petring, Andrej Stuchlik Political Positions on the European Economic and Social Model – a Map of Interests 14 ertheless, they wholeheartedly support the establishment of minimum rates of company taxation or the harmonisation of tax bases. On the other hand, such Europäische Politik (08/2006) proposals meet with resistance, chiefly from the parties of the Left in Eastern Europe. Yet the transfer of responsibility is viewed with less scepticism than by the Scandinavian parties of the Left(e.g. anti-cyclical measures, closer coordination of employment policy, tax responsibility of the Commission). If one takes into consideration the redistributive consequences brought about by additional rules and the transfer of responsibilities, this observation may be explained: a greater need for regulation without direct EU responsibilities would involve increased cost burdens on Eastern European countries. The Scandinavian countries on the other hand will experience only minor effects from minimum standards of regulation, yet will profit from the decreasing competitive advantages of countries subject to low regulation. The competitive pressure decreasing as a result of this will make it easy for parties of the Left in these countries to preserve redistributive measures in their own countries(or to develop them). Transfer of responsibility, as would be necessary in implementing anti-cyclical measures, would however produce a different redistributive effect. With direct EU responsibilities, East Europeans would be only slightly affected by the costs as a result of unequal financing of the EU budget, yet could take full advantage of the redistributive effects amongst the EU countries. In this way, calculation of redistribution costs would by comparison favour the East European countries, while the Scandinavian countries would be enlisted to provide a relatively high level of financing, profiting less from the process of interstate redistribution. These various redistributive effects of the transfer of responsibility and regulation also explain why the countries of Southern Europe adopt the most welcoming positions towards integration in both matters. What should be assumed here is that both costs and benefits of the transfer of responsibility are somewhat in equilibrium, just like European rules would not entail too steep a rise in adapting and raising one's own standards.

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