Europe is caught between two opposing tides: We are at a crossroads between the temptations of renationalisation and the prospect of completing the Economic and Monetary Union. Suffering more from its weaknesses than from its supposed omnipotence, European integration is coming up against the problems it had at the beginning, now exposed by repeated crises.
- The crisis of confidence has deepened: citizens’ latent scepticism towards the European Union has since been overlaid by real distrust in relationships among the Member States themselves, now falling victim to reactionary and populist outbreaks. This situation has exposed the lack of shared vision among Member States which in return has provoked some nationalist reactions and a retreat behind national identity.
- We are witnessing here a real systemic crisis: To the extent that Europe has too often made decisions ‘too little, too late’, integrating irresponsibly without any real solidarity, doubts have set in. The European project seems disorientated, having lost its purpose of building de facto solidarity amongst the members. European integration is in fact lived like an accumulation of negative interdependencies which have not produced the relationships of solidarity expected. As soon as the step-by-step approach has stumbled against subjects touching on shared sovereignty, it has collapsed. Maastricht has not produced a European economic policy; Schengen has not produced a common policy on asylum, integration or external borders. It is therefore the very model of governance which is at issue here: The ultra-liberal policies pursued have let these very issues unsolved. This model has too often caused piecemeal management and far from having an overall vision has rarely allowed the creation of truly integrated strategies which could then be differentiated. For these global strategies involve a shared vision and the organisation of in-depth political debates. The battle over the content must take shape within our political family.
- More than ever, European integration needs to change direction. We must find a shared sovereignty. We must therefore undertake some fundamental reworking to create a new contract to unite the people of Europe. Social democracy is facing a historic challenge. Our political family must again take the initiative whilst the socialists have a share of the power in fourteen out of twenty-eight countries.
- We must remind Europe’s less enthusiastic advocates that a return to national solutions would be a death blow to peace and prosperity in the Union which can only take up the challenges of the 21st century if it is completed. The Union will not be able to continue to operate with 27 unless there is an initiative to open the way to differentiated integration.
- The socialists and social democrats must now take responsibility for rebuilding a consensus around a long-term strategy and vision capable of bringing Europe together. The safeguard of fundamental rights and the respect of social rights must be guaranteed in every dimension of European policies, including in the area of migrations with the same care that we owe to the monitoring of public finances and budgets. The urgent task today is to create a 10-year projection, putting into place a ‘Delors Plan II’ which would gradually establish a process of economic and social convergence to restore Europe’s true vocation: to deliver progress for its people.
From competition to convergence: towards cooperative policies
In order for the EMU, which remains an unfinished political project, to be completed, it must be equipped with the mechanisms necessary for any optimal currency area. To this end, we propose to go beyond the current logic of competition where the advantages of competitiveness for some are in fact often gained to the detriment of others. The situation is that budgetary policy as well as fiscal and social policies have not been adequately coordinated when the latter two have not constituted important levers of internal devaluation. To develop towards a cooperative model, we propose a new process of convergence of economies by means of financial support to the structural reforms which would support a harmonisation of certain social and fiscal standards.
To couple together the convergence of social and fiscal standards…
- We propose an economic and social ‘convergence code’: Economic competition has often prevailed over economic cooperation among member states. Whilst the macro-economic situation of the Member States in the euro area continues to diverge, the original idea of criteria for adopting the single currency should be revisited in order to offer a code of convergence allowing Member States to organise the conditions for their alignment depending on a few objective criteria established over a five-year period. The priority is to define a common set of social rights which can be enriched by means of social dialogue.
- In an integrated currency area where States no longer have the exchange rate instrument, taxation and wages have become instruments of price competition which have caused a downward pressure, making the people of Europe compete with one another.
- Therefore, in an internal market without fiscal harmonisation, the free movement of capital and freedom to provide services have led to an appalling situation of fiscal competition between States. This means that work needs to be done in this area, beginning with convergence of the bases and minimum rates for corporate tax, notably for transnational groups. Against the background of a crisis where a great deal is asked of citizens, combatting fraud and tax evasion cannot wait any longer. The principle of paying tax in the place where the wealth has been generated must become the rule.
- We propose to organise a convergence of minimum wages – be it defined by law or by collective bargaining agreement – through an annual salary conference gathering European institutions and social partners in the framework of the European Semester.
…with the convergence of economies via investments and structural reforms
- Fiscal and social harmonisation is a precondition for the operation of a real convergence of economies, as are the structural reforms which must be accompanied by adequate investments and finance.
- A budget of the euro area should be created which is to be orientated towards investment. The sources to finance should be further specified. One option to finance the budget of the euro area could be a common Financial Transaction Tax with a broad tax base, including the trading of derivatives. In our opinion, the originators of the financial market crisis must contribute their fair share to cope with the costs.
- The funds must be directed to help combat the social consequences of the financial crisis, future investments and support for the job market. Faced with the risk of deflation and deficit reduction policies, long-term public and private investment should be promoted and the savings available moved towards financing projects and the SME. Moreover, social investment needs to receive massive support and should no longer be set against economic growth but designed as an integral component of inclusive and shared growth. In the long-term, social imbalance and wide variations in standards of living are some of the main risks to growth and stability in our democracies.
The social pillar of the EMU: towards a European employment market, ‘Job Union’
- A Union of European employment markets should be created based on greater mobility and improved portability of rights, in particular as regards pensions, health, professional training and job loss. This would have to be accompanied by a real recognition of diplomas and professional qualifications.
- Within this framework, national social security systems need to be brought into line with one another, so that citizens can move within the EU more easily, as should the rules on collective bargaining in the case of multinational companies; pension rights, professional training rights and unemployment benefit rights need to be effectively portable and career paths safeguarded across national borders.
- That would imply investing massively in the social sector and in human capital, and in particular training just as it was decided to invest in growth with the Juncker plan.
The euro area budget: a macro-economic stabilisation tool
- An ambitious euro area budget underpins the rebalancing of the EMU and can be regarded as a counter-cyclical stabilisation instrument. The reality is that the internal market and the European budget already constitute a transfer Union even though somewhat limited. In addition to that, to mitigate the absence of a real mechanism for redistribution and to mark the profound cohesion between our European countries, it would be appropriate to discuss about creating a form of automatic stabiliser based on solidarity and reciprocity.
The importance of parliamentary control
- These reforms need to go hand in hand with a further strengthening of democratic oversight and control of European decision-making. This concerns both the role of national parliaments in the EU and the European Parliament.
- With regard to the euro area budget, one option would be a parliament for the Eurozone comprised of members from the EP and national chambers (Eurozone parliament).