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Palgrave Studies in European Political Sociology
Welfare Markets
in Europe
The Democratic Challenge
of European Integration
Amandine Crespy
Palgrave Studies in European Political Sociology
Aim of the Series
Palgrave Studies in European Political Sociology addresses contemporary
themes in the field of Political Sociology. Over recent years, attention has
turned increasingly to processes of Europeanization and globailzation and
the social and political spaces that are opened by them. These processes
comprise both institutinoal-constitutional change and new dynamics of
social transnationalism. Europeanization and globalization are also about
changing power relations as they affect people's lives, social networks and
forms of mobility. The Palgrave Studies in European Political Sociology
series addresses linkages between regulation, institution building and the
full range of societal repercussions at local, regional, national, European
and global level, and will sharpen understanding of changing patterns of
attitudes and behaviours of individuals and groups, the political use of
new rights and opportunities by citizens, new conflict lines and coalitions,
societal interactions and networking, and shifting loyalties and solidarity
within and across the European space. We welcome proposals from across
the spectrum of Political Sociology including on dimensions of citizen-
ship; political attitudes and values; political communication and public
spheres; states, communities, governance structure and political institu-
tions; forms of political participation; populism and the radical right;
and democracy and democratization. Editorial Board Carlo Ruzza (Series
Editor) Hans-Jörg Trenz (Series Editor) Mauro Barisione, Neil Fligstein,
Virginie Guiraudon, Dietmar Loch, Chris Rumford, Maarten P. Vink,
Niilo Kauppi, David Schwarz
Welfare Markets in
Europe
The Democratic Challenge of European
Integration
Amandine Crespy
Ulb CEVIPOL, Dept of Political Science
Université libre de Bruxelles, Belgium
Brussels, Belgium
3 Resistance to Liberalization 71
Index 255
vii
Acronyms
ix
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x Acronyms
EP European Parliament
EPP European People’s Party
EPSU European Public Services Union
ESF European Social Forum
ETF European Transport Federation
ETUC European Trade Union Confederation
EU European Union
FGTB Fédération générale des travailleurs de Belgique
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GDP Gross Domestic Product
IG BAU Industriegewerkschaft Bau-Agrar-Umwelt
ITF International Transport Federation
MAI Multilateral Agreement on Investment
MEP Member of the European Parliament
MP Member of Parliament
NESGI Non-Economic Services of General Interest
NGO Non-gveronmental organization
NHS National Health Service
PCF Parti communiste français
PES Party of European Socialists
PIIGS Portugal, Italy, Ireland, Greece, Spain
PS Parti socialiste
PSI Public Services International
SGEI Services of General Economic Interest
SGI Services of General Interest
SP.A Sociaaldemocratische Partij. Anders
SPD Sozialdemokratische Partei Deutschlands
SSGI Social Services of General Interest
TFEU Treaty on the Functioning of the European Union
TISA Trade in Services Agreement
TTIP Transatlantic Trade and Investment Partnership
UN United Nations
UNESCO United Nations Educational, Scientific and Cultural
Organization
UNICE Union of Industrial and Employers’ Confederations of
Europe
WTO World Trade Organization
List of Figures
xi
List of Tables
xiii
List of Boxes
xv
1
Introduction: Welfare Markets,
Democracy and European Integration
As the latest crisis of financial capitalism which broke out in 2008 in the
USA put the European banking sector in turmoil, its rescue by public
funding caused public debt to skyrocket in the overwhelming majority
of European countries. Since then, the policies of austerity implemented
across Europe have strongly targeted the welfare state(s). Of course, coun-
tries receiving financial assistance from the so-called Troika (the European
Central Bank, the European Commission and the International Monetary
Fund) have experienced the most radical debasing of their social model as
drastic cuts in public spending was a condition for their financial rescue.
In Greece and Portugal, this has notably translated into large-scale privati-
zation plans which included the sale of companies in the sectors of energy,
transport and post as well as public infrastructures such as ports, railways
or motorways. In Italy, 120,000 schools teachers have been laid off since
2008, and public funding of universities has dramatically decreased.
Vulnerable economies in Central and Eastern Europe have taken drastic
measures; like in Bulgaria, where the budget for hospitals fell by 24 % in
2009 with many public hospitals being closed or privatized. A total of
380,000 people lost their right to free healthcare as a result of changes in
the Public Health Act adopted in January 2010 (PSIRU 2011). In Ireland
too, the austerity plan adopted in response to the bank crisis has brought
about a degradation of healthcare services and the adoption of a plan for
privatization of the sector by 2016. But the debasing of welfare services
has not only affected the most vulnerable economies in Europe. In the
UK, a country which is not directly involved in the salvage of the euro, the
government has implemented a major plan of austerity since the conserva-
tives came to power in 2010. The viability of the National Health Service
(NHS) has been hotly debated and is cause of much concern, as creep-
ing privatization has been ongoing over the past years. The funding of
schools is equally problematic as needs increase. Even Germany, the eco-
nomic hegemon of the European Union (EU), adopted the ‘package for
the future’ in June 2010, the largest austerity plan in the post-war period.
Similar concerns about the sustainability of public funding of healthcare
and education under austerity are being debated. France, under the social-
ist President Francois Hollande, first resisted austerity. The creation of
60,000 jobs in the Education nationale was a main theme of Hollande’s
presidential campaign, and the French government has assured that this
would not be questioned. In 2014, the government nevertheless adopted
a plan foreseeing €50 billion cuts in 2015–2017, including €20 billion
from the funding for healthcare and other social expenses. In Belgium
and France, public funding of culture or public broadcasting has been
significantly reduced. Besides the consequences of ‘fiscal consolidation’,
some problematic aspects in the liberalized network industries have been
more salient as the crisis hit societies. The price of energy, in particular, has
significantly increased in proportion to stagnating or decreasing wages.
Similarly, the affordability of housing has become problematic in many
European countries, thus putting pressure on social housing policies. In
a nutshell, in the vast majority of European countries, people have wit-
nessed a significant deterioration of welfare over the past five years or so.
This is due mainly to the dramatic decrease of available public resources,
but the problematic effects of ongoing marketization also raise issues with
regard to the quality and affordability of services for citizens. In the face
of increased pressure from the markets, international financial institutions
and the EU to tackle the brutal increase of public debt, EU countries
have responded mainly in two ways: cuts in public spending leading to
retrenchment and cuts in investments, on the one hand, and the further
1 Introduction: Welfare Markets, Democracy… 3
1
While recognizing that terminology issues have been part of the political struggles under study, the
book does not seek to take a position on this matter. The term ‘welfare services’ has several advantages
compared to other notions. It is sufficiently broad to encompass a whole range of services but less
bureaucratic than the ‘indigenous’ notion of services of general interest (SGI) forged in EU law. The
latter will nevertheless be used in reference to EU policy making. The notion of welfare services does
not reflect any particular culturally biased conception and does not presuppose whether these services
are or should be provided by public authorities, the private sector or mixed organizations and arrange-
ments. Moreover, the term ‘welfare’ indicates that, traditionally, such services have been a key compo-
nent of the welfare state in Europe. However, while most authors in the field of social policy and
comparative welfare state reform tend to focus on benefits (unemployment benefits and pensions in
particular), this book makes a contribution on the issue of services. This is particularly important
insofar as the future of the welfare state is arguably perceived as increasingly oriented towards the
provision of services as opposed to cash transfers, as the debate on social investment suggests.
4 Welfare Markets in Europe
over the long term, and the marketization agenda could never be stopped
or reversed. In a nutshell, this book argues that the EU is inclined but not
bound to be neoliberal due to structural factors. The prevailing of pro-
market policies is also due to the fundamental political and ideological
weakness of the coalitions of actors promoting a more regulated capitalism
as a means to foster social cohesion. Today, marketization and austerity are
two sides of the same coin, as the lack of public resources to fund welfare
services is regarded by most European decision makers as a main justifica-
tion for pushing the marketization of welfare further.
The provision of public utilities and services has been one of the areas
most affected by the neoliberal restructuring of the European economy.
Undeniably, the rise of services in the economic structure of developed
countries has been a major development of capitalism since the indus-
trial revolution. The principles underlying the provision of public goods
and services have been deeply affected by this transformation. While sig-
nificant variation across countries persists, Europe has been witnessing
a common and ongoing process of marketization in a large number of
public utilities and social services sectors. This means that these services
are increasingly provided by markets, and no longer by public authori-
ties themselves. Correspondingly, they have been increasingly submitted
to the rationales of competition and profit making. However, the State
still remains responsible for the regulation and, in case of serious market
failure, for the allocation of these services. Thus, developments affecting
the provision of public services epitomize the neoliberal restructuring of
the European economy. This process, which has been accelerating since
the 1980s, has been underpinned by the principles of ‘liberalization, pri-
vatisation, commodification, regulatory reforms, and delegation to non-
majoritarian institutions such as “independent” regulatory agencies and
central banks, plus individual responsibility, competition, and enterprise’
1 Introduction: Welfare Markets, Democracy… 7
(Schmidt and Thatcher 2013b). These reforms have gone hand in hand
with a belief in the desirability of intensifying free trade on a global scale,
and the rejection of state interventionism and Keynesian demand-side
policies, as well as with major welfare state and labour market reforms
(Hay 2004).
The Single European Act of 1986, which paved the way for a common
European market, implied pursuing the opening of national markets,
and subsequent suppression of the traditional monopoly on the part of
national ‘historical’ operators in a number of sectors such as energy, tele-
communications, broadcasting, transport and post. These changes have
been shaped to an important extent by the case law of the European
Court of Justice (ECJ), which had to rule on conflicts between national
regulation and the principle of free competition that underpins the whole
project of market integration in Europe (Baquero Cruz 2005). In EU
secondary and primary law, the concept of SGI has emerged in order
to deal with the provision of public utilities and services across Europe.
Meanwhile, it remains a changing and contested legal category (van de
Gronden 2009).
Whether stemming from public or private providers, welfare services
today represent a substantial part of the economic activity in Europe,
generating about 26 % of the EU’s Gross Domestice Product (GDP),
occupying 30 % of the workforce and attracting about 6 % of all invest-
ments (CEEP 2010). From a global perspective, the EU is home to very
competitive firms in these sectors. For that reason, SGI have been seen by
European decision makers as a major driver for improving the competi-
tiveness of the European economy, both internally and externally. On the
one hand, the liberalization of utilities and social services sectors within
the European market has been considered as a way to increase the pro-
ductivity of large firms in the network industries (telecommunications,
transport, energy). On the other hand, it has been part of the process of
welfare states’ reform, especially as far as social services are concerned. In
that perspective, competitive European firms would then be able to enter
foreign markets outside of the EU under the auspices of the provisions
for services liberalization promoted by the WTO. All in all, moderniza-
tion through market liberalization and privatization has put the boundar-
ies between the State and the market into question.
8 Welfare Markets in Europe
— On kylläkin.
— Pekka, sinä olet koko perhana, heh, heh, hee… sinä olet aika
poika keskeltä maailmaa, heh, heh, hee. Me tahdottiin vallan jäädä
kuin seisomaan, heh, heh, hee. Aiotko, laskiaisena tulla kilpa-ajoihin?
III.
— Kyllä mies tietää mitä tekee, huomautti isä… ei sitä tarvitse noin
nenästä taluttaa.
— Kas vaan, Pyörän poika se onkin. Nyt on kylmä ilma, heh, heh,
hee.
Saa nähdä kuinka meidän tässä käy, heh, heh, hee. Mutta
koetetaan,
Pekka, koetetaan kovasti.
— Myönnetään, aja.
Kello soi. Piiskan siima sivahutti jäätä, Pekka hikkasi ja Sukka lähti
livistämään. Juoksi kuin vimmattu. Kavioista kuului läikinä ihan
sellainen, kuin olisi sata suuttunutta akkaa sotkenut pyykkiä.
Hetkisen hiljaisuus.
IV.
Se oli kova kolaus Pekan arvolle ja vakavuudelle. Puksahtaa kunnian
kukkulalle vievältä tieltä alas sorakuoppaan noin suin päin, noin
roimasti ja hurraahuudoilla, se oli kerrassaan rusentavaa.
Puhumattakaan kolmesta kauratynnyristä, jotka Sukka oli pureksinut
keveytymistä ja voimistumista varten, ne olivat menneet kuin
järveen. Lisäksi vielä narriksi joutuminen, hurraahuudot,
pilkkahammasten ilveilyt, omat pettymykset, mieliharmit,
katumukset — oli niissä kolausta kerraksi.
— No, mitäs ihmettä siinä… joutaahan sitä… eihän tämä ensi kerta
ole.
— Menetkö kilpa-ajoihin?
— Minne? Kesähän nyt on.
— Kuule, Maija, luuletko etten vielä ole saanut tarpeeksi asti kärsiä
hullukkaasta päähänpistostani. Luuletko tosiaankin että…?
— Minä olen katunut niin kovasti. Jos arvaisit, miten olen katunut
ajattelemattomuuttani. Ollaan me hyvät jälleen, Maija.
Paininlyöjä.
— Kuulut olevan.
— Heitetään siitäkin.
Mutta juuri ennen lähtöä sattui niin, että Olavi ja Saku rynnähtivät
kolmannen kerran yhteen. Ensimainittu, joka oli melkein
kuumeenlaisessa tilassa, vaani nimittäin koko lähtöpuuhain aikana
tarkasti Sakua, astui sitte hänen eteensä ja virkkoi, puhkuen ja
seisoen hajasäärin:
— Täällä puolen on kolmas voitto vasta miehen voitto. Sinä olet
kahdesti kaatanut minut, kun kaatanet kolmannen kerran, ei ole
enää väittelyä.
— Sopiihan se sekin.
Ja tallin ylisille hiipi Olavi ja, sill'aikaa kun muut pitivät iloa,
käänteli hän itseään kyljeltä toiselle ja mietti maailman
ristiriitaisuuksia.
*****
— Kiitos vain.
— No mitä kuuluu?
— Kallen Tuomas.
— Niin teki.
— Se on Serafiiakin jo naimisissa.