Nations have differing priorities re:
Fra bibliotekSocial aspect in Treaty of Rome

economic and social progress
low priority not specific


Developments in future, particularly single market

1971 reforms


financing from State levies to EU’s ‘own resources’ 2 broad objectives


facilitate employment adjustment from EU policies help overcome structural problems experienced by regions / groups, eg young job seekers


paid holidays living & working conditions vocational training established ESF (1960)
ESF

Initially limited


financial support to temporarily unemployed migrant workers localised retraining



Adopt raft of social policies Raises cost of employing workers by ‘T’ Result:lower wage (W1) & employment (L1) Important: wage incl wage & non-wage costs
(2) 1950s-1970s


Little progress beyond TOR TOR, despite deficiencies did seek to establish


freedom of movement for workers freedom of establishment equal pay rights for migrant workers

greater burden of (T) falls on workers
Open economy

vocational training more important


Greater activity Several ‘minor’ developments SEA - main impetus for change
(3) 1980s: Social dimension of the SEM
Open economy

Now, consider open economy More elastic demand (now D2)

greater integration in goods mkt greater competition between workers

Wage falls below W1 if social policies, (non-wage )cost = T
Closed economy
Real wage
D S
w
L
Labour
Closed economy
Real wage
D1 T D S
w w1
L1 L
Labour
Non-wage benefits include



Part of wage taken as benefits rather than take home pay Limit working hours (eg Working Time Directive, French 35 hr week) Maternity, paternity & sick leave Pension benefits Holidays TUPE

Social policy: Counterbalance to SEM

Integral part of econ policy Strengthens social cohesion


Economic integration creates winners and losers Willingness to undertake economic integration depends on the winners readiness to compensate the losers


Argued ‘safety net’ required for broad political support Argued prerequisite for economic integration
Social policy & productivity

EU founders believed full harmonisation of social policies not necessary component of integration

the division of wage & non-wage costs (ie: social policies) have limited impact

Assume

initially no social policy & closed economy wage W, employment level L
EU Social Policy
ref: social policy Mar 09
(1) Introduction

Broad definition in EU compared to UK

Employment & living conditions (welfare) labour markets social security leisure & other social aspects