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Social Europe

German elections: enabling or preventing a socially balanced EU?

12 Sep 2017 - 12:27
Source: Wikimedia Commons
The German elections reveal two different paradigms

Dramatically high youth unemployment, higher risks of poverty and social exclusion as well as growing discontent with market-driven globalisation: given the multitude of crises in Europe, one could imagine that Social Europe would be a topic at the heart of national election debates. That is only partly true for Germany. In the French elections, the question if and how the EU serves the people played an important role. On the other side of the Rhine, and close to the general elections in late September, Social Europe remains rather low on the political agenda. This tranquillity seems odd: looking at the parties’ manifestos, there is strong disagreement on future ideas. While the progressive camp sees a European social dimension as a key demand, the conservatives and (market-) liberals seek to prevent it.

Healing the wounds of the Euro Crisis

In the first camp the Social Democratic Party (SPD), The Greens and the far left-wing Die Linke have – independently from each other - developed a common understanding of what would be needed for a European social dimension. All three parties portray an EU divided by misguided politics too narrowly focusing on austerity and market-enhancing measures. Nationalism and authoritarianism shall be combated by a pro-European policy approach to strengthen European solidarity. The Greens speak of the need of a “paradigm shift” towards a “social-ecological modernising project”, Die Linke wants a “fundamental social and democratic alternative to this neoliberal EU” and the SPD calls for “renewing the European welfare promise”. All three parties seek to overcome the – in their view – failed austerity approach in the monetary union.

More specifically, a European investment programme and social policies shall be developed to prevent social dumping. This latter would consist of minimum wage standards, a basic income provision and co-determination standards for employees. In a social progress protocol added to the treaties, the predominance of market freedoms shall be contested, putting social rights on the same footing. The Greens want to implement a European unemployment insurance while the SPD sees the need for a common EMU fiscal capacity. Both parties want to strengthen the coordination of economic policies in EMU, prevent tax avoidance and work on a common consolidated corporate tax base with minimum standards. The strongest demands for a social turn can be found in the manifesto of Die Linke. They want to drastically increase European funds, prioritise debt restructuring, and introduce Eurobonds.

Solidarity only by conditionality

The three notions of a future Europe differ in detail, but similarities are striking. They outline a different approach to the EU, which would try to heal the wounds of the Euro Crisis by taking first steps towards a true European Social Model. This perspective is not at all shared by the parties one can assign to a second camp. The conservative Christian Democratic Union (CDU) and her Bavarian sister party, the Christian Social Union (CSU), both governing the country since 2005, keep a low profile in regard to Social Europe. The CDU wants to help fight youth unemployment, but only on the condition that states in crisis meet the criteria of the Stability and Growth Pact. Even after a seven-year long period of painful austerity policies, Merkel’s party insists on fiscal rules instead of fostering European solidarity. This position is underlined by the clear refusal of any form of debt harmonisation. The CDU is, however, open to the idea of a European Monetary Fund and harmonisation of corporate tax law with France. The CSU more explicitly condemns any form of financial transfers such as a European unemployment insurance or Eurobonds.

While CDU/CSU want to keep “muddling through” reforms, the liberal Free Democratic Party (FDP) is clearer in rejecting a European social dimension. Each member state shall control its own labour market and social policy without common rules. The European Pillar of Social Rights proposed by the Commission is rated not constructive, and neither is the idea of a European unemployment insurance. Seeing the market as the best tool to correct imbalances in the Eurozone, the Liberals want to abolish the ESM, are against any interference of the ECB and want to strengthen sanctioning on deficit criteria by enabling an insolvency procedure for member states. Their plans for EMU reform include reinstating the no-bailout rule, preventing a common deposit guarantee for the Banking Union and altering the treaties so states can leave the Eurozone without leaving the Union.

“CDU/CSU want to keep “muddling through” reforms [and] a conservative-liberal Government would […] continue the solidarity-against-conditionality approach”

Most extreme are the arguments of right-wing populist party Alternative for Germany (AfD), who looks to enter the Bundestag for the first time. They want Germany to leave the Eurozone and therefore reject all forms of EMU reform, especially regarding common liabilities, financial transfers or economic governance. The AfD claims that getting rid of the common currency is the best way to tackle unemployment in the Southern countries.

This latter camp is very reluctant towards social and economic EU reforms (CDU/CSU), wants to roll back parts of the crisis management tools in favour of a more market-driven approach (FDP) or cut off the whole integration process (AfD). The overall message is that a ‘social’ EMU reform needs to be prevented. This position clearly stands against the demand of SPD, Greens and Die Linke to integrate on a more socially-balanced path.

So, what can we expect after the elections? A progressive government would possibly walk this new path, cherished by many (crisis-stricken) European partners and particularly France. A conservative-liberal Government would instead continue the solidarity-against-conditionality approach with a stronger turn to the markets. Parties may agree to continue tackling youth unemployment and to work on a European Monetary Fund, an idea Emmanuel Macron is pushing for. However, the SPD and Greens surely have a very different understanding of such a new institution than the CDU/CSU. Any coalition between the two camps would have to seriously consider the trade-offs and benefits of a European social dimension for Germany. In 2013, the SPD – with quite similar plans in their election manifesto like in their current one – decided in favour of a coalition with CDU/CSU and against any new policies for the European project.

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Björn Hacker is Professor of European Economic Policy at University of Applied Sciences HTW Berlin.

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