Committee Reports > List of Committees > Joint > 1990 > Committee on the Secondary Legislation of the European Communities (6th Committee) > Report No. 01 - Social Dimension of the Internal Market

SOCIAL DIMENSION OF THE INTERNAL MARKET

A. INTRODUCTION

1.The 5th Joint Committee devoted considerable attention to the social dimension, and in particular, to the major Commission document then available on the subject - the Commission’s Working Paper on the Social Dimension of the Internal Market (SEC 88 1148 final) of 14 September, 1988. The main contents of the Working Paper are summarised in Chapter C. This, and the other major related documents - the European Community Charter of the Fundamental Social Rights of Workers (Reproduced in Annex III) and the Action Programme to implement the Charter (COM (89) 568 final) of 29 November, 1989 - were examined for the Joint Committee by its Sub-Committee on Social, Environmental and Miscellaneous Matters.

This report was prepared by Deputy Michael D. Higgins, Chairman of the Sub-Committee. The Joint Committee is indebted to Deputy Higgins and his colleagues on the Sub-Committee for their dedicated work. It is indebted also to the 5th Joint Committee for a substantial volume of preliminary work which has facilitated the preparation of this Report.

2.Written submissions were received from the Department of Labour, the Irish Congress of Trade Unions, the Confederation of Irish Industry and the Federation of Irish Employers.

The Joint Committee gratefully acknowledges the assistance and co-operation of these bodies. It gratefully acknowledges also the assistance given to it and to the Sub-Committee by Mr. John Hogan in preparing this Report.

3.The Sub-Committee had consultations with the Department of Labour, the Irish Congress of Trade Unions and the Federation of Irish Employers.

These consultations provided a valuable opportunity for consideration and discussion of many points raised in the written submissions.

B. BACKGROUND

4.The Commission’s White Paper of June, 1985 on Completing the Internal Market (endorsed by the Heads of State or Government and incorporated in the Single European Act) which was the subject of Joint Committee Report No. 26 of the Fourth Joint Committee represented a watershed in the development of the European Community, particularly in terms of the public perception of the Community. The pivotal change in the Commission’s approach, as enunciated in the White Paper, was the substitution of mutual recognition of standards for harmonisation of standards. The harmonisation road was perceived as cumbersome and, in many cases, impractical. There is general agreement that the change of approach has produced a very significant improvement in coping with the vast work-load to be disposed of in securing the objective of completing the internal market by 1992.

5.It will be useful at this stage to recall the three aspects identified by the Commission as crucial to the objective of completing the internal market:

(i)the welding together of the twelve individual markets of the Member States into one single market of 320 million people;

(ii)ensuring that this single market is not static but growing and expanding;

(iii)ensuring, to this end, that the market is flexible so that resources, both of people and materials, and of capital investment, flow into the areas of greatest economic advantage.

6.It should be recalled also that in its White Paper on Completing the Internal Market the Commission recognised that many of the changes proposed would present considerable difficulties for the Member States and that time would be needed for the necessary adjustments to be made. The Commission suggested, however, that the benefits to an integrated Community economy of the large, expanding and flexible economy would be so great that they should not be denied to Community citizens because of difficulties faced by individual Member States. “These difficulties must be recognised, to some degree they must be accommodated, but they should not be allowed permanently to frustrate the achievement of the greater progress, the greater prosperity and the higher level of employment that economic integration can bring to the Community”.

7.The Commission recognised in particular, the importance of the social implications:

“There are many other areas of Community policy that interact with the Internal Market in that they both affect its workings and will benefit from the stimulus that will be provided by its completion. This is particularly true of transport, social, environment and consumer protection policy. As far as social aspects are concerned, the Commission will pursue the dialogue with governments and social partners to ensure that the opportunities offered by completion of the Internal Market will be accompanied by appropriate measures aimed at fulfilling the Community’s employment and social security objectives”.

8.The White Paper on the Social Dimension of the Internal Market represents the Commission’s conception of the necessity for establishing, by 1992, a Community social foundation such that the social dimension of the internal market will be on target for completion at the same time as its economic dimension.

9.It should be recalled that the European Council, meeting in Hanover on 27 and 28 June, 1988 stressed the importance of the social aspects of progress towards the 1992 objectives, noting that “by removing obstacles to growth, the large Single Market offered the best prospect for promoting employment and increasing the general prosperity of the Community to the advantage of all its citizens”. The Council considered it necessary, besides improving working conditions and the standard of living of wage earners, to provide better protection for the health and safety of workers at their work place. welcomed the initiatives already taken on the basis of provisions in the Treaty and in particular in Article 118A and requested the Commission and the Council to continue in this direction. The European Council considered that the achievement of the large market must go hand in hand with improved access to vocational training, including training linked with work in all Member States. In this connection it expressed the wish that the conditions be met for mutual recognition of qualifications. It emphasised the importance of informing and consulting management and labour throughout the process of achieving the Single Market and, with that in mind, requested the Commission to step up its dialogue with management and labour, paying special attention to the provisions of Article 118B of the Treaty.

10.The text of Articles 117-122 of the Rome Treaty is attached as Annex I. Articles 21 and 22 of the Single European Act supplemented Article 118 of the Treaty; the text of these Articles is appended as Annex II.

11.The text of the European Community Charter on the Fundamental Social Rights of Workers adopted by the European Council meeting in Strasbourg on 8th and 9th December, 1989 by Ireland and ten other Member States of the European Community, is given in Annex III.

C. MAIN CONTENTS OF WORKING PAPER (SEC (88) 1148 FINAL)

Part One: priorities

12.The drive for completion of the Internal Market by 1992 must embrace measures resulting in the establishment of a European social foundation within the same time-frame.

13.The principal economic and social problem facing EC countries is unemployment.

14.The EC already exhibits widely varying levels of development. A major objective must be an increase in the economic and social cohesion between all Member States. This can only be achieved by maximum co-operation between the national authorities and the Community institutions.

15.Social policy must, above all, contribute to the establishment of a “single labour market” by doing away with barriers which still restrict the effective exercise of the freedom of movement of persons and freedom of establishment.

16.Social policy must not confine itself to structural intervention, action in the field of education and vocational training and legislation relating to working conditions and industrial relations.

17.It will be essential to maintain job creation programmes and alleviate the situation of the groups most hard hit by unemployment and to step up measures dealing with exclusion and poverty.

18.Current population migrations have different characteristics and pose different problems from the population movements which characterised the sixties and early seventies. It is therefore necessary to amend the basic legislation on freedom of movement or to adopt such new measures as may be considered necessary to deal with the particular problems posed by this new type of migration.

19.Active measures should be taken to encourage, in particular, the mobility of technical and qualified staff as a vital element in the policy of scientific and technological development.

20.Once the Council has dealt with the draft directive for the recognition of higher level diplomas, work should be speeded up on the mutual recognition of professional qualifications.

21.The Member States have very different population structures. The continuing fall in birth rates means that, in the not too distant future, some countries will begin to experience serious difficulties in maintaining an adequate indigenous workforce. At the same time, other Community countries will continue to suffer high levels of unemployment. It is already time to begin considering what policy options are available to resolve such imbalances.

22.Medium-term, there could be 5 million new jobs created in the Community and there could be an increase in the Community growth rate of 7 per cent a a result of completing the internal market.

23.One of the new Community objectives established by the Single Act is that of strengthening economic and social cohesion, in particular by reducing disparities between the various regions and the backwardness of the least favoured regions. Greater cohesion is desirable in itself and the action taken to strengthen cohesion can result in benefits for all regions of the Community, not only for those to which they apply directly. Furthermore, it is an indispensable complement to the process of setting up the internal market in that it makes it possible to compensate for some of the negative effects mentioned above which may occur in certain areas. Strengthening economic and social cohesion is basically to be obtained by lending impetus to the potential of the most backward areas for internally generated development. Contributing to this is the chief task assigned to the structural funds since their reform. It may also be achieved, and simultaneously, by means of mobility of labour, mobility of productive capital or some combination of these two.

24.Productive capital does not simply move, as sometimes claimed, to areas which have very low wage levels. More decisive factors are the supply of infrastructure, the quality of the public services or the availability of a well trained workforce. A policy of strengthening economic and social cohesion must aim at eliminating these deficiencies. Among the instruments for strengthening economic and social cohesion, the structural funds are of special importance, as pointed out and laid down in the Single Act. The doubling of the Funds’ resources in real terms will be an essential instrument in correcting the conspicuous inequalities between the regions, but changes and improvements in the utilisation of the Funds’ resources will be required.

25.The objective of strengthening economic and social cohesion requires, apart from the most effective possible utilisation of the increased resources of the structural funds, special attention to social policy instruments such as training activities and the harmonisation of provisions regarding labour relations and working conditions.

26.The strengthening of the scientific and technological basis of European industry provided for in the Single Act requires both higher levels of training for all workers and a strengthening of relations between the educational system and the system of production. In the long term this is the only way in which greater homogeneity of living standards can be achieved and it is also the only way in which the intra-European migration flows which are to be expected in the future will be balanced.

27.On-going training must be especially encouraged. Another priority area must be that of integrating young people into the workforce.

28.In the immediate future the social policies of the Community and of the Member States must continue to give priority to programmes to create jobs and promote employment for groups in special difficulty and to social solidarity programmes to soften the impact of unemployment on family incomes.

29.As regards programmes to promote employment, the Community’s policy must concentrate on two key objectives: creation of more jobs by promoting new initiatives by business combined with measures to help the long-term unemployed into jobs.

30.Work must continue on programmes to support small businesses and to encourage the growth of co-operatives and local employment initiatives.

31.While it will probably not be possible in the short term to find a satisfactory solution to the plight of many of the long-term unemployed it is all the more important that steps be taken to strengthen all available means of showing solidarity. One ideal measure would be a guaranteed income for all.

32.A closer dialogue between the two sides of industry is fundamentally important to every aspect of social policy, and, in particular, to promote training to provide a more flexible workforce and to consolidate the internal market in the matters of freedom of movement and establishment and in defining professional qualifications. This dialogue has a fundamental part to play in developing Community rules on health and safety and other aspects of industrial relations or working conditions.

Part two: proposals for action

33.The measures which go to make up the social contribution to the building of the internal market may be grouped in three categories viz:-

(i)a number of measures designed to eliminate the obstacles still hampering the full exercise of freedom of movement and freedom of establishment;

(ii)measures to encourage intra-European labour mobility, particularly of skilled labour, members of the professions and academics, and

(iii)back-up measures for establishment of the internal market.

Measures under each of these headings are specified.

34.Measures in relation to education and vocational training, in-service training for adults, training and job start-up for young people, and training for the new information technologies are also set out, as are measures to encourage progressive harmonisation of the rules governing working conditions and labour relations.

35.The White Paper specifies a number of studies being undertaken on unemployment and other important social phenomena.

36.The overall strategy is that by 1992 a Community social foundation should be laid which will show that the social dimension of the Internal Market is being completed at the same time as its economic dimension.

D. VIEWS OF THE COMMITTEE

37.The Committee regards the Social Dimension Programme - the work deriving from the Commission Working Paper, Action Programme and the Social Charter - as an essential concomitant to the Community objective of achieving the Internal Market by 1992. The primary objective of the Social Dimension - to ensure that all Community citizens benefit from the Internal Market and that there is a simultaneous and progressive improvement in social standards and living conditions throughout the Community - is fully worthy of support.

38.The Social Dimension was fully recognised in the Commission’s White Paper of June, 1985 on Completing the Internal Market.

The White paper was endorsed by the Heads of State or Government and incorporated in the Single European Act. The importance of the social aspects of progress towards the 1992 objectives was fully recognised by the European Council at its Hanover, Rhodes and Strasbourg meetings.

39.The Committee considers that it is essential that the drive to achieve, across a broad front, the corpus of measures involved in the Social Dimension, should treat with respect and sensitivity national arrangements such as those obtaining in Ireland for free collective bargaining in the area of improvements in workers’ living standards.

40.The Committee has noted with satisfaction the commitment of policy makers and negotiators to the objective of cost containment in the context of the Irish economy. The need for such an approach is clear, particularly in view of the economic penalties for Ireland’s peripherality and of Ireland’s industrial and commercial profile with its predominance of small and medium-sized enterprises.

41.The Committee, in this connection, wishes to underline the recognition specially provided in the Single European Act for the necessity of avoiding constraints to the creation and development of SME’s. The language of Article 21 of the SEA is quite unequivocal in this regard.

42.The Committee has been assured, in written and oral submissions, that Ireland’s approach to social proposals generally has been, and will continue to be conditioned, as a basic criterion, by assessment of the implications for employment. This approach has the Committee’s full support. The Committee has also been advised that regard to the need to provide basic minimum standards both for workers generally (e.g. protection from the possible effects of dangerous substances) and for specific categories of workers who tend to be unorganised and open to exploitation (e.g. as regards minimum conditions of employment) will constitute a constant element in the assessment of proposals.

43.The Committee is aware, and is gratified that, in the Social Affairs area, Ireland has consistently stressed that the concentration of effort should be on the adoption of effective measures to combat unemployment by accelerating economic growth and by intensifying the employment content of growth especially in the less-developed Community regions to which the cohesion provisions of the Single European Act are specifically addressed. In this connection, the Committee welcomes the initiative of the current Irish Presidency of the Council to develop pilot measures benefitting the long term unemployed. The Committee wishes to stress the further need for employment initiatives in the social areas to accelerate employment creation beyond the limits of growth.

44.The Committee is convinced that, in addition to pressing forward the co-operative growth strategy, the most direct method open to the Community to promote employment in the short term is through the strengthening of the Community Structural Funds.

45.Specifically as regards the Social Charter, the Committee

-while regretting that a legally binding Charter proved incapable of attainment, recognises the significance of the political commitment towards the reduction of disparities between working standards in the Member States achieved at the Strasbourg Summit and considers that the outcome of the protr and complex negotiations represents a reasonable balance;

-welcomes the broad scope of the Charter, defining as it does rights and objectives in relation to freedom of movement, freedom of association, equitable pay, working time, training, the conditions of employment of atypical workers such as part-time and temporary workers, the development of vocational training, social security and social protections, employment equality, safety and health at work, the protection of young workers and protection of the elderly and the disabled;

-notes the recognition in the Charter of the principle of subsidiarity;

-notes the account taken in the Charter of the very considerable diversity of practices in the employer/employee relationship across the Community.

46.To implement the Charter, the Commission has drawn up an Action Programme (COM (89) 568 final) the text of which is attached as Annex IV). This comprises almost 50 specific measures, of which over 20 will be legally binding community instruments, where this is felt to be the most appropriate means of implementation. The intention is that all the necessary decisions will be taken by 1 January 1993 the completion date of the single market.

47.The Commission indicated that, in making its selection of proposals included in the Action Programme, it limited itself, in accordance with the principle of subsidiarity, to those areas where Community legislation is appropriate and necessary to achieve the Social Dimension. The Commission proposals relate to part only of the issues raised in certain articles of the Charter. The Commission takes the view that responsibility for the initiatives to be taken as regards the implementation of Social Rights lies with the Member States as well as, within the limits of its powers, with the European Community. This inevitably raises problems with the economic programme being perceived as a European achievement and the social programme being made conditional upon national structures and goodwill.

48.Given the volume of work involved in the Social Dimension and the limitations imposed by six month tenures of the Community Presidency, the Committee approves the arrangement whereby the Irish Presidency has involved the succeeding Italian and Luxembourg Presidencies in the establishment of priorities and timetables.

E. RECOMMENDATIONS OF THE COMMITTEE

49.It is clear that recent developments in Eastern Europe, and especially the matter of German reunification, constitute a new dimension in relation to developing Community social policy. The Committee is advised that these developments and their implications are under active consideration by the Member State Governments and by the Commission. The Committee intends to consider the implications for Ireland of the new European realities with particular reference to labour mobility and free movement of persons as a separate issue.

50.The thrust for development and achievement of the Social Dimension should be maintained so that solid arrangements for basic and real protection for workers across the Community are in place by the end of 1992. The arrangements, in terms of “solidity”, and political and social commitment, should be of such a scope as to reflect and counterbalance the ambitious economic objectives of completing the internal market. It is crucial that social and economic objectives share the same time frame for achievement.

51.Domestically the process of consultation between the Government and the social partners in the whole area of the Social Dimension should be maintained and every opportunity to develop and improve the social dialogue at Community level should be taken.

52.The cost implications of individual measures and the cumulative cost of the body of proposals involved in the Social Dimension, should be assessed on an ongoing basis and the results of these assessments should constantly inform the approach of Irish negotiators within all the instances of the Community in the clear recognition, however, that evolution of social rights is not impeded, or perceived as an aspiration to follow economic gains.

53.In the course of the nexus of negotiations involved in the Social Dimension programme of work, emphasis must be placed upon the necessity to ensure that national arrangements (such as, in Ireland’s case, the tradition of free collective bargaining in the area of workers’ living standards) be fully respected.

54.The measures involved in the Social Dimension generally should be framed in such a way as to allow for implementation in the Member States in way appropriate to national practices and traditions but in such a way as not to erode the mutual time frame of economic and social objectives. The Committee wishes to express its concern at the conflict of interpretation between the submissions of the social partners as to the issue of the time scale of the Social Charter.

55.The Committee is of the opinion that the spirit and text of the Community’s agreements created an unqualified commitment to the co-terminous evolution of the Social Charter and the completion of the Internal Market.

56.The Committee feels that the construction of such social commitments as residual to economic gains would be a distortion of national and European commitments to Irish and European citizens.

57.The Committee strongly recommends that this report and the Social Dimension in general should be considered by the Houses of the Oireachtas at the earliest possible date and that the Social Dimension should be the subject of periodic Oireachtas debate between now and the end of 1992.

CHAIRMAN OF THE JOINT COMMITTEE

(4 April, 1990).