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The Constitutional (Im)balance between ‘the Market’ and ‘the Social’ in the European Union

Abstract

An assessment of the balance between ‘the market’ and ‘the social’ by reference to the areas of social policy, the internal market and economic governance – Imbalance resulting from a consitutional displacement of the legislative process (EU and national) and instead decision-making by the judiciary and the executive – Proposals to address the imbalance by reinforcing the role of the EU legislative process and limiting other forms of European integration.

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1 Schmidt V., ‘Democracy and Legitimacy in the European Union Revisited: Input, Output and “Throughput”’, 61 Political Studies (2013) p.2 .

2 For a discussion of the social acquis, see Garben S., ‘Social Policy, in P. Kapteyn and P. verLoren Van Themaat, European Union Law, 5th edn (Kluwer Law International, 2017), forthcoming.

3 Barnard has argued that ‘EU employment law is going nowhere very fast’ due to a crisis of regulation: Barnard C., ‘EU Employment Law and the European Social Model: The Past, the Present and the Future’, 67 Current Legal Problems (2014) p.199 .

4 Decision (EU) 2016/344 of the European Parliament and of the Council of 9 March 2016 on establishing a European Platform to enhance cooperation in tackling undeclared work, OJ L 65, 11.3.2016, p. 12.

5 European Commission Communication, Launching a consultation on a European Pillar of Social Rights, COM(2016) 127 final.

6 On the market correcting rationale of labour law see H. Collins, ‘Justification and Techniques of Legal Regulation of the Employment Relation, in H. Collins et al., Legal Regulation and the Employment Relation (Kluwer Law International 2003) p. 3. For criticism on how the EU limits its social and employment policy to the existence of (internal) market failures see Barnard C., ‘Regulating Competitive Federalism in the European Union? The Case of EU Social Policy’, in J. Shaw, Social Law and Policy in an Evolving European Union (Hart 2000) p. 49 .

7 Art. 153(1)(j) and (k), jo. (2)(b) TFEU.

8 Art. 153(5) TFEU.

9 For a comprehensive overview of the debate about the EU’s legitimacy see A. Føllesdal and Hix S., ‘Why there is a Democratic Deficit in the EU: A Response to Majone and Moravcsik’, 44 JCMS (2006) p.533 .

10 Art. 153(b) and (5) TFEU.

11 Ales E., ‘“Non regresso” senza dumping sociale ovvero del “progresso” nella modernizzazione (del modello sociale europeo)’, 15 Diritti, lavori, mercati (2007) p. 1 ; Bercusson B., ‘The Lisbon Treaty and Social Europe’, ERA Working Paper (2009); Corazza L., ‘Hard Times for Hard Bans: Fixed-Term Work and So-Called Non-Regression Clauses in the Era of Flexicurity’, 17 European Law Journal (2011) p. 385 .

12 The ECJ has given a restrictive interpretation of these clauses, denying direct effect, applying a wide definition of the ‘general level of protection’ and not prone to establish a lowering of that level: Cases C-378/07 to C-380/07, Angelidaki et al. v Organismos Nomarkhiaki Aftodiikisi Rethimnis [2009] ECR I-3071; Corazza, supra n. 11; Peers S., ‘Non-regression Clauses: The Fig Leaf Has Fallen’, 39 Industrial Law Journal (2010) p. 436 .

13 ECJ 17 June 1998, ECLI:EU:T:1998:128 UEAPME v Council of the European Union, para. 80.

14 See in particular: ECJ 26 June 2006, ECLI:EU:C:2001:356, R and Secretary of State for Trade and Industry, ex p Broadcasting, Entertainment, Cinematographic and Theatre Union (BECTU), paras. 57-61, ECJ 9 September 2004, ECLI:EU:C:2004:497, Kingdom of Spain and Republic of Finland v European Parliament and Council of the European Union, paras. 70-75. See, however, Opinion of AG Trstenjak in ECJ 7 July 2011, ECLI:EU:C:2011:465, KHS AG v Winfried Schulte, paras. 62-65.

15 See Mandelkern Report on Better Regulation, 2001 available at <ec.europa.eu/smart-regulation/better_regulation/documents/mandelkern_report.pdf>, visited 12 December 2016; Commission communication, Better Regulation in the European Union, COM(2010)543; Commission Communication, EU Regulatory Fitness, COM(2012)746 final; and the recent interinstitutional agreement on better law-making, OJ L 123, 12.5.2016, p. 1.

16 Sixty-four NGOs have established a Better Regulation Watchdog concerned about deregulation: <www.betterregwatch.eu/Open_Letter_to_EP_on_IIA.pdf>, visited 12 December 2016.

17 See e.g. ETUI, ‘REFIT – a breakthrough toward a strengthened and more encompassing deregulatory agenda?’ 20 Transfer (2014) p. 305; ETUC, ‘Declaration on “Better Regulation”’, 18 June 2015, <www.etuc.org/documents/etuc-declaration-better-regulation>, visited 12 December 2016.

18 Four such directives have been adopted: the Fixed-Term Work Directive 1999/70/EC, the Part-Time Work Directive 97/81/EC, the Temporary Agency Work Directive 2008/104/EC and the Parental Leave Directive 2010/18/EU.

19 Protocol on the application of the principles of subsidiarity and proportionality, Arts. 6 and 7. For a detailed analysis see P. Kiiver, ‘The Treaty of Lisbon, the National Parliaments and the Principle of Subsidiarity’, 15 Maastricht Journal of EU Comparative Law (2008) p. 1.

20 In this consultation, they can decide to take over and negotiate an agreement between themselves instead (Art. 154(4) TFEU).

21 On this ‘transparency shift’ in the Council see Hillebrandt M. et al., ‘Transparency in the EU Council of Ministers: An Institutional Analysis’, 20 European Law Journal (2014) p. 1 . For proposals for further improvement see D. Curtin and P. Leino-Sandberg, ‘Openness, Transparency and the Right of Access to Documents in the EU’, European Parliament Research Paper (2016), <www.europarl.europa.eu/supporting-analyses>, visited 12 December 2016.

22 Garben S., ‘Confronting the Competence Conundrum: Democratising the European Union through an Expansion of its Legislative Powers’, 1 Oxford Journal of Legal Studies (2015) p. 14 .

23 A note of nuance is warranted, as EU legislative measures are notoriously difficult to amend. See Zbiral R., ‘Restoring tasks from the European Union to Member States: a bumpy road to an unclear destination?’, 52 Common Market Law Review (2015) p.51 .

24 For instance, the Court has interpreted the Insolvency Directive 2008/94/EC requiring Member States to protect occupational supplementary pension entitlements not to oblige a ‘full’ guarantee (ECJ 25 January 2007, ECLI:EU:C:2007:56, Carol Marilyn Robins v Secretary of State for Work and Pensions); it has left it to the national level to determine whether the Part-Time Work Directive applied to a zero-hours contract (ECJ 12 October 2004, ECLI:EU:C:2004:607, Nicole Wippel v Peek & Cloppenburg GmbH & Co KG); it has held that the Fixed-Term Work Directive 1999/70/EC does not require the automatic conversion of fixed-term contracts into a permanent position (ECJ 4 July 2006, ECLI:EU:C:2006:443, Konstantinos Adeneler v Ellinikos Organismos Galaktos (ELOG)); that successive fixed-term employment of 11 years could be justified in certain situations; and has accepted a wide range of objective justifications for otherwise unlimited fixed-term employment (ECJ 26 January 2012, ECLI:EU:C:2012:39, Bianca Kücük v Land Nordrhein-Westfalen; ECJ 13 March 2014, ECLI:EU:C:2014:146, Antonio Márquez Samohano v Universitat Pompeu Fabra). It has accepted an interruption of 60 days as sufficient to break the link of continuous fixed-term employment (ECJ 17 September 2014, ECLI:EU:C:2014:2044, Maurizio Fiamingo et al).

25 The UK challenged the Working Time Directive for having been wrongly based on Art. 118a TEC, arguing that the link between the regulation of working time and the health and safety of workers was too tenuous. While the Court disagreed, and upheld the measure for the most part, it annulled the provision that weekly rest be preferentially taken on Sundays: ECJ 12 November 1996, ECLI:EU:C:1996:431, United Kingdom of Great Britain and Northern Ireland v Council of the European Union.

26 ECJ 3 October 2000, ECLI:EU:C:2000:528, Sindicato de Médicos de Asistencia Pública (Simap) v Conselleria de Sanidad y Consumo de la Generalidad Valenciana; ECJ 9 September 2003, ECLI:EU:C:2003:437, Landeshauptstadt Kiel v Norbert Jaeger; ECJ 1 December 2005, ECLI:EU:C:2005:728, Abdelkader Dellas v Premier Ministre and Ministre des Affaires sociales, du Travail et de la Solidarité.

27 ECJ 20 January 2009, ECLI:EU:C:2009:18, Gerhard Schultz-Hoff v Deutsche Rentenversicherung Bund and Stringer v Her Majesty’s Revenue and Customs.

28 Especially in the UK. For an overview, see K. Barysch, ‘The Working Times Directive – What’s the fuss about?’ Centre for European Reform Paper (2013), <www.cer.org.uk/sites/default/files/publications/attachments/pdf/2013/pb_workingtimedir_kb_26april13_bl-7268.pdf>, visited 12 December 2016.

29 Simap, supra n. 26, para. 50.

30 E.g. Art. 17 of the Directive allows derogations from the minimum rest provisions and the reference period to calculate average weekly working time for activities involving the need for continuity of service.

31 Art. 22 of the Directive, conditional on the worker’s consent.

32 ECJ 22 November 2011, ECLI:EU:C:2011:761, KHS AG v Winfried Schulte.

33 ECJ 15 June 1978, ECLI:EU:C:1978:130, Defrenne v Sabena.

34 Case C-144/04, Mangold [2005] ECR I-9981. See also ECJ 19 January 2010, ECLI:EU:C:2010:21, Seda Kücükdeveci v Swedex GmbH & Co KG.

35 Paras. 74-77 of the judgment.

36 For an interesting discussion see Dougan M., ‘In defence of Mangold?’, in A. Arnull et al. (eds.), A Constitutional Order of States? Essays in EU Law in Honour of Alan Dashwood (Hart Publishing 2011) p.219 .

37 This therefore seems to corroborate the findings of Moravcsik, at least in the context of the Social Policy Title, that ‘Constitutional checks and balances, indirect democratic control via national governments, and the increasing powers of the European Parliament are sufficient to ensure that EU policy-making is, in nearly all cases, clean, transparent, effective and politically responsive to the demands of European citizens’: see Moravcsik A., ‘In Defence of the “Democratic Deficit”: Reassessing Legitimacy in the European Union’, 40 JCMS (2002) p.605 .

38 Schmidt, supra n. 1.

39 For an exhaustive discussion, see N. Nic Shuibne, The Coherence of EU Free Movement Law – Constitutional Responsibility and the European Court of Justice (Oxford University Press 2013).

40 Art. 151 TFEU.

41 See e.g. ECJ 17 December 1981, ECLI:EU:C:1981:314, Criminal Proceedings against Alfred John Webb; ECJ 3 February 1982, ECLI:EU:C:1982:34, Société anonyme de droit français Seco and Société anonyme de droit français Desquenne & Giral v Etablissement d’assurance contre la vieillesse et l’invalidité; ECJ 27 March 1990, ECLI:EU:C:1990:142, Rush Portuguesa Ldª v Office national d’immigration; ECJ 28 March 1996, ECLI:EU:C:1996:147 Criminal proceedings against Michel Guiot and Climatec SA, as employer liable at civil law; ECJ 23 November 1999, ECLI:EU:C:1999:575, Criminal proceedings against Jean-Claude Arblade and Arblade & Fils SARL and Bernard Leloup, Serge Leloup and Sofrage SARL; ECJ 15 March 2001, ECLI:EU:C:2001:162, Criminal proceedings against André Mazzoleni and Inter Surveillance Assistance SARL, as the party civilly liable, third parties: Eric Guillaume.

42 As Dawson and de Witte note, ‘welfare services other than healthcare are not so “fully” covered by internal market law. The Court tends to find a restriction of the freedom to provide services only where the national welfare system is organized in such a way that it provides services which could equally be offered by a commercial provider based in another EU state’: M. Dawson and B. de Witte, ‘Welfare policy and social inclusion’, in Arnull A. and Chalmers D. (eds.), The Oxford Handbook of European Union Law (Oxford University Press 2015) p. 973 .

43 ECJ 18 December 2007, ECLI:EU:C:2007:809, Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet; ECJ 11 December 2007, ECLI:EU:C:2007:772, International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP and OÜ Viking Line Eesti.

44 C. Joerges and F. Rodl, ‘Informal Politics, Formalised Law and the “Social Deficit” of European integration: Reflections after the Judgments of the ECJ in Viking and Laval’, 15 European Law Journal (2009) p. 18; O. de Schutter, ‘Transborder provision of Services and “Social dumping”: Rights-Based Mutual Trust in the Establishment of the Internal Market’, in I. Lianos and Odudud O. (eds.), Regulating Trade in Services in the EU and the WTO. Trust Distrust and Economic Integration (Cambridge University Press 2011) p. 346 ; A. Bücker and Warnek W., Reconciling Fundamental Social Rights and Economic freedoms after Viking, Laval and Rüffert (Nomos 2011); Davies A., ‘One Step Forward, Two Steps Back? The Viking and Laval Cases in the ECJ’, 37 Industrial Law Journal (2008) p. 126 .

45 European Committee of Social Rights, Swedish Trade Union Confederation (LO) and Swedish Confederation of Professional Employees (TCO) v Sweden, Complaint No. 85/2012, Decision of 3 July 2013. See Rocca M., ‘A Clash of Kings. The European Committee of Social Rights on the “Lex Laval” … and on the EU Framework for the Posting of Workers’, 3 European Journal of Social Law (2013) p. 217 .

46 ECJ 3 April 2008, ECLI:EU:C:2008:189, Dirk Rüffert v Land Niedersachsen.

47 Advocate General Tizzano in ECJ 5 October 2004, ECLI:EU:C:2004:187, Caixa Bank, para. 63 of the Opinion, describing in disapproval an approach that catches non-discriminatory measures that do not affect access to the market in any other way than to reduce the economic attractiveness of pursuing a particular activity.

48 Barnard C., ‘Restricting Restrictions: Lessons for the EU from the US?’, 68 Cambridge Law Journal (2009) p. 575 .

49 The Commission v Luxembourg judgment is an example of the Commission pushing the new market-oriented doctrine further. While Laval departed from the previously-held assumption that the host state standards listed in Art. 3(1) of the Posting Directive were minimum standards, it did not explicitly exclude the possibility of higher standards being imposed on public policy grounds based on Art. 3(10). The Commission actively sought to limit this possibility, opening infringement proceedings against Luxembourg for imposing a range of social standards in reference to public policy grounds. See C-319/06, Commission v Luxembourg, ECLI:EU:C:2008:350.

50 F. Scharpf, ‘The Socio-Economic Asymmetries of European Integration or Why the EU cannot be a “Social Market Economy”’, 1 SIEPS (2010) p. 4, referring to R. Kelemen, ‘Suing for Europe. Adversarial Legalism and European Governance’, 39 Comparative Political Studies (2006) p. 101.

51 ECJ 11 December 2014, ECLI:EU:C:2014:2430.

52 Proposal for a Directive of the European Parliament and of the Council on Market Access to Port Services, COM/2001/0035 final.

53 Proposal for a Directive of the European Parliament and of the Council on market access to port services, COM/2004/0654 final.

54 P. Verhoeven, ‘Dock Labor Schemes in the Context of EU Law and Policy’, European Research Studies (2011).

55 Proposal for a Regulation establishing a framework on market access to port services and financial transparency of ports, COM/2013/0296 final.

56 Advocate General Kokott in her Opinion on the Wippel case has already given a view on the benefits of zero-hours contracts: see Opinion of 18 May 2004, ECLI:EU:C:2004:308, Nicole Wippel v Peek & Cloppenburg GmbH & Co KG, paras. 83-87.

57 Barnard, supra n. 48, p. 576.

58 de Witte F., Justice in the EU: The Emergence of Transnational Solidarity (Oxford University Press 2015) p212 .

59 Scharpf F., ‘The Asymmetry of European Integration, or Why the EU Cannot Be a “Social Market Economy”’, 8 Socio-Economic Review (2010) p. 211 ; Scharpf F., ‘The European Social Model: Coping with the Challenges of Diversity’, 40 Journal of Common Market Studies (2002) p. 645 .

60 In response to the (critical reception of the) judgments, the Commission proposed a Council regulation on the exercise of the right to take collective action within the context of the freedom of establishment and services. However, in June 2012, the Commission received the first-ever ‘yellow card’. Twelve national parliaments expressed subsidiarity-related concerns regarding this so-called ‘Monti II Regulation’ amounting to 19 votes. Upon the mandatory revision of the proposal, the Commission decided to withdraw it. See ‘Commission decision to withdraw the Proposal for a Council Regulation on the exercise of the right to take collective action within the context of the freedom of establishment and the freedom to provide services – COM (2012) 130’.

61 Scharpf, supra n. 59, p 226.

62 Copeland P., ‘EU enlargement, the clash of capitalisms and the European social model’, 10 Comparative European Politics (2012) p. 476 .

63 Directive 2014/67/EU, OJ L 159, 28.5.2014, p. 11.

64 ECJ 12 February 2015, ECLI:EU:C:2015:86, Sähköalojen ammattiliitto ry v Elektrobudowa Spółka Akcyjna.

65 ECJ 17 November 2015, ECLI:EU:C:2015:760, RegioPost GmbH & Co KG v Stadt Landau.

66 ECJ 14 September 2014, ECLI:EU:C:2014:2235, Bundesdruckerei GmbH v Stadt Dortmund.

67 Art. 26 of the Public Procurement Directive.

68 Para. 67 of the ruling.

69 Para. 73 of the ruling.

70 Firstly, it is not clear whether in the event of a generally applicable minimum wage, Member States can impose higher minimum standards by law in the specific context of public procurement. Secondly, the difficult relationship between the Posting Directive and Art. 56 TFEU is not fully clarified. Finally, it is unclear whether the same outcome can be expected in situations of cross-border service provision that imply the use of home state workers in a host state, but that for one reason or another do not fall under the Posting Directive.

71 As Kilpatrick has pointed out, there are several advantages to settle these issues of services regulation through legislation rather than judicial Treaty elaboration, namely to offer a structure for market participants, to offer detail and certainty, to allow for adaptation to national specificities, to consolidate the case law but also to react to it. Finally, as she points out, ‘legislation has a democratic imprimatur’: C. Kilpatrick, ‘Internal Market Architecture and the Accommodation of Labour Rights’, 4 EUI Working Paper Series LAW (2011) p. 2.

72 See European Parliament, ‘Parliament elects new European Commission’, <www.europarl.europa.eu/news/en/news-room/content/20141016IPR74259/html/Parliament-elects-new-European-Commission>, visited 12 Decmber 2016; ‘Juncker defines 10 priorities for EU, seeks inter-institutional support’, Euractiv.com, 14 November 2014, <www.euractiv.com/sections/eu-priorities-2020/juncker-defines-10-priorities-eu-seeks-inter-institutional-support>, visited 12 December 2016.

73 See, for instance, the letter from seven EU Member States ministers to EU Employment Commissioner on the exploitation of posted workers, 18 June 2015, <www.gmb.org.uk/assets/media/gmbbrussels/EU%20Government%20ministers%20letter%20to%20Commissioner%20Thyssen%2018%20june%202015.pdf>, visited 12 December 2016.

74 Proposal for a Directive of the European Parliament and the Council amending Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, COM(2016) 128 final.

75 For a discussion, see ‘EU-Level: Posted workers proposal gets “yellow card” from Member States’, Eurofound, <www.eurofound.europa.eu/observatories/eurwork/articles/industrial-relations/eu-level-posted-workers-proposal-gets-yellow-card-from-member-states>, visited 12 December 2016

76 ECJ 17 March 2015, ECLI:EU:C:2015:173, Auto- ja Kuljetusalan Työntekijäliitto AKT ry v Öljytuote ry and Shell Aviation Finland Oy.

77 This Directive was adopted based on Art. 153 TFEU, allowing minimum harmonisation for the protection of workers. However, in line with the ‘flexicurity’ approach, the Directive also contains Art. 4, stipulating that ‘prohibitions or restrictions on the use of temporary agency work shall be justified only on grounds of general interest relating in particular to the protection of temporary agency workers, the requirements of health and safety at work or the need to ensure that the labour market functions properly and abuses are prevented’. This clearly evokes other prohibitions in the Treaty, looking like a directly effective right to challenge national restrictions on temporary agency work. This was indeed advocated by a company, in defence against an enforcement action of a trade union for breaking a provision in the applicable collective agreement specifying that agency work would only be used to cover temporary needs. If this interpretation were followed, temporary agencies and user undertakings could challenge all kinds of restrictions on temporary agency work. This would, furthermore, apply in wholly internal situations meaning a complete liberalisation of this precarious type of employment, brought about by means of an EU labour law directive. The AG supported this approach, arguing that the substantive obligation of Art. 4 was already contained in Art. 56 TFEU. The ECJ disagreed, denying direct effect to Art. 4, and thereby arguably prevented another Laval.

78 ECJ 11 November 2014, EU:C:2014:2358, Elisabeth Dano and Florian Dano v Jobcenter Leipzig; ECJ 15 September 2015, ECLI:EU:C:2015:597, Jobcenter Berlin Neukölln v Nazifa Alimanovic.

79 Davies G., ‘Democracy and legitimacy in the shadow of purposive competence’, 21 ELJ (2015) p. 2 .

80 The legislative process and output can be sub-optimal: ‘slow or absent responses to changing circumstances, entrenched positions, the construction as addressees rather than as producers of norms of key actors and unclear and contradictory legislative bargains are central and well-known problems’: see Kilpatrick, supra n. 71, p. 19.

81 The European Stability Mechanism and the European Financial Stability Facility are intergovernmental support mechanisms created by the Euro Member States in response to the financial crisis. The European Financial Stability Facility was created as a temporary rescue mechanism, following the decisions of 9 May 2010 within the framework of the Ecofin Council. In October 2010, it was decided to create a permanent rescue mechanism, the European Stability Mechanism, based on an international Treaty, entering into force on 8 October 2012. The ESM, taking the form of an intergovernmental organisation under public international law, is now the main instrument to finance new programmes. Parallel to the European Stability Mechanism, the European Financial Stability Facility continued with the ongoing programmes for Greece, Portugal and Ireland. Before the European Stability Mechanism and European Financial Stability Facility, so-called Balance-of-Payments programmes had been agreed between the International Monetary Fund and the EU with Latvia, Hungary and Romania.

82 As reported by the International Labour Organization, ‘the European Centre for Disease Control warned that serious health hazards are emerging because of the fiscal consolidation measures introduced since 2008. More specifically, in Greece, Spain and Portugal citizens’ access to public health care services has been seriously constrained, to the extent that there are reported increases in mortality and morbidity’. In January 2013, doctors from Portugal, Spain, Ireland and Greece sent an open letter in which they deplored the effects that financial and economic decisions were having on the health of the populations of their countries calling for immediate action to reverse the situation: <http://epha.org/european-doctors-send-open-letter-on-the-effects-of-austerity-on-the-health-of-people/>, ILO, World Social Protection Report, 2015, p. 135.

83 The 2015 ILO Report provides a comprehensive, damning overview. For instance, it indicates that in the EU, ‘cuts in social protection have already contributed to increases in poverty which now affects 123 million people or 24 per cent of the population, many of whom are children, women, older persons and persons with disabilities’. ‘In Ireland, Greece, Portugal and Cyprus, where some of the boldest structural reforms have taken place as part of the terms agreed under the different economic adjustment programmes adopted by these countries since 2008, disposable household incomes have declined in consequence, as a result of high unemployment, lower wages and social protection expenditure cuts, and this in turn has led to lower consumption’. ‘[…] curtailments informed by fiscal consolidation objectives have reduced social protection expenditure by more than 12 per cent in real terms since 2008 […]. Inevitably, poverty in Greece rose to a historically high level, exceeding 35 per cent of the population in 2013, inflicting intense human suffering as many families found themselves unable to access any longer the basic necessities for a life in dignity. Trade union activists speak of “a programmed impoverishment of the population”’: see ILO Report, supra n. 82, pp. xxv, 9, 24 and 137.

84 Kilpatrick E.g. C. and de Witte B., ‘Social Rights in Times of Crisis in the Eurozone: The Role of Fundamental Rights’ Challenges’, EUI Working Paper LAW (2014); de Witte F., ‘EU Law, Politics and the Social Question’, 14 European Law Journal (2013) p. 581 ; Koukiadaki A. and Kretsos L., ‘Opening Pandora’s Box: the Sovereign Debt Crisis and Labour Market Regulation in Greece’, 41 Industrial Law Journal (2012) p. 276 ; H. Augusto Costa, ‘From Europe as a Model to Europe as Austerity: the Impact of the Crisis on Portuguese Trade Unions’, 14 European Law Journal (2012) p. 397.

85 Barnard, supra n. 3, p. 203.

86 Federation of Employed Pensioners of Greece (IKA-ETAM) v Greece, European Committee of Social Rights, Decision on the Merits, Complaint No. 76/2012, paras. 81 and 83.

87 See Salomon M., ‘Of Austerity, Human Rights and International Institutions’, LSE Working Paper (2015).

88 ILO press release, ‘ILO calls on Greece to bring its labour relations system back to fundamental rights’, 15 November 2012, <www.ilo.org/brussels/press/press-releases/WCMS_193308/lang--en/index.htm>, visited 12 December 2016.

89 366th Report of the Committee on Freedom of Association, paras. 784-1003.

90 Zeitlin J. and Vanhercke B., ‘Socializing the European Semester? Economic Governance and Social Policy Coordination in Europe 2020’, SIEPS (2014) p. 7 .

91 No sanctions have been imposed to date.

92 16 Member States in 2015.

93 For instance, Poland has been criticised for its high share of temporary contracts. However, the proposed solution is to facilitate dismissals. See COM(2015) 250 final.

94 For instance, in 2015, Belgium was to reduce ‘align wage growth more closely with productivity and to make wage-setting more flexible’, the Commission criticised Bulgaria (which has the lowest minimum wage in the EU) for the ‘substantial’ increases since 2011 as such ‘sharp discretionary shifts in the Government’s wage-setting policy could be distortive for the labour market’, although the Council watered this down in the final recommendation, Croatia was asked to ‘tighten the definition of arduous and hazardous professions’ for the purpose of retirement and to increase flexibility in wage-setting, Finland was asked to eliminate early retirement, France was to lower its minimum wage and to increase working time, Italy should promote ‘second-level bargaining, which could help to better align wages with productivity and encourage the adoption of innovative solutions within firms’, Luxembourg was to reform its wage-setting system so as to reduce wages in all sectors apart from the financial sector, and Portugal was criticised for its minimum wage that ‘has risen significantly faster than the average wage in nominal terms since 2008’ and needs to ensure that collective bargaining ‘allows firms to adjust to specific circumstances’. See <ec.europa.eu/europe2020/making-it-happen/country-specific-recommendations/2015/index_en.htm>, visited 12 December 2016.

95 Zeitlin and Vanhercke, supra n. 90.

96 According to the European Parliament, only ‘around 9 % of the country specific recommendations were fully implemented by the Member States in 2013’, European Parliament resolution of 11 March 2015 on the European Semester for economic policy coordination: Annual Growth Survey 2015.

97 Moravcsik A., ‘Why the European Union Strengthens the State: Domestic Politics and International Cooperation’, 52 Harvard University Centre for European Studies WPS (1994) p. 1 .

98 M. Dawson, ‘Integration through Soft Law: No Competence Needed? Juridical and Bio-Power in the realm of Soft Law’, ‘Integration through Soft Law: No Competence Needed? Juridical and Bio-Power in the realm of Soft Law’, in Garben S. and Govaere I. (eds.), The Division of Competences between the European Union and its Member States: Reflections on the Past, Present and Future (Hart 2017), forthcoming.

99 This could be different if sanctions were imposed for non-compliance, as indicated by Koen Lenaerts, President of the ECJ, in a lecture in Leuven on 26 April 2013, reported by Zeitlin and Vanhercke, supra n. 91, p. 57.

100 The TFEU provides the three central provisions: Art. 121 on multilateral surveillance, Art. 126 on excessive deficits, and Art. 136 on specific economic policy guidelines for the Euro-area. These provisions have allowed the adoption of secondary legislation, elaborating the framework and providing further legal basis for action in the European Semester, such as the Stability and Growth Pact, the Six-pack and Two-pack regulations. The intergovernmental Fiscal Compact Treaty lays down the ‘balanced budget’ rule.

101 de Witte B., ‘Euro Crisis Responses and the EU Legal Order: Increased Institutional Variation or Constitutional Mutation?’, 11 EuConst (2015) p.434 .

102 Scharpf F., ‘After the Crash: A Perspective on Multilevel European Democracy’, 21(3) European Law Journal (2015) p.389 .

103 As regards the European Stability Mechanism, the Court confirmed this in the Pringle judgment: ECJ 27 November 2012, ECLI:EU:C:2012:756, Thomas Pringle v Government of Ireland, Ireland and The Attorney General.

104 Dawson M. and de Witte F., ‘Constitutional Balance in the EU after the Euro-Crisis’, 76 Modern Law Review (2013) p.817 .

105 Kilpatrick C., ‘Are the Bailouts Immune to EU Social Challenge Because They are Not EU Law?’, 10 EuConst (2014) p.393 ; Schwarz M., ‘A Memorandum of Misunderstanding’, 51 CMLR (2014) p.398 .

106 de Witte, supra n. 101, p. 452.

107 Lenaerts K., ‘EMU and the EU’s constitutional framework’, 39 European Law Review (2014) p.758 .

108 Schmidt V., ‘The Eurozone’s Crisis of Democratic Legitimacy – Can the EU Rebuild Public Trust and Support for European Economic Integration?’, 15 ECFIN Discussion Paper (2015) p.10 .

109 In a similar vein, the current situation has been described as ‘authoritarian liberalism’. See C. Joerges, ‘What is Left of the European Economic Constitution? A Melancholic Eulogy’, 30 European Law Review (2005) p. 461 and Wilkinson M., ‘The specter of authoritarian liberalism: reflections on the constitutional crisis of the European Union’, 14 German Law Journal (2013) p. 527 .

110 Barnard, supra n. 48.

111 For critical views on this aspect of Viking and Laval see Davies, supra n. 45, p. 136; Reich N., ‘Free Movement v Social Rights in an Enlarged Union: The Laval and Viking Cases before the European Court of Justice’, 9 German Law Journal (2008) p. 153 .

112 Barnard, supra n. 48.

113 ECJ 24 November 1993, ECLI:EU:C:1993:905, Criminal proceedings against Bernard Keck and Daniel Mithouard.

114 ECJ 10 February 2009, ECLI:EU:C:2009:66, Commission v Italy. Nevertheless, there are still judgments where the Court carries Keck forward: ECJ 29 April 2004, ECLI:EU:C:2004:256, Weigel v Finanzlandes direction für Vorarlberg; ECJ 8 September 2005, ECLI:EU:C:2005:518, Mobistar SA v Commune de Fleron. See Barnard, supra n. 48, p. 601. In tax cases especially: ECJ 12 December 2006, ECLI:EU:C:2006:773, Test Claimants in Class IV of the ACT Group Litigation v Commissioners of Inland Revenue; ECJ 12 December 2006, ECLI:EU:C:2006:774, Test Claimants in the FII Group Litigation v Commissioners of Inland Revenue. See K. Banks, ‘The Application of the Fundamental Freedoms to Member State Tax Measures: Guarding Against Protectionism or Second-guessing National Policy Choices’, 33(4) European Law Review (2008) p. 504.

115 Scharpf, supra n. 102, p 401.

116 Ibid.

117 O. de Schutter, ‘The Accession of the European Union to the European Social Charter’, <www.coe.int/t/dghl/monitoring/socialcharter/Presentation/PublicationCSEUEODeSchutterJuly2014_en.pdf>, visited 12 December 2016.

118 Especially since the Court’s rejection of the EU’s accession to the European Convention of Human Rights, ECJ Opinion 2/13.

119 On the comparison between the level of protection of the European Social Charter and EU law, see O. de Schutter, ‘Le statut de la Charte sociale dans le droit de l’Union européenne’ and J. Akandji-Kombé, ‘Charte sociale et droit communautaire’, in J. Akandji-Kombé and S. Leclerc (eds.), La Charte sociale européenne (Bruylant 2001).

120 Barnard, supra n. 3, p. 224.

121 At <www.etuc.org/a/5175>, visited 12 December 2016.

122 M. Maduro, ‘A New Governance for the European Union and the Euro: Democracy and Justice’, RSCAS Policy Papers (2012).

123 Kumm M., ‘What Kind of a Constitutional Crisis is Europe In and What Should Be Done About It?WZB Discussion Paper (2013).

124 Dawson M. and de Witte F., ‘Self-Determination in the Constitutional Future of the EU’, 21 European Law Journal (2015) p.380 .

125 Habermas J., Zur Verfassung Europas. Ein essay (Suhrkamp 2011).

126 Collignon S., The European Republic: Reflections on the Political Economy of a Future Constitution (Federal Trust for Education and Research 2003).

127 Hix S., What’s wrong with the European Union and How to Fix It (Polity 2008).

128 Scharpf, supra n. 102, p. 393.

129 See Thomas Pringle v Governement of Ireland, Ireland and The Attorney General, supra n. 103. B. de Witte and T. Beukers, ‘The Court of Justice approves the creation of the European Stability Mechanism outside the EU legal order: Pringle’, 50 Common Market Law Review (2013) p. 805; Craig P., ‘“Pringle”: Legal Reasoning, Text, Purpose and Teleology’, 1 Maastricht Journal of European and Comparative Law (2013) p. 3 ; D. Thym and M. Wendel, ‘Préserver le respect du droit dans la crise; la Cour de justice, le MES et le mythe du déclin de la Communauté de droit (arrêt Pringle)’, 3 Cahiers de droit européen (2012) p. 733.

130 J. Tomkin, ‘Contradiction, Circumvention and Conceptual Gymnastics: The Impact of the Adoption of the ESM Treaty on the State of European Democracy’, 14 German Law Journal (2013) p. 169 at p. 189. See also D. O’Donovan, ‘The Insulation of Austerity: The Charter of Fundamental Rights and European Union Institutions’, 16 May 2013, <www.humanrights.ie>, visited 12 December 2016.

131 B. de Witte, ‘Internationale verdragen tussen lidstaten van de Europese Unie’, in R. Wessel and B. de Witte, De plaats van de Europese Unie in het veranderende bestel van de volkenrechtelijke organisatie, Mededelingen van de Nederlandse Vereniging voor Internationaal Recht [The Place of the European Union in the Changing Order of the International Organization, Announcements of the Dutch Society for International Law] (Asser Press 2001) p. 104.

132 Chalmers D. et al., European Union Law (Cambridge University Press 2010) p.132 .

133 Para. 64 of the judgment.

134 Para. 68 of the judgment.

135 C. Timmermans, ‘ECJ Doctrines on Competences’, ‘ECJ Doctrines on Competences’, in Azoulai L., The Question of Competence in the European Union (Oxford University Press 2014) p.164 .

136 Para. 67 of the judgment.

137 Garben S., ‘Confronting the Competence Conundrum: Democratising the European Union through an Expansion of its Legislative Powers’, 35 Oxford Journal of Legal Studies (2015) p.55 .

138 A situation where some benefit and no one is made worse off. In earlier work, Majone argued that EU policies are generally about regulation addressing market failures, and thus about producing Pareto-efficient outcomes. G. Majone, Regulating Europe (Routledge 1996). Majone is highly critical of the current type of monetary integration: Majone G., Rethinking The Union of Europe Post-Crisis: Has Integration Gone Too Far? (Cambridge University Press 2014).

139 Moravcsik A., ‘In Defense of the “Democratic Deficit”: Reassessing Legitimacy in the European Union’, 40 Journal of Common Market Studies (2002) p.603 .

140 Føllesdal and Hix, supra n. 9.

141 On the Europeanisation of public opinion in the Euro-crisis, see M. Meijers, ‘The Euro-crisis as a catalyst of the Europeanization of public spheres? A cross-temporal study of the Netherlands and Germany’, 62 LEQS Paper (2013), and Risse T. (ed.), European Public Spheres: Politics is Back (Cambridge University Press 2014).

142 Art. 17 TEU.

* Professor of EU Law, College of Europe, Bruges. The views expressed in this article are entirely personal and do not in any way reflect the views of the European Commission. The author wishes to thank the participants of the GOLEM session at the London School of Economics on 1 December 2015 and the MCEL seminar at Maastricht University on 24 May 2016 for their useful comments, as well as three anonymous reviewers.

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European Constitutional Law Review
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