Part I - Analytical Framework

2 European Economic Governance and Labour Politics

2.1 Introduction

The 2008 financial crisis represents a major turning point for European economic governance and labour politics. The crisis triggered European Union (EU) interventions in its member states’ employment relations and social policies, which had hitherto been largely shielded from coercive EU interventions. At first, this shift occurred only in countries where governments had signed bailout programmes with international and EU institutions. After the EU adopted a Six-Pack of laws on economic governance in 2011 however, no member state was outside the reach of its new economic governance (NEG) regime. This shift is significant for analysts and social actors alike. As NEG denotes a departure from the usual trajectories of EU policymaking, EU scholars must rethink their long-established analytical perspectives. The shift to NEG challenges organised labour and egalitarian democracy too, as it threatens the role that labour movements and public services have played in Europe since the making of the mid-twentieth-century class compromise between capital and labour.

Although the NEG prescriptions that the EU began issuing after the financial crisis did not affect all workers and all public service users across Europe equally, the shift to NEG has nevertheless been fundamental. The Six-Pack’s new EU Regulation 1176/2011 ‘on the prevention and correction of macroeconomic imbalances’, for example, assumes that the purpose of NEG is to ensure that member states pursue ‘proper’ economic policies (Art. 2). This wording mirrors a technocratic understanding of EU governance, predicated on the implementation of apparently apolitical ‘regulatory’ standards by European executive agencies to create an integrated marketplace, as advocated, for example, by the Italian political scientist Giandomenico Majone (1994). If, however, EU economic policymaking is reduced to an exercise that consists of the implementation of ‘proper’ policies, it eschews the idea of democratic interest intermediation between conflicting political priorities or social interests. After all, NEG affects not only technical standards but also redistributive areas of labour politics, which affect social classes differently, as happens in the case of wage bargaining or the provision of public services. NEG’s technocratic assumptions, which supplant democratic choices, thus become highly problematic.

Although the single market programme (SMP) and economic and monetary union (EMU) exposed workers and labour movements to increased competitive pressures, the greater horizontal market integration caused by the SMP and EMU did not question the formal autonomy of social partners, as illustrated by the revival of neo-corporatist social pacts and social partnership agreements during the 1990s (Erne, 2008). By contrast, the shift to the much more vertical NEG regime pushed trade unions into a corner. This development seemed to leave very few options to labour movements: passive acceptance, national resistance, or transnational counter-mobilisations (Erne, 2019). Which of these responses have dominated, and why? And what have been the intended and unintended consequences of the shift to NEG for the European integration process, labour politics, and egalitarian democracy? These questions are vital for practitioners and analysts of EU governance and labour movements alike. The shift to NEG not only restructures the European political space and thereby challenges the role of trade unions but also requires new analytical tools that can adequately capture the ongoing social transformations that NEG has triggered.

In sum, in response to the upheavals caused by the 2008 financial crisis, EU policymakers adopted NEG. To understand the challenges that this new regime poses to labour politics however, we must also comprehend EU economic governance and its bearing on employment relations and public services prior to the shift to NEG. In section 2.2, we thus assess European integration dynamics already present before NEG and the ways in which labour movements positioned themselves in relation to them. Tensions between market-driven and political modes of EU integration were already apparent in the 2000s, but the shift to NEG made them much greater. NEG also unsettled EU policymakers’ and scholars’ core assumptions about EU economic governance and labour politics. Before we can discuss the analytical and political challenges caused by NEG however, we must first describe how it works, as we do in section 2.3.

2.2 EU Economic Governance and Labour Politics before the 2008 Financial Crisis

Economic Dynamics

According to the Treaty on European Union (TEU), the ‘Union shall establish an internal market’ and ‘promote social justice’ and ‘economic, social and territorial cohesion, and solidarity among Member States’ (Art. 3(3) TEU).¹ Whereas advocates of a social Europe argued that the latter EU objectives would require countervailing EU social policy interventions (Marginson and Sisson, 2004), the business-friendly promoters of the European single market project argued that its creation would produce substantial employment and welfare gains, as the free movement of capital, goods, services, and people would generate economies of scale and a decrease in prices for consumers resulting from increased competition (Cecchini, Catinat, and Jacquemin, 1988; van Apeldoorn, 2002; Jabko, 2006). Given these conflicting views, it is not surprising that the EU integration process did not follow a uniform trajectory since the adoption of the European Economic Community (EEC) Treaty in 1957. Instead, European economic and social integration has proceeded in different stages and at different speeds.

To draw a differentiated picture of the European integration process and to explain the unequal progress of its social and economic goals across time, Fritz Scharpf (1999) distinguished between the negative liberalising and positive harmonising of European laws, building on earlier works of Keynesian economic integration theory (Tinbergen, 1965; Pinder, 1968). Concretely, Scharpf distinguishes between EU interventions that (a) remove restrictions to the free movement of goods, capital, services, and people across borders (negative integration) and (b) set supranational standards to regulate goods, capital, services, and labour markets at EU level (positive integration). Negative integration increases market competition between firms and regulatory competition between different national governance regimes. The outcome is thus an increase in labour commodification (Streeck, 1992), which means turning labour power into a mere commodity to be bought and sold in the marketplace. In contrast, positive integration sets harmonised standards at EU level. If the harmonised standards are not set too low, positive integration curtails firms’ capacity to use lower national standards to gain a competitive advantage and thus limits market and regulatory competition. When positive integration involves the regulation of employment relations and social protection, it functions as a market-correcting device that decommodifies labour.

The distinction between negative and positive integration enabled Scharpf (1999) to capture an essential shift in European policymaking triggered by the Single European Act (SEA) and its single market programme. After the SEA’s adoption in 1986, economic integration processes went up a gear. The SEA departed from the positive (but cumbersome) integration approach based on building a level playing field for all firms through the harmonisation of national standards at European level. Instead, to remove all remaining non-tariff barriers to the internal market,² the SEA pursued a negative integration approach based on the mutual recognition of national standards for commodities traded across borders rather than their harmonisation at European level.

Positive regulation has always faced significant obstacles at European level. Most notably, new EU laws in the social field require a high level of consensus that is ‘difficult or impossible’ to reach, given the ‘heterogeneity of Member State interests and preferences’ (Scharpf, 2006: 854). In this context, European leaders’ strategy of playing the market as a mechanism to unite Europe (Jabko, 2006) and the consequent shift to negative integration was significant: the SEA’s single market programme (SMP) amplified market competition and facilitated the rise of a much more integrated European production system. The SEA rewarded companies that relocated part of their production capacities to countries with lower labour standards. In addition, economic integration went up another gear after the Maastricht Treaty (1992) launched the Economic and Monetary Union (EMU) and after the European Council opened the EU’s eastwards accession process at its 1993 Copenhagen summit. Subsequently, the Maastricht EMU and the Copenhagen EU accession criteria, coupled with the increasing competitive pressures in an ever more integrated European market, increased the pressures on national budgets and unit labour costs (wages and social contributions) across old and new Europe alike.

The drafters of the Maastricht Treaty attached a social protocol to it, which was meant to facilitate the adoption of EU laws in the social field to prevent a race to the bottom in labour and social standards. Since the late 1990s however, EU policymakers have adopted only very few positive, market-correcting EU laws – although the EU did manage to adopt more of them in the social field than Fritz Scharpf (1999) and Wolfgang Streeck (1992) anticipated. Overall, those laws were not robust enough to offset competitive pressures unleashed by the SMP and the EMU (Marginson and Sisson, 2004; Maccarrone, Erne, and Golden, 2023).

Although the increased intra-European economic competitive pressures triggered by the SMP and EMU did not lead to the creation of a strong social Europe, neither did they lead to an end to social concertation between governments, employers, and unions at national level, as initially expected by neo-corporatist employment relations scholars (Streeck and Schmitter, 1991). Governments and employers continued to involve unions in national corporatist arrangements or social pacts – not to ensure a fair distribution between capital and labour as before but to moderate wage growth. Wage moderation was a key feature of these arrangements for two reasons: first, to improve the competitive position of countries’ firms in an ever more transnational marketplace and, second, to fulfil the Maastricht Treaty’s low inflation criteria to access the EMU (Grote and Schmitter, 1999; Molina and Rhodes, 2002; Erne, 2008). To access the EMU, governments also began reducing the costs of public services to meet the Treaty’s public deficit criteria. They achieved that by curtailing public expenditure or shifting the costs of public services to private purses through a series of marketising reforms (see Chapters 5–10), leading to a commodification of the social welfare state, namely, employment relations, social services, and public utilities (Supiot, 2013).

After the introduction of the Euro in 1999 and the accession of ten new EU member states in 2004 however, the disciplining effects of the EMU and accession criteria on labour and the social welfare state diminished. This led EU leaders to relaunch the economic integration process by drawing on negative integration through service liberalisation. To achieve that, the Commission notably asked the European Parliament and Council in 2004 to adopt its proposal for an EU Services Directive, but these attempts were not entirely successful and, by the end of the decade, the contradictions of European economic integration became ever more apparent. Contrary to the assumptions of the proponents of the internal market programme quoted at the start of this section, European integration did not lead to market integration trickling down to social integration. Another reason for this was that the building of the single market and monetary union in an enlarged EU accentuated rather than reduced social and economic imbalances across countries and social classes (Meardi, 2013; Hugree, Penissat, and Spire, 2020).

Given the absence of substantial European industrial and social policies to reorient them, economic forces were by and large left to their own devices. As a result, the SMP, the EMU, and accession processes strengthened the productive apparatus in the EU’s old core (namely, in countries that belonged to the former Deutschmark zone). In the eurozone’s periphery, interest-rate convergence fuelled speculative property investments instead of productive ones, which would have allowed sustainable growth (Aglietta, 2019: 66). This happened even in countries like Ireland, where governments included unions in social pacts and adopted policies in favour of the creation of new industrial clusters (McDonough and Dundon, 2010; Ó Riain, 2014; Roche, O’Connell, and Prothero, 2016). In contrast, firms in core countries benefitted from two mutually reinforcing trends: (1) increasing economies of scale (in the enlarged EU market) and (2) increasing agglomeration effects whereby the most innovative and productive businesses prefer existing innovation hubs to greenfield peripheral locations (Aglietta, 2019: 78). Thus, the economies in the EU’s strongest economies benefitted the most from economic and monetary unification, also because the introduction of the Euro removed any danger of countervailing currency revaluations in the former Deutschmark zone (Erne, 2008: 101). In turn, the SMP and the accession process led to a restructuring of productive capacities in the EU’s new eastern periphery at the price of its continued dependence on the core (Hardy, 2009; Bohle and Greskovits, 2012; Simonazzi, Ginzburg, and Nocella, 2013; Ban, 2014; Stan and Erne, 2014).

From an international political economy perspective, the making and enlargement of the internal market and monetary union led to a new transnational division of labour that affected the economies of different member states differently. From a labour perspective however, economic integration increased the competitive pressures on wages and working conditions everywhere. Workers in high-wage, core countries faced increased threats from firms that they would relocate, and economic and monetary EU integration exposed lower-paid workers from peripheral locations to increased transnational competition, not least given their employers’ subordinate position in transnational supply chains. In addition, just before the advent of the 2008 crisis, the Court of Justice of the European Union (CJEU) further accentuated the imbalance between the EU’s economic and social objectives by prioritising the transnational economic freedoms of corporations over workers’ social rights (Dølvik and Visser, 2009; Schiek, 2012; Garben, 2017; Arnholtz and Lillie, 2019; Wagner, 2020). Thus, although economic EU integration led to a much more integrated production system on the continent, it also amplified social divisions inside countries and transnationally across Europe.

By the 2000s, economic EU integration had also become increasingly politicised (Höpner and Schäfer, 2010; Schulz-Forberg and Stråth, 2014; Zürn, 2016), with unions and social movements (Turnbull, 2006; Erne, 2008; della Porta and Caiani, 2009) and the European Parliament playing an increasingly influential role (Hix and Høyland, 2013). Calls for a more political Europe also led to the draft Treaty establishing a Constitution for Europe in 2004. Many proponents of a social and democratic Europe had already been supporting a shift from economic to political integration in the 1990s (Habermas, 1992; Erne et al., 1995; Golden, 2024). After the introduction of the Euro, some promoters of economic integration called for more political EU interventions too (Buti and van den Noord, 2004), albeit for different reasons, namely, to trigger structural reforms in member states that would consolidate the internal market and monetary union and enhance their competitiveness (Trichet, 2006). In the following, we thus assess the political dynamics of EU integration before describing the shift to the EU’s NEG regime in section 2.3.

Political Dynamics

The devastation caused by fascism and World War II amplified calls, including from trade unionists (Buschak, 2014), for a democratic, federal Europe (Spinelli and Rossi, 2013 [1941]). The first attempts to create one failed though. To uphold human rights and democracy in Europe, ten countries³ created the Council of Europe (CoE) in 1949 as an international and not a federal organisation.⁴ The constitution of a Political European Community, with a directly elected Peoples’ Chamber, a Senate, and a supranational Executive accountable to parliament (Karp, 1954), equally unravelled in 1954 (Griffiths, 1994). European integration thus became an economic venture, albeit one that continued to be shaped by powerful political dynamics.

In 1951, six countries⁵ created the European Coal and Steel Community (ECSC), which was led, by contrast to the CoE, by a supranational High Authority, the latter-day European Commission. The ECSC Treaty also established a supranational Court, the latter-day CJEU (Art. 31, ECSC Treaty). Whereas the High Authority was subject to judicial review, the actions of the ECSC executive did not depend on a democratic, popular mandate, even though the ECSC Treaty also created an Assembly, the latter-day European Parliament, which could dismiss the High Authority by a no-confidence vote (Art. 24, ECSC Treaty). The ECSC was tasked with overseeing the post-war reconstruction of the steel and coal sector not only for economic but also for political reasons. This was outlined by the French foreign minister, Robert Schuman, who proposed its creation: ‘By pooling basic production and by instituting a new High Authority, whose decisions will bind France, Germany and other member countries, this proposal will lead to the realization of the first concrete foundation of a European federation indispensable to the preservation of peace’ (European Commission, 2020a). According to neo-functionalist European integration scholar Ernst Haas (1958 [2004]), the promotors of the ECSC in 1951 and the EEC and European Atomic Energy Community (Euratom) in 1957 were convinced that political integration would ultimately follow from the creation of these European communities as a spill-over from economic integration.

Although the making of an integrated European common market and customs union required supranational laws, the exact dosage of supranationalism and intergovernmentalism remained a contested issue among decision makers, lawyers, and scholars from the outset. At every stage in the ‘process of creating an ever closer union among the peoples of Europe’ (Art. 1 TEU), different visions emerged of what the EU should be. To what extent should member states retain their autonomy and just pool their sovereignty on a case-by-case basis (intergovernmentalism) or does European integration also require supranational state structures to govern an ever more integrated economy (federalism)? During their first three decades, the European communities worked largely as an intergovernmental organisation despite the founders’ federal ambitions. This changed in 1987, when the SEA extended qualified majority voting in the Council to more policy areas to facilitate the implementation of its single market programme by new EU laws. In 1993, the Treaty of Maastricht extended qualified majority voting to additional areas, including working conditions and public services, and gave the European Parliament more co-legislation rights. At long last, Haas’ neo-functionalist hypothesis seemed to be confirmed. In foreign and security policy, or pay and healthcare policy, however, member states retained much of their policymaking powers. Furthermore, the Maastricht Treaty counterbalanced the power of the supranational Commission by institutionalising the intergovernmental European Council of heads of state or government and by tasking it to ‘provide the Union with the necessary impetus for its development’ (Art. D TEU; now Art. 15(1) TEU). In employment relations and public services, EU policymaking followed therefore neither an intergovernmental nor a supranational approach. Instead, it has been described as a multilevel governance regime that displays different combinations of intergovernmental collaboration and supranational EU authority (Marginson and Sisson, 2004).

Both intergovernmentalist and supranationalist EU scholars have focused their studies on institutional questions, addressing the question of the formation of a European polity, usually in terms of an opposition between national and supranational decision makers.⁶ However, their focus on political executives, namely, the Council and the Commission, often neglects questions about democratic accountability. Regardless of whether EU decisions are made at intergovernmental Council or supranational Commission meetings, in both settings national and European parliaments and publics play a secondary role. To be able to assess also the prospects of a more democratic EU, we must enlarge our analytical perspectives. We therefore analyse not only institutional processes but also the roles played by non-governmental actors, namely, trade unions and social movements, which also contributed to the making of social and democratic states at national level. In addition, we must place EU integration within broader developments in capitalist accumulation.

As shown in historical European studies, political authority over a population included few rights at the outset (i.e., civic rights to private property) and only subsequently more fundamental political and social rights (Marshall, 1950). The establishment of European state structures has usually been a product of coercion and economic capital accumulation (Tilly, 1992). Political and social rights usually followed afterwards as ruling elites’ response to countervailing social movements (Marshall, 1950; Galbraith, 1952; Habermas, 1992). Although ‘soft-liners’ within ruling classes often played a key role in past democratisation processes (O’Donnell and Schmitter, 2013 [1986]: xviii), Western Europe’s democracies and welfare states were not created out of the blue by benevolent rulers. Rather, they were usually the outcome of the social (class) struggles and subsequent class compromises between organised labour and capital (Rueschemeyer, Huber Stephens, and Stephens, 1992).

The creation of welfare states would not have been possible without labour’s struggles for a democratisation of social and economic policymaking, namely, through an extension of political rights to participation in decision making and of social rights shielding workers from market pressures and vagaries (Marshall, 1950; Foot, 2005). These struggles included calls not only for more democracy in politics and society but also for actions that politicised social and economic issues by bringing them into the public sphere of debate and policy intervention. After World War II, Western European labour movements therefore partially succeeded in shifting the conflict between workers and employers from the marketplace to the political arena, thereby embedding liberalism (Ruggie, 1982). This stabilised the capitalist economy and led to the creation of European social welfare states (Crouch, 1999; Millward, 2005; Wahl, 2011), with three key dimensions: individual and collective labour rights, social protection, and public utilities (Supiot, 2013).

Building on Stein Rokkan (1999) and his own work (Bartolini 2000) on the formation of democratic states, Stefano Bartolini (2005) stressed that the formation of EU state structures requires not only democratic participation rights but also the building of a welfare system. Others have reached similar conclusions (Habermas, 1992; Erne et al., 1995; Schmitter, 2000; Erne, 2008). EU policymaking in employment relations and public services is thus connected to political integration as well as its democratisation and politicisation. An exclusive focus on the institutional (national/supranational) dimensions of EU policymaking would thus be too narrow in scope to understand the links between EU governance and its democratisation – hence our focus on interest groups and social movements.

As seen in the previous section on economic integration however, the creation of the internal market resulted in ‘regime competition’ (Streeck, 1992), which exposed employment relations and public services across Europe to increased commodifying market pressures. Workers perceived this process of renewed commodification of labour, social protection, and public utilities as resulting mostly from either impersonal market forces or interventions by national governments. Countervailing trade union action therefore usually targeted the latter rather than the more distant EU. This was possible also because the shift to negative integration, following the 1986 SEA, left the formal autonomy of national labour and social policy regimes intact. Thus, these regimes could still react differently to the pressures of the increased market and regime competition unleashed by EMU and EU accession processes. This triggered a torrent of institutionalist research about the different national ‘varieties of capitalism’ and labour politics (Thelen, 2001). Until the 1990s, apart from some notable exceptions (Lefébure and Lagneau, 2001; Erne, 2008), national trade unions therefore found few reasons for EU-level action and were mostly invested in concession bargaining to defend labour and social standards at national, regional, or local level as well as they could.

The obstacles to positive EU integration in social policy fields, seen in the section above, led to an inbuilt asymmetry between market-making and market-correcting EU laws, which favoured capital. Nonetheless, unions started to build – intersectoral and sectoral – European umbrella organisations (Gobin, 1996; Dølvik, 1997; Degryse and Tilly, 2013; Fischbach-Pyttel, 2017) and participated in EU policymaking in the hope of obtaining some labour and social rights at EU level in exchange for their support for the integration process (Crouch, 2000; Erne, 2008). These included the SEA’s Treaty articles on occupational health and safety and the Maastricht Treaty’s protocol on social policy that facilitated the adoption of directives in these fields by a qualified majority vote (instead of unanimity) in the Council (see Chapter 6). Although the EU’s social legislative agenda went much further than Scharpf and Streeck had initially expected, overall, its achievements remained quite modest, also because of loopholes in many social EU directives that firms and governments could exploit to derail their application in practice.⁷ By contrast, the EU laws that created the internal market and monetary union left national policymakers much less room for manoeuvre.

A few days before the Euro became an everyday reality, the European Council (2001) thus acknowledged that European citizens would be ‘calling for a clear, open, effective and democratically controlled Community approach’ and tasked a Convention of national and EU-level public representatives to draft a Constitution for European citizens. Despite these democratic openings, however, the European Council also restated that the ‘basic issue should continue to be proper operation of the internal market and the single currency’ (2001: 21).

Popular political pressures for a more democratic EU led to a partial democratisation of EU decision-making processes. In the 1980s, the Commission used its powers to open up public services to competition through the adoption of Commission Directives (Art. 106(3) Treaty on the Functioning of the European Union: TFEU). After the Commission decided to marketise the public telecommunications sector on its own, several governments challenged its power to do that before the CJEU. Although the governments lost their legal battle in court, they nevertheless won the war. In fact, the Commission thereafter felt obliged to abandon its exclusive legislative competition policy powers concerning public services ‘in favour of conventional law-making processes involving the Council and Parliament’ (Maher, 2021b: 832; see also Chapter 7). The marketisation of public utilities henceforth relied on inter-institutional, political compromises and thus progressed more slowly (see Chapters 7 and 8).

The democratisation of EU law-making went also beyond these institutional actors, as the Treaty of Maastricht introduced European social dialogue with representative EU-level organisations of management and labour, giving them formal co-decision rights in EU social policymaking (Arts. 154 and 155 TFEU). The partial democratisation of EU policymaking also went beyond organised interest groups to include EU citizens at large: the European Citizens’ Initiative (ECI) introduced in the Treaty of Lisbon (2007) gives groups composed of at least one million European citizens from at least seven different member states the right to make a legislative proposition to the Commission (Art. 11(4) TEU; Szabó, Golden, and Erne, 2022).

The more the EU democratised its legislative procedures, the more trade unions and social movements became aware of the threat of commodifying EU laws for employment relations and public services and mobilised against them across borders. By the mid-2000s, the Commission’s attempts to deregulate public services by EU laws had run out of steam, as the countermovements that they triggered motivated the European Parliament to curb the Commission’s commodifying bent through legislative amendments, for example in the case of Commissioner Bolkestein’s draft Services Directive of 2004 (COM(2004) 2 final/3) (Erne, 2008; della Porta and Caiani, 2009; Crespy, 2012). The referendums on the draft Treaty establishing a Constitution for Europe (hereinafter, constitutional treaty or CT) did ‘bring citizens closer to the European design and European Institutions’ (CT, Preface), but without producing the desired effects. Instead of consolidating the ‘proper operation of the internal market and the single currency’ (European Council, 2001: 21), the French and Dutch referendum debates on the CT in 2005 and the parallel discussions on the draft Bolkestein Directive gave social movements and unions an exceptional opportunity to politicise and reject the policy orientation of the EU’s economic integration processes in a European public sphere (Kohler-Koch and Quittkat, 2013; Béthoux, Erne, and Golden, 2018). The more EU governance by hard law triggered political countermovements, the more the EU relied on new governance tools.

In 2000, the European Council launched its Lisbon strategy, which aimed to turn the EU, by 2010, into the most competitive economy in the world. To achieve this objective, the EU relied on tools introduced in the previous decade, namely, the Broad Economic Policy Guidelines (BEPGs) introduced by the Maastricht Treaty (Art. 121 TFEU) and the Open Method of Coordination (OMC) introduced by the Amsterdam Treaty (Art. 148 TFEU). These procedures sought to achieve a greater convergence of national policies towards the EU’s economic and social goals, namely, through a combination of numerical benchmarks, country-specific reports and recommendations, mutual learning, and peer pressure (Armstrong, 2010). Although not legally binding, these ‘soft law’ mechanisms nevertheless had ‘practical effects’ (Snyder, 1993: 32). They created stronger links between national and EU officials and crafted a new way of governing that depoliticised policymaking and strengthened policymakers’ capacity to govern at a distance from popular pressures (Miller and Rose, 1990; Lascoumes and Le Galès, 2004). Even so, trade unionists hardly found these new governance mechanisms threatening. After all, the promotors of the Lisbon agenda still tried to reconcile opposing social interests, as shown by the introduction of composite terms – such as ‘flexicurity’ – into the Euro-speak vocabulary (Hyman, 2005: 26). The Lisbon strategy’s non-binding nature also reassured those who feared commodifying EU interventions in the social field. After the crisis of 2008 however, EU leaders broke the institutional padlocks that had hitherto constrained direct EU interventions in employment and social fields without much ado and set up the much more constraining NEG regime.

2.3 The EU’s New Economic Governance Regime after 2008

The making of the EU’s NEG regime marks a major shift in EU policymaking. NEG provides new tools for the European Commission and Council not only to issue policy prescriptions to member states in areas of employment relations and public services but also to enforce them. In this section, we outline the economic and political context in which NEG was set up after the 2008 financial crisis, its coercive architecture, and the mechanisms that led to its institutionalisation at the beginning of the 2010s.

A Silent Revolution from Above

Before 2008, EU laws that directly affected employment relations and public services were rare, even though the SMP and EMU exposed workers and welfare states to increased competitive market pressures. Most European business and centre-right political leaders did not think that this would be a problem. Employment relations and social policy should remain a matter for national social partners and policymakers (Léonard et al., 2007), regardless of the frictions that the making of the internal market and monetary union might entail. Although economic and monetary integration would make labour and social policy adjustments necessary, business and centre-right political leaders thought that the increased competition between different national industrial relations and welfare regimes triggered by it would suffice to ensure the EU’s cohesion quasi automatically (Erne, 2008: 54).

After 2008 however, the views of European business and centre-right political leaders changed dramatically when they realised that the internal market and monetary union did not ‘promote economic, social and territorial cohesion, and solidarity among Member States’ (Art. 3(3) TEU) but led to threatening macroeconomic imbalances between them. In June 2010, the European organisation of organised capital therefore urged the Commission and Council to draft a ‘European framework’ for ‘product, labour, health care and social security reforms’ (Business Europe, 2010: 7). This was a major policy shift, as Europe’s business leaders had perceived the mere interest of EU authorities in employment relations under the banner of governance as ‘too much intervention’ only a few years earlier (Léonard et al., 2007: 7).⁸

To prevent the collapse of the monetary union, which ‘would lead to a chain reaction that might well bring down the European Union as a whole’ (Beck, 2013: 24), the EU adopted a much more interventionist NEG regime. In these exceptional situations, the existing order ‘may legitimately be suspended to defend the common good’ (2013: 27). The ‘impending catastrophe empowers and even forces the Europe builders to exploit legal loopholes so as to open the door to changes’ (2013: 26–27). Although Ulrich Beck acknowledged that the rhetoric of the ‘imminent collapse of Europe may easily result in the birth of a political monster’ (2013: 28), the sociologist of the risk society condoned the route taken by EU leaders as a response necessitated by the financial crisis. This pathway involved unlocking the many constitutional padlocks that had hitherto stood in the way of a more interventionist EU governance regime in employment relations and public services.

Across the globe, the upheavals caused by the financial crisis shattered into pieces ‘the sophisticated but conceptually hollow premise on which the framework of self-regulating markets had been built’ (Griffith-Jones, Ocampo, and Stiglitz, 2010: 1). Within the EU, the crisis seemed to vindicate the views of heterodox economic sociologists and political economists who had long argued that the single market and monetary union would require a gouvernement économique européen (Albert, 1997: 584) or even a gouvernement européen tout court (Boyer and Dehove, 2001). At first, many centre-left politicians and trade union advisors thus welcomed the shift to a more interventionist EU governance regime (Erne, 2012a, 2012b). This shift, however, soon disappointed those who believed in 2008 that the crisis would lead to a shift away from the free-market credo towards more social policies. In fact, the failures of neoliberal theory did little to weaken the power of corporate business interests in EU socioeconomic policymaking (Crouch, 2011). As political leaders considered private banks to be systemically relevant, the banks managed to turn even the threat of their ‘imminent ruin’ into a powerful political asset (Erne, 2020: 260; Stiglitz, 2010). After 2008, the Commission thus approved national bank bailouts of unprecedented proportion. Intriguingly, by doing this, the Commission reinterpreted, in ‘a highly politicised environment’ (Maher, 2021b: 833), the EU Treaties’ competition policy principles that seemed to stipulate that state aid for private corporations was incompatible with the internal market (Buch-Hansen and Wigger, 2011).⁹

Facing competing pressures from business associations, unions, and governments, the European Commission and Council of finance ministers (EU executives) adopted a crisis narrative that mirrored different political concerns – as outlined below – but still went in a business-friendly direction (Syrovatka, 2022a: 211–299). First, EU executives endorsed the calls of business interests and surplus countries¹⁰ for the curtailment of public spending. At the same time, EU executives endorsed calls for a supranational surveillance of national employment and social policies. Although this policy shift echoed long-standing Keynesian concerns of centre-left politicians and trade union economists (Erne, 2008; Delors, Fernandes, and Mermet, 2011), it did not represent a shift to the left. The EU executives just decided that the Euro’s success would depend not only on the curtailment of public spending in deficit countries but also on a much more constraining pan-European strategy of employment relations and public services reforms. This conclusion mirrored the shift of Business Europe (2010) in favour of stronger EU powers in labour, healthcare, and social policy, which was supported also by the American Chamber of Commerce, southern European organised capital, and MEDEF, the movement of French enterprises (Syrovatka, 2022a: 221–224). The German employer and business associations, BDA and BDI (2010), however, remarkably did not favour it, as they feared that a more supranational labour and social policy regime would lead to EU calls for higher wages in Germany, which would counteract the export-oriented strategies of German firms (2010: 4).

A Constraining Governance Architecture

When some member states were no longer able to refinance their public debt after the crisis, the EU concluded several bailout programmes with member states in collaboration with the International Monetary Fund (IMF) and, in eurozone countries, also with the European Central Bank (ECB). These programmes made EU bailout funding conditional on the implementation of strict policy prescriptions, including in policy fields hitherto believed to be shielded from top-down EU interventions. This happened despite the EU’s allegedly ‘ordoliberal’ (Joerges, 2013) principles that would outlaw the massive bailouts of private banks, the Treaty’s no-bailout clause that would outlaw EU funding for its member states (Art. 125 TFEU),¹¹ and its Charter of Fundamental Rights. Regardless of their liminal legality, the EU first approved massive state aid packages for ailing private banks and then conditional state bailout programmes of around €500 billion, which is a lot more than the EU’s annual budget of around €140 billion (Kilpatrick, 2017: 338).¹² Arguably, the EU could also have let banks or member states default on their debt repayments. This option was not chosen though, as EU and ECB leaders feared that even partial defaults could lead to the collapse of the Euro, which would represent a systemic risk to capitalist accumulation in general (Harvey, 2010; Tooze, 2018). In its subsequent case law, the EU’s CJEU upheld the legality of the EU’s NEG regime. To that end, the CJEU had to advance an interpretation of Treaty provisions that was not ‘always the legally obvious’ one (Barrett, 2020: 5).¹³ The Memoranda of Understanding (MoUs) with three non-eurozone (Hungary, Latvia, and Romania) and four eurozone (Greece, Ireland, Portugal, and Cyprus) member states signed by the EU between 2008 and 2015 could thus include binding prescriptions on employment relations and social policies, despite EU executives’ lack of legislative powers in these fields. As non-compliance would lead to a withdrawal of EU bailout funding, the level of constraint faced by a member state in relation to MoU-related prescriptions was very significant.

The strict conditionalities of MoU did not affect only bailout programme countries. The MoU’s approach to budgetary discipline and policy changes also served as a general model for the silent revolution from above that the then Commission President, José Manuel Barroso, had already announced in 2010. This revolution took the form of a package of new EU laws that strengthened the EU’s economic governance powers in relation to all its member states. Using a dormant Maastricht Treaty paragraph as its legal basis,¹⁴ the European Parliament and Council adopted the Six-Pack of EU laws on EU economic governance in 2011. The Two-Pack, which they adopted in 2013, further institutionalised the powers of the Commission and the Council in national fiscal policy (Bauer and Becker, 2014).

Instead of steering member states’ policies through the classical method of governing by law in accordance with the EU’s ordinary legislative procedure, the Six-Pack institutionalised the NEG regime that steers member state policies through new public management tools, for example numerical benchmarks, country-specific ad hoc prescriptions, and an extraordinary policy enforcement regime. According to the Six-Pack laws, the Commission can propose fines for non-compliant states. In the event of excessive deficits, Regulation 1173/2011 allows yearly fines of up to 0.2 per cent of GDP for non-complying eurozone countries (Erne, 2012b; Bauer and Becker, 2014). In contrast to the fines foreseen in the original Stability and Growth Pact (SGP) adopted in 1997,¹⁵ the Commission’s fines apply automatically unless a qualified majority of national finance ministers vetoes them within a ten-day period. The Six-Pack thus substantially enhanced the sanctioning mechanisms behind the SGP’s excessive deficit procedure (EDP), which is the corrective arm of the EU’s surveillance regime that aims to ensure member states’ compliance with the EU’s deficit and debt criteria. Although the EU’s reference values for its EDP are clear-cut,¹⁶ most member states exceed them most of the time; but what matters for an EDP against a state are not reference values as such but the Commission’s assessment of their trajectory. This gives the Commission considerable leeway in relation to member states’ budgetary policies.¹⁷ In 2013, the Six-Pack’s rules on budget deficits were strengthened further by the Two-Pack of EU laws that enhanced the Commission’s control over national budgetary processes and by the Treaty on Stability, Coordination, and Governance in the Economic and Monetary Union (or Fiscal Treaty), in which EU member states committed themselves to introducing balanced budget rules and automatic fiscal correction mechanisms in their own legal systems.

In addition to the enhanced EDP, the Six-Pack laws introduced a novel Macroeconomic Imbalance Procedure (MIP), which likewise foresees fines that the Commission can enforce unless a reversed qualified majority of finance ministers vetoes them within ten days. MIP Regulation 1176/2011 allows yearly fines of up to 0.1 per cent of GDP for eurozone countries that display excessive macroeconomic imbalances and fail to enact the corresponding EU corrective action plans. Compared with the EDP, the MIP rests on an even vaguer definition of what constitutes a punishable infringement, that is, excessive imbalances in the MIP case. According to Art. 2 of the MIP Regulation, these ‘mean severe imbalances, including imbalances that jeopardise or risk jeopardising the proper functioning of economic and monetary union’ (emphasis added).¹⁸ This definition is so all-encompassing that no employment and social policy area can a priori be placed out of its reach, as almost all employment relations and social policies restrict the apparent self-sufficient functioning of markets (Erne, 2012b).

The scoreboard of MIP indicators, which Art. 4 of Regulation 1176/2011 tasked the Commission to set up, does not clarify the limits of MIP-related NEG interventions in employment relations and public services either. By contrast, the scoreboard confirms the encompassing remit of the MIP, as four of its fourteen headline indicators affect labour and social policy, namely, unit labour cost, unemployment, long-term unemployment, and youth unemployment rates. The inclusion of these four social indicators, however, is not a sign of a social turn in the MIP. Their use rather indicates a vision that sees labour as a troublesome factor of production that can jeopardise the proper functioning of the European economy. This is evidenced by the scoreboard’s benchmark for unit labour cost increases, which defines only a ceiling but no floor for them. This is very problematic, as the unequal wage developments across the EU in the 2000s were caused not by excessive wage increases in the EU’s periphery (i.e., wage increases above national inflation and productivity rates) but by excessive wage moderation policies in a core country, namely, Germany (Erne, 2008). Conversely, the scoreboard’s ceilings for unemployment, long-term unemployment, and youth unemployment rates seem to point in a social direction. What matters, however, is not only the design of the MIP indicators as such. More important is the policy direction of the subsequent NEG prescriptions that the EU issues to reach them. To lower unemployment rates, for example, EU executives issued NEG prescriptions that urged the Italian government to weaken the Italian labour law, which protected workers against unjustified dismissals (Chapter 6).

The MIP thus became a significant tool for making inroads into the structural reform agenda first advanced through EU laws on the internal market and monetary union as well as the non-binding Broad Economic Policy Guidelines (BEPGs) that EU executives began to issue after the adoption of the Maastricht Treaty in 1993. However, whereas the former ran out of steam in the 2000s following the democratisation of the EU’s ordinary legislative procedure, the latter lacked coercive power, as outlined in section 2.1. By adopting MIP Regulation No 1176/2011, the European Parliament de facto delegated its legislative power to define what constitutes appropriate socioeconomic policies to the Commission and the Council’s Economic Policy Committee (EPC) advising it.¹⁹ The Commission and the EPC not only designed the MIP scoreboard, which is meant to identify those countries whose socioeconomic policies require an in-depth review but also drafts the country-specific recommendations (CSRs) and, if necessary, corrective action plans to ensure the ‘proper’ functioning of the European economy.

The Commission also plays a central role in the sanctioning procedures underpinning both EDP and MIP procedures. So far however, the ‘atomic bomb character’ (Calmfors, 2012: 11) of the fines for non-complying member states has prevented the Commission from triggering them. Even so, the Commission succeeded in nudging reluctant member states to take NEG prescriptions seriously, namely, when they threatened to open an EDP or an MIP against those member states. This happened, for example, in 2018, when the first Italian government led by Prime Minister Conte initially declined to follow EU advice in relation to its 2019 budget law. After the Conte government was confronted with both the Commission’s determination to sanction it and increasing interest payments demanded by holders of Italian government bonds, the Italian government felt obliged to revise its stance and reach an accord with the Commission (Fabbrini, 2022; Gasseau and Maccarrone, 2023).

Since 2014, all EU structural and investment funding has depended on ‘sound economic governance’, which means the implementation of MoU, SGP, and MIP prescriptions by the member state concerned (Art. 23, Regulation 1303/2013 of the European Parliament and of the Council of 17 December 2013). Hence, EU social and cohesion funding became conditional on the implementation of NEG’s policy agenda (Costamagna and Miglio, 2021; Syrovatka, 2022a), even though local recipients of EU funding can hardly be held responsible for excessive imbalances or deficits (Jouen, 2015). This set in train a money-for-reforms approach that fundamentally reoriented the purpose of the EU’s social and cohesion funding. Whereas the EEC’s social funds offset the negative effects of horizontal market integration, the structural reform clause of Common Provisions Regulation 1303/2013 turned the EU’s social and cohesion funding into an instrument for the further advancement of market integration.

As all facets of the NEG regime are interrelated, EU executives introduced a new policymaking process in 2011, the European Semester, which integrates all NEG interventions in one overarching procedure.

How NEG Works: The European Semester

The EU’s ordinary legislative procedure understands politics as a process of democratic interest intermediation between conflicting social and political interests. To reshape member states’ policies, the Commission must therefore propose specific, universally applicable laws and get them adopted by the European Parliament and the Council. In the social policy field, the Commission must also consult the European confederations of employers and trade unions on possible directions of its proposals (Art. 154(2) TFEU). ‘Should management and labour so desire’, their EU-level agreements can even be ‘implemented by a Council decision on a proposal from the Commission’ (Art. 155(2) TFEU), making social partners ‘co-legislators’ at EU level (Welz, 2008: 357).

NEG does not follow this logic of democratic interest intermediation. It is instead a new policymaking space at the borderline of democracy, bypassing national and European parliaments and social partners (Habermas, 2011). Whereas labour politics had been an arena of interest intermediation between organised capital and labour – and right- and left-wing political parties, respectively – NEG frames politics in technocratic terms as a conflict between the ‘right and the wrong’ (Mouffe, 2011: 5). Hence, NEG gave the Commission and the Council a complementary (and arguably more efficient) policymaking tool that is less prone to parliamentary intermediations and the veto power of social partners, more holistic in terms of its overarching strategic goals, and country-specific in its focus by comparison with the EU’s ordinary legislative procedure.

The EU bailout programmes, the excessive deficit procedure (EDP) of the revised SGP, and the new macroeconomic imbalance procedure (MIP) thus came to complement and overlay the EU’s economic growth strategy called Europe 2020. All four mechanisms were brought together in 2011 when the EU introduced an annual cycle of country-specific policy prescriptions, surveillance, and enforcement in the guise of the European Semester (the Semester). The Semester has thus institutionalised NEG as a system of policy coordination and surveillance drawing on four legal strands: the legally binding MoU, EDP, MIP, and the non-binding Europe 2020 strategy.

The Semester begins with a strategic Commission document that outlines the EU’s Annual Growth Strategy (AGS),²⁰ proceeds with the Commission’s assessment of member states’ progress in implementing the NEG agenda (in Country Reports and, if necessary, in-depth reviews), and ends with a Council Recommendation for each member state that includes several policy prescriptions outlining their tasks. As shown in Figure 2.1, the recommendations are drafted by the Commission in May and adopted by the Council (of finance ministers) in July. Each recommendation document includes several CSRs on fiscal and economic as well as employment relations and public services matters.

Figure 2.1 The four faces of the EU’s new economic governance (NEG) regime

Figure 2.1 also shows that the Council Recommendations issued since 2011 integrated all NEG prescriptions in one document, despite their different legal foundations. Concretely, Council Recommendations include policy prescriptions based on the following strands of the NEG regime:

1. (1) Memoranda of Understanding (MoUs) specifying the strict conditions attached to EU bailout funding. If a member state was subject to an EU bailout programme, the Council Recommendation that it received stated that it had to implement the prescriptions specified by the corresponding MoU and its updates.

2. (2) The Stability and Growth Pact (SGP), which aims to discipline member states’ fiscal policies (as revised by the Six- and Two-Pack laws of 2011 and 2013).

3. (3) The Macroeconomic Imbalance Procedure (MIP), which aims to prevent and correct macroeconomic imbalances (as introduced by the Six-Pack laws).

4. (4) Europe 2020, which was the EU’s ‘smart, sustainable, and inclusive’ growth strategy for 2010–2020. It was based merely on a Commission Communication (COM [2010] 2020 final) and formally not binding. Europe 2020 replaced the Lisbon strategy (2000–2010).

The integration of policy prescriptions, emanating from different but interdependent strands, in one document appears to favour a holistic, multidimensional approach to socioeconomic governance. Yet, the social goals of the Europe 2020 strategy are subordinated to the ‘meta-priority of the structural stability of monetary union’ (Pochet and Degryse, 2013: 109). This becomes clear by comparing the weak constraining power of social Europe 2020 prescriptions (backed merely by the naming and shaming of non-compliant states) with the significant constraining power of SGP/MIP prescriptions (backed by fines) and the very significant constraining power of MoU-related prescriptions, given the threat of a withdrawal of financial assistance in the event of non-compliance. We therefore cannot treat all CSRs equally, as is usual among other scholars in the field (see Chapters 4 and 5). As MoU-, SGP-, and MIP-related NEG prescriptions constrain the range of national policy options, we can also no longer dismiss NEG recommendations as mere soft law (Bekker, 2021; Jordan, Maccarrone, and Erne, 2021; Rocca, 2022). In comparison with the EU’s preceeding economic policy coordination tools, NEG prescriptions leave member states much less room for manoeuvre. This is true not only if a country becomes subject to an MoU programme, but also if a country faces an EDP or an MIP – as happened in the case of France, which is neither a small nor a peripheral country (Erne, 2015; Syrovatka, 2021).

Member states that received NEG prescriptions in MoUs and their updates had to implement them to receive bailout funding. It is thus not surprising that all eurozone countries that were subject to a bailout programme ‘by-and-large adopted the fiscal consolidation measures prescribed by the Troika’ (European Parliament et al., 2014: 6). The same study also noted that Ireland, Cyprus, Portugal, and Greece were given unevenly onerous prescriptions for ‘structural reforms’, depending on the different ‘structural conditions’ that businesses enjoyed in them before the crisis. As the structural conditions that business enjoys can always be improved further, the study finally also conceded that it was difficult to assess whether the structural reforms that a government implemented in turn would be ‘sufficient’ (2014: 6). As a result, national governments could never be sure in advance whether their reform programme would satisfy EU expectations (Erne, 2015) – as shown, for example, regarding the recurrent NEG prescriptions that Italy received to deregulate its employment protection laws (see Chapter 6).

The difficulty of delimitating the scope of necessary NEG reforms at the outset makes the task of assessing the implementation of NEG prescriptions difficult too. When assessing the implementation of an EU directive, the Commission usually conducts a merely formal analysis to check whether all member states have transposed it into national law. When assessing the implementation of NEG prescriptions however, the Commission evaluates member states’ progress substantively, within the framework of the European Semester. Put differently, its assessment of policy implementation under NEG is qualitatively different and enlarged, increasing its scope for follow-up and further policy intervention. As there are no limits to ‘growth-enhancing structural reforms’, it is thus not surprising that the Commission and the European Court of Auditors (2020) were fully satisfied with the implemented changes in only a few cases. This, however, does not mean that the impact of CSRs is limited, as one may think if one relies on the CSR implementation figures provided by the Commission itself (Efstathiou and Wolff, 2018; Al-Kadi and Clauwaert, 2019). Any meaningful analysis of NEG therefore requires a research methodology that allows us to assess the policy orientation and effects of NEG prescriptions across countries and areas in their semantic, communicative, and policy context. We construct and outline such a methodology in Chapters 4 and 5.

In this chapter, to unveil its governance mechanisms, we have described the intricate NEG regime that EU leaders adopted after 2008. In Chapter 3, we review the classical approaches of scholars of EU integration and labour politics and outline why they need to be revised given the EU’s shift to NEG.

3 A Paradigm Shift in Understanding EU Integration and Labour Politics

3.1 Introduction

The shift to the European Union’s (EU’s) new economic governance (NEG) regime after the financial crisis of 2008 questions key assumptions that guide the thinking of scholars and practitioners in the field. This prompts us to argue first for three conceptual innovations, namely, new ways to envision (1) different modes of European integration, (2) different EU governance mechanisms, and (3) the politicisation of EU governance and labour politics. After that, we outline the interests of the EU’s NEG regime for employment relations and public services, as well as the need to examine the role of different structural conditions under which countervailing movements of trade unions and social movements can or cannot politicise EU integration (Erne, 2018; Szabó, Golden, and Erne, 2022).

3.2 Modes of integration: From Negative/Positive to Horizontal/Vertical Integration

The 2008 financial crisis showed that the creation of the EU’s single market and monetary union led not to economic and social convergence, as anticipated by its promoters (Cecchini, Catinat, and Jacquemin, 1988; European Commission, 1990), but to severe economic imbalances that threatened to break up the EU. To prevent that from happening, the European Commission and Council (EU executives) triggered a ‘silent revolution’ (Barroso cited in ANSA, 2010) and set up NEG, as shown in Chapter 2. As market forces failed to trigger the ‘necessary’ adjustments in member states’ employment relations and social policies, EU executives had to trigger them by fiat, as a European Commission official from DG ECFIN openly admitted at a meeting of an EU–ECB–IMF Troika delegation with Irish government officals, social partners, and academics in Dublin Castle in 2012 (see Chapter 1, n. 1). In response, by introducing NEG, EU executives created a new political space located outside the EU’s ordinary legislative procedure. Its legality is liminal; and, surprisingly, it is still not clear to EU lawyers whether NEG prescriptions constitute law, and, if yes, EU law (Kilpatrick and Scott, 2021: 3), despite their constraining nature. Although NEG prescriptions were spelled out in legal documents, the legal scholar Alain Supiot (2013) argued that NEG would challenge the rule of law, as the normative concept of the rule of law should not be reduced to the mere application of legal techniques of domination.

By contrast, Ulrich Beck, the sociologist of the risk society, argued that the ‘impending catastrophe empowers and even forces the Europe builders to exploit legal loopholes so as to open the door to changes’ (Beck, 2013: 26–27), as mentioned in Chapter 2. It is thus hardly surprising that almost all legal challenges to NEG have failed, including those of workers, unions, and left-wing parliamentarians who questioned the legality of NEG interventions in the social field by invoking social rights as set out in national constitutions, International Labour Organisation conventions, and the EU’s Charter of Fundamental Rights (Kilpatrick, 2017; Bonelli and Claes, 2018; Markakis and Dermine, 2018; Barrett, 2020; Kilpatrick and Scott, 2021). After all, pundits time and again presented NEG’s package of internal devaluation, austerity, and structural reforms as a ‘necessary’ adjustment to an ‘external shock’ that would leave ‘responsible’ governments with no other option but to implement it; even if this meant that more and more people would become detached from democratic politics (Armingeon, Guthmann, and Weisstanner, 2016; see also Mair, 2013). The EU’s NEG prescriptions in areas hitherto shielded from vertical interventions have thus questioned interpretations of the EU’s competences that are based on a narrow reading of its Treaties. The wording of the Treaty articles on ‘pay’ (Art. 153(5) TFEU), the ‘protection of workers where their employment contract is terminated’ (Arts. 153(1)(d) and (2) TFEU), or ‘the organisation and delivery of health services’ (Art. 168(7) TFEU), for example, seems to suggest that these areas would be prerogatives of member-state rather than EU laws and procedures, but this did not prevent vertical NEG interventions in these fields.

Ironically however, by creating NEG, the EU’s business and political leaders unintentionally created conditions that rendered past debates about the EU’s apparent lack of legal competences in essential social policy fields anachronistic (Scharpf, 1999: 10, 203; Stan and Erne, 2021a, 2021b). Until recently, the opponents of social EU laws often succeeded in preventing them by pointing to the apparent lack of EU competences in the social field (Cooper, 2015). After a decade of recurrent EU interventions in national wage and employment policymaking (Chapter 6), however, such EU competence arguments no longer worked to prevent the adoption of the EU Directive on Adequate Minimum Wages (2022/2041) by the European Parliament and Council in October 2022 (Chapter 13).

In sum, after the financial crisis, EU legislators broke the institutional padlocks that had hitherto limited EU interventions in the employment and social policy fields by adopting, in 2011, the Six-Pack of EU laws, which enabled unrestricted interventions by EU executives in these fields. The financial crisis triggered a ‘quantum leap of economic surveillance in Europe’ (Commissioner Rehn, EUObserver, 16 March 2011) and institutionalised NEG to allow vertical EU interventions in employment and social policy areas. NEG shifted legislative powers from national and European parliaments and social partners to the Commission and Council. This ‘revolution’, which was meant to ‘save the status quo’ (Barrett, 2020: 6), was also supported by the EU’s Court of Justice, the European Parliament (which approved the Six- and Two-Pack laws), and national parliaments of both deficit and surplus countries (which approved the EU’s bailout programmes). Consequently, the shift to NEG achieved what institutionalist EU integration theorists, like Scharpf (1999), believed impossible for the EU to achieve, namely, the concentration of substantive policymaking and enforcement powers in the hands of EU officials in all socioeconomic areas, including pension, healthcare, and wage policies.

Given this radical shift in EU policymaking, we argue that it is time for an analytical paradigm shift that allows us to capture the emerging European system in employment relations (Erne, 2019; Jordan, Maccarrone, and Erne, 2021), social policy (Stan and Erne, 2021a, 2021b), and public service governance (Golden, Szabó, and Erne, 2021). Instead of negative and positive integration (Tinbergen, 1965; Pinder, 1968; Scharpf, 1999), we propose an alternative analytical distinction that better captures the current EU integration dynamics triggered by the shift to NEG: the distinction between horizontal (market) and vertical (political) integration. Whereas vertical integration is triggered by substantive policy prescriptions of a ‘supranational political, legal or corporate authority’ (Erne, 2019: 346), horizontal integration refers to the abstract, but nevertheless constraining, transnational market pressures experienced by social actors within the increasingly integrated European marketplace.

This analytical move is important for two reasons. First, once the single market had been created by law (through negative and vertical EU acts that removed national legal restrictions to the free movement of goods, capital, services, and people across borders), the resulting horizontal market pressures became an independent driver of further integration in their own right, hence the need to distinguish horizontal (market) integration from vertical (negative or positive) political integration.

Second, after the shift to NEG, earlier institutional padlocks no longer prevented EU interventions in substantive policy areas, such as employment relations and public services. To ensure structural convergence (Scharpf, 2021), the NEG regime set supranational standards also in these policy fields. This amounts to positive integration in the original, analytical sense of the term, which denotes the making of the ‘system of economic regulation at the level of the larger unit’ (Scharpf, 1999: 45). At the same time, the policy orientation of the NEG ‘government of governments’ (Scharpf, 2021: 162) hardly matches the underlying normative Keynesian beliefs of those who coined and propagated the positive/negative integration typology in the first place. Accordingly, Scharpf (2021) quietly abandoned the typology, which had informed the scholarly debate on different modes of European integration for decades. We thus distinguish between different types of vertical EU intervention in the economic and social fields, based on their (commodifying or decommodifying) policy orientation and not their (negative or positive) institutional properties.

The shift to the EU’s NEG regime also questions earlier institutionalist views of EU politics, which emphasised the EU’s limited legal competences and policymaking capacities in the field of employment relations and public services. We therefore go beyond earlier institutionalist thinking and take larger processes into account, especially those of capitalist accumulation and crisis (Bieler and Erne, 2015; Bieler and Morton, 2018: ch. 9). This wider perspective on transnational economic and political integration pressures helps us explain why EU leaders were able to break institutional EU padlocks when they created the NEG regime.

We acknowledge that the underlying idea of these two concepts is not new. Vertical political interventions and horizontal market pressures have been forces structuring the behaviour of modern capitalist societies since their making. Acknowledging this, however, is an asset rather than a drawback, as it gives the proposed framework for analysis an even stronger basis. After all, the social sciences were created to study the interactions between capitalist horizontal (market) and vertical (political) interventions precisely when the ‘great question sociale (or soziale Frage) of the late nineteenth or early twentieth century: how to incorporate the industrial working class within civil society’ became a salient political, economic, and social issue (Crouch, 2015: 4).

The distinction between horizontal market pressures and vertical political interventions allows us to account for both the economic and the political aspects of European integration and the ways in which they were combined during its history. After the Single European Act (SEA), European integration was driven by vertical EU laws and interventions that opened new sectors and areas to transnational competition. Although rarely a direct target of the latter, national employment relations and social protection arrangements have nonetheless been indirectly impacted by the horizontal market pressures unleashed by the SEA, the Economic and Monetary Union (EMU), and EU enlargements.

Given the urgency of the financial crisis and the botched attempts to pursue further liberalisation through Commissioner Bolkestein’s proposal for a Services Directive in 2004 (COM (2004) 2 final/3), EU leaders did not use the EU’s ordinary legislative procedure to bring about the changes in employment relations and public services that they deemed necessary (Erne, 2015). Instead, the EU turned the (soft law) socioeconomic policy coordination instruments of the early 2000s into hard and coercive policymaking tools.

The EU’s shift to the NEG regime brought a new formula to EU integration, namely, country-specific vertical interventions by EU executives based on supranational EU steering and surveillance mechanisms. These interventions also directly targeted areas hitherto largely shielded from EU vertical interventions via the EU’s ordinary legislative procedure (e.g., pay and healthcare policy). In doing so, EU executives sought to compensate for the failure of existing horizontal market pressures to bring about the desired economic convergence of national policies in these social policy areas.

In contrast to horizontal market forces, vertical NEG interventions are much more tangible, and thus politically contentious. Countervailing movements may therefore be able to politicise vertical NEG interventions much more easily than horizontal market pressures (Erne, 2018). The concentration of new powers at EU level could be seen as a near perfect example of neo-functionalist spill-over, but increased vertical (political) integration pressures can also trigger popular countermovements that may lead to the EU’s downfall. In 2012, even proponents of neo-functionalist EU integration theory could therefore imagine the following scenario: ‘first, the collapse of the euro; then of the EU, and, finally, of democracy in its member states’ (Schmitter, 2012: 41). Thus, precisely to prevent EU disintegration from happening, the NEG regime’s architects devised new EU governance tools that could not be politicised that easily.

3.3 EU Governance: From State-Centred to Corporate Management Mechanisms

In the 1990s, governance became a widely used analytical category, as it allowed scholars to adopt a much more encompassing perspective on politics and the economy. EU scholars used the term to go beyond the classical intergovernmental and federal perspectives mentioned in Chapter 2 (Marks et al., 1996; Kohler-Koch and Rittberger, 2006). Economic sociologists used it to go beyond the dichotomy of states and markets (Hollingsworth and Lindberg, 1991; Hollingsworth and Boyer, 1997; Crouch, 2005), and industrial relations scholars used governance for both reasons (Marginson and Sisson, 2004; Léonard et al., 2007).

Since its origin however, the term ‘governance’ had also been used for political reasons. In its White Paper on governance, for example, the European Commission (White Paper, COM (2001) 428) used the concept to propagate a more deliberative (and less hierarchical) form of policymaking, which would allegedly allow a greater involvement of non-state actors and therefore increase its legitimacy (Joerges, 2002; Kohler-Koch and Quittkat, 2013). In addition, governance has been used to justify supranational interventions in the political affairs of notionally sovereign nation-states. After all, the World Bank and the IMF coined the term in the early 1990s precisely to legitimise their ‘good governance’ interventions in the Global South and Eastern Europe (Guilhot, 2005; Moretti and Pestre, 2015: 82).

Despite the shift to a much more vertical NEG regime after the crisis, most scholars who come from state-centric disciplines, such as law and political science, continue to portray governance as a non-hierarchical form of policymaking, namely, one based on mutual learning, policy coordination, and surveillance. Consequently, EU governance would be a mix (or a hybrid form) of intergovernmental and supranational mechanisms combining soft EU law with laws emanating from a hard and binding legal norm (Maher, 2021a, 2021b). Building on industrial relations and economic sociology, we propose, by contrast, an alternative analytical framework that captures NEG not as a hybrid form of intergovernmental and supranational rulemaking, but as an independent, third mechanism borrowed from the private governance found in transnational corporations (TNCs) (Erne, 2015). The vertical nature of the NEG regime rests on control mechanisms that TNCs use to govern their subsidiaries (numerical benchmarks, ad hoc prescriptions, and financial awards and penalties). This allows us to go beyond the dominant state-centred paradigms in EU integration research (e.g., intergovernmentalism or federalism) without having to abandon the focus of the political sciences on power and power relations.

The similarity of the NEG regime’s country-specific and corporate subsidiary-specific policy prescriptions also allows us to go beyond the state-centric perspectives of EU scholars on differentiated integration (Kölliker, 2006; Leuffen, Rittberger, and Schimmelfennig, 2022). One can describe NEG’s country-specific prescriptions as a case of differentiated integration but not in the usual sense of the opt-outs from EU laws that aim ‘to accommodate economic, social and cultural heterogeneity’ (Bellamy and Kröger, 2017: 625). State-centred differentiated integration scholars have focused their analysis on national opt-outs, which accommodate EU member states with different objectives. Alkuin Kölliker (2006: 14), for example, defined differentiation as a general term for the ‘possibility of member states to have different rights and obligations with respect to certain common policy areas.’ In contrast, the EU’s NEG regime uses country-specific prescriptions to realign the policies of its member states along its overarching supranational priorities, namely, the proper functioning of the eurozone and the EU economy as a whole, as outlined above. Hence, EU executives used NEG’s country-specific measures to achieve pan-European goals, as managers in headquarters (HQs) of TNCs use site-specific interventions to achieve company-wide objectives. We have thus argued that NEG can be described as a case of reversed differentiated integration, as its country-specific prescriptions aim to reduce (rather than accommodate) national heterogeneity (Stan and Erne, 2023).

The proposed change of perspectives on EU governance from state-centred to corporate management mechanisms represents an important analytical move, and not just because TNCs started long ago to effectively use similar governance tools to advance their agendas (Arrowsmith, Sisson, and Marginson, 2004; Erne, 2015). Equally important are the insights of studies on international human resource management and industrial relations highlighting that TNCs’ vertical interventions in the affairs of their subsidiaries do not always succeed, regardless of HQs’ control over investment decisions and their frequent use of whipsawing tactics that pit subsidiaries against one another (Bélanger et al., 2000; Edwards and Kuruvilla, 2005; Anner et al., 2006; Morgan and Kristensen, 2006; Erne, 2008; Pulignano et al., 2018; Clegg, Geppert, and Hollinshead, 2018; Golden and Erne, 2022).

In sum, NEG is neither a supranational nor an intergovernmental governance regime (Bauer and Becker, 2014; Bickerton, Hodson, and Puetter, 2015), as it uses mechanisms that cannot be neatly captured by either of these state-centred paradigms of European integration scholarship. If, however, we go beyond them, we can grasp the nature of the EU’s NEG regime much more easily, namely, as a governance regime that mimics the corporate governance mechanisms of TNCs, which use numerical benchmarks and ad hoc prescriptions to increase the command of corporate HQs’ senior management teams over their subsidiaries (Erne, 2015). Accordingly, the EU’s NEG regime allows EU executives – that is, the supranational European Commission and the intergovernmental Council of national finance ministers – to shape member states’ labour and social policies through key performance indicators, country-specific ad hoc prescriptions, and corrective action plans.

NEG’s methods reshape member states’ policies by combining governance at a distance already set up through the Broad Economic Policy Guidelines and the Open Method of Coordination (Arrowsmith, Sisson, and Marginson, 2004; Lascoumes and Le Galès, 2004; Armstrong, 2010) with the vertical punch of constraining enforcement procedures. To regulate the EU economy, including its employment relations, public services, and social policies, EU executives draw on divisive corporate governance methods that business leaders have designed to govern TNCs (Arrowsmith, Sisson, and Marginson, 2004), rather than on universal laws enacted by democratic legislators (Joerges, 2016). Yet, as the EU is not a business corporation but a political organisation that claims to ‘be founded on the values of respect for human dignity, freedom, democracy, the rule of law and respect for human rights’ (Art. 2, TEU), its shift to NEG also led to a severe legitimacy crisis of EU governance, which in turn would facilitate its politicisation.

3.4 Politicising EU Governance and Labour Politics

The distinction between horizontal and vertical integration and the similarities between NEG and corporate governance mechanisms described above not only enlightens us about the EU’s arcane NEG dynamics but also enables us to identify potential ‘levers’ (Mills, 2000 [1959]: 131) by which the NEG may be challenged and changed by countervailing social actors, namely, unions and social movements. As mentioned above, we distinguish vertical and horizontal modes of EU integration based on the different types of constraints underpinning them. Horizontal market integration places societal actors (unions and social movements, but also companies) under transnational (economic) market pressures. By contrast, vertical political integration leads to them being constrained by prescriptions of a supranational political authority. This distinction is pivotal, as these two modes of EU integration offer different crystallisation points for countervailing collective action.

Horizontal (market) integration pressures first and foremost result from the exploitation of labour power in the capitalist production process. The social nature of these pressures, however, is not easily detectable. Although commodities are produced by human labour, they seem to acquire a life of their own once they are traded on the market. As a result, the ‘mutual relations of the producers, within which the social character of their labour affirms itself, take the form of a social relation between the products’ (Marx, 2005 [1867]: ch. 1.4). Consequently, workers often perceive market pressures as emanating from an external, even natural, mystical force. This highlights ‘a paradox in Marx’s account: how can there be class struggle when exploitation is not palpable but mystified?’ (Burawoy, 2022). If we pose Burawoy’s question in the context of increasing transnational market pressures, it becomes even more puzzling.

As seen above, the horizontal market pressures unleashed by the SEA and the EMU did not question the autonomy of national welfare states and trade unions. Even so, trade union experts described their national bargaining autonomy, as far back as 2004, as ‘autonomy in the playpen’ (Sterkel, Schulten, and Wiedemuth, 2004: 1), as national multi-employer collective bargaining agreements were no longer able to take workers’ pay and conditions out of competition between different producers, given their increasing exposure to transnational market competition. At the beginning of EU economic and monetary integration, some observers therefore believed that ‘as markets expanded unions had to enlarge their strategic domain to keep workers from being played off against each other’ (Martin and Ross, 1999: 312); but the attempts of European trade union federations to coordinate national wage bargaining strategies across borders, to prevent a race to the bottom in wages and labour standards through the adoption of EU-level targets, largely resulted in failure. This reflected European trade unions’ difficulties in revealing and politicising the hidden social relations behind horizontal market integration pressures (Erne, 2008: 189).

By contrast, vertical political pressures are more tangible than horizontal market pressures and therefore easier to politicise. Reliance on vertical state-like structures (e.g., EU institutions) makes decisions taken in their name more visible, thereby offering concrete targets for contentious transnational collective action (Erne, 2008; Erne et al., 2015). Vertical interventions are easier to politicise, albeit ‘within a limited timeframe, as the impact of vertical intervention (e.g., in the case of looming liberalizing EU laws) increases horizontal competition in the medium and long term’ (Szabó, Golden, and Erne, 2022: 636). In short, horizontal integration constrains transnational labour mobilisation, whereas vertical integration can act as a catalyst for it (Erne, 2008: 199–200; Erne, 2018). Crucially however, there is a significant difference between universal vertical interventions and country-specific vertical interventions, as the latter favour uneven protests across countries (Stan, Helle, and Erne, 2015).

Thus, given NEG’s recourse to mechanisms characteristic of corporate governance, we can learn a lot from unions’ fights against corporate whipsawing tactics that put workers from different subsidiaries in competition with one another. TNCs put workers under pressure, but, at times, workers within TNCs can also unite across borders (Anner et al., 2006). Countervailing transnational movements of workers within TNCs occur when workers across different locations are victims of similar vertical corporate interventions (Erne and Nowak, 2022; Golden and Erne, 2022). Likewise, NEG interventions in labour politics must follow an overarching EU script to trigger encompassing countermovements. To be effective, these movements can either deliberately target NEG through transnational collective action or unintendedly trigger EU-level policy changes through the aggregate effects of their actions at local or national level if they point in the same policy direction (Nunes, 2021; for countervailing, national, and local level protests in the era of NEG see: Maccarrone, 2020; Naughton, 2023; Galanti, 2023).

But what kind of EU interventions would represent a fundamental challenge for trade unions and social movements such that it would trigger counter-mobilisation? The distinction between horizontal market pressures and vertical political interventions allows us to grasp the form of EU pressures that may or may not trigger countervailing movements. We nevertheless must also address the substance of these pressures and their articulation with labour politics. Otherwise said, what fundamental labour interests do these pressures threaten? We argue that labour movements are not only about struggles that limit the exploitation of workers by their companies in the production process. It is equally in the interest of labour to decommodify employment relations and public services to ensure labour’s social reproduction and well-being by shielding it from the vagaries of market fluctuations and the systemic whims of transnational processes of capitalist accumulation. We thus need to see where EU integration and NEG stand in relation to them and to labour commodification.

3.5 The Interest of It All: The Commodification of Labour and Public Services

The creation of European welfare states during the twentieth century would not have been possible without labour’s struggles for social rights seeking to shield workers from the vagaries of the market (Marshall, 1950). Labour’s interest in engaging in such struggles can be seen as stemming from the nefarious effects that unchecked markets have on society. These effects take the form of commodification, a process whereby ‘wage employment and the cash nexus [become] the linchpin of a person’s existence’ (Copeland, 2020: 103). Traditionally, welfare states sought to respond to commodification through decommodification, that is, the processes allowing individuals ‘to uphold a socially acceptable standard of living independent of the market’ (Copeland, 2020: 104; see also Esping-Andersen, 1990). Nonetheless, since the 1970s, the application of neoliberal reforms to employment relations and social protection has led to employment and welfare arrangements being used ‘to both commodify and decommodify’ social relations (Copeland, 2020: 103).

But why was it so, why did the mid-twentieth-century class compromise no longer do the trick? In order to respond to this question, we must address the fact that labour has an interest in social rights not only because markets dissolve meaningful social relations in society at large (Polanyi, 2001 [1944]), but also, more precisely, because the interest of the capitalists who are the players in these markets is to expand and intensify labour commodification as a way to maximise the extraction of surplus value in the productive process (Marx, 2005 [1867]; Bieler, 2021). At a macro, structural level, welfare states are thus an attempt to temper capitalist accumulation and rebalance the power relation between capital and labour. Traditionally, employment and welfare arrangements aimed to (partially) shield labour from market forces by (1) shielding workers from full exploitation and commodification (through protective employment legislation); (2) socialising the reproduction of the current and future labour force (through the provision of public services in the areas of healthcare, water, transport, but also childcare and education); and (3) socialising the risks of sickness, unemployment, and old age (through social security).

The crisis in the Fordist regime of capitalist accumulation after the 1970s unsettled the post-World War II class compromise (Harvey, 2005). Dominant classes, including European ones, used neoliberal theory – namely, its view of free markets as offering the best road to economic and social development – as a justification for attacks on the solidaristic, redistributive employment and welfare arrangements of the previous era. These attacks were driven not only by a purely ideological preference for markets over redistributive employment and welfare arrangements but also by capitalists’ need to respond to the exhaustion of previous modes of capitalist accumulation by conquering new areas for capitalist expansion and commodification – in this case, social reproduction processes hitherto shielded from capitalist accumulation through solidaristic, redistributive employment and welfare arrangements.

Labour’s loss of power in the context of stagflation (since the 1970s) and then the demise of communist regimes in Eastern Europe (since the 1990s) emboldened neoliberal free-market approaches to employment and welfare arrangements. At the same time, during neoliberal times, capitalist accumulation came to rely extensively on predatory practices reminiscent of Marx’s ‘primitive accumulation’ (2005 [1867]: part 8) as an antidote to the exhaustion of spatial–temporal fixes relying on expanded reproduction in the form of capital delocalisation and long-term investment in new productive assets. This is what Harvey (2003) aptly calls accumulation by dispossession, a process that involves not only using financial mechanisms and intellectual property rights in asset stripping but also, and importantly, ‘enclosing the commons’ (Bieler and Jordan, 2018: 75) of previously socialised, decommodified areas of social reproduction. Indeed, one of the key mantras of contemporary global capitalism is the privatisation of state assets, state companies, and public services (Harvey, 2003).

Given the variegated character of neoliberalisation (Brenner, Peck, and Theodore, 2010) and the uneven realisation of the single market programme across the EU, the commodification of employment and welfare arrangements proceeded to different degrees and at a different pace across countries and sectors. This was already apparent in the 1990s and 2000s when EU leaders sought to construct the single market as a space for extended capitalist accumulation. The single market put national employment and welfare arrangements under increasing horizontal market pressures. These pressures triggered different responses at different times in different member states. The single market programme, EMU, and accession processes placed governments under budgetary and competitive pressures that led to their adopting various mixes of commodifying employment and welfare measures to lower public expenditures and unit labour costs. These pressures also led to a greater integration of productive capacities across Europe, most notably by transnational manufacturing firms opening subsidiaries in the EU’s eastern periphery. This was paralleled in the area of social reproduction by the rise of TNCs engaged in public service provision, including in water, transport, and healthcare, and informal private arrangements in the form of transnational ‘care chains’ (Hochschild, 2000). As a result, workers were set in competition with one another not only through regulatory competition between national systems but also through competition between public and private service providers as well as subsidiaries and suppliers of TNCs.

Although these commodification pressures are thus linked to broader restructuring processes within the capitalist world system that preceded the EU’s shift to NEG, they also needed to be enforced politically (Burawoy, 2000), especially when horizontal market integration did not lead to the desired economic convergence of national labour and social policies as outlined above. This explains our book’s focus on EU executives’ NEG prescriptions on employment relations and public services and the social countermovements that they might trigger. In section 3.6, as a last conceptual move, we outline our approach to countervailing protests of unions and social movements, including their potential role as agents of the EU’s democratisation.

3.6 NEG and Transnational Collective Action: From Agent-Centred to Structural Factors

The formation of political authority in nation-states typically preceded their democratisation through political and social rights. Accordingly, the formation of a more vertical EU polity through NEG may paradoxically also lead to a transnational democracy. After all, ‘democracy requires not only a people (demos) but also binding rules (kratos)’ (Erne, 2008: 18). There is a dialectical relationship between popular mobilisations and the creation of political authority (Tilly, 1992). Nonetheless, the vertical nature of the EU’s NEG regime may not only trigger popular demands for more voice but equally lead to popular calls to exit the EU, as became apparent in the UK’s Brexit referendum debate. This has also been emphasised in many EU politicisation studies that analysed the salience of Eurosceptic positions in opinion polls, elections, referenda, or EU-related media debates (for a review, see Zürn, 2016).

To understand the growing politicisation of the EU integration process however, we must go beyond the scope of existing EU politicisation studies that assess the salience of EU-related issues in media debates, opinion polls, election, or referendum campaigns. To capture the restructuring of the European political space, we must study not only these micro- and macro-level processes but also activities that take place at the (meso) level of interest-group politics (Zürn, 2016). After all, the creation of the left–right cleavage in European politics has also been driven by the organisational networks of the labour movement (Bartolini, 2005).

The restructuring of the European political space remains a social process (Saurugger, 2016). Individual attitudes become a social force only if they are mobilised and reinforced by intermediary associations; this in turn depends on the organisational networks of interest groups and social movements in the forecourt of party politics. EU politicisation studies should therefore look below the macro level of public debates as presented in mass media and above the micro level of survey results and election outcomes (Zürn, 2016). This explains our interest in European trade unions and social movements, as they play a key role not only in the formation of the left–right cleavage but also in the democratisation of social and economic policymaking (Rueschemeyer, Huber Stephens, and Stephens, 1992; Bartolini, 2000; Foot, 2005; Erne, 2008).

The shift to a much more vertical NEG regime offers contradictory options for labour. EU executives’ vertical NEG interventions make decisions taken in the EU’s name more tangible, offering concrete targets for countervailing, transnational collective action. At the same time however, NEG’s technocratic, numerical benchmarks and its country-specific, ad hoc interventions put countries in competition with one another. This constitutes a deterrent to transnational collective action. Thus, the shift to NEG may also favour the politicisation of EU politics along national culturalist rather than transnational class lines (Erne, 2019). This is partly because some pro-European politicians – such as former Commissioner Bolkestein (Béthoux, Erne, and Golden, 2018) – like to portray their critics in cultural terms as nationalists (Statham and Trenz, 2013: 132) and partly because Eurosceptics believe that the restoration of national social states’ formal autonomy would solve workers’ social and economic problems.

NEG thus risks being a supranational regime that nationalises social conflict (Erne, 2015). Does this mean that transnational counterreactions to NEG are doomed from the start, as some Eurosceptic analysts of the EU’s democratic prospects think? For Wolfgang Streeck, for example, the ‘growing feeling among the citizens of Europe that their governments are not taking them seriously’ (2014: 160) mirrors capitalists’ diminished interest in democratic interest intermediation: ‘All capital still wants from people is that they give back to the market … the social and civil rights they fought for and won in historic struggles’ (2014: 159). Even so, we do not assume that ‘constructive opposition is impossible’, as this would indeed imply that ‘irrational’ outbursts of rage would be the only option left to people (2014: 160). Nor do we share the false optimism of global labour scholars who assume, following a partial reading of Polanyi (2001 [1944]), that transnational market fundamentalism will inevitably produce a transnational countermovement, as if ‘society’ would ‘summon up its own defence in the face of a market onslaught’ (Burawoy, 2010: 302).

In this study, we avoid Polanyi’s under-theorised notion of society and analyse concrete social actors instead, namely, those engaged in social protests that contest the commodification of public services, such as water provision, and those engaged in social protests that target the exploitation of workers in the production process. Polanyi’s approach suffers from another limitation: that of missing the ‘complex interplay’ between ‘state and society’ (Burawoy, 2010: 302). Thus, we do not focus our analysis on the actor-centred factors that explain why some labour alliances have succeeded in politicising European integration pressures across borders (Szabó, Golden, and Erne, 2022). Instead, we try to unpack the relationships between the structures of the EU’s NEG regime and countervailing collective action.

Indeed, scholars of social protests have acknowledged the role played by structural explanations in triggering them, such as political opportunity structures faced by social movements (Tarrow, 1994) or long waves of economic boom and bust in which they act (Kelly, 2012 [1998]). Nevertheless, social movement scholars usually explain successful instances of collective action in terms of actor-centred factors, such as activists’ interactions with allies and the public (Diani and Bison, 2004), the use of bottom-up organising strategies (McAlevey, 2016), or activists’ capacity to foster alliances across workplaces and union organisations at different levels (Brookes, 2019). Although these social interactions are certainly critical, the options available to actors to build successful countervailing movements are also shaped by structural factors, as neatly summarised by union organiser and industrial relations scholar Jane McAlevey (2016: 3): ‘Even understanding whom to target – who the primary and secondary people and institutions are that will determine whether the campaign will succeed (or society will change) – often requires a highly detailed power-structure analysis.’ This explains our interest in the different forms of European integration pressures that unions and social movements have been facing.

Hence, we analyse the making and operation of the EU’s NEG regime across time, locations, and sectors to identify the internal contradictions that could serve labour movements as crystallisation points for countervailing collective action (Poulantzas, 1980; Bieler and Erne, 2014; Bruff, 2014; Cox and Nilsen, 2014; Panitch, 2015). This is important, as the biggest challenge that we are facing is hardly the absence of studies that deplore the decline of the mid-twentieth-century class compromise that laid the foundations for solidaristic, redistributive employment and welfare arrangements in Europe. The biggest challenge is rather the scarcity of ideas about the potential ‘levers’ (Mills, 2000 [1959]: 131) that countervailing movements could pull to turn the page of austerity politics. In this book, we therefore aim not simply to add a novel, conceptually driven depiction of the EU’s NEG regime, its operation, and its outcomes, but also to identify such potential levers or points of intervention for trade unions and social movements that the EU’s NEG regime may unintentionally have created for them.

Certainly, these interventions are far from easy, as NEG concentrates decision-making powers in the hands of EU executives and uses technocratic governance-by-numbers techniques to insulate policymaking from popular demands. At the same time, we also know that the more policymaking institutions are insulated from democratic interest intermediation mechanisms, the more they risk becoming targets for countervailing mobilisations (Bruff, 2014; Erne, 2018) or calls to simply exit them (Hirschman, 1970). The EU’s much more vertical NEG regime may offer unions and social movements a tangible target for its politicisation to defend decommodified labour and welfare arrangements. Yet, NEG’s politicisation is likely to happen across national borders only if its country-specific prescriptions are informed by a commodifying pan-European policy script. As such a script is a necessary (albeit not sufficient) condition for countervailing collective action, we outline in Chapters 4 and 5 a novel methodology to assess the policy direction of NEG prescriptions in the social field across countries and years that goes beyond the decontextualised pea counting of EU executives’ country-specific recommendations that has so-far dominated the research in the field.

4 How to Assess the Policy Orientation of the EU’s NEG Prescriptions?

4.1 Introduction

In this chapter, we first present the existing studies of the EU’s new economic governance (NEG) policy prescriptions and then discuss the methodological challenges that they pose to their assessment. We show that these studies flattened both (a) the semantic relationships between the different policy terms used in them and (b) the power relations between different actors involved in their production. We set up instead a research design that accounts for (a) the links between the policy orientation of NEG prescriptions and the material interests of concrete social groups and (b) the hierarchical ordering of prescriptions in larger policy scripts unevenly deployed across countries, time, and policy areas. We address the first point in this chapter and the second in Chapter 5.

In section 4.2, we identify commodification as the most relevant NEG policy orientation for analysing the nexus between EU economic governance and labour politics. Before the EU’s shift to NEG, EU interventions had triggered countervailing social protests specifically when they pointed in a commodifying policy direction, as shown in Chapter 3 and Chapters 6–11. In section 4.3, we thus operationalise the concept of commodification in the areas of employment relations and public services and outline the corresponding analytical framework against which we assess the policy orientation of NEG prescriptions in these two policy areas.

4.2 Assessing the Policy Orientation of NEG and Its Methodological Challenges

Following the establishment of the European Semester (see Chapter 2), an increasing number of scholars have assessed the frequency and policy orientation of NEG prescriptions in the social field, that is, those targeting areas such as employment relations, education and training, equality policy, health and long-term care, pensions, and poverty and social exclusion (Bekker, 2015; Darvas and Leandro, 2015; de la Porte and Heins, 2016; Clauwaert, 2018; Copeland and Daly, 2018; Dawson, 2018; Zeitlin and Vanhercke, 2018; Al-Kadi and Clauwaert, 2019; Crespy and Vanheuverzwijn, 2019; Copeland, 2020). Two major views have emerged. One sees NEG as becoming increasingly social over time, given the increase in the number of prescriptions addressing employment and social policy issues as well as a postulated change in their policy orientation. The other view questions these conclusions, arguing that social prescriptions have been mostly subordinated to fiscal discipline objectives.

Prominent among the first camp are Zeitlin and Vanhercke (2018), who argue that a progressive socialisation of the European Semester has occurred since its establishment in 2011. According to them, this socialisation is manifested at two interdependent levels. At the governance mechanisms level, it takes the form of an increasing involvement of social policy actors (i.e., the Commission’s DG for Employment, Social Affairs, and Inclusion; the Employment, Social Policy, Health, and Consumer Affairs Council; and so on) in the formulation of country-specific recommendations (CSRs) and in the EU’s multilateral surveillance of national reforms implemented in response to these recommendations. This involvement is accompanied, at policy orientations level, by an increasing presence of social objectives in NEG documents, affecting the share not only of prescriptions in the social field in general but also of those geared towards social investment objectives more particularly.

Proponents of the socialisation thesis highlight processes of ‘strategic agency, reflexive learning and creative adaptation’ (emphasis added) (Zeitlin and Vanhercke, 2018: 149) to account for social policy actors’ apparently successful uploading of social objectives to the European Semester. Offering a complementary position to that of Zeitlin and Vanhercke (2018), Greer and Brooks (2021: 71) argue that ‘opponents to a narrow fiscal governance agenda’ of the European Semester – Zeitlin and Vanhercke’s (2018) social policy actors – have managed not so much to socialise the Semester as to weaken it. The two authors take the example of healthcare and argue that, by broadening the goals of the Semester, expanding the scope of conflict around it, and disputing and diversifying the data on which it rests, social policy actors in the European Commission and Council have undermined the efficacy of its fiscal governance agenda in this area.

In response to these stances that privilege agency, other scholars propose a more balanced view of the structure–agency nexus (Copeland, 2020). They point out that social policy actors’ agency is limited by a series of structural constraints inbuilt in the architecture of the European Semester (Copeland and Daly, 2018; Dawson, 2018). Most notably, their subordination to economic and financial policy actors (i.e., the DG for Economic and Financial Affairs, the Economic and Financial Affairs Council) has led to social policy continuing to be displaced and marginalised by fiscal policy in the Semester’s policy process (Dawson, 2018; Copeland, 2020). This has contributed neither to the Semester’s socialisation (Zeitlin and Vanhercke, 2018) nor to the weakening of its fiscal governance objectives (Greer and Brooks, 2021). It has resulted instead in the capturing of social policy actors’ agenda in economic policy actors’ ‘wider logic of competitiveness and market fitness’ (Dawson, 2018: 207; see also Degryse, Jepsen, and Pochet, 2013). Therefore, the increase in the number of social prescriptions in NEG documents does not reflect a move to a socially progressive orientation of NEG’s structural reform but rather a mostly cosmetic (discursive) move to address social discontent generated by austerity policies in the aftermath of the crisis (Crespy and Schmidt, 2017; Crespy and Vanheuverzwijn, 2019).

How can we test these opposing claims, that is, how can we assess empirically the orientation of policy prescriptions included in NEG documents? Such an endeavour poses certain methodological challenges. As seen in Chapter 2, the NEG regime is largely shielded from democratic control. NEG prescriptions are formulated in a technocratic jargon that is both precise enough to trigger the desired political effects and ambiguous enough to diminish the risk of their politicisation (Moretti and Pestre, 2015). As scholars critical of the socialisation thesis have shown, the language of NEG documents in social areas has been vague (Dawson, 2018) and ambiguous (Crespy and Vanheuverzwijn, 2019; Miró, 2021) or has mixed orientations (Copeland and Daly, 2018). This reflects a classical domination method whereby documents are peppered with jargonistic language to make them incomprehensible to non-expert readers and thus immune from popular critique (Orwell, 2013 [1946]; Lanchester, 2014).

Two main methodological approaches have emerged on how to assess the orientation of NEG prescriptions in the employment and social policy areas. One approach draws on the history of policy ideas and neo-institutionalism and upgraded analyses of social policy at national level to study policymaking at the supranational EU level. It considers that, as the national institutional framework would be articulated around a few path-dependent, self-reproducing traditions or varieties of welfare capitalism (namely, liberal, conservative, and social democratic, see Esping-Andersen, 1990), so EU social policy is informed by various policy paradigms or philosophies of welfare reform (namely, liberal, Third Way, and social democratic, see Daly, 2012). This approach therefore proceeds by considering given sets of distinct policy paradigms (Daly, 2012), models (Heimberger, Huber, and Kapeller, 2020), objectives (Zeitlin and Vanhercke, 2018), or orientations (Copeland and Daly, 2018) and then tracking them down in policy documents.

The second approach draws on post-structuralist discourse theory to capture not so much the path-dependency and stability of policy paradigms, as the possible indeterminacy and change across time of the meaning of policy terms (Crespy and Vanheuverzwijn, 2019; Miró, 2021). It asks whether NEG’s key policy terms are not inherently ambiguous and open and thus function like empty signifiers. Concretely, this approach mobilises semantic analysis to map the semantic connections between ambiguous policy terms (e.g., structural reform or competitiveness) and distinct policy objectives (Crespy and Vanheuverzwijn, 2019) or frames (Miró, 2021). Crespy and Vanheuverzwijn (2019) thus map the links between structural reform and social investment versus social retrenchment policy objectives. In turn, Miró (2021) maps the connections between competitiveness and quality versus cost policy frames.

Certainly, policy paradigms are not as coherent and stable as implied by varieties-of-welfare studies. The change across time in the content of policies adopted under a certain banner (social democratic, for example) and the convergence and overlap between different social policy approaches (Copeland, 2020) question these studies’ assumptions that specific policy prescriptions can be assigned to distinct and stable social policy paradigms. Nonetheless, seeing policy terms as inherently indeterminate and constantly shifting is equally problematic in methodological and analytical terms. Indeed, although the two studies mentioned above show that key policy terms are associated with contradictory objectives (i.e., structural reforms with social retrenchment and social investment, see Crespy and Vanheuverzwijn, 2019) and frames (i.e., competitiveness with cost and quality, see Miró, 2021), they have difficulty solving the resulting conundrum – namely, given the presence of contradictory policy orientations, how can we assess which one is most significant from an analytical point of view, and how can we then explain why it reveals the deeper character of NEG employment and social policies?

The two studies show that more progressive policy objectives or frames are consistently (i.e., quality competitiveness) or even increasingly (i.e., social investment) present in policy documents. This indicates a discursive turn away from austerity policies and is a finding that seems to confirm the socialisation thesis. At the same time, both studies engage in a critique of the socialisation thesis by stressing the continuous importance across time of socially regressive orientations within NEG prescriptions. They thus highlight that structural reform has retained an ideological core of ‘typically neoliberal policy recipes’ (Crespy and Vanheuverzwijn, 2019: 94) and that competitiveness is seen mostly in terms of cost rather than of quality (Miró, 2021).¹

To explain why it is the repeated occurrence of socially regressive rather than socially progressive policy orientations that reveals the deeper character of NEG policies, both sets of authors had to mobilise factors such as the deployment of policy reforms over time and the coercive power of policy prescriptions, which lie outside discourse per se. This analytical move is not surprising. Thinking in terms of empty signifiers may help give a name to the presence of contradictory orientations and frames but has little to offer towards explaining the centrality of particular types of policy orientations in NEG policy processes. At the 1997 EU summit in Amsterdam, the newly elected socialist French government succeeded in adding Growth to the name of the Stability Pact. However, this amendment reoriented the pact only at a discursive level, as the renamed Stability and Growth Pact still focused on fiscal restraint (Heipertz and Verdun, 2010). Discourse theory rests on underlying assumptions of semantic indeterminacy, disconnection between language and social groups’ material interests, and flat power relations (Turner, 1994). This results in an analytic design that likewise flattens the semantic relationships between different policy terms: the latter are ‘ambiguous’ only if the analysis gives equal weight to the opposing policy orientations with which these terms are semantically linked. Moreover, this analytic design eludes a consideration of how policy prescriptions promote or inhibit the interests of concrete social groups (and most particularly social classes) and are thus embedded in the struggles waged by these groups over prescriptions’ meaning.

We thus need a research design that accounts for (a) the links between the orientation of NEG prescriptions and the interests of concrete social groups and (b) the hierarchical ordering of NEG prescriptions in larger transnational policy scripts, which are unevenly deployed across countries, time, and policy areas. This results in a research design that (1) links the policy orientation of prescriptions to the material interests of labour (i.e., in opposing the commodification of labour and social reproduction) – to account for the embeddedness of NEG prescriptions in social (class) conflict; (2) captures the uneven semantic context of prescriptions – to map the ways in which prescriptions form larger hierarchical taxonomies; (3) captures the uneven communicative context of prescriptions – to account for the differentiated allocation of coercive power to different types of prescriptions across countries, time, and policy areas; and (4) captures the uneven policy context of prescriptions – to account for the embeddedness of NEG prescriptions in an uneven European political economy, their national and supranational EU-level path-dependency, and their differentiated deployment across countries and time. Such a research design allows us to link the dots between macro-level theory and processes (e.g., neoliberalism), meso-level operational categories of policy orientation (e.g., commodification and decommodification), and systematic empirical analysis (i.e., the classification, comparison, and assessment of NEG prescriptions in terms of their policy orientation).

In Chapter 5, we situate NEG prescriptions in their semantic, communicative, and policy contexts and draw their implications for our case selection, data collection, and analytical strategies. In section 4.3, we address the issue of linking the policy orientation of NEG prescriptions to the material interests of labour. We argue that commodification is the most relevant dimension for our analysis of the nexus between NEG and labour politics. We then operationalise the concept in the specific policy areas of employment relations and public services.

4.3 Towards a Novel Approach for Assessing the Policy Orientation of NEG Prescriptions

By looking at the material interests of the social groups that might benefit from NEG prescriptions, or be hurt by them, we can also more fundamentally question the analytical relevance of the policy orientations selected in the two studies discussed in section 4.2: are social investment and quality competitiveness indeed socially progressive and, if yes, for whom? As some analysts have already argued, social investment policies may contribute both to decommodifying labour (e.g., active labour policies provide increased resources for training) and to recommodifying it (e.g., the same policies link welfare payments to work activation) (Greer, 2015; Copeland, 2020; McGann, 2021). Likewise, the promotion of quality competitiveness relies on quality quantification, thus expanding rather than curtailing technocratic governance over employment and social policy areas. In both cases, the decommodifying potential of policy prescriptions is subordinated to a larger commodifying logic. Neither thus truly serves labour’s interests in decommodified, solidaristic employment relations and public services.

In contrast, and as argued in Chapter 3, looking at whether NEG employment relations and public services prescriptions promote the further commodification of these policy areas allows us to capture the nexus between NEG and labour politics. It does so, more particularly, by addressing labour’s interest in opposing commodification and in defending solidaristic, redistributive, decommodified employment relations and public services. Therefore, rather than assessing whether NEG prescriptions follow social investment or social retrenchment objectives, or again quality or cost competitiveness frames, we consider that the policy orientation most relevant to our analysis is the policy prescriptions’ potential to advance the commodification or decommodification of employment relations and public services.

In Chapter 3, we follow Harvey (2004) in considering the renewed commodification of employment relations and public services as participating in processes of accumulation by dispossession. This also allows us to operationalise the concept of commodification, most notably by capturing the connections between the curtailment of employment relations and public services (dispossession) and their marketisation (accumulation) (see also Mercille and Murphy, 2016, 2017; Stan and Toma, 2019; Hermann, 2021). This is highly relevant for our study of NEG interventions in employment relations and public services, as Business Europe and the European Commission and Council regarded both austerity (curtailment) and structural reform (marketisation) as the two main dimensions of NEG, as outlined in Chapter 2.

We thus consider that the commodification of employment relations and public services is two-sided, inasmuch as it combines a quantitative attack on the level of workers’ wages and on the level of resources and coverage of public services (curtailment) with the qualitative marketisation of governance mechanisms in employment relations (bargaining mechanisms and hiring and firing rules) and in public services (at sectoral and provider level). In the opposite direction, decommodification too combines quantitative and qualitative dimensions. The policy developments in this decommodifying direction include, respectively, increasing wage levels, resource levels for public services, and coverage levels of public services and de-marketising, that is, making the governance mechanisms of employment relations and public services more solidaristic and redistributive.

The dynamics of curtailment and marketisation are interlinked. If workers have to live on lower wage levels (curtailment), they are also more vulnerable when facing employers’ pressures to flexibilise the employment relations mechanisms that had hitherto protected them from employers’ discretionary decisions (marketisation). Likewise, decreased state funding for public services (curtailment) opens up new opportunities for private companies’ involvement in these services (marketisation). In transport, state underfunding for British Rail, for example, led to the latter’s wholesale privatisation in the 1990s (Dyrhauge, 2013: 45). In healthcare, decades of underfunding of public health services paved the way for increasing numbers of private hospitals, for example, in Romania in the 2010s (Stan, 2018). In the water sector, the combination of public budget restraints and the need to meet environmental standards was used by governments to justify infrastructure upgrades through public–private partnership (PPP), which gave private capital investors a crucial role (Boda and Scheiring, 2006; Hall and Lobina, 2007).

We understand commodification as a process rather than as a condition (i.e., commodity) that social relations can enter or leave (Appadurai, 1986; Hermann, 2021). This is most relevant for assessing the commodification of employment relations and public services. Indeed, in the areas of labour and social reproduction more largely, full commodification has rarely been achieved. In fact, both labour and social reproduction are fictitious commodities (Polanyi, 2001 [1944]; Hermann, 2021). For us, therefore, commodification and decommodification are matters of relative degree. This means that, in looking at NEG prescriptions, we assess their potential for increasing or decreasing commodification in a particular area of intervention. Categorising prescriptions as having a potential for commodification or decommodification thus indicates their potential not so much to fully commodify or decommodify a certain policy area, as to increase its commodification or decommodification relative to the status quo. This also allows us to overcome the need to pre-define, like Copeland (2020), a series of points on the continuum between decommodification and commodification.

In the following two subsections, we outline the conceptual framework against which we assess the potential of NEG prescriptions to further commodify or decommodify employment relations and public services. This framework is theoretically driven inasmuch as it draws on our theoretical perspective on the nexus between NEG and labour politics but also on existing theoretical discussions of the dimensions of commodification of employment relations and public services.

Analysing the Policy Orientation of NEG Prescriptions in Employment Relations

Within employment relations, we focus on NEG prescriptions that affect workers’ terms and conditions while in employment (see also Copeland, 2020). This means that we exclude prescriptions on workers’ social wage, most notably the payments provided by states outside of employment that enable workers’ subsistence (e.g., unemployment benefits or pensions, see de la Porte and Natali, 2014) or their employability (e.g., education and training). Concretely, we distinguish between three categories that are central to the relationship between management and labour: (1) wage levels, (2) bargaining mechanisms, and (3) hiring and firing mechanisms. Whereas wage levels represent the most significant quantitative feature of employment relations, the latter two areas stand for its most significant qualitative features: bargaining mechanisms determine the operation of employment relations, and hiring and firing mechanisms determine the conditions for the creation and dissolution of employment relationships. Table 4.1 operationalises what commodifying and decommodifying prescriptions mean in each of these three areas of intervention.

Table 4.1 Analytical framework for the analysis of NEG prescriptions on employment relations

Categories	Dimension	Policy orientation
		Commodification	Decommodification
Wage levels	Quantitative	Curtail	Increase
Bargaining mechanisms	Qualitative	Marketise	De-marketise
Hiring and firing mechanisms	Qualitative	Marketise	De-marketise

Source: Our own.

Under the wage levels category, we distinguish between commodifying prescriptions that curtail wage levels and decommodifying ones that increase them. Wages are the price that workers receive from employers in exchange for their labour power. At the same time, labour is ‘a human activity which goes with life itself’ (Polanyi, 2001 [1944]: 75) and not a good produced for sale on the market. Labour is a fictitious commodity (Polanyi, 2001 [1944]), inasmuch as it not only has a price but also is vital for securing workers with their subsistence and social reproduction. In the event of wages falling, workers cannot withhold their labour power from the market in the same way that a manufacturer can withhold products until their price increases (Esping-Andersen, 1990: 37). Instead, given wages’ importance in ensuring workers’ subsistence and social reproduction, workers become even more dependent on selling their labour power to employers, for example by working longer hours or taking up a second job. This may result in a race to the bottom in wage levels. At the extreme, the subordination of labour to a fully self-regulating market threatens not only its social reproduction but also that of society (Polanyi, 2001 [1944]).

To prevent such a development from happening, all European employment relations systems include decommodifying political interventions, which ensure that wage levels do not decline below a certain floor (Nowak and Erne, 2024). Sometimes, governments set this wage floor directly by introducing a statutory national minimum wage, or employers and trade unions determine it in collective bargaining agreements. Other times, governments back up wages indirectly by keeping unemployment and welfare benefits as well as public sector wages relatively high, thereby incentivising private sector employers also to provide higher wages. Furthermore, the EU and its member states recognise workers’ rights to defend their interests collectively by allowing them to form trade unions, which provide workers protection against arbitrary dismissals. All government decisions in the area of employment relations have therefore a signalling role for the entire labour market and thus – directly or indirectly – also for workers’ wage levels. Interventions that aim to roll back these features that workers have achieved over ‘years of bargaining and political activity’, point in a commodification direction, as they increase wage and labour market flexibility under the guise of ‘economic efficiency’ (Stiglitz, 2002: 13). For the sake of clarity, however, we must assess the quantitative NEG prescriptions that curtail wages directly and the qualitative prescriptions on employment relations mechanisms separately. Under the heading of wage levels, we therefore assess only NEG prescriptions that curtail wage levels directly, either in general or in the public sector in particular.

Furthermore, we must highlight another insight of employment relations research: we cannot assess wage developments in isolation. Our analysis of country-specific prescriptions on wage levels must thus also take the corresponding national inflation and productivity developments into account (Erne, 2008: part II).

Finally, it is also important to note that not all NEG prescriptions that mention wages fall into our quantitative wage levels category. Some prescriptions demand wage increases to be linked to company-level productivity developments rather than to overarching sectoral or national benchmarks. Depending on the particular productivity rate in a given company, these prescriptions may (or may not) curtail wage levels. We have nevertheless classified them as commodifying – not because they curtail wages but because they call for a decentralisation of multi-employer bargaining structures. This leads us to consider the qualitative dimension of employment relations, namely, the central mechanisms governing them.

Under the bargaining mechanisms category, we distinguish between commodifying prescriptions that call for a decentralisation and individualisation of bargaining mechanisms between employers and workers that expose workers to increased market pressures and decommodifying prescriptions that favour solidaristic collective agreements (Schulten, 2002). The decentralisation and individualisation of bargaining mechanisms marketise bargaining mechanisms by making labour more like a commodity to be bought and sold on the market. In contrast, solidaristic collective bargaining institutions (such as multi-employer bargaining arrangements) de-marketise bargaining mechanisms by setting collectively agreed standards that apply to all employers covered by the agreement, thus taking workers’ wages and working conditions out of competition (Pontusson, 2006).

Individualisation and decentralisation both matter when it comes to deciding whether the bargaining logic is decommodifying (solidaristic) or commodifying (individualistic) (Schulten, 2002; Thelen, 2014). Individualisation is a more radically commodifying process in which collective agreements are abolished altogether and employees are left to negotiate individually with the management. Decentralisation is still within the domain of collective employment relations, but we consider it as a step on the way towards individualisation, thus participating in the further commodification of employment relations. Decentralisation means a downward shift in the dominant level of bargaining. The dominant level means the level of the economy at which the negotiations on core employment issues take place. This can be the firm (company), the industry, the sector, or the entire economy – the latter three are also called multi-employer bargaining because more than one employer’s participation is needed for their functioning. Negotiations can occur at multiple levels, but what matters is the hierarchy of these levels. In centralised bargaining systems, actors at the lower level (for example, in a single firm) have only limited space to deviate from the terms set at the higher level. Following decentralisation, these higher levels lose their relevance and give way to the lower levels in determining the key parameters of wages and working conditions. Negotiations at national, sectoral, or industry level may disappear altogether. They may also just be hollowed out, meaning that they no longer set enforceable targets for lower levels, only propose broad guidelines, or allow a broad range of exemptions on various grounds.

Until recently, the policy orientation of collective bargaining has coincided with the level on which bargaining takes place: the higher the level at which the bargaining takes place, the more solidaristic the logic (hence enhancing decommodification). If there is no collective agreement, contracts will be by default negotiated (or even imposed in the case of vulnerable workers such as undocumented immigrants) at individual level, hence pointing to the deepest possible commodification of bargaining mechanisms. Examples include bargaining mechanisms in the United States or Britain, which have consistently led to much more differentiated and therefore more unequal wage policy outcomes, as they reflect the lack of centralised, multi-employer bargaining systems in these liberal market economies (Crouch, 1999; Thelen, 2001; Pontusson, 2006). In turn, company-level agreements illustrate a slightly less extreme form of commodification: if they adopt the solidaristic principle of setting employment conditions at company level, they limit competition between workers inside it (decommodification); however, workers still find themselves in competition with workers from other companies active in the sector (commodification). At the next level, sector-level bargaining may diminish competition in terms of wages and working conditions between companies in a sector and thus contribute to further decreasing labour commodification. Finally, national-level collective bargaining can provide the most elaborated version of solidaristic, decommodified wage policy. An example is the Rehn-Meidner model, named after two Swedish trade union economists, which used ‘deliberate, centrally controlled force to counteract … the centrifugal force of the market, i.e., its tendency towards wage differentiation’ (Meidner and Heldborg, 1984: 71 cited in Schulten, 2002: 174).

Although the bargaining level remains a widely used industrial relations indicator,² its significance has been undermined by the radical changes undertaken by a number of EU countries. More specifically, multi-employer collective bargaining agreements have increasingly allowed local deviations from collectively agreed standards over time. This happened, for instance, in Germany in 2004 when the opening and hardship clauses of a new sector-wide agreement allowed company-level agreements to derogate from collectively agreed sectoral wage standards (European Commission, 2010a). These changes led to bargaining levels and policy orientations of collective bargaining mechanisms starting to diverge.

Therefore, as the bargaining level per se can no longer capture the decommodifying and commodifying potential of bargaining mechanisms, we distinguish instead between more solidaristic and more individualistic mechanisms to set workers’ terms and conditions. The first mechanisms de-marketise bargaining mechanisms by decreasing competition between workers (decommodification). The second marketise these mechanisms by increasing competition and thus workers’ exposure to market pressures or, better said, to the power of capital (commodification).

We define solidaristic collective bargaining narrowly, meaning mechanisms to ensure the equality of wages within one country across different employee groups. The narrowness of this definition implies that the equality of wages may go together with overall wage moderation. We therefore regard NEG prescriptions in favour of centralised collective bargaining as decommodifying, although national collective bargaining institutions have often been used to moderate wages to get an international competitive advantage within an ever more integrated European economy (Molina and Rhodes, 2002; Erne, 2008). This conceptualisation is also analytically consistent and ensures that our categories do not overlap. Our first category on wage levels captures calls for the curtailment of wages as commodifying interventions. In turn, we classify NEG prescriptions that call for centralised collective bargaining structures under the bargaining mechanisms category as prescriptions with a decommodifying policy orientation.

Governments rarely intervene directly in the content and mechanisms of bargaining – except when they are themselves the employers – but they can still influence them indirectly. This is particularly relevant for our study, as it is neither employers nor trade unions who receive NEG prescriptions but member state governments. The formal rules for government intervention in collective bargaining vary across the EU, but governments in general are capable of changing the legal framework in which bargaining takes place between employers and trade unions. In this context, commodifying prescriptions ask governments to promote bargaining decentralisation. In turn, prescriptions are decommodifying if they call for an expansion and strengthening of these supports.

Our third category in employment relations covers hiring and firing mechanisms, which refer to the rules that determine employment boundaries and employers’ discretion in setting them. Prescriptions under this category may either decrease workers’ protection in this respect, and thus lead to a higher exposure of workers to market vagaries and the power of employers (commodification), or increase workers’ protection vis-à-vis such vagaries and power (decommodification). This category includes prescriptions relative to the duration of employment as well as those relative to (collective) dismissal rules. The first may seek to commodify labour by reducing contract durations (e.g., fixed-term and temporary agency work versus permanent contracts), the second by favouring more flexible dismissal rules (e.g., by abolishing rules on unfair dismissal, adopting rules that are less protective on notice periods, compensation in the case of dismissal, reinstatement rights, and so on).

Protections on the duration of employment and on dismissal rules may overlap. A lower contract duration (e.g., fixed-term) may serve as a functional equivalent to easier firing: they both serve to increase management’s discretion vis-à-vis workers. In theory, workers also may benefit from increased flexibility – as easier firing means also easier hiring according to the advocates of employment reforms. However, as workers must work to ensure their subsistence, even workers enjoying trade union collective bargaining rights are ‘typically in a disadvantageous position in labour markets’: ‘It is far easier for an employer to replace recalcitrant workers than for employees to “replace” a recalcitrant employer, especially when the unemployment rate is high’ (Stiglitz, 2002: 13).

Finally, we should note that prescriptions in the areas of wage levels, bargaining mechanisms, and hiring and firing mechanisms may also focus more closely on public sector employment relations. This is possible because governments are also the employers in the public sector. In that role, they can act as decommodifying model employers promoting higher wages, more encompassing collective bargaining mechanisms, and more protective hiring and firing mechanisms (Szabó, 2018). Alternatively, they can use the signalling role of public sector employment relations to drive down private sector wages, decentralise bargaining, and lower the protection offered by hiring and firing mechanisms – therefore promoting commodification.

In the next subsection, we turn to the ways in which we have operationalised the potential of NEG prescriptions to further commodify or decommodify public services.

Analysing the Policy Orientation of NEG Prescriptions on Public Services

The commodification of public services may affect both their provision and users’ access to them. In this study, we therefore consider NEG prescriptions that affect both the provision of public services and access to them, as this allows us to capture the degree to which these prescriptions may affect both workers and users – and thus have the potential to trigger counter-reactions from both organised labour and users. Although provision and access are interlinked, we nonetheless distinguish between prescriptions affecting first and foremost provision and those affecting first and foremost access. We combine in a single table (see Table 4.2) the categories that we used to assess the potential for commodification or decommodification of NEG prescriptions on the provision of public services and on access to these services.

Table 4.2 Analytical framework for the analysis of NEG prescriptions on public services

	Categories	Dimension	Policy orientation
			Commodification	Decommodification
Provision of public services	Resource levels	Quantitative	Curtail	Increase
	Sector-level governance mechanisms	Qualitative	Marketise	De-marketise
	Provider-level governance mechanisms	Qualitative	Marketise	De-marketise
Access to public services	Coverage levels	Quantitative	Curtail	Increase
	Cost-coverage mechanisms	Qualitative	Marketise	De-marketise

Source: Our own.

Among prescriptions affecting the provision of public services, we distinguish three categories, namely, one with a quantitative dimension (resource levels) and two with a qualitative dimension (sector-level as well as provider-level governance mechanisms).

Among NEG prescriptions on resource levels, we consider those requesting the curtailment of these resources as commodifying. Curtailment measures in this area include attacks either on the levels of expenditure on public services (e.g., cuts in the budget allocated to the sector) or on the material infrastructure needed for the provision of services (e.g., cuts in the number of hospitals or hospital beds, of railway and bus lines, or of water infrastructure and water provision levels). The curtailment of resource levels may also be a result of what some analysts see as ‘implicit privatisation’ (Schmid et al., 2010: 459), namely, the shift of expenditure and service levels from areas where services are provided mostly by public providers to areas where private providers play a more prominent role (e.g., the shift from inpatient to outpatient care). In the opposite direction, we consider prescriptions seeking to increase the levels of expenditure and the material infrastructure available to public service providers as decommodifying. This classification is warranted inasmuch as such an increase channels resources towards public providers. The degree to which this happens can, however, be evaluated only by looking at the larger context, namely, the extent to which public services have already been commodified. Indeed, in cases where private providers have already entered the sector following previous commodification waves (more specifically by marketising their sector- and provider-level governance mechanisms, see below), increased public resource levels could be used to bolster the private provision of these services (and hence commodification).

NEG prescriptions may commodify public services also by marketising their sector-level governance mechanisms. Among these, we first distinguish those seeking to establish sector-wide regulatory and service-purchasing independence. Regulatory independence involves moving the regulation of the sector (i.e., the terms and conditions for the use of public infrastructure as well as the relations between service providers) from democratic government control (i.e., relevant ministries) to a regulatory authority that is independent of the state (e.g., transport, water, or healthcare agencies). Likewise, service-purchasing independence involves the establishment of bodies (e.g., national healthcare funds or national transport authorities) that manage public service funds and contract public services out to (private or public) service providers. These regulatory bodies are called independent, as they are not subject to democratic control (i.e., relevant ministries and parliaments). Both regulatory and purchasing independence are portrayed as technocratic fixes that place decisions beyond the influence of politics to ensure a conducive environment for competition (De Francesco and Castro, 2018). The declared goal of independent regulators and purchasers is to make all service providers (including publicly owned ones) behave like private companies, as well as to ensure access to the sector for private providers and to fight monopolies.

Prescriptions seeking to marketise sector-level governance mechanisms (and thus commodify public service provision) may also include those seeking to open the sector to private providers. These measures have been known in the literature as leading to the liberalisation of public services.³ Liberalisation can be achieved by allowing sector-level purchasers to buy services from private providers as well as by introducing competitive tendering mechanisms in the sector (Hermann and Verhoest, 2012). Decision makers qualify competitive tendering, also known in the EU as procurement, as a way to increase the cost-efficiency of public services by increasing competition among service providers (Kunzlik, 2013). In addition, private service providers can enter public services sectors through PPPs. PPPs are long-term contractual agreements where private companies make an initial investment (usually in infrastructure) that the state subsequently repays over the life of the project (Ménard, 2009; Mercille and Murphy, 2016). In turn, sector-level governance may be decommodified by making sector-level regulators and purchasers subject to greater democratic government control and by decreasing the opening of the sector to competition from private providers. The latter involves re-erecting barriers to private providers’ entry into the sector.

NEG prescriptions may commodify public services also by marketising their provider-level governance mechanisms. Among these prescriptions, we first distinguish those that seek to change the legal status of public providers. Thus, prescriptions may seek to transfer providers’ assets from public ownership into private hands (e.g., selling to private companies publicly owned hospitals, water utility companies, or public bus or railway companies). This is what is generally understood by the privatisation of public services and what Krachler, Greer, and Umney (2022: 2) aptly term ‘material privatisation’. Other prescriptions seeking to change the legal status of public providers may give private companies the right to contract out services with the latter, resulting in what Krachler, Greer, and Umney (2022: 2) call ‘functional privatisation’. This involves, in a first step, the division of public services into core and secondary services, with the first remaining to be provided in-house by public providers and the second being, in a second step, outsourced to private providers (e.g., the contracting out of ancillary cleaning, catering, and diagnostic services in healthcare or the leasing of marginal rail lines in transport). Sometimes, outsourcing secondary services has prepared the ground for outsourcing core services. Finally, a change in public providers’ legal status may entail their corporatisation. This involves incorporating public service providers under private company law although their ownership remains public (e.g., the transfer of responsibilities from local authorities to a water utility; changing the status of public hospitals to autonomous commercial units). Corporatisation moves providers from the public services sector to the semi-state sector, whereby they are subject to EU competition rules. It may sometimes be a first step towards full (material) privatisation. Corporatisation also normally means that workers are not governed by collective public service agreements. This shows that the commodification of employment relations and of public services are interconnected and have feedback effects.

NEG prescriptions that commodify public services by marketising their provider-level governance may also affect providers’ internal operation. This may happen, most notably, by promoting the introduction of models imported from the private business sector, namely, new public management or managerialism (Clarke, Gewirtz, and McLaughlin, 2010). Managerialisation may include corporate governance reforms that strengthen the power of company management and reduce the influence of public service workers and trade unions on the day-to-day management of the company. Managerialisation may also include managerial reforms that centralise financial control, monitoring, and surveillance in the hands of managers. This rests on ‘governance by numbers’ (Supiot, 2017), which involves segmenting services into tasks that are priced in the light of cost-benefit calculations; increasing the visibility of financial flows (e.g., by introducing e-health measures such as user identifiers); introducing methods for financing providers on the basis of fixed-priced reimbursement rates (e.g., the diagnostic-related-groups [DRG] method in healthcare) (Krachler, Greer, and Umney, 2022); or introducing performance-based payment, wage, and fund-allocation systems. These measures serve to place workers in competition with one another and increase managers’ control of them (Friedberg et al., 2010).⁴ Increased managerial control at provider level is a precondition of increasing central managerial control at sector level (as seen above).

In the opposite direction, prescriptions seeking to de-marketise provider-level governance mechanisms (and thus decommodify public services provision) may do so by favouring a public status for providers. This can be achieved, for example, through the public repossession of privatised facilities and assets or by reverting to the in-house provision of outsourced services. An example is the re-municipalisation of water services, whereby local authorities take back direct control of services previously contracted out to private providers (Kishimoto, Gendall, and Lobina, 2015). Decommodification may also follow prescriptions seeking to move public providers away from market-like technocratic management to public service administration, most specifically by increasing workers’ and citizens’ democratic oversight over decision making.

Among prescriptions affecting users’ access to public services (see lower part of Table 4.2), we distinguish between prescriptions on coverage levels (quantitative) and those on coverage mechanisms (qualitative dimension).

Prescriptions on coverage levels with a potential for commodification include those seeking to curtail the scope of services or again the range of the population covered by public schemes (e.g., in the first case, by reducing the range of services covered by public schemes and, in the second, by excluding some categories of people from automatic coverage). In the opposite direction, access to public services may be decommodified by increasing the scope of services and the range of population covered by public schemes.

Prescriptions seeking to commodify access to services by marketising cost-coverage mechanisms include those seeking to make these mechanisms more dependent on users’ private means (e.g., by introducing co-payments and private insurance for accessing healthcare services or water charges and cost-recovery mechanisms for accessing water services). In the opposite direction, access to public services may be decommodified by reintroducing redistributive mechanisms (such as progressive taxation or social insurance) to cover the cost of public services to users and by making access free at the point of delivery.

The privatisation of service provision, the managerialisation of service organisation, sector-level regulatory and purchasing independence, the opening of public services sectors to private providers, competitive tendering, and recourse to cost-coverage mechanisms putting a premium on private means all contribute to the marketisation of public services.⁵ Policymakers who promote marketising policies claim that the latter increase competition and thus lead to a more cost-efficient allocation of resources and an improvement in service quality. Nonetheless, in practice, marketisation often far from lives up to these promises. Managerialisation may lead to public service providers playing with numbers in a bid to increase the costs reimbursed by public funders (e.g., hospitals allocating patient cases under higher-priced DRGs) (Krachler, Greer, and Umney, 2022). Public service providers may also seek to reach cost-cutting managerial targets by increasing the pace of service delivery, resulting not only in increased workloads and worsening working conditions for public services workers (Flecker and Hermann, 2012; Galetto, Marginson, and Spieser, 2014; Kunkel, 2021) but also in lower service quality for users (Mihailovic, Kocic, and Jakovljevic, 2016; Armstrong et al., 2000; Hermann, 2021). Likewise, the privatisation of service provision may foster the selective appropriation of more profitable services by private providers – leaving more costly ones to be provided by generally underfunded and overloaded public providers (Krachler, Greer, and Umney, 2022). In turn, this may lead, over time, to increased capital concentration rather than competition among providers (Buch-Hansen and Wigger, 2011).

In our analysis, we classify prescriptions in the different categories detailed in this section according to whether the object rather than the aim of prescriptions fits a particular category. By looking at what prescriptions address in the first instance (object) rather than at what they might allegedly realise in policymakers’ view (aims), we seek to avoid conceptual fuzziness and analytical uncertainty. Indeed, as many prescriptions have multiple aims, classifying them according to their aims would be difficult, if not impossible. For example, prescriptions on cost-coverage mechanisms (e.g., introduce co-payments for medical services) aim in the end to curtail healthcare expenditure (and hence resource levels available for public service provision) but concern in the first instance the cost of services to users. We therefore classify these prescriptions under access to public services and its cost-coverage mechanisms category rather than the category of resource levels under provision of public services.

Having operationalised the concept of commodification in the areas of employment relations and public services, we now turn to the analytical strategies that we adopt in assessing the patterns of NEG prescriptions across countries, time, and policy areas.

5 Contextualising the EU’s NEG Prescriptions and Research Design

5.1 Introduction

In Chapter 4, we highlighted the need for a research design that acknowledges the links between the policy orientation of new economic governance (NEG) prescriptions and the material interests of different social groups. We thus identified commodification as the policy orientation most relevant to our analysis of the nexus between EU economic governance and labour politics and developed a corresponding analytical framework to assess NEG prescriptions in the areas of employment relations and public services. Before engaging in this assessment, however, we need to understand their meaning, for which we must make an additional analytical move.

The meaning of NEG policy prescriptions depends not only on their wording but also on their location in larger policy scripts and their uneven coercive power across countries, time, and policy areas. Hence, NEG prescriptions are embedded in larger semantic fields and taxonomies, in power struggles over the definition of appropriate solutions to social problems, and in the uneven European political economy. This chapter thus first explains the semantic, communicative, and policy contexts in which we situate NEG prescriptions and then outlines the implications of this analytical move for our research design, including case selection, data collection, and comparative approach.

5.2 How to Map the Patterns of Prescriptions across Countries, Time, and Policy Areas?

In Chapter 4, we argued that, to assess NEG prescriptions, we need not only to link them to the interests of concrete social groups (in our case, labour and its interest in opposing the commodification of employment relations and public services) but also to account for the hierarchical ordering of prescriptions in larger policy scripts unevenly deployed across countries, time, and policy areas. In order to address the latter point, we highlighted that we need a research design that captures (1) the uneven semantic context of prescriptions – to map the ways in which prescriptions form larger hierarchical taxonomies; (2) the uneven communicative context of prescriptions – to account for the differentiated allocation of coercive power to different types of prescriptions across countries, time, and policy areas; and (3) the uneven policy context of prescriptions – to account for the embeddedness of NEG prescriptions in an uneven European political economy, for their national-, supranational-, and EU-level path-dependency, and for their differentiated deployment across countries, time, and policy areas. In this section, we look at each of these contexts and then draw their implications for our research design.

Semantic Contexts and Hierarchical Taxonomies

The semantic context of policy prescriptions refers to how the meaning of prescriptions emerges from their relations with other prescriptions found in the policy documents of which they are part. Approaching policy prescriptions in this way reflects a core insight from linguistics: namely, that the relationship between symbols (including written ones, i.e., words), what they stand for (e.g., objects, actions, ideas), and the meanings that they carry with them (e.g., literal and metaphorical) are arbitrary (Lavenda and Schultz, 2020). Indeed, symbols, what they stand for, and their meanings vary from society to society and even from social group to social group, as well as across time. Therefore, to fully grasp the meaning of words (in our case, policy terms) rather than simply and solely look at the content signified by the symbols, we need to consider the semantic relationships established between them in a given symbolic field (e.g., a language or, in our case, the set of policy texts produced in a certain policy area).

Semantic interconnections between words are nonetheless far from random but cluster in more complex taxonomies. Taxonomies are systems of classification that organise hierarchically the sets of terms and concepts used to name and understand specific areas of reality. Classical taxonomies include those developed by botanists and zoologists since the eighteenth century, yet all human societies develop their own ‘folk’ taxonomies (Vanpool and Vanpool, 2009) in relation to the various aspects of reality. The latter include not only flora and fauna but also the desired solutions to the social problems of human societies, of which employment and social policies are modern welfare state variants. Taxonomies are not universal but reflect time- and place-specific understandings of reality. In turn, when mobilised in actual social practices of linguistic performance (e.g., policy documents), they provide the symbolic classifications and thus lenses through which social actors perceive reality.

By seeing policy formulations as part of larger policy taxonomies, we do not need to assume that the latter are fully coherent or that they are perfectly self-contained and distinct from other taxonomies. Even the most polished social policy taxonomies, namely, social policy paradigms, share policy terms and solutions with other paradigms and in this sense overlap with one another and have fuzzy boundaries. This does not make them indeterminate or ever changing, as taxonomies point to hierarchical connections between terms that have a certain degree of consistency across policy documents produced in different spatial and temporal locations. Moreover, seeing policy formulations as organised in folk (rather than scientific) taxonomies highlights their strangeness and thus unsettles their proponents’ claims that the solutions they offer to social problems are logical, natural, or universal. Policy responses are as folk, as strange, and as exotic as the Medio period (1200–1450) fauna classifications from northwest Mexico documented by Vanpool and Vanpool (2009). Bringing hospital case-based financing and active labour market policies together under the same banner of structural reforms responding to the 2008 financial crisis is as strange as grouping owls, rattlesnakes, and shamans under the category of night creatures (Vanpool and Vanpool, 2009). Both classifications reflect understandings of reality that are specific to a certain time, place, and social location rather than universal.

To assess the meaning of policy prescriptions found in NEG documents and the connections that link them with one another, we draw on ethno-semantic analysis developed by linguistic anthropologists (Vanpool and Vanpool, 2009; Spradley, 2016). Ethno-semantic analysis assesses ‘the underlying semantic connections’ between words (emphasis added) (Vanpool and Vanpool, 2009: 529) to map the patterns of word usage across texts produced in different locations and periods in time and their grouping in the hierarchically ordered and more encompassing semantic domains (or categories) that, in turn, form larger taxonomies. This type of analysis thus allows us to map the articulation of NEG prescriptions on employment relations and public services in larger policy taxonomies as well as cross-country and cross-time patterns. For the purpose of this book, we draw on the theoretically driven categories, depicted in Chapter 4, of commodification and decommodification of employment relations and public services to uncover NEG taxonomies and patterns in these areas.

Before looking at how ethno-semantic analysis can be applied to the analysis of NEG documents, let us define the units of our analysis. Several scholars and European Commission analysts have pointed out that most country-specific recommendations (CSRs) contain not one but several policy statements that may apply to quite distinct areas of intervention. They have hence divided CSRs into several sub-parts, components, policy measures (Efstathiou and Wolff, 2018), policy issues (Copeland, 2020), and sub-recommendations (Darvas and Leandro, 2015; Clauwaert, 2018). It follows that it does not make much sense to assess the policy orientation of whole CSRs (Copeland and Daly, 2018). Instead, we need to look at their smaller and policy area-specific sub-components. Our units of analysis are therefore policy prescriptions, which we define as the shortest policy statements that make sense from a semantic point of view.

If the meaning of NEG prescriptions cannot be understood in isolation but only by considering the other prescriptions to which they are semantically linked, we can then use ethno-semantic analysis to map their deployment across NEG documents in a systematic manner. This presupposes mapping the semantic relations between each prescription and the concentrical textual fields of which it is part. These are formed first by all prescriptions accompanying it in the CSR of which it is part and then by all prescriptions found in the CSRs issued in the corresponding country- and year-specific Council Recommendation.

To illustrate such an approach, let us take as an example the prescription to ‘increase cost-effectiveness’ in healthcare, issued to Ireland in 2014 (Council Recommendation Ireland 2014/C 247/07). This prescription may be seen as ambiguous and thus illustrating the empty signifier approach to NEG seen in Chapter 4. Indeed, we could understand its meaning in two different ways: to increase the number of healthcare services provided while keeping the level of expenditure constant or to keep the level of healthcare services constant while reducing the level of expenditure. However, although these possible readings have divergent takes on the fate of healthcare expenditure, they both involve an intensification of service provision that is detrimental to workers’ employment conditions and users’ service quality (and thus commodifying). Moreover, this prescription takes an even clearer meaning if we consider the other prescriptions surrounding it in the document. We discover that the prescription sits in CSR2, where it is accompanied by prescriptions on increasing central financial control in healthcare and on introducing e-health measures. The latter two prescriptions thus explain what the 2014 Council Recommendation for Ireland meant by increased cost-effectiveness: a process that is about enhancing managerial control over financial flows in the healthcare sector rather than about improving health outcomes. The juxtaposition of these different prescriptions signals the semantic connections between them and thus their belonging to a common semantic category. Looking further afield, we notice that CSR1 from the same document includes prescriptions on the need to achieve ‘fiscal adjustment’ by enforcing binding government expenditure ceilings and that both CSR3 and CSR4 include a series of prescriptions in the area of active labour market policies. The prescription to increase cost-effectiveness in healthcare acquires therefore new shades, as it becomes one component of a larger package prioritising the curtailment of state funding (through fiscal adjustment) and the further marketisation of labour (through its activation, see Greer, 2015; McGann, 2021) – rather than better and more evenly distributed health services and health outcomes.

Looking at textual fields closest to prescriptions gives us an intimation of what ethno-semantic analysis achieves in terms of unearthing the meanings of prescriptions and grouping them in semantic categories. A systematic analysis, though, also needs a consideration of wider textual fields. In our case, the latter include the field formed by all policy prescriptions issued since the start of the NEG for the EU member state under consideration. This helps us uncover the whole range of meanings with which ambiguous prescriptions are associated in NEG documents and thus get closer to uncovering their core meaning. Of importance for ambiguous prescriptions are the more precisely formulated prescriptions with which they are semantically linked. For example, the prescription to increase cost-effectiveness in healthcare is associated mostly with prescriptions seeking more explicitly to commodify healthcare (see map of semantic links in Table A5.1 in the Online Appendix). Likewise, we can trace the meaning of vague prescriptions by uncovering their semantic links to similarly but more precisely formulated prescriptions present in Council Recommendations issued for the same country in other years. For example, we can elucidate the meaning of the prescription to ‘open up the services sector to further competition, including … professional services’ (Council Recommendation Italy 2011/C 215/02, emphasis added) issued for Italy between 2011 and 2015 by looking at all similarly formulated prescriptions across all documents issued in the years under study for the same country. Italy received a similar prescription in 2016, whereby healthcare was explicitly included in a longer explanatory list: ‘increase competition in regulated professions [and the] … health sector’ (Council Recommendation Italy 2016/C 299/01, emphasis added). This can help us see that healthcare may have been implicitly targeted by commodifying NEG prescriptions requesting increased competition in the sector even before the term was explicitly mentioned in relation to that. The meanings of apparently ambiguous or vague prescriptions are therefore not floating above actual NEG documents, freely associating with one or another prescription (as empty signifiers). Instead, they are sedimented in temporally successive layers that pull them in certain directions rather than others (i.e., commodification or decommodification).

A consideration of prescriptions’ widest textual field, namely, the one formed by all prescriptions issued for all countries and years under consideration, allows us to document whether prescriptions display any common patterns across countries and years and to assess on this basis their position in NEG taxonomies. For example, prescriptions with similar formulations to the one issued to Ireland in 2014 (to increase cost-efficiency in healthcare) were issued twelve times for the four countries under study in the period 2009–2019; namely, four times to Germany (2011–2014), five times to Ireland (2014–2016, 2018–2019), and three times to Romania (2013–2014, 2019). That these prescriptions are also richly linked semantically to a whole set of commodifying prescriptions indicates that their dominant meaning is a commodifying rather than a decommodifying one. It also indicates that cost-efficiency may be one of the threads connecting a number of NEG prescriptions in healthcare in a common commodifying script (see also below).

A consideration of the semantic context of NEG prescriptions allows us to unearth the larger taxonomies of which they are part and the patterns that they form across countries, time, and policy areas. We need, however, to move a step further in our analytical strategy to link these taxonomies and patterns with social (class) conflict. As seen in section 3.3, focusing on commodification allows us to capture the nexus between NEG and labour politics. But how can the deployment of NEG prescriptions across countries, time, and policy areas be accounted for in terms of the struggles among concrete social actors and their interests? To answer this question, we now turn to the communicative context of prescriptions.

Communicative Contexts and Struggles over the Naming of Reality

The communicative context of prescriptions refers to how their meanings emerge in the specific practices of communication that inform the production of policy documents. Drawing on the sociology of the state and policymaking, we understand the production of policy documents as involving ‘symbolic struggles’ over ‘the power to produce and to impose the legitimate vision of the world’ (Bourdieu, 1989: 20). Indeed, policy documents imbue with symbolic legitimacy (and, in the case of NEG documents, also with legal power) the policy terms on which they draw. These terms are nonetheless not neutral or natural but rather an outcome of the symbolic struggles that social actors¹ wage over the definition of social problems and what are to be considered as their adequate solutions. In these struggles, social actors are differently positioned in terms of economic, political, and cultural capital (Bourdieu, 1994) and hence have different efficacy in imprinting their views on policy documents and their key terms.

In these struggles, social actors rally behind various approaches to social policy to advance their own interests. In practice, these approaches coagulate around a limited range of social policy paradigms. The share and the relative pre-eminence in policy documents of concepts informed by one or another paradigm are an outcome of symbolic struggles among social actors. Paradigms, however, function not simply as pre-existing, stable reference points that actors mobilise in symbolic struggles. They are themselves the object of symbolic struggles whereby some social actors (most notably policymakers and social policy scholars) seek to reinforce the coherence and stability of paradigms, whereas others seek to challenge them. In this process, some actors might seek to build on the inherent arbitrariness of language to enhance the ambiguity of policy terms and make the boundaries between paradigms more porous. Otherwise said, coherence and ambiguity are moving stakes, not fixed outcomes.

We therefore consider the production of NEG policy prescriptions as a communicative process whereby variously situated actors struggle to impose their own views of the problems encountered by EU member states after the 2008 crisis and of the measures needed to respond to them. Most studies of NEG prescriptions on employment and social policy have concentrated on the actors most closely involved in the production of NEG documents (namely, the European Commission and the Council as addressers and member state governments as addressees). Thus, as seen above, scholars participating in the socialisation debate concur to distinguish between economic and social policy actors at EU and national level but come to different conclusions regarding the outcome of their struggles for the orientation of NEG in employment and social policy.

We argue that, although valuable, these studies gloss over several aspects of the symbolic struggles waged by social actors over policy documents and terms – aspects that are crucial for analysing the deployment of NEG prescriptions across countries and time. As seen in Chapter 4, we need to enlarge our perspective on NEG (and its documents) by taking into consideration that its production is the result of struggles not only among institutional actors at national and supranational EU level (discussed in the socialisation debate) but also among interest groups – most notably organised labour and capital (Erne, 2023a). Moreover, the production of policy documents involves social actors struggling not only to impose certain views of the world, and thus certain policy orientations through language, but also to enhance the coercive power of language. In our case, and as several analysts have pointed out (Erne, 2015; Baeten and Vankercke, 2016; de la Porte and Heins, 2016; Crespy and Schmidt, 2017; Dawson, 2018; Bekker, 2021), this enhancement goes beyond the use of language per se to include the assignation of legal bases to individual NEG prescriptions.

The coercive power of a prescription depends on its legal basis and on the location of the receiving country in NEG’s enforcement regime, which is determined by struggles over the state’s inclusion or exclusion in disciplinary NEG procedures (Figure 2.1; Table 5.1). Critical scholars in the socialisation debate have found this process to be far from neutral, as the prescriptions with the strongest legal bases have been structurally linked to conservative fiscal and economic objectives (Baeten and Vanhercke, 2016; Crespy and Schmidt, 2017; Dawson, 2018). The struggles have thus typically been over the extent of austerity and most particularly over the curtailment and marketisation of employment relations and public services to achieve these objectives. These scholars thus saw the battle over ‘the lens under which policy should be examined’ (Dawson, 2018: 203) as having resulted in a lose-lose game for labour and social policy: social prescriptions were based either on the non-binding Europe 2020 strategy, which may accommodate socially progressive objectives but provides a weak legal base, or on disciplinary procedures, in which case they acquire significant coercive power, but only by at the same time being geared towards socially regressive objectives (Dawson, 2018). However, precisely because NEG prescriptions target different countries and policy areas differently in terms of their frequency and coercive power, we need to adopt a research design that is also able to capture these differences empirically.

Table 5.1 Coercive power of NEG prescriptions

Legal basis of NEG prescription	Enforcement mechanisms	Coercive power
MoU strand of NEG: NEG prescriptions related to MoUs and Precautionary-MoUs	Withdrawal of financial assistancea Withdrawal of EU structural fundingb Financial finesc, d Naming and shaminge	Very significant
Corrective SGP/MIP strand of NEG: SGP- and MIP-related NEG prescriptions for states with excessive deficits or excessive macroeconomic imbalances	Withdrawal of EU structural fundingb Financial finesc, d Naming and shaminge	Significant
Preventive SGP/MIP strand of NEG: SGP- and MIP-related prescriptions for states with no excessive deficits or excessive macroeconomic imbalances Europe 2020 strand of NEG: Prescriptions related to the EU’s Europe 2020 growth strategy	Naming and shaminge	Weak

Source: Adapted from Stan and Erne (2018/2019), Jordan, Maccarrone, and Erne (2021), and Stan and Erne (2023).

^a According to the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF) for euro area states created in 2012 and 2011, respectively, as well as the Balance of payments (BoP) assistance facility created in 2002 for non-euro area states, EU financial assistance is conditional on the implementation of the economic adjustment programme (EAP) spelled out in the corresponding MoU and its updates.

^b Since 2014, EU structural and investment funding to all member states is conditional on ‘sound economic governance’, i.e., the implementation of EAP-, SGP-, and MIP-related NEG prescriptions (Art. 23, Regulation No 1303/2013 of the European Parliament and of the Council of 17 December 2013).

^c Since 2011, a member state of the euro area that has not ‘taken effective action to correct its excessive [budget] deficit’, risks ‘a fine, amounting to 0.2% of the Member State’s GDP in the preceding year’ (Art. 6, Regulation No 1173/2011 of the European Parliament and of the Council of 16 November 2011).

^d Since 2011, a member state of the euro area that ‘has not taken the corrective action [against excessive macroeconomic imbalances] recommended by the Council’ risks an ‘annual fine of 0.1% of the GDP in the preceding year of the Member State concerned’ (Art. 2, Regulation No 1174/2011 of the European Parliament and of the Council of 16 November 2011).

^e Since the adoption of the Maastricht Treaty in 1993 and the Amsterdam Treaty in 1997, the Council adopts Broad Economic Policy Guidelines (Art. 121(2) TFEU) and Employment Policy Guidelines (Art. 148(2) TFEU), which are non-legally binding recommendations for policymaking.

The assignment of coercive power to prescriptions during the production of NEG documents reveals power differentials between different member states, and between them and EU executives, and in the ways in which they are drawn upon in NEG’s vertical policymaking and surveillance process. We thus need a research design that allows us to map the patterns of prescriptions across countries and time and, in so doing, capture variations in terms of both their meaning (and thus location in NEG taxonomies and spatial–temporal patterns) and their coercive power. Hence, continuing with the example provided in the previous subsection, just counting the frequency of prescriptions ‘to increase cost-effectiveness in healthcare’ is not enough; we also need to capture their varying coercive power from country to country and year to year, as well as the patterns of their coerciveness across countries and time. By highlighting the combination of this pattern of coerciveness and the consistent semantic association of these prescriptions with other more clearly commodifying prescriptions, our research design thus also allows us to question their signifying emptiness. Instead, rather than confirming their ambiguity, our analysis reinforces our previous insight on the dominant orientation of these prescriptions being the commodification rather than the decommodification of healthcare.

A consideration of how policies are patterned across time and countries is crucial if we want to understand the overall orientation and therefore deeper nature of NEG prescriptions in a specific policy area. Thus, the repeated occurrence of prescriptions oriented towards the commodification of healthcare, which, at the same time, usually had significant coercive power (Chapter 10), signals the channelling of NEG interventions in healthcare into a strong commodifying policy flow rather than an indeterminate policy drizzle mixing commodifying and decommodifying raindrops. To see how and why this flow may follow an overarching script rather than being a simple accumulation of similarly oriented prescriptions, we need, last but not least, to also take into consideration the policy context of NEG prescriptions.

Policy Contexts and the Uneven Deployment of NEG Prescriptions

The policy context of NEG prescriptions refers to how their content and coercive power relate to other current and past policies adopted at national and EU level. Studies in the varieties-of-welfare tradition draw on neo-institutional approaches to highlight the importance of institutional trajectories in understanding current social policies (Esping-Andersen, 1990). In doing so, they highlight path-dependency as one of their important dimensions, document how social policies coalesce at national level in distinct pathways or varieties (Hall and Soskice, 2001), and then use these varieties to make country-by-country comparisons.

Thinking in terms of varieties, however, raises important methodological and analytical questions, given that, at the outset, these varieties were far from isolated from one another and that, in the last decades, they have been pushed in a similar commodifying direction (Crouch, 2005; Copeland, 2020; Hermann, 2021). This push towards the commodification of employment relations and public services has also been the result of policymakers at national and EU level participating in a common transnational policy space in which neoliberal approaches have become ever more powerful (Blyth, 2013; Ban, 2016). In a European context, it is not only national governments but also EU institutions (and most notably the Commission and the Council) that have played a crucial role in the adoption and imposition of these approaches as appropriate solutions to the social policy challenges of the day (Greer, Jarman, and Baeten, 2016). The policy context of NEG prescriptions therefore includes past policies situated at both national and supranational (EU) level and their impact on the extent to which specific policy areas have been commodified in specific countries and at specific junctures.

Hence, the history of employment and social policies in the EU is not one of distinct pathways taken by different groups of countries, but rather of meandering yet interconnected trajectories that, although diverging at times, flow nonetheless in a common direction. National governments have deployed commodifying interventions unevenly across countries and time, given the uneven power relations between different member states, between them and EU institutions, and, as seen in Chapter 2, the uneven unfolding of horizontal market pressures across the EU in anticipation of economic and monetary union and EU accession processes. This unevenness has manifested itself in terms both of the specific policy mixes that EU member states adopted at different junctures and of the pace and intensity with which they implemented these interventions. A consideration of the history of unevenly deployed policies and of their impact on the commodification of employment relations and public services is crucial for accounting for why NEG prescriptions in a specific policy area targeted, at a specific juncture, some countries rather than others. For example, as shown in Chapter 10, NEG commodifying prescriptions in healthcare targeted mostly Ireland and Romania; this can be accounted for by the fact that, before NEG was introduced, healthcare (and especially hospital) commodification was less advanced in these two countries than in the other two countries in our dataset, Germany and Italy. This points to NEG commodifying prescriptions in healthcare amounting to something more than simply a set of prescriptions displaying a common commodifying orientation. Rather, it points to their participation in an overarching transnational policy script that follows a common logic in its deployment across countries and time.

Therefore, taking into consideration the time-specific unfolding of policies across countries allows us to uncover not only and simply NEG’s semantically hierarchical ordering of prescriptions in employment relations and public services (i.e., taxonomies) but also their uneven deployment as overarching scripts encoded in NEG documents produced in different years and for different countries. Moreover, by going further back in time and considering pre-2008 EU interventions in a particular policy area, we may discover the deeper temporal sediments of EU economic governance and thus the precursors of NEG’s commodifying script in this area.

Our analytical strategy thus aims to uncover the policy scripts that inform NEG documents and NEG prescriptions in selected employment and social policy areas. By seeing these documents and prescriptions as outcomes of the symbolic struggles waged by social actors over the legitimate naming of reality, our analytical strategy allows us to acknowledge the existence of a plurality of agendas that may inform NEG prescriptions in a particular policy area. As shown in Chapters 6–11, we have identified a dominant commodifying script across all policy areas, despite the occasional presence of NEG policy prescriptions that pointed in a decommodifying direction. Moreover, when analysing the semantic links of the much less constraining and less frequent decommodifying prescriptions to the policy rationales underpinning them, we found that they did not constitute a countervailing policy script. Instead, most of those policy rationales were compatible with the overarching commodification script of NEG (Tables 11.2 and 11.4).

Having looked at the semantic, communicative, and policy contexts of NEG prescriptions and their implications for our research design, we now turn to our comparative and analytical strategy, case selection, and data collection.

5.3 Research Design

As seen in the previous section, traditional country-by-country comparison à la varieties of capitalism (Hall and Soskice, 2001) or varieties of welfare state (Esping-Andersen, 1990) aims to uncover clusters (varieties) among countries. In this perspective, each variety displays a distinctive and coherent national institutional configuration in employment and social policy areas (Brenner, Peck, and Theodore, 2010).

Our analysis seeks instead to capture transnational dynamics at work in NEG. We argue that this is a particularly relevant level for analysing NEG prescriptions in employment relations and public services – and trade-union and social-movement reactions to them (Jordan, Maccarrone, and Erne, 2021; Stan and Erne, 2021a). As outlined in Chapter 3, the NEG regime may nationalise social conflict through its country-specific recommendations (Erne, 2015). The EU-wide reach of the NEG documents that guide them – namely, the Annual Growth Survey and the Recommendations for the euro area (see Figure 2.1), as well as the institutionalisation of NEG and its sanctioning procedures in EU laws – namely, the Six-Pack of EU laws on economic governance – bring member states nonetheless under the same supranational regime of multilateral policymaking and surveillance (Erne, 2015).

Case Selection and Analytical Strategy

As this study goes beyond the methodological nationalism that characterises traditional comparative studies in social sciences, we employ a different rationale for case selection. Positivist research designs rely on Mill’s method of induction, selecting most-different or most-similar cases (Przeworski and Teune, 1970), with the aim of isolating the presumed causal factors for the observed outcomes, similar to what would happen in a natural experiment. Implicit in such an approach ‘is the assumption that nations or societies are aggregates of variables which can in principle be isolated analytically’ (Hyman, 2001: 208). However, in a transnationally integrated regime such as NEG, it is not possible to ‘seal’ national boundaries in order to compare countries. Neither is it possible to separate policymaking into supranational EU and national policy production processes (Brenner, Peck, and Theodore, 2010), given that the two levels are interconnected, as outlined in Chapter 3.

By choosing countries and sectors differently positioned within the EU and its NEG regime, we have instead selected our cases as ‘vantage points’ (Bieler, 2021: 4) that allow us to uncover the deployment of NEG and commodification in the uneven and integrated European political economy. We expect this deployment to be uneven among countries located at different points relative to the EU’s core and periphery. We also expect it to be uneven among policy areas, as these have been differently affected by EU governance and integration processes prior to, as well as after, the establishment of the NEG regime. Finally, we expect this deployment to draw on an already established commodifying stream in EU policymaking. We therefore compare country-specific NEG prescriptions not only in terms of these countries’ past trajectories in the adoption of policies commodifying employment relations and public services but also in terms of whether they follow a common commodifying script in these areas. These comparisons seek thus to find transnational dynamics. Consequently, we selected four countries (Germany, Italy, Ireland, and Romania) that cover contrasting poles in terms of member state size (and thus votes in the Council) and economic power in the uneven EU political economy. This operationalises more abstract considerations of core–periphery divisions and helps us capture the uneven power relations involved in the production of NEG documents, in the allocation of countries to sanctioning procedures, and in the assigning of different legal bases (and hence different degrees of coercive power) to NEG prescriptions. It also allows us to assess whether policy prescriptions reflect an overarching commodifying script while being unevenly deployed across countries. The central question for us is whether commodification is indeed the dominant script in the policy areas under consideration, to what extent alternative, decommodification prescriptions can be identified, and whether the latter coalesce in a countervailing decommodifying script.

Rather than considering all prescriptions issued in the social field, our study focuses on a limited set of policy areas, namely, at cross-sectoral level (employment relations and public services) and at sectoral level (transport, water, and healthcare public services). Doing so allows not only for an in-depth consideration of the semantic, communicative, and policy contexts within which NEG prescriptions are situated but also for the fine-tuning of our account of the uneven deployment of NEG across countries, time, and policy areas. This is a value added with respect to those studies of NEG that, by assessing all CSRs (in employment and social policy areas) for all EU countries, can map the trends taken by NEG prescriptions only at a very general level.

To account for the semantic context of NEG prescriptions, we grouped them in a series of ever more encompassing semantic categories. First, we grouped country-specific prescriptions that use slightly different formulations to convey the same policy measure (e.g., prescriptions issued for Romania in 2013 – ‘improve efficiency and effectiveness in the healthcare system’ and ‘pursue health sector reform to increase its efficiency’ [Council Recommendation Romania 2013/C 217/17], in 2014 – ‘step up reforms in the health sector to increase its efficiency’ [Council Recommendation Romania 2014/C 247/21], and in 2019 – ‘improve … cost-efficiency of healthcare’ [Council Recommendation Romania 2019/C 301/23]) under a common theme, for which we used a standardised formulation (e.g., ‘increase cost-efficiency of healthcare’).

Second, we classified prescriptions (by drawing on the above themes) under the categories of the conceptual framework developed in Chapter 4. This conceptual framework operationalised the commodification and decommodification potential of prescriptions on employment relations and public services. The aim of this framework is to make the classification of prescriptions according to their policy orientation (commodification or decommodification) more intelligible and then to use these categories to give a finer-tuned picture of the policy taxonomies and of the patterns formed by the deployment of NEG prescriptions across countries and time.

To account for the communicative context of NEG prescriptions, our analysis took into account their different coercive power. Following Jordan, Maccarrone, and Erne (2021: 9), we considered this power to range from very significant, for prescriptions enunciated in Memoranda of Understanding (MoUs) for countries under bailout programmes; to significant for Stability and Growth Pact (SGP)- or Macroeconomic Imbalance Procedure (MIP)-related prescriptions for states with excessive deficits or excessive macroeconomic imbalances; and to weak, for prescriptions underpinned by the Europe 2020 strategy, or by the EU’s SGP or MIP if countries did not experience excessive deficits or excessive imbalances, as outlined in Table 5.1.

To account for the policy context of NEG prescriptions, we looked at the latter from a historical perspective. We thus placed NEG prescriptions against the canvas of EU interventions in employment relations and public services and national-level reforms that happened before the financial crisis of 2008. In doing so, we aimed to uncover continuities and differences between the latter and subsequent NEG prescriptions, most notably in terms of the commodification of employment relations and public services. As NEG did not replace but only complemented the ordinary EU governance method by law, we analysed not only the NEG prescriptions in our fields issued by EU executives since the financial crisis but also the EU laws that the Commission proposed after 2008 in accordance with the EU’s ordinary legislative procedure.

In sum, when considering NEG prescriptions in their semantic, communicative, and policy contexts, we thus pursued an analytical strategy based on the following steps:

1. 1. grouping all individual NEG prescriptions that refer semantically to a common policy measure in common themes, that is, standardised formulations;

2. 2. identifying the explicit and implicit semantic links of apparently ambiguous and vague prescriptions to prescriptions found in other EU and national policy documents to uncover their deeper meaning and then mapping the larger policy taxonomies mobilised in NEG documents;

3. 3. assessing the NEG prescriptions’ potential to foster the commodification or decommodification of their respective policy areas and then classifying these prescriptions according to the categories of the analytical framework developed in Chapter 4;

4. 4. identifying the coercive power of prescriptions and mapping the uneven attribution of this power to prescriptions going in commodifying and decommodifying directions;

5. 5. tracing the patterns across countries and years formed by NEG prescriptions issued in each cross-sectoral and sectoral policy area;

6. 6. assessing whether NEG prescriptions issued in each cross-sectoral and sectoral policy area follow, across countries and years, an overarching commodification script;

7. 7. identifying the semantic links between decommodifying prescriptions and the policy rationales informing them and assessing their articulation with NEG’s commodification scripts;

8. 8. comparing the patterns of commodifying and decommodifying NEG prescriptions across cross-sectoral and sectoral policy areas.

Data Collection and Sources

Our study focuses, in a first instance, on whether NEG prescriptions follow an overarching transnational commodifying script across countries, time, and policy areas. Identifying this script is important, as it may offer potential crystallisation points for transnational countermovements, as shown in Chapter 3.

Our analysis of NEG prescriptions draws on (a) prescriptions included among the conditions listed in MoUs and their subsequent updates for Ireland (2010–2013) and Romania (2009–2013) and (b) prescriptions included in the CSRs listed in country-specific Council Recommendations issued between 2011 and 2019 for our four countries, namely, Germany, Italy, Ireland, and Romania. To better understand the semantic, communicative, and policy contexts of selected NEG prescriptions, we also draw on the Commission’s annual Country Reports and member states’ annual National Reform Programmes, as well as Annual Growth Surveys, Euro-area Recommendations, and Joint Employment Reports. Moreover, as understanding the policy contexts informing NEG policy prescriptions requires a deep knowledge of the policy context in the affected member states and corresponding language skills, our analysis is based on a long-term engagement with our cases (Almond and Connolly, 2020), which we know very well (Erne, 2008; Stan and Erne, 2014; Golden, 2015; Stan and Erne, 2016; Stan, 2018; Szabó, 2018; Maccarrone, Erne, and Regan, 2019; Maccarrone and Erne, 2023; Stan and Toma, 2019; Jordan, Maccarrone, and Erne, 2021; Golden and Erne, 2022; Szabó, Golden, and Erne, 2022). For each country selected, at least two of the book’s authors are familiar with its national language. This allowed us to complement NEG documents (available in English) with studies and grey literature on employment relations and public services published both in English and in national languages. We examined NEG prescriptions by drawing mainly on document analysis, which we enriched with semi-structured interviews conducted with policymakers, for example, Commission officials involved in the operation of the European Semester process. For the purpose of mapping NEG policy prescriptions, we analysed MoUs, Council Recommendations, Commission’s Country Reports, and other policy documents (Online Appendix, Table A1.1), conducted interviews with national and EU policymakers (Online Appendix, Table A1.2), and engaged in participant observations of trade-union, social-movement, and EU policy meetings (Online Appendix, Table A1.3). We participated in about sixty events organised by the abovementioned groups to make observations and maintain relationships with past and potential interviewees.

In a second move, our study analyses transnational counterreactions to NEG, based on a novel database of transnational socioeconomic protests since 1997 reported by national and EU-level labour-related sources, which we also compiled in the framework of our ERC project (Erne and Nowak, 2022, 2023).

Another protest database of events across thirty European countries reported in English-language newswire reports from 2000 to 2015 confirmed the return of socioeconomic grievances as the most important driver of protests across Europe (Kriesi et al., 2020). Within the economic protest cluster, political or ‘public’ protests ‘targeting the economic crisis management of governments’ clearly outnumbered the ‘private’ protests targeting ‘private actors, above all business corporations’ (Kriesi and Wüest, 2020: 280), by contrast to those that took place in the 1970s (Crouch and Pizzorno, 1978). Unfortunately, Kriesi et al.’s (2020) database does not record transnational protests, given its traditional country-by-country methodology. This motivated us to compile our own database (Erne and Nowak, 2023) to enable us to assess the role of the EU executives’ commodifying interventions by (draft) EU laws and by NEG prescriptions as drivers of transnational socioeconomic protests during the two distinct historical periods – before and after the EU’s shift to the NEG regime.

Our database captures transnational protest events related to socioeconomic grievances, including demonstrations, strikes, boycotts, and direct democratic European Citizens’ Initiatives (ECIs) (Erne and Nowak, 2023). Its geographical scope includes protests across all European countries irrespective of EU membership, except Turkey, Belarus, and Russia, which we excluded for practical reasons. We collected the data on these protest events from a wide range of European and national websites, newsletters, and media outlets specialised in labour politics published in English, French, German, or Italian. The selection of sources in these languages exposes us to the risk of missing some protests, but we are confident that almost all transnational protests are captured by at least one of our sources.²

Our analysis of transnational socioeconomic protests since 1993 included in our database (Erne and Nowak, 2022, 2023) had two goals. We aimed, firstly, to identify transnational collective action by unions and social movements and, second, to link these to pressures following from EU economic governance both before and after the establishment of the NEG regime. Trade unions and social movements are the main social actors examined in the area of contentious politics. When studying the making and operation of the NEG regime however, we also considered the activities and policy statements of employer associations.

Our data collection was multi-sited, as it took place at two main levels. At EU level, we looked at the interaction between EU institutions and European-level trade unions. Brussels serves not only as the main headquarters of EU institutions but also as the seat of the European Trade Union Confederation (ETUC) and of European sectoral trade union federations, such as the European Public Service Union (EPSU) and the European Transport Federation (ETF). Therefore, our Brussels field trips were the starting point for our investigation of transnational labour reactions to NEG. Furthermore, cognisant of the country-specific methodology and impact of NEG prescriptions, we also conducted fieldwork in the four selected countries of Germany, Ireland, Italy, and Romania, where we talked with representatives of national and sectoral unions on the topics of the impact of NEG on employment relations and public services and of unions’ counterreactions to NEG-driven interventions.³

In our data collection on trade-union and social-movement collective action, we applied a step-by-step approach aiming to map first trade unions’ views on NEG pressures and then their counterreactions to these pressures. In other words, we first explored trade unions’ positions regarding NEG pressures and then focused on their actions at transnational level. Regarding collective action, we distinguished between the formal engagement of trade unions with European institutions through technocratic mechanisms and more contentious forms of collective action politicising European economic governance (Erne, 2008).

We adopted a historical perspective and sought to capture trade union responses to EU economic governance both before and after 2008. For this purpose, we relied on a combination of sources. We drew on documents published by unions, including articles, policy briefs, press statements, and reports. We also conducted around 160 interviews with trade unionists, social movement activists, employers’ representatives, and public representatives at EU level and in the countries under analysis. We participated at events relating to the European Semester (e.g., the consultations with social partners on the Annual Growth Survey), union demonstrations, seminars and congresses (e.g., the 2019 congresses of ETUC, EPSU, and ver.di), and social movement actions (Table A1.3, Online Appendix). Our participation in these actions allowed us to gather further information through direct observation, informal interviews (Spradley, 2016), and the collection of documents otherwise not accessible online.

At the same time, during fieldwork at national level, we had to come to terms with the fact that NEG per se may not have been perceived by national trade unions as a factor directly impacting on national reforms. We noticed in more than one instance that sectoral unions delegate EU issues to general confederations to save resources or to ensure a unified view on European governance. Moreover, many interview partners had no direct engagement with NEG documents in their day-to-day organising work, but they had first-hand experience of how NEG-driven policies affected the employees and public service user groups that they represented. To talk about this impact, we drew on the categories identified in our conceptual frameworks (see Chapter 4) that had an immediate meaning for trade unions. For example, asking mid-level trade union representatives in the public sector in Romania about the impact of EU economic governance provoked a ‘don’t know or not relevant’ answer. By contrast, asking them about the impact of a specific NEG prescription, for example how they experienced and responded to expenditure cuts in healthcare, was a discussion opener. This approach also allowed us to link back our findings from the country-specific fieldwork sites to NEG prescriptions at EU level and make findings comparable across the different countries and policy areas examined in this book.

Finally, to get a comprehensive picture of transnational counter-mobilisations of unions and social movements in response to EU governance interventions, we drew on our transnational socioeconomic protest database (Erne and Nowak, 2023). In each empirical Chapters (6–10), we extracted from this database a list of protests in the respective policy areas. Having outlined our conceptual framework and research design, we now assess EU economic governance interventions and the countermovements that they triggered. In each ensuing chapter, we first assess the commodifying or decommodifying policy direction of vertical EU interventions before and after the EU’s shift to NEG and then analyse the transnational union and social-movement reactions to the EU’s economic governance interventions.