Transcript The Political Economy of Economic and Monetary Union

Internal policies II: Economic and
Monetary Union and Social Policy
Prof. Andreas Bieler
Structure of lecture
I.
The History of EMU;
II.
The mechanisms of EMU;
III.
The normative underpinning of EMU;
IV.
EU Social Policy;
I. The History of EMU
1. First attempts in the 1970s;
2.
The European Monetary System in 1979;
France within the EMS;
Important lesson for assessment of EMS as a whole: the
EMS led to a convergence of national economic policies
around a neo-liberal economic programme, partly due to the
direct pressure by the EMS, partly due to conscious political
decisions.
3. Economic and Monetary Union

1991 EMU is adopted as part of the Treaty of Maastricht;

Three stages:
Stage 1: preparation;
Stage 2: harmonisation;
Stage 3: implementation;

Final steps towards EMU;
II. The mechanisms of EMU
1. The convergence criteria:

the inflation rate is not more than 1.5 per cent higher than the
average of the three lowest inflation rates in the EMS;

the long-term interest rate is not more than 2 per cent higher than
the average observed in the three low inflation countries;

a country has not experienced a devaluation during two years
preceding the entrance in the union;

the government budget deficit is not higher than 3 per cent of its
GDP;

the government debt is not higher than 60 per cent of its GDP;
The mechanisms of EMU:
2. The tasks of the European Central Bank (ECB);
3. The accountability of the ECB;
4. 1997 Stability and Growth Pact;
Excessive deficit procedure;
Multilateral surveillance procedure;
III. The normative underpinning of EMU

loss of national economic policy autonomy;

neo-liberal economic policy is institutionalised;

EMU is part of a disciplinary neo-liberal project,

repercussions for economic and employment
policies;
The normative underpinning of EMU:

new constitutionalism;

trade unions become sidelined in the economic
policy-making process;

EMU serves mainly the interests of transnational
capital;
IV. EU Social Policy
1.
1992 Social Protocol attached to the Treaty of
Maastricht:

extension of Community competence in social policy area;

introduction of QMV in these areas;

possibility for Commission to ask social partners directly to
negotiate a directive on a particular issue;

the new British Labour government signed up for the Social
Chapter as part of the Treaty of Amsterdam in 1997;
EU Social Policy: Results of social dialogue.

1996 Parental Leave Directive;

1997 Atypical Work/Part-time Directive;

1999 Fixed-term Work Directive;

2002 voluntary Agreement on telework between social partners;

2004 voluntary Agreement on work-related stress;

2007 voluntary Agreement on harassment and violence at work;
EU Social Policy: Amsterdam Employment
chapter.

focus on labour market flexibility as a result of monetary and
economic policy focusing on low inflation;

co-ordination of national employment schemes;
In sum, common policies in the area of social policy and
employment are much weaker than in the monetary and
economic fields.
Social policy as a part of a market-building exercise rather
than as protective measures against market forces (see
role of ECJ)? (Leibfried 2006).