1
Governance in EU Social and Employment Policy: A Survey
George Pagoulatos (AUEB and ELIAMEP), Myrto Stasinopoulou (University of Oxford) and
Dimitri A. Sotiropoulos (University of Athens and ELIAMEP)
Abstract
This paper examines the social and employment policy governance in the European Union
since the European Employment Strategy and the Open Method of Coordination were launched.
It focuses on the role of this new mode of governance in obtaining the goals of social cohesion
and competitiveness, as set in the Lisbon Agenda. For this purpose, this overview includes, first,
a brief introduction to new modes of governance; second, an outline of the key characteristics,
actors and processes of the OMC and EES; third, a review of the strong points and weaknesses
of these modes of governance; and fourth an overall assessment of the impact of the OMC and
EES, which reveals potential reform directions that the enlarged EU may follow in the face of
future challenges.
Last revision: May 2007
. Introduction
The literature on new governance sprang out of the realisation that at least since the 1980s the
way advanced industrial societies were governed has been gradually modified. For example,
new public-private partnerships and networks of NGOs, associations and state agencies
replaced or complemented central government institutions, such as ministries, in policy-making
and implementation, while supra-national actors, such as the EU or the World Trade
Organization, also assumed significant roles in various policy areas. However, the changes
brought about by new governance may have been exaggerated. New governance structures
may not be understood as a substitute for traditional government. Rather they constitute a mode
of steering societies which is complementary to traditional government (Peters and Pierre
2006). Regardless of the extent to which central government in contemporary European states
has been hollowed-out and the possibility to speak of governance without government (Rhodes
1996), certain functions are common to both traditional state and new governance structures.
Such functions include setting priorities and selecting among them, resolving conflicts both at
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the programmatic level and at the level of social interests and implementing policy decisions
(Peters and Pierre 2006: 215-216).
The study of the manner in which traditional state structures have handed the execution of the
aforementioned functions over to new governance structures has primarily focused on public
policies other than social and employment policies which this paper is about. The same shift
from traditional to new modes of governance has started from the level of the central, regional
and local government and only later has it moved to the EU level. It should then be interesting
to find out what we could learn about new governance through the study of social and
employment policies, not only at the national, but also at the supranational (EU) level.
Social and employment policies are but two examples of a larger trend of shifting to new modes
of governance in EU policy areas, which characterizes both policy-making and policyimplementation.
The new modes of governance reflect a shift away from hierarchical policymaking,
which privileged a `top-down' fashion of decision-making and which is gradually being
replaced by more consensual modes of decision-making; a preference for delegating some
competences to relevant organizations and collective actors (e.g., state agencies, social
partners); and an emphasis on including all relevant stakeholders (Risse 2004). In the context of
new modes of governance policy-implementation is also meant to be consensual, delegated
and inclusive. Behind these shifts there is a realization that old-style policy-making and
traditional `hard law' regulation may not work in a complex environment consisting of 25 (now
27) EU member-states each of which may additionally be domestically organized in multilayered
governing structures.
Keeping these considerations in mind, in the remaining of this paper we are going to briefly
discuss social and employment issues in EU before and after the Lisbon agenda. We will
emphasize the period after 2000 and we will present the key characteristics of the Open Method
of Coordination (OMC) and the way it has evolved. We will list the main actors involved in this
new mode of governance and we will assess the major strengths and weaknesses of the new
process. We will touch upon the effects of OMC on EU enlargement and we will suggest how
EU social policy is being overall transformed. In the prior to last section of the paper we will
repeat the same exercise for the European Employment Policy (EES), assessing key
characteristics, processes, key actors, strengths and weaknesses, in addition to challenges the
EES faces today and the reform paths this policy may take in the future. In the last section of
the paper, we will assess the advantages and disadvantages of the OMC and the EES. We will
suggest three things. First, that these two new modes of governance have not altered traditional
governance structures, but have somehow become complementary to them; second, that,
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despite their mixed performance, both OMC and EES are part and parcel of today's EU policy
repertoire; and, third, that there is ample room for improvement for both modes of governance.
II. Social and employment issues in EU before the Lisbon agenda
Although the need for some European treatment of social and employment issues has been
recognized ever since the European Community was launched, the role attributed to the
relevant policies at EU level, as well as the content and the limits of the European "social
space", have varied across time. During the years that followed the Treaty of Rome, the main
themes of European Social Policy were related to social and health services that had a market
dimension and focused mainly on the protection of workers (O'Connor, 2005). At that time, the
dominant trend among the six Bismarckian welfare states was to prevent market distortion
(ibid.). In the 1980s, this corrective-to-the-market dimension was challenged by the idea that
social policy should rather be viewed as a counterbalancing factor to the process of market
building.
By 1981 the "golden age" of European social policy had passed, the first two enlargements had
already taken place, adding to the picture three diverse welfare state models (Scandinavian,
Anglo-saxon and Southern European), while the neo-liberal movement had introduced
deregulation and privatization policies in a context of economic internationalization (Pochet,
2005 : 9-10). In 1986, the Single European Act formalized the European priority of the creation
of the internal market by removing barriers and enhancing harmonization. At that point, Jacques
Delors argued that the single market needed a social dimension (social dialogue and
redistributive expenditure) if it were to be acceptable to those who would initially lose out (Bache
and George, 2006: ch.24). Although the SEA was not finally complemented by a significant
social programme, Delors' White Paper Growth, Competitiveness and Employment contributed
in recognizing the interrelation between these three targets, placed employment policy within
the context of European economic integration and acknowledged the existence of common
roots across member states to unemployment problems that called for common action.
Ultimately it indicated a shift "from harmonization to the definition of pertinent policies" paving
the way for a soft-law Community approach (Régent, 2002: 3)
The way from the Maastricht Treaty to the Lisbon Strategy revealed the limits of EU
competence and capacity vis  vis the European social dimension (Leibfried, 2005). In the early
1990s the existing strategies in several countries were dealing insufficiently with rising
unemployment and low employment rates, population ageing started to put pressure on pension
systems, whereas fiscal resources were limited. The British veto during the Maastricht
negotiations blocked the introduction of a "Social Chapter" in the Treaty, leaving the remaining
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11 member states with a Protocol on Social Policy (de la Porte et al, 2001). Soon, the diversity
of economic growth and social standards among member states triggered the "historical clash"
between the divergent interests of social partners ­ETUC and UNICE. This doomed the newly
institutionalized (Maastricht, 1992) European Social Dialogue to a plain intergovernmental
compromise in the European Council (Garcia et al, 2004). Still, the Maastricht Treaty is said to
have established avant la lettre a new governing mode, the Open Method of Coordination
(Hodson and Maher in Scharpf, 2002). In fact, the monetary union project (via the Broad
Economic Policy Guidelines) created a spillover of methodologies and aspirations and led to the
adoption of multilateral surveillance to employment policy-making. However, the efforts of the
Essen European Council (1994) to set the framework of an employment strategy at EU level
received insufficient political consensus. As Régent (2002: 4) notes:
"..the search for the right model combining non-binding tools with an effective Community
employment policy was still left open. In this period, soft-law was less a legal tool promoting
convergence of different policies than an instrument to manage social policy pluralism"
By the late 1990s, a new sociopolitical context was crystallizing. The three new member states
(Sweden, Austria, Finland), who defended a European solution, and the centre-left governments
in the UK, Italy and France, all felt an increasing public pressure against the "link of economic
integration and layoffs" (Mosher and Trubek, 2003), at a period of growing poverty and
inequality rates, low employment and faltering economic growth. The approach of radically
limiting social protection was virtually a non-option for many member states, while the possibility
of Europeanization of the social and employment policies had to confront an already growing
anti-Brussels backlash and the diversity of welfare state traditions and aspirations (ibid.).
Given the interaction between the above mentioned internal driving forces and the impact of
growing global competition, EU member states reached an agreement to move from top-down
uniform rules and minimum requirements, to "more flexible and participatory approaches and
semi-voluntary forms of coordination" (ibid.: 63). In the Amsterdam Treaty (1997) the
institutional framework set for the European Employment Strategy (EES) radically differed, in its
techniques, from the conventional regulatory methods. By 1999 the centre of gravity had moved
from labour market restrictions that protected the rights of workers (insiders) to opportunities for
work and training for the unemployed (outsiders) (Bache and George, 2006: ch.24).
Since that time, discussions about an emerging EU social model have intensified. This model
combines aspects of traditional compulsory state-funded social protection with voluntary, mainly
private additional schemes of social security. The model is reflected in the Treaty of Amsterdam,
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in the adoption of soft methods of making national policies converge, such as the OMC, and in
a series of repeated concerns of the European Commission in the employment and social policy
areas, such as the following six `policy headlines' (Commission of the EC 2003: 12-22):
* The creation of more and better jobs
* A new balance between individual security and flexibility
* The fight against poverty and social exclusion
* The linking of economic performance with solidarity
* The promotion of gender equality, and, additionally,
* The strengthening of social policy aspects of East European enlargement
The above headlines reflect the Lisbon strategy, set out in 2000, to create out of current EU a
competitive and dynamic, European - wide, knowledge economy.
The institutionalization of soft law, as an integral part of the EES, opened the way for the
introduction of the OMC in social policy, a development which gained momentum in the Lisbon
summit of 2000. The Lisbon strategy sought to reinforce the social pillar of European
integration, and gradually (Nice, Stockholm Summits) initiated the introduction of the OMC in a
number of "sensitive" social policy areas. Ever since the Amsterdam Treaty and the Lisbon
Summit, employment and social policy strategies have tried to respond to the major challenges,
defined on the European agendas, in the context of globalization and EU enlargement.
III. Social policy and economic competitiveness in the Lisbon agenda
The famously overambitious goal for 2010 set for Europe at the Lisbon Council was "to become
the most competitive and dynamic knowledge-based economy in the world, capable of
sustainable economic growth with more and better jobs and greater social cohesion." The
European Council agreed to devote serious efforts in "promoting the social dimension of
economic growth" (European Commission, 2005; Collignon et al., 2005), in order to deal with a
number of weaknesses in the European economy and respond to the challenges of a globalized
world economy. Social policy was officially recognized as a "productive factor" (O'Connor,
2005). Competitiveness and social cohesion, placed at the kernel of the Lisbon Agenda,
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affirmed the close interplay between economic, employment and social policies. The move
"from employment-focused social policy to social policy that is still employment-anchored but
has broader objectives and redistributive implications in the context of labour markets
characterized by increasing levels of poor-quality atypical work that impact on poverty and
social exclusion" (O'Connor, 2005: 354) searched to reconcile the priorities of social democratic
solidarity and market flexibility (Rhodes, 2005).
The main issue at stake was the ability of the European Social Model to provide significant
"added value" to the national policies. Two central concepts entered the political and academic
discourse: the modernization of the European Social Model and the synchronization of
employment, social and economic policy coordination processes. Two instruments were agreed
upon for the implementation of the Lisbon strategy (Ferrera et al, 2002): (a) the orchestrating
role of the European Council and (b) the OMC as "the methodological paradigm for European
Social Policy" (Garcia et al., 2004). The soft coordination by objectives and the spreading of
best practices in the social policy field aim at deepening economic integration and at grasping
the opportunities and avoiding the threats by globalization and enlargement (Sapir, 2005).
Why was OMC introduced in Social Policy: key characteristics and process
In the social policy realm the logic of pure integration and the traditional Community Method are
challenged by parameters such as the wide diversity (institutional features, aspirations, norms)
of national welfare states, or the unwillingness of national governments to transfer competences
to the EU level, in a field of major electoral significance (Leibfried, 2005) and political
accountability (Scharpf, 2002). Moreover, the realm of social policy deals with sensitive
questions (Régent, 2002) for national populations, who ­after all- are rather critical to Brussels'
policies so far. Still, the development of social policy is not a purely national concern, due to the
spillover of the EU market-building process, and it cannot be left to the member states alone,
given the consequences of employment, social protection and cohesion policies for the
economic, monetary and labour market policies of the EU (ibid.). After all, welfare states acted
"independently but in parallel over a long period of time", where parallel reads as common basic
features (social and economic citizenship and employment rights) as well as common
challenges shared by member states (Wickham, 2002: 20). Equally debatable is the
effectiveness of pure co-operation in the face of common problems asking for common solutions
by governments whose "traditional policy toolkit" is either ineffective ­constrained as it is by
EMU (the Stability and Growth Pact) and the impact of global economic and financial forces
(O'Connor, 2005)--or rendered far too costly (Leibfried, 2005). In the context loomed the
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economists' wide mistrust (since the 1980s) of the effectiveness of "active demand
management". Under the influential Lucas critique, the "tool kit" available to governments was
not as rich and effective as assumed in the 1960s and 1970s. This was also an additional
argument against installing an "economic government" at the EU level.
In the Lisbon Summit the national left-of-centre governments and the EU authorities recognized
the necessity of at least demonstrating some joint action on sensitive social cohesion policies.
Scharpf (2002: 652) sharply describes the authorities' dilemma:
"To ensure effectiveness, they need to assert the constitutional equality of social-protection
and economic-integration functions at the European level - which could be achieved either
through European social programs or through the harmonization of national social-protection
systems. At the same time, however, the present diversity of national social protection
systems and the political salience of these differences makes it practically impossible for them
to agree on common European solutions."
Hence the OMC emerged as an alternative solution, which can be viewed as a compromise
between two logics, of pure integration and of simple cooperation (de la Porte et al., 2001). This
"learning process for all" is thought to lead to a convergence in policy areas where a uniform
European "top-down", hard-law solution is not feasible, and still "openly" coordinated national
policies are more than desirable. In the absence of a firm commitment to a shared social policy
vision and a leading model (as in the single currency process) (Wickham, 2002; de la Porte et
al, 2001), OMC was launched in order to reinforce the social pillar of European integration. Yet,
according to the Commission, OMC is not set to substitute but to complement Community
action, especially in areas with limited scope for European legislation. As a form of
supranational governance, this method attempts to organize at European level the exchange of
best practices and experience, by means of soft regulation. In the new global context, OMC not
only respects national diversity but seeks to profit from it using benchmarking and peer review
processes (Régent, 2002). At the heart of this decentralized yet carefully coordinated iterative
process lies an emphasis on transparency, accountability, inclusiveness and effectiveness,
which are features relevant to the principles of good governance (de la Porte et al., 2001). The
main characteristics of this policy-learning / policy-coordination process are (Bache and George,
2006; de la Porte et al., 2001; Metz, 2005):
1. Policy choices remain at national level. Legal responsibilities at supranational level (European
welfare law, European Court of Justice) are explicitly excluded. Still, national policies are
acknowledged as matters of common concern.
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2. Co-ordination is decentralized and open to a wide range of actors in the private and public
sector. It lacks a Treaty basis and it is voluntary and non-binding. There are no formal
sanctions or constraints.
3. The European Council and the European Commission have an important role, while there is
minimal role for the European Parliament.
4. There is no Brussels welfare bureaucracy, nor a "European social budget", in the sense of
direct taxes or contributions to back the initiatives taken through the OMC.
By 2002 the OMC covered many social (and other) policy areas, and in 2005 Metz used the
term "OMCs" to denote the qualitative differences between these "open methods of
coordination" (Metz, 2005). OMCs differ in their objectives, their procedural characteristics and
their institutional setup (Metz, 2005: 7). Nevertheless, in its general form, the OMC process,
"designed to help Member States to progressively develop their own policies, [this method]
involves:
1. fixing guidelines for the Union combined with specific timetables for achieving the goals which
they set in the short, medium and long terms;
2. establishing, where appropriate, quantitative and qualitative indicators and benchmarks
against the best in the world and tailored to the needs of different Member States and sectors
as a means of comparing best practices;
3. translating the guidelines into national and regional policies by setting specific targets and
adopting measures, taking into account national and regional differences;
4. Periodic monitoring, evaluation and peer review organised as mutual learning processes."
(Lisbon European Council, 2000: paragraph 37)
Clearly, benchmarking as a method was not originally invented by the Commission. Before
being adopted by the EU, it was widely practiced in the corporate world as well as international
organizations. Notably, the OECD from the 1980s used to examine structural adjustment
policies much along the same lines as the Lisbon agenda and also produced considerable
amount of work on a number of social policy issues and indicators. There was clear added value
though in applying the benchmarking methodology within the EU: a framework allowing closer
intergovernmental coordination; a better interface between the intergovernmental/supranational
and the national level; the possibility for a more comprehensive examination of macro- and
microeconomic policies; higher political visibility ­or at least so it was assumed.
Chalmers and Lodge (2003) identify two sets of dynamics within the OMC process: a top-down
"politics of strategization", where the development of ideas takes place, and a bottom-up
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"politics of reaction", where the national actors decode the guidelines according to national
differences, implement policies in line with the principle of subsidiarity, and provide feedback. In
the absence of national or common recommendations, the introduction of Joint Reports and
Community Action Programmes at the final stage of each cycle of this iterative process is
indispensable in assessing progress and good practices. Still, the success or failure of the OMC
depends crucially on the efforts of national governments throughout the OMC process, the
extent and quality of public scrutiny, and the ability to identify best practices (de la Porte et al.,
2001). Hence, benchmarking, along with the definition of indicators, plays a key role. A clear
example of the importance that the Commission attributes to indicators is that, from 2003,
member states have to adopt the commonly agreed indicators (reflected, for example, in the
ESPROSS data), while national specificities would be reflected by a third level of optional ---non
harmonized--indicators (O'Connor, 2005).
The main actors
The OMC provided "a new form of institutional ordering" (Chalmers and Lodge, 2003) in the
Union's policy-making by conferring a different (more / less central) role to traditional policymaking
actors and by introducing new ones. The Council has the final say in evaluating the
process and in confirming the guidelines, the Joint Reports and Community Action
Programmes. It also took the initiative (June 2000) to give a formal status to the Social
Protection Committee, which has given an advisory role. European Commission, the
"orchestrator" of OMC, coordinates the actions throughout the process, identifies the relevant
issues and "maps relevant actors" (Bache and George, 2006: ch.24). It also contributes in
assessing the NAPs, in drafting the new guidelines, and in undertaking direct actions in areas
such as social inclusion. Of equal significance is its role in organizing the load of information,
experts' and other stakeholders' comments, as well as the peer review and mutual learning
processes (de la Porte et al., 2001). Although the Commission's role is formally advisory, it
exerts significant influence since its decisions often coincide with the Counciľs decisions
(Smismans, 2004). The European Parliament retains only a certain advisory role mainly through
its Committee on Employment and Social Affairs1
, while the ECJ is explicitly excluded from the
process. Still, its decisions -along with those of the Ecofin Council- often have a strong impact
on the definition of benchmarks and guidelines (Leibfried, 2005).
1
Nice and Stockholm Summits acted closely in alliance with the Parliament to extend and
deepen the OMC in several policy areas (Rhodes, 2005).
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The considerable formal role of supranational actors in the OMC notwithstanding, the
effectiveness of this method relies fundamentally on actions and initiatives taken at the national
level. National actors play a critical role throughout the OMC cycle "as interpreters between subnational
actors and organizations on the one hand, and the array of good (and bad) practices
across the other member states on the other hand" (de la Porte et al., 2001: 300). Other
stakeholders at national level (social partners, NGOs, grassroots organizations and think tanks)
are given the role not only to spread knowledge but also to modify appropriately relevant
indicators (O'Connor, 2005).
The OMC as a new mode of governance: strong points and weaknesses
It has been argued that one of the main assets of the OMC is its open and decentralized nature,
which presents new potential for bottom-up participatory governance. By "reaching out to
citizens through regional and local democracy" the OMC is set to create a profoundly
accountable and inclusive policy making process (Régent, 2002, citing the Commission).
Equally important though is the added value that OMC may offer as a soft regulatory method. It
is suggested that such "soft law" mechanism is superior to the rigid instruments of the traditional
regulatory toolkit when dealing with diverse national political environments and priorities. It is
more likely that member states will reach a consensus and make commitments in policy areas
where they are traditionally unwilling to hand competencies over to the EU (Mosher and Trubek,
2003; Busby, 2005; Ferrera et al., 2002), as long as the convergence of policies is not "dictated
by Brussels" but emerges through a trial and error process and mutual multi-level policy learning
(Biagi, 2000, in de la Porte et al., 2001). As a result, OMC has a dynamic of initiating progress
where the prospect of further legislation would undermine severely the already injured
legitimacy of the European Union (Bache and George, 2006: ch.24). Besides, it might be argued
that OMC not only rescues but also enhances European and national authorities' political
credibility, by revealing the positive effects of the European integration on domestic policymaking
(de la Porte et al., 2001).
Another important advantage of OMC is its flexible and iterative character which allows for
constant adjustment and learning in a complex global framework, and thus, for an "opening up
of the policy standard setting process" (Chalmers and Lodge, 2003: 11). Yet, OMC has in-built
follow up mechanisms that prevent it from becoming a "fully open means of intervention"
(Régent, 2002: 23). OMC has some binding potential, assuming good functioning of naming and
shaming mechanism, learning and peer review processes. "Soft law may be harder than you
think" (Trubek and Trubek, 2005: 10), given that soft regulation at the EU "is not just a provision
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but also a process which provides a soft frame to hard law interventions and has its own way of
sanctioning" (Régent, 2002: 23). Consistent with the flexible and decentralized qualities of OMC
is the focus on outcomes rather than means, which is after all a required characteristic in view of
the much treasured subsidiarity. O'Connor (2005) notes that the OMC facilitates the
maintenance of the subsidiarity principle while providing space for policy learning.
Policy learning is another positive feature of OMC tightly linked to the opportunities for
decentralized and deliberative experimentation (Chalmers and Lodge, 2003). National
authorities confront new policy-making paradigms and familiarize themselves with new
aspirations and vocabularies (Trubek and Trubek, 2005). In other words, OMC has mechanisms
that destabilize existing understandings and foster national discourse transformation (Mosher
and Trubek, 2003). Through this knowledge-generating process, innovative solutions to existing
problems are bound to occur.
Nevertheless, the mid-term review of the Lisbon strategy, the Kok report and a growing
academic literature have highlighted a number of weaknesses in the OMC that question its
legitimacy, effectiveness and practical value. The first line of criticism addresses the legitimacy/
democratic deficit of OMC. The weak role of the European Parliament, the
bureaucratic/"executive character" of OMC (Metz, 2005), and the limited, as compared to the
anticipated, involvement of relevant stakeholders, reveal a top-down and mainly governmental
process throughout the OMC cycle. Collignon et al. (2005: 12) speak of a "depoliticization of
decision making" since decisions are made "within obscure networks" at the European level by
national governments and executive committees. This threat is made even more explicit in the
absence of clearly institutionalized "open access" to stakeholders, which hinders the
participation of a wide range of new actors other than the established societal ones (Chalmers
and Lodge, 2003). After all, the absence of some form of control is a major flaw for a method
like OMC, which is based on decentralized implementation mechanisms (Collignon et al., 2005).
Smismans (2004), paraphrasing the OMC initials, spoke of a Method of Centralization, which is
Open "merely as being open-ended in its outcomes" and not in the sense of the assumed
bottom-up participation and public scrutiny.
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In terms of inter-institutional balance, it has been argued that the role of the Commission, being
pivotal, is becoming even stronger. This is particularly more so in sight of Lisbon II, where a
stronger steering and co-ordinating role among policy areas is needed (Borras, 2006). For
some, the Commission has developed in practice an informal `right of initiative' (Deganis, 2006).
From this point of view, enlargement has reinforced the status of the Commission (de la Rosa,
2005).
Another major line of criticism scrutinizes the weaknesses of mechanisms upon which the
effectiveness of OMC is based. Benchmarks and targets are often judged as too vague and too
many or even nave given the diverse welfare priorities, the different starting positions of
member states (Chalmers and Lodge, 2003), and the institutional arrangements displayed in the
varieties of capitalism (Hall and Soskice, 2001; Chalmers and Lodge, 2003). According to de la
Porte et al. (2001), even if similar objectives are assumed, benchmarking risks ignoring crucial
differences among member states, and therefore, any learning process based principally on
benchmarking is hazardous (Lundvall and Tomlinson, 2001, in de la Porte et al., 2001).
Smismans, taking one step further from the above mentioned argument on the "Open Method of
Centralization", claims that in the absence of a decentralized participation, the benchmarking
exercise at European level may be "rather a threat for rather than a radicalization of the principle
of subsidiarity" (Smismans, 2004 : 14).
Another flaw is the weak and insufficient toolkit of the OMC. Although statistics is central in a
"learning by doing" method where policies are shaped experimentally, the feedback
mechanisms (Eurostat, national governments) provide vague and often contradictory data
(Chalmers and Lodge, 2003). This "data deficit" (O'Connor, 2005) is crucial in developing
accurate indicators, targets and benchmarks. Chalmers and Lodge (2003) also mention that
even when indicators are defined, the OMC process is unlikely to relate performance to results
due to the lack of appropriate knowledge systems, which would provide policy makers with an
aggregate and coherent pool of information on good practices. Thus, the identification of
measures deserving a "good practice status" becomes a thorny issue (Ferrera et al., 2002).
Overall, there is "no convincing system of categories as a methodological tool to identify
promising fields of application".
The peer review system is judged insufficient for both exogenous (differences in economic
conditions, national traditions, inertia, externalities) and endogenous reasons (collusion of
peers) (Collignon et al., 2005). Futility of peer group pressure occurs partly due to the little
incentives of naming-and-shaming among peers. The uncomfortable finger pointing is not
widespread in policy evaluation (de la Porte et al., 2001). After all, peer review is administered
13
passively, since what the member states mainly do -taking turns in exerting and undergoing
control- is to self-assess the achievement of their own NAP goals (Metz, 2005). Moreover the
whole process is rather symbolic since it is too truncated to create useful feedback (Mosher and
Trubek, 2003). Equally important is the perverse effect that might arise from a peer review
exercise that puts the emphasis mainly on quantitative (rather than qualitative) evaluation: the
exercise might become "counterproductive as paradoxically it might encourage governments
that fear a negative evaluation of their performance not to engage in long term reforms that tend
to be politically costly" (Collignon et al., 2005: 15) or to overestimate their performance ("window
dressing") and to respect only in short term the targets set.
Overall Assessment
Two crucial questions need to be answered. Has OMC lived up to the expectations? And, at the
end of the day, is OMC suitable for the European social policy? In the absence of sufficient
proof of indisputable causal relationship between OMC processes / initiatives and social policy
modifications, the successes and failures of the OMC are still debatable.
On the one hand, it is reported that OMC has generated noticeable change over the last few
years. The main contributions of OMC is the increased awareness being given to enhancing
social inclusion by national governments (Bache and George, 2006: ch.24), and the increased
understanding about the main features and causes of poverty and social exclusion
(http://www.europa.eu.int). Bache and George (2006) also underline that OMC has allowed
progress in social policy areas where the traditional regulation methods confronted the lack of
any consensus over priorities and an anti-Brussels reaction. Leibfried (2005) reports "several
instances" of innovative adjustment and successful policy learning in countries that achieved
high levels of competitiveness and employment without sacrificing their social-policy ideals.
Ferrera et al., (2002) confirm that even "the patchy and unsatisfactory 2001 Naps/incl" have
contributed in combating social exclusion by providing bottom up information, prompting the
creation or consolidation of monitoring and projecting structures, testing the adequacy and
identifying weaknesses of policies. On the other hand, there are statistics indicating that there
has not been a uniform progress in all countries or across all policy areas (Collignon et al.,
2005). The rate of transposition of the Lisbon directives since 1999 has been low, whereas a
very limited number of the directives transposed were correctly implemented (ibid.). In fact the
implementation of directives in social and employment policies has been particularly low.
Chalmers and Lodge (2003) also report that the coordination process has not been fruitful,
14
partly due to the fact that OMC, put into practice, was not a coherent strategy, but a "tactical
response with limited manoeuvre to the new political economy of the Eurozone" (ibid.:2).
Still, it is difficult to assess the effectiveness and suitability of OMC in social policy unless these
concepts are redefined to include changes in policy outlook, altered ways of thinking, the
emergence of new alliances and a new equilibrium of national social policy making (Mosher and
Trubek, 2003; Rhodes, 2005)). OMC provides new room for innovative social policy in times of
diminished authority at national level and weakness at European level (Leibfried, 2005). This
room might be restricted to a lowest common denominator, but this still is an important change
"when the premium for the Commission is to make a start on building an acquis communautaire"
(Bache and George, 2006: ch.24). Ultimately it could lead to legally binding decisions by
creating "a climate of conformity to a legal norm" (Busby, 2005: 34) and by providing an opening
for synergies between soft regulation and framework directives (Scharpf, 2002).
However, hard-law proponents claim that opportunities for the necessary hard legislation may
be crowded out (Trubek and Trubek, 2004). Soft coordination has occurred "at the expense of
top down harmonisation of minimum legal standards", a fact that jeopardizes the European
social policy influence on national legal systems (Busby, 2005: 36). Moreover, OMC is judged
insufficient in areas of social and employment policy characterized by strong negative
externalities (Collignon et al., 2005). More radically, OMC is characterized as "an incoherent set
of welfare targets and strong neo-liberal policy dynamic" which fails to take into consideration
the far-reaching alternatives welfare states may suggest (Chalmers and Lodge, 2003). It is seen
as a second best option, which allows only for supply side structural reforms (Collignon et al.,
2005) and rewards the member states which are loyal to this neo-liberal agenda or those
already meeting the objectives set (Chalmers and Lodge, 2003).
Enlargement
The Eastern enlargement has added a new ­fourth- welfare model, which combines elements
from Southern countries (state intervention) with English/Irish features (weak levels of
unionization and firm representation) (Rhodes, 2005). The accession of this model affects
significantly social policy-making at EU through OMC at least in the following ways.
Enlargement has further complicated the issue of prioritizing social objectives (Metz, 2005), and
has created doubts whether there is "sufficient commonality in social policy frameworks and
outcomes to allow realistic policy learning and convergence in key social outcome indicators"
(O'Connor, 2005). Some of these countries will need a period of 20 to 40 years to catch up with
15
average EU income levels, while at the same time they have to find ways to increase their
productivity, combine these gains with job creation, and improve their performance in terms of
"knowledge economy" (culture of life-long learning and training) (Barysch, 2005). Moreover, the
Eastern enlargement has strengthened the bargaining power of employers, who increase their
pressures for wage restraints, given the "availability of million cheap workers on their doorstep"
(ibid.: 6). Overall, there is increased concern on how the new distribution of power among the 27
member states will work in practice, under the modified QMV.
Nevertheless, it is argued that the enlargement creates new roles for the Lisbon Strategy and
the implementation of the OMC in social policy. Central and Eastern European countries share
important social problems and reform challenges in sensitive social policy areas (ageing
populations, low employment rates, high unemployment rates and regional gaps). Thus,
although the accession countries have increased the heterogeneity of the European Union,
which seems to be an obstacle in terms of policy coordination, enlargement has also stressed
the need for and the positive role of policy learning through OMC. Ferrera et al. (2002: 232) note
that the Agenda, placing the social inclusion process in the acquis communautaire, provided for
actions to help the applicant countries to implement relevant policy objectives.
Reforming European social policy making
Several lines of social policy reform have been suggested, in the light of contemporary
challenges of the enlarged European Union that visions itself as a competitive and knowledgebased
economy with increased social cohesion. On the one hand, there are several proposals
on how the OMC ­per se- could become more effective in more social policy areas, other than
employment and social inclusion where OMC has been applied. Streamlining and modernizing
the OMC involves reconsidering both its objectives and its toolkit. The need for simplification
and rationalization of objectives, already recognized in the Lisbon mid-term review, should also
be satisfied when further extending or deepening the scope of OMC through QMV in areas such
as poverty, social services, discrimination and health (European Commission, 2005). Thus, it is
urgent that criteria for identifying potential fields of application be agreed upon (Metz, 2005;
Scharpf, 2002). Furthermore, OMC processes should also have both an intergenerational
approach, focusing on the intertemporal aspect of dynamic phenomena such as migration or
pensions (European Commission, 2005), and an inter-national approach, not only among the
EU member states but also with third countries. Moreover, public scrutiny and democratic
debate should be openly held at least annually, and the role of social NGO networks should be
16
enhanced (Social Platform, 2005). Finally, a more active parliamentary involvement has been
proposed as a response to the executive character of OMC (Metz, 2005).2
On the other hand, another approach suggests that European Social policy-making could only
be effectively reformed, if hard and soft regulation mechanisms were combined. Trubek and
Trubek (2005) support De Burca's view that OMC might be a powerful tool in creating real
rights, especially when used in conjunction with the EU Charter of Fundamental Rights. In this
vein, OMC in some cases (political and civil rights) would complement judicial action and in
others (economic and social rights) would substitute for it. However, an important part of recent
literature calls for a more definite institutionalization of open co-ordination in the Treaties, in
order to make it more binding and transparent (Metz, 2005). Still, constitutionalization of OMC,
in its present form, might not be a sufficient solution for what Scharpf (2002) calls "constitutional
asymmetry of social and economic policies". Scharpf (2002) proposes instead a combination of
framework directives addressed to subsets of member states with similar policy directions and
binding minimum floors corresponding to national conditions.
IV. The European Employment Strategy: basic elements, processes, key actors
The European Employment Strategy is considered to have arisen out of a spill-over of or a need
to counterbalance the EMU, and out of the need to deal with key issues of common concern
among all member states irrespectively of their industrial relations system (Busby, 2005;
O'Connor, 2005). Closely correlated with the overarching goal of improved economic
performance and competitiveness, EES has been the forerunner of OMC, but has developed in
parallel and often overlapped with social policy (Rhodes, 2005). Still, it possesses two qualities
2
Some doubts have been expressed on whether the democratization of OMC can be dealt
with in terms of an improved role for the EP (Collignon et al., 2005). Proposals have been
made for a parliamentary dimension to the OMC, either national (Duina and Raunio, 2006), or
combined national and European (Tsakatika, 2006).
17
that distinguish it from any other OMC process: it has a Treaty base and incorporates (national
and common) recommendations issued by the Commission (Smismans, 2004). Goetschy
(1999) identified three main objectives of the EES as set in the Amsterdam Treaty: to increase
the legitimacy of European-level action; to enhance the efficiency of Social Europe vis  vis the
opposition to the implementation of directives and the sluggish progress in social partners
negotiations; and finally to accelerate national employment reforms.
The Amsterdam Treaty, borrowing key elements from the economic convergence methodology,
set the framework for EES, which was put into practice in the Jobs Summit (Luxembourg 1997).
EES, a multi-tiered, flexible, decentralized and iterative process, became the model of nonbinding,
sanctions-free management by objectives. During its first phase of implementation
(1997-2003) EES was organized around four main objectives (employability, entrepreneurship,
adaptability and equal opportunities) and was driven by some twenty guidelines (Régent, 2002).
Since 2003, three main modifications have taken place (Rhodes, 2005): First, there has been a
rationalization and simplification towards ten "results oriented" priorities, based upon three
objectives (full employment; quality and productivity at work; social cohesion and social
inclusion). Second, the peer review process focused more intensively on the implementation of
the employment recommendations (King, 2003, in Rhodes, 2005). Third, the modified timetable
allowed adequate time for the European Parliament to prepare its opinion for the annual June
European Council. Recently (2005) EES was revised to improve coordination between member
states and the European institutions, and to synchronize more effectively employment policies
with macroeconomic and microeconomic policies of the EU (http://www.europa.eu.int). This new
EES, which covers a three year period, has the same procedural characteristics as its
forerunners: a stage of policy formulation, a stage of policy implementation and a stage of policy
evaluation (Integrated Employment Guidelines, National Reform Programmes, Joint
Employment Report, Recommendations, EU annual progress report).
The key actors of EES are the Ministers of Employment and Social Affairs who have the final
veto point through QMV, and the European Commission (Rhodes, 2005). The Council of
Ministers has the final word on the Employment Guidelines, Recommendations, Evaluation of
member states submissions and the Joint Employment Report. The European Commission
(coordinator) draws the proposals for all the above and co-decides, together with the Council,
the Joint Employment Report. It has also been suggested that the European Commission acts
as a "norm entrepreneur", which not only sets the agenda but also has the ability to influence
the preferences of member states (Schmidt, 2000, in de la Porte and Pochet, 2004). The
European Council evaluates the situation of employment at EU level and endows with political
guidance the Commission and the Council. The European Parliament has a mere consultative
18
(and until recently marginalized) role, as is also the case for the representatives of social
partners. Other mandatory consultative participants are the national partners, the Economic and
Social Council, the Labour and Social Affairs Council, the Employment Committee, and the
Committee of Regions. National governments have the most important role in the proper
implementation of the Guidelines. They formulate and adopt the NAPs for Employment and
submit their implementation reports to the Commission. Finally, the involvement of stakeholders
in the formulation of NAPs and the national evaluation process depends largely on the internal
policy structure of the member states.3
The EES impact on member state policy
The five-year review of the EES process (2002) included "national impact evaluation studies" by
the member states and "an aggregate assessment of labour market performance at EU level" by
the Commission. The creation of 10 million new jobs and the reduction of 4 million unemployed
were explained as consequences of more proactive approaches undertaken by a number of
member states that focused on the needs of the unemployed and provided training, education
and tax incentives (Busby, 2005). Moreover, EES is thought to have had the most significant
influence at EU level on equal opportunities policies (Rubery, 2002, in de la Porte and Pochet,
2004). However, the five-year review revealed that in most cases there was no uniform impact
across countries (Mosher and Trubek, 2003; Régent, 2002). For example, little change was
reported in the Netherlands, which already had an advanced starting point, and in Italy, which
accredited to EES some "reform stimulation" but insisted on a more neo-liberal approach and
subsidiarity. France and Greece reported significant changes in policies (e.g. real employment
gains) and in policy making (deepened social dialogue, focus on long-term reforms, (ibid.) and
inter-ministerial cooperation (Régent, 2002).
Since the EES confers all responsibility for the elaboration and implementation of NAPs to
national governments (Garcia et al., 2004), its varied impact across member states is mainly
explained by the different responses of the national authorities to the EES objectives. The
divergent national welfare systems, the varying estimations on the appropriate degrees and
levels of regulation, and distinct industrial relations systems account for the inertia/ resistance or
readiness of member states to take in EES recommendations when designing and
implementing the NAPs. Busby (2005) notes that member states with least regulated labour
markets are not expected to incorporate eagerly to their policy priorities EES objectives such as
3
The above data are taken from Garcia et al., 2004, graph 1, p.17.
19
the increased protection of vulnerable workers. Similarly, the resistance to adjust the balance
between tax incentives and benefits in order to "make work a real option for all", is defended on
the grounds of safeguarding a generous welfare system, which lies at the heart of Social Europe
and at the national acquis of Continental and Nordic countries (Sapir, 2005).
The impact of EES across member states is also dependent upon the participation of social
partners, local authorities and civil society in the elaboration, implementation and evaluation
process of NAPs. According to the Guidelines social partners have an important role under the
heading of adaptability, whereas regional and local authorities have a particular role in the
entrepreneurship pillar (Smismans, 2004). However, stakeholders had a rather symbolic and
fragmented role, which could not "maximize the impact of the national plans" (Régent, 2002:
18). Their participation was also asymmetrical across countries, since the member states differ
largely on their "degree of openness and the structure of political opportunity for participation
and contestation within the EES" (Garcia et al., 2004). With the single exception of Luxemburg,
NAPs were characterized by social partners as "governmental rather than jointly produced
documents" (de la Porte and Pochet, 2004: 74).
The impact of EES on member state policy has also varied across the policy areas (Mosher and
Trubek, 2003). Guidelines that require a shift to preventative unemployment policy and
intensification of active unemployment policies have brought about more change than guidelines
calling for more employment-friendly taxation systems (ibid). Mosher and Trubek (2003) explain
this variation both on grounds of guidelines' structure and of politics of policy change. Change
occurs in areas where the guidelines are specific with quantitative indicators and do not confront
sharp political opposition, and less in areas where the guidelines are more general and face
fierce political resistance; in the latter cases it is easier to make it appear "as if" some change
has occurred even if not motivated by the EES (ibid.)
Overall assessment of EES
The limited and largely differentiated participation of stakeholders has been broadly
documented as one of the weakest points of EES (de la Porte and Pochet, 2004; Rhodes,
2005). In only 7 out of 15 countries did trade unions make a direct contribution to NAPs, and
only six of them assess the participatory conditions as satisfactory (de la Porte and Pochet,
2004). In terms of local action, only in Sweden were the Local Action Plans coherent with NAPs
and drawn up to reflect political objectives agreed under the EES (ibid.) These data mainly
reflect the different opportunities for participation offered by different industrial relations
20
systems. Nonetheless, there have been some trends of widening of actors in the UK, which was
lagging well behind, in Germany, which overall maintained its corporatist structure attributing
labour organizations a key role, and in Sweden, which put a new emphasis on the local level
(Garcia et al, 2004). Yet, in cases like Spain, not only did the EES fail to lead to widening the
consultation dimension (as in the UK) or to legitimizing existing tendencies (as in Germany and
Sweden), but it also failed loudly to reinforce the social dialogue that had broken apart since
1997 (ibid.)
Furthermore, although the learning potential has a central role in EES structure, there has been
little evidence of an effective learning process yielding substantial outcomes ­according to the
evaluations of member states (de la Porte and Pochet, 2004). Only the Netherlands reports a
modest level of learning (Mosher and Trubek, 2003). There has not been any overall change of
goals or ranking of priorities as a result of learning promoting mechanisms (ibid). The adoption
of EES is thought to be "driven by political bargaining rather than by learning" (de la Porte and
Pochet, 2004: 74).
Still, national and European authorities have reached "an overwhelming agreement" (Scharpf
2002; de la Porte et al., 2001) on the employment guidelines, despite the much mentioned
heterogeneity of political and social traditions and priorities across the EU, that vary from
solidarity-oriented to individualistic (ibid.). In fact, in the five-year review, the Commission
attributes the substantial advancement in labour market performance across the EU to the
enhanced co-ordination in the areas covered by the guidelines (Busby, 2005). European
authorities also see clear evidence of partial convergence and diversity accommodation, which
are mainly accredited to the consensus on agency and policy domains that should be "cut
across" (Mosher and Trubek, 2003).
Overall EES is unable to impinge on the balance of power in any member state, but it may bring
about change in national laws, policies and budgetary allocations (ibid.). Its value is even more
evident in cases where modest adjustment of social systems is an accepted reform by national
governments and the public. EES provides to modest reformers arguments and examples and
pinpoints good policies and efficient ways of benefiting from existing resources (ibid.). EES may
have a "catalyzing influence" in supporting developments that are already taking or are bound to
take place, a dimension that should not be neglected, although not always measurable or visible
(Büchs, 2003).
Future Challenges
21
The mid term review of the EES has accurately defined a set of dynamics that create new
challenges for the employment strategy. Globally, the economic prospects are increasingly
uncertain due to a changing global framework where the Asiatic economies are gaining in power
(Giddens, 2006; Bosco et al., 2004). Within the Union, the latest round of enlargement has
increased significantly the diversity in performance, cohesion, and regional variations (Ferrera,
2006; Bosco et al., 2004). EES targets in the EU-25/27 now appear even more ambitious to
achieve (Ingham et al., 2005).
Over the last few decades, international trade and labour competition from Asia have altered the
challenges of globalization for the EU, having produced "ever-increasing income divergences
between skill sectors, with Asia having a labour cost advantage" (ibid.). The range of production
that may be outsourced in the EU is not limited in low-cost goods, but increasingly expands to IT
goods and to financial, legal and medical services, given that China and India also "produce"
four million graduates per year (Giddens, 2006). Those leaning to the neo-liberal side of the
argument support the view that the commitment of EES targets so far to protect the weakest in
society risks making European labour markets less flexible (or more inflexible) and therefore
less competitive, yielding substantial costs in terms of jobs and growth (Diamond, 2006).
Others however note that globalization and national welfare states may be mutually supportive,
with the former providing financial resources to the latter, and the latter providing sustainable
and positive role to the former through proper redistribution of gains (Vorbuna, 2003). Thus, the
challenge of Social Europe in the global economy is to serve the twin priorities of social justice
and economic competitiveness (Diamond, 2006). EES has to take into consideration the rising
inequalities, partly due to the structural trends of the global economy (ibid.), but it also has to
develop new areas of comparative advantage vis  vis the Asiatic countries and to redefine
Europe's foundations as a knowledge-based economy.
In fact, it has been argued that accession countries have a strong role to play in re-establishing
Europe's position in the global economy, since they have a significant advantage of low cost
labour force and flexible labour markets (compared to older member states) (ibid). However,
some note that even these countries "are struggling to stay competitive in the face of low-cost
competition from fast-growing Asia, and look for ways to produce more high-tech goods and
services" (Barysch, 2005: 2).
The major challenge for EES arising from the Eastern enlargement has not been the so much
feared waves of immigrants towards old members or capital flows from the old members
22
eastwards, but the increase of regional variations4 i
and the amplified heterogeneity of priorities.
The enlargement was not coupled with an increased budget contribution from the old member
states, and limited structural funds were targeted to the poorest regions, which does not always
facilitate the reduction of disparities (ibid). Under these conditions, EES might need to redefine
the role given to localities and regions, since there are reservations that, in its present form, it
may lead to a "territorialization of employment policy" in favour of the already successful regions
whose governments, local authorities and interest groups are highly unlikely to support
redistributive policies in favour of the poorer regions (Busby, 2005). Regional variations may
also lead to fragmented initiatives with minor impact on the employment outcomes across the
EU.
Modernising employment policy in the EU: potential reform directions
The Commission early enough recognized the need for a more focused - better targeted cohesive
strategy and streamlined approach (Busby, 2005). This partly refers to the need to link
the EES with European economic policy by streamlining relevant timetables, delivering fewer
guidelines with broader perspective, enhancing the involvement of stakeholders and shifting to
results-oriented medium-term planning. (This tendency is demonstrated in the evolution of EES
­Table I). These developments, integrated in the New Employment Package, point to a more
coherent agenda setting, but such administrative arrangements are not enough to consolidate
the policy-making approach, since they do not alter the hierarchy between the EES and BEPGs
or touch the separate policy agendas (Begg, 2003; Busby, 2005). In all, there is a need for a
more coherent approach between multiple economic and social issues, especially when the
issue at stake is the combination of good economic performance, labour market flexibility and
security (Ferrera, 2006; Bosco et al., 2004).
TABLE I
The evolving structure of the European Employment Strategy
1998 4 main lines of action
13 guidelines
1999 4 pillars
22 guidelines
4
Ferrera (2006) notes that some 92 percent of the population of the new member states lives in regions
where GDP per capita is below 76 percent of the EU25 average.
23
Annex on the need to develop quantitative targets/indicators
2000 4 pillars
21 guidelines
2001 5 horizontal objectives
4 pillars
18 guidelines
2002 6 horizontal objectives
4 pillars
18 guidelines
2003 Integrated guidelines
3 overarching objectives
10 guidelines + good governance stipulation
2004 As in 2003
2005 3 clear priorities
8 guidelines
Source: Ingham et al. 2005.
The relaunched Lisbon strategy (Lisbon II) sought to address such weaknesses by better
integrating employment and economic policies. The Integrated Guidelines for Growth and
Employment (2005-08), proposed by the Commission and approved by the European Council in
2005, incorporated EES and BEPGs into one document.5
Arguably, the degree of integration
achieved by the new Integrated Guidelines is probably not as high as it was meant to be. It may
not be really feasible to consolidate the two dimensions, formulated by different DGs
(Employment and ECFIN respectively), into a single policy document. Though the new IG/
coordination process represents an undeniable improvement, it has been argued that
contestation between economic and employment actors continues to exist (Zeitlin, 2006).
Moreover, in the road of "making Europe a more attractive place to invest and to work", the EES
still has to define new areas of potential comparative advantage across the EU, such as
technologies, or social and environmental expertise (Bosco et al., 2004). Still, in order to
consolidate the competitiveness of EU, when discussing "job creation" EES should put extra
emphasis on drawing qualitative targets, along with quantitative, in order to include parameters
such as service design, affordability and quality (Ferrera, 2006). As Busby (2005) notes "the
5
The eight employment guidelines in the IGs (2005-08) included, apart from the objective of full
employment, improved quality and productivity at work, and social/territorial cohesion: the
promotion of a new lifecycle approach to work; inclusive labour markets for job-seekers and
disadvantaged people; improved matching of labour market needs; flexibility combined with
employment security and reduction of labour market segmentation; employment friendly wage
and other labour cost developments; expansion and improvement of investment in human
capital; adaptation of education and training systems in response to new competence
requirements.
24
danger of combining job creation with a shift away from social protection is that the resulting
increases in employment are likely to take place at the expense of many of the policy priorities
identified in the employment guidelines" (Busby, 2005 : 35).
V. Concluding remarks
On the basis of our discussion of the OMC and EES, we would like to agree with the opinion
that new modes of governance may not be alternatives to traditional modes of government, but
complementary ways of fulfilling governing functions. The OMC and EES are innovative ways of
supplementing the efforts of national governments of EU member-states to attempt reform of
their national social and employment policies. The new modes of governance also help national
governments to follow parallel paths, if not to converge, towards social and employment policy
reform.
In this paper we have argued that new modes of governance are already an integral part of EU
social and employment policy. Less than a decade after their inception new modes of
governance in social and employment policy (OMC, EES) are considered to be innovative policy
tools. There is almost no talk of abandoning these tools, which is a sign that such new modes of
governance have gained some legitimacy. Nevertheless, if the OMC and the EES are to
develop and perhaps to be transplanted in other policy areas, it would be pertinent to assess
their strengths and weaknesses so far. This is what we try to recap in the concluding section of
this paper. In regard with social policy, we summarize the advantages and disadvantages of the
OMC. Then we do the same in regard with employment policy, focusing on the EES.
The OMC has partly lived up to the expectations it had raised. This new mode of governance
has helped make the governments of EU member-states more sensitive to social inclusion and
has contributed to a comparative, cross-national understanding of the factors contributing to
poverty and social inclusion. Some policy adjustment, policy learning, provision of information
about and monitoring of poverty and social exclusion and specification of policy weaknesses
may be attributed to the OMC. On the other hand, this method needs to become more coherent,
simple and rational, may be extended and tested in more policy areas and should be more open
to public scrutiny. It may be that such a soft law approach will yield more results if implemented
in conjunction with the hard law approach.
As far as the EES is concerned, we observed that this new mode of governance has contributed
to a growing consensus in the EU on employment guidelines as well as to increased
25
coordination and convergence among EU member-states in the area of employment. While the
EES has not upset the domestic balance of power in the field of employment in individual EU
member-states, it has been a source of arguments and examples in favour of modest policy
reform and it has facilitated policy shifts in cases where national governments had already
embarked on reforms. It seems that as in the case of the OMC the EES also needs
streamlining, more cohesion, closer coordination with the EU's economic policies, enhanced
involvement of relevant stakeholders, emphasis on results-oriented planning and qualitative
target setting.
Both the OMC and the EES have contributed significantly in "bridging the gap between negative
and positive integration" (Ferrera et al., 2002), and have had some promising impact on social
and employment policies. It is true that EES, the precursor of OMC, has been more penetrative
so far compared to the OMC in social policy, partly due to its entrenchment in the Amsterdam
Treaty and its explicit connection to the economic policy and the BEPGs since 1997. Still, the
impact of OMC on "infant" social policies is not at all negligible, and its added value in building
an acquis communautaire in new policy areas is vital. Ultimately both OMC and EES have
contributed in launching decentralized policy-view exchange by introducing new policy-making
paradigms that challenged established ideas.
Nevertheless, there is always ample space for improving their performance and modernizing
their objectives and processes. As already noted above, streamlining and specificity of targets,
greater coherence, coordination and integration with other related policies at the macro- and
micro- level are a constant challenge, magnified by the large disparities of an enlarged EU-27.
External challenges, such as those created by globalization and enlargement, as well as others
that have an important internal dimension, such as ageing population, income inequality and
social exclusion, provide grounds for modifications that will move OMC and EES beyond the
realm of symbolic politics (Metz, 2005). The modernization of social and employment policy
targets may affirm the necessity to establish synergies between soft and hard regulation modes
of governance. Above all, however, it is a process that will need, somehow down the road, to
clarify the overall objective (ibid.) of OMC and EES, i.e. whether they seek to establish a
process of policy learning or one of policy coordination. For at the core of the problem lies the
inherent tension between decentralized governance and the need to deliver collective European
policy effectiveness.
26
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