Eastern Europe:  was the European Social Model ever valid ?

In this exclusive interview with Metis, Charles Woolfson investigates the Western perception of Central and Eastern Europeans as well as the evolution of their social developments in the course of the past years. According to this expert, the recent economic crisis has resulted in the degradation of several indicators in Eastern Europe: cut backs on social policies, taxing outward migration, social unrest, … More importantly, Woolfson questions the importance of social policies for the leading elites of these countries.

What is for you the main central issue in those countries?

We are now a Europe of 28 countries. It is thus very important to understand the common features that draw the people of Europe together as well as the differences that exist between the member states. What is happening in Eastern Europe really matters for the older member states of Europe. We have to recognize that there are differences in histories, legacy, social development, and that the broad project of European integration and harmonization poses considerable challenges for all MS but particularly those of Eastern Europe.

It is quite clear that this process faces many challenges, in particular in the last years of crisis and austerity, in which we have seen poverty and unemployment, particularly youth unemployment, low wages, and an economic downturn that has undermined much of the optimism that may have existed after the enlargement of 2004.

Would you say that for all of these states?

It is clear that some countries of Central and Eastern Europe entered the European Union (EU) in a more advantageous position than others. I am particularly thinking of the Visegrad countries, which had certain advantages in terms industrial development and foreign direct investment in comparison to more peripheral countries such as the Baltic states or Bulgaria or Romania. There were also measurable differences in living standards and in estimates as to how long it would take them to catch up with the older member states.

However, this crisis has also revealed a common vulnerability: their economic dependence on the older member states. Much of the investments that we have seen have proved to be less permanent than expected in 2004. Jobs have been lost, plants have been closed and industrial development has taken a step back. Even in the ‘best’ places of Eastern Europe, the crisis has shown the unequal nature of European integration, and that is something we should address in policy terms.

Do you think migration matters to Eastern states, or is it only an issue for older ones?

It is an issue for the whole European project: let’s look for example at the situation in Latvia and Lithuania. While they experienced high levels of outward migration in the years immediately following the 2004 enlargement, the onset of the crisis has intensified this trend. In the last two or three years, approximately 10 percent of the labour force has left these countries. You might say, where are they going? They are coming to those older member states that are themselves in difficulty (including UK & Ireland). This is not a good prognosis in terms of the future economical recovery of these states, since they are lacking the human resources necessary for the recovery in the longer term. It is an economical catastrophe. On the other hand, in older member states, recent studies suggest that the migrants provide and contribute far more to the economy of the countries to which they are coming than they are taking away. We are thus in a situation with winners and losers, and the losers are clearly in the East.

There is an ongoing debate on the topic of the posting of workers…

This is a complicated question. Is wage dumping taking place in which workers from the East are prepared to work for less and in worse conditions than would be the norm in Western European countries? We would be foolish to pretend it does not exist. However the problem is not so much posted workers. It rather lies with the so-called « self-employed », or those who work in the black and grey market. They are the ones that truly threaten social conditions in older member states. We have seen some cases of labour conflicts arising around the issue of wage dumping, and I regret to say that these conflicts will only become more frequent in a period in which native workers are concerned about their employment prospects. The Eastern workers must be ensured an equal level of protection compared to native workers. This is thus an enforcement challenge for the policy makers of older member states, as well as for their trade unions.

Is there a difference in the perception of the word « social » between Eastern & Western Europe?

The important thing to understand is that the people of Eastern Europe were reluctant to let go of the high level of social protection that the previous system provided: they had a general feeling of security when it came to accommodation, jobs and wages. In the new market economy which followed the socialist system, all of that was quickly dismantled. People felt that a level of protection was being taken away from them and were not happy about it. When commentators say ‘social’ and ‘socialism’ are too close, that is really the discourse of the new elite. Ordinary people did not experience this transition in the same way. Eastern Europe has been a huge political experiment in imposing a new ideology which was entirely based upon the individual and which refuses to recognize the need for a social framework. Neo-liberalism has replaced any form of collectivist state. The problem is that if you have extreme individualism, you tend to also sacrifice any form of solidarity and social cohesion. You create a society in which it is the individual against all the rest. When you add to that a social crisis and poverty, it is not surprising that people say to themselves: « Why am I staying here, surely things are better elsewhere? » It is these factors, and not simply the economic factors, which create the level of outward migration some of these Eastern countries are now experiencing.

How relevant is the notion of a European Social Model in Central & Eastern Europe?

One needs to ask: was the European Social Model (ESM) ever valid for these countries? Historically that concept was developed by Jacques Delors to ensure a certain level of popular legitimacy for the market project that is central to the European community. It was meant to provide some protection for the worst excesses of a free market. It was supposed to provide some form of generalized social protection for the population of the core member states of the EU.

The ESM was a product of a particular form of Christian Democratic ideology in the period that preceded the enlargement of the European community. It was always an ‘export ideological commodity’ as regards the newer member states. Frankly, the elites of the newer member states had to align with the acquis communautaire and thus consequently had to take on board, more or less willingly (or not), certain components of that ‘foreign’ ideology.

I do not believe that a social model of this sort, which was essentially a Western European creation of a particular time and place was ever entirely relevant to Eastern Europe. One might actually question the fact that the Eastern elites ever believed in it. Moreover, in the context of the aftermath of the crisis, what little social protection there may have been has been dismantled.

I will not even go into details about the core directives which underpin the European Social Model, and the level to which they were effectively implemented in Eastern Europe. However I believe the social dimension of Europe was always very secondary for the East. There have been many misconceptions on the impact of this model in the region, and it is probably time to come clean.

This is a quite pessimistic view. Do you see any positive development coming from these countries on that level?

Without wanting to overstate the situation, I am not terribly optimistic that Eastern European countries will do much to assist in the reconstruction and renewal of the ESM. I am using the term reconstruction because the Commission has just issued a new Communication last month on how to rebuild the ESM in the aftermath of the crisis. One positive thing I can say is this: the people of the newer member states have drive, energy, and a commitment to improve their life. The negative is that in many cases however, they only see the possibility to realize their dreams by exiting their country of birth. People are not seeing a future in terms of their own personal development in countries like Latvia and Lithuania. They feel like opportunities are denied from them.

What about trade unions and social dialogue?

Once again, legacy, history and tradition are really important here. The nature of trades unions in the previous system was quite different from what it has been in social democracy. The transition for trade unions from a collectivist model to democracy was a difficult one. How can trade unions be relevant in the post-communist state? This adjustment has not been easy and in many cases has not been successful. We thus see a huge decline in union membership. In Estonia for example, less than ten percent of the workforce is organized in trade unions. In Lithuania, there are just under 14 percent, and the numbers are perhaps a few per cent higher in Latvia.

In Eastern Europe, trade unions lack bargaining power. Social actors, in the sense we understand the term in Western Europe, are really weak in most countries; even in Slovenia, where they use to be strong, they are now on the defensive. Those elements of ‘social dialogue’ that existed before the crisis were swept aside by governments seeking fiscal consolidation, internal austerity, and in the case of the Baltic states, membership of the Eurozone at any cost.

How about Poland?

It is the one country that did not experience severe crisis, as opposed to the steep decline of the Baltic states. Poland is better off. But I recall the Polish Minister of Employment saying the following: We haven’t had a crisis, but in order to prevent one in the future, we’ll implement austerity measures in any case. Therefore they also experienced a setback in social dialogue and wages levels. Even in a country where there was no serious economic crisis, the crisis has been use as a pretext to attack labour standards and living conditions.

Is trade unionism a thing from the past?

Despite my pessimism, collectively there is always that inextinguishable perception of injustice in society. What makes us human is our capacity to contest social injustice. From that point of view, the inherent potential for trade union and other organizations of the civil society is as strong, or stronger than it has ever been. Neo-liberalism is a failed theory that has produced a failed economic system, and people understand that. Their wages, their living standards and their future are being sacrificed to resolve a crisis created by the greed of international banking communities. The peoples of Europe understand that they are being asked to carry more than their fair share of the burden of the crisis. There are thus huge possibilities in the coming period to regain some of the territory that has been lost in the last decades. I am optimistic in the longer term, even though the crisis has caused some immediate setbacks.

How attractive are trade unions for younger generations?

This is perhaps the biggest challenge they will have to face. If trade unions can show that they are relevant and able to provide social dialogue for young people, then yes. I think that possibility exists, since young people want a future. The picture is therefore not entirely black. The trade unions in the West and the East will have to undergo changes to demonstrate the ways in which they are relevant to the younger generations.

How do you see the civil society now in those countries, in the light of the massive demonstrations we have recently witnessed?

These demonstrations are the first green shoots of new forms of social movements and protests that will become increasingly important. As we speak, they are protesting in Bulgaria against what they call 25 years of ‘phoney transition.’ Reading protesters’ banners makes me very hopeful. Their banners are saying: « We are staying, you go, » « Let us have our country back! » These are the kinds of movement and protests that can only grow in the coming period.

It will be more difficult for something similar to happen in the Baltic states, where there is less tradition of civil society activism and a developed repressive apparatus. But the Arab Spring shows it: at some point, things become intolerable and people end up taking to the streets. That kind of protest is impossible to stop, even with the most advanced police apparatus.

There were no massive protests in Poland, or in the Czech Republic? Why is that? How does corruption play into that?

It is true, the movements of protest in these societies have been rather weak. Corruption is the thing people consider to be the least tolerable. We have seen for example in Latvia how the state officials, even as most public sectors workers were experiencing massive wage cuts, were awarding themselves pay raises and bonuses. These things are not yet understood and have not caused massive protests. But I see this in a longer-term perspective. There will be a social movement in Eastern Europe to contest the rupturing and dislocation that has been caused by elites that serve only their own interests at the expense of the people in these countries.

This interview is also available in French (part 1 & part 2)