SPEECH/02/537
Romano Prodi
President of the European Commission
Economic growth vs social policies:
a false dilemma
Breakfast with the DGB (German Trade Union Federation)
Brussels, 5 November 2002
Chairman, ladies and gentlemen,
It is a pleasure to meet you here in Brussels, and your new Chairman in particular,
ahead of your national bureau meeting.
Your meeting comes at a crucial point in the EU's history: we are in the last stages
of enlargement for ten new members. And the Convention on the future of Europe
is now entering its most delicate phase.
Today I want to concentrate first on economic growth and social policies. People
often think we need to choose between them: a false dilemma in my opinion.
I want to explain why I believe the EU should not neglect economic interests in
favour of social concerns, or vice versa. Rather, we need to harness both, turning to
account the synergy they develop.
In Germany you are well placed to appreciate this view. I am a great admirer of your
approach to industrial relations.
You have long understood that robust social policies need not conflict with dynamic
economic growth. Your system of worker participation in decision-making or codetermination -- Mitbestimmung -- has given wide social responsibility to German
trade unions. And this has fostered growth, not limited it.
This system cannot just be extended to other countries with different histories and
experiences. But it shows clearly that sound social policies and economic growth
can be combined successfully.
The consensual approach to industrial relations is a vital ingredient of our
European social model. This model has been one of the Member States' greatest
achievements in the post-war period. It gives the EU distinctive social features and
it sets us apart internationally.
But today the problem facing us is to adapt this model to new needs in society and
on the labour market.
I am thinking of phenomena like irregular work, immigrant labour, the selfemployed, small enterprises and so on.
There are good examples of ways of adapting social policies without reducing
protection and without curbing growth. The Netherlands and Sweden, for instance,
have managed to restructure their social-protection systems consensually, through
social dialogue.
Dialogue between the social partners is a key element of the European social
model. That is why strong trade unions have a crucial role to play in shaping our
economy and our way of life. Your organisation is very important in this respect.
The vital importance of social dialogue at national level is reflected in the Treaty,
which gives the social partners a semi-legislative role. You have contributed to this
dialogue and it has resulted in EU-level agreements on a number of important
issues. The Council has then translated these into law.
Clearly, when the social partners meet and negotiate, the solutions they find are
those best suited to the real conditions. This is also true at EU level.
But we need to confine ourselves to the framework level and let the social partners
and the Member States find the solutions best adapted to the situation locally, in
accordance with principles laid down at EU level.
2
One of the key factors in Europe's prosperity is economic growth. It is vital for job
creation and for keeping unemployment down to acceptable levels.
At Lisbon we set ambitious goals in this area. With the downturn, we need to use all
the available instruments in a balanced and intelligent manner in order to preserve
social cohesion and foster economic development.
But all this cannot work without a thorough rethinking of the Welfare State. Trade
unions can and must play a crucial role in achieving a new equilibrium that protects
the weaker parties in our society but reduces excesses and rigidity.
Today the European social model, even with the necessary adaptations, faces
another challenge -- that of enlargement.
Maintaining social cohesion at national or regional level has never been simple.
With greater diversity within the EU, the task will be even harder.
Some employers will decide to invest in the future Member States. Some workers
and citizens will be drawn to labour markets in the current EU. Certain skills already
call for migration from non-member countries.
We need to deal with these issues in a democratic and transparent way. And we
need to manage these flows and solve the issues of integration and security.
This means resisting the temptation to resort to protectionism. We must not place
excessive limitations on the basic freedoms that have done so much for the EU in
the past.
That would mean damaging our economies and squandering the great opportunities
that enlargement offers.
The European Trade Union Confederation, your umbrella organisation at EU level,
has recently put forward a contribution towards a constitutional treaty for a social
and citizens' Europe.
I welcome its proposals warmly.
They echo many of the Commission's positions regarding the European social
model and the Community method.
Like the DGB and the European Trade Union Confederation, the Commission wants
to see the Charter of Fundamental Rights incorporated in a legally binding way in
the constitution being drafted by the Convention.
We need to introduce more effective coordination of our economic policies.
Responsibility for such coordination must be clearly defined. Our citizens need to
know that things are in safe hands. Hands that can steer the system safely and
consistently, when things are going well and when the going gets tough.
We need institutions capable of identifying and supporting a social model that is in
line with the interests of all EU citizens.
We need institutions that can stand up for the common good.
The method the Community has followed for the past fifty years has functioned
admirably. It involves a decision-making process in which the three major
institutions all play an essential part.
3
Let us be wary of abandoning a Community method that has proved its worth and
reverting to the intergovernmental approach. Let us think twice before halting the
ongoing process of integration, of abandoning the ideal of "ever closer union" that
inspired our founding Member States.
Of course we need to reform our institutions. We need to bolster their democratic
legitimacy. We need to make them more accountable and ensure they work in the
common interest.
Which is why we need a strong Commission and qualified majority voting as a
general rule. And we need to give more power to the European Parliament.
The nation-states may be the building blocks of our European Union. But the
cement that holds the Union fast is the European integration process.
So I welcome the DGB's contributions to the debate. I encourage you to put your
views forward strongly in the interests of all your members. And for the sake of the
European social model we all value.
Thank you.
4