(Page 2 of 36) - SOFT EUROPEANIZATION?: THE INFLUENCE OF THE EUROPEAN EMPLOYMENT STRATEGY IN PROCESSES AND EMPLOYMENT POLICIES IN EU MEMBER STATES authored by Lopez-Santana, Mariely.

1. Introduction
In the mid-1990s, Europe was experiencing an acute crisis. Unemployment rates were
dramatically high, employment rates were low,

and welfare states did not have the capacity to

handle these pressures. On top of these unfavorable conditions, most European countries
emphasized the question of the sustainability of their welfare states given adverse demographic
conditions, better known as the ‘Demographic Time bomb’ (i.e., aging population).

Moreover,

external threats, labeled by many as ‘globalization’ (e.g., intensified international competition,
higher levels of capital and labor mobility, the increasing development of knowledge-based
economies), demanded a change in the qualities of the European workforce and labor market. To
be able to survive internal and external demands and be competitive in this era, European
economies needed to become more adaptable to these pressures by transforming themselves into
knowledge-intensive economies, rather than industrial based. These challenges put strains on
welfare states designed to deal with other demographic and socio-economic contexts and realities.

Defenders of the ‘European social model’ believed that action was needed to preserve “a
commitment to expansive benefits, relative wage and income equality, and coordinated
bargaining by organized interest groups where they existed and to spread these features were they
were missing” (Trubek and Mosher, 34). The matter in question was how to reform existing
social policies and institutions with the end of surpassing common European problems and
challenges, while maintaining member States’ welfare institutions. Common problems demanded
a supranational European-wide response.

The Treaty of Amsterdam formalized the idea of a ‘European Employment Strategy’ (EES), a
supranational instrument to boost European employment rates and competitiveness. The
European strategy is ruled by the ‘Open Method of Coordination’ (OMC), a new regulatory
model for developing the social ambit of the European Union that is not legally binding and is
voluntary in nature. The establishment of the annual strategy sets an innovative form of
European governance for two reasons. First, since the European Community (EC) was created,
Brussels did not have any say about the path that national labor market policy should follow.
However, after the Luxembourg Summit (1997), member States were responsible for making
annual reports to the European Union about the status of their labor market policies and
institutions. Moreover, the Council provides individual recommendations to member States
about their labor market policies and institutions. Thus, the process makes, in some way or
another, member States accountable to the EU on employment matters. Second, the EES

At this point, it is important to clarify the difference between unemployment and employment. The

denominators of the employment and unemployment rates illustrate the main difference—the denominator
of the first indicator is total population, while the denominator for the second is the number of people in the
labor force. In theoretical terms, the main difference between these indicators is that the notion of
increasing employment is grounded in an acknowledgement of structural factors inhibiting certain groups
(e.g., women, immigrants, racial minorities, youth, aged) from becoming part of the labor market. In this
way, ‘increasing employment’ involves the creation of policies and institutions to (re)incorporate these
groups in the workforce, and to extend the working life of ‘aged’ population.

The following statement shows the demographic situation in the EU, “Due to a declining birth rate, the

labour force share of young people (15-24) fell from about 20% in 1987 to about 13% in 2000. The share
of those aged 25-54 went from slightly below 70% in 1987 to slightly above 77% in 2000, while the labour
force in the age bracket 55-64 remained mainly stable at around 10%” (Impact Evaluation of the
Employment Strategy, 76). Moreover, the projections are that from 2000 to 2030 the old age dependency
ratio (the percentage of people aged 65 and above compared to the number of people aged 15-64) will
increase from 23% to 39% (Employment Task Force, 12).