The Bolkestein Directive: Social dumping and international challenges

The labour movement has found internationally, it seems, an issue around which to mobilize: the Directive on Services in the Internal Market, otherwise known as the Bolkestein Directive.

The directive, which would remove barriers to the provision of services between member states, is most often criticized for its “country of origin principle”. Under this principle, companies which are registered in any EU member state may not only provide services in any other, but also can employee workers to perform such services abroad remaining subject to the law of the country in which they are registered. It is feared that businesses will utilize this law to take advantage of less strident labour and environmental standards in countries with more relaxed standards. An inevitable race to the bottom is bound to occur.

The Lisbon Strategy and the Erosion of the Social Model
The interests of business and labourers are bound to clash so long as the mandate for profit runs business practice. But just as investors, producers and employees strive to drive labour costs down, workers, particularly those in “developing” countries and other low-wage locations, strive to earn more. Those living in richer environments on the other hand are hoping to maintain their levels of affluence and stave off any further erosion of their living standards.

With the destruction of capitalism being an option that fewer and fewer are willing to propose, we are offered up a poor choice of scenarios, each replete with numerous inevitable problems. Some offer us national protectionism and a high level of state intervention in the economy, but this solution often obfuscates the fact that some levels of capitalistic attainment have been achieved through decades - even centuries of the systematic use of capital, economic imperialism, economic and environmental exploitation. Others embrace globalization as an inevitability and urge us to answer its challenge by becoming “competitive”. And then there are the fence sitters who wish to find some solution in-between, with some gestures towards global competitiveness but the retention of just a high enough level of protectionism to make sure that the state (and, more importantly, the corporations) won’t be facing any social revolutions.

It is in this context that the European Union, dominated by some of the richest countries in the world, is confronted with the economic and political realities of not only the globalized world, but of a growing portion of citizens within its own borders.

Those governments clinging to “the social model” are in fact engaged in some sort of theatrical enterprise for, despite considerable political pluralism in the EU, it has long ago committed itself to eroding this model in favour of a more competitive, profit-driven one.

The Lisbon Agenda has been a plan in place concerning the future of the EU workforce for quite some time now, but the labour movement and the left missed the wake-up call; indeed some even welcome the strategy. (1) It has been misread due to capitalism’s language of sedation: periods of unemployment are turned into attractive “career breaks” and having to leave your home to relocate for a job becomes a “freedom”. Labour flexibility is needed to “create jobs” and “social partnership” means that they’ll negotiate the slow erosion of your working conditions with trade union leaders and write some laws about “protection of workers” that will protect you from some nuisances – except the inevitable slide into the global struggle for competitive survival.

If the language of the Lisbon Agenda was too misleading to set off many alarms, then at least the Bolkestein Directive has caught some people’s attention. Mass protests have occurred in connection with it and there is an ongoing campaign throughout many European countries.

Unfortunately, the debate has sometimes taken on xenophobic and protectionist overtones, such as the noise about “the Polish plumber”, which became connected not only to EU enlargement, but to the Directive as well. This leads us to a number of questions, namely, what people propose instead and how the EU without the Directive would resolve the problems of labour disparities.

The first aspect of the Bolkestein Directive, the freedom of establishment, as been a business issue for 30 years already and has become a limited reality with the adoption of the European Company form of registration (SE) which came into force in 2004. With a SE, a company registered and operating out of one country (provided it has its physical seat actually in that country), can change its place of operation without liquidating the original company and re-registering. This issue of establishment has many limitations, including capital limitations, thus it does not extend to most self-employed entrepreneurs (like our friend the plumber), many of whom are also limited by regulations concerning the recognition of professional qualifications, etc..

However, it is the country of origin principle which presents the potential bonanza as it would allow employers to avoid such pesky profit-eaters as local minimum wages.

Proponents of the Directive are of course quick to point out that a country can employee numerous derogations. Articles 17-19 (in addition to allowing governments exemptions in areas such as postal and other services ) allow governments to employ derogations for compelling reasons of public health, public security, public policy or environmental concerns. In other words, these economic “freedoms” can (and will) be selectively regulated by member states.

This doesn’t mean that governments will use them, although it is likely that they will be seen, especially in areas with either strong protectionist tendencies or large militant labour unions.

Such measures, however, do not offer any solution to the basic problems of wage disparity, on either the global or the European level.

Proponents of Bolkestein also point out that one of the assumptions of the directive is that there will be certain harmonization in the EU in strategic areas. In other words, they claim that if standards in certain areas are harmonized, then the country of origin principle will not be an instrument to take advantage of lower standards. Only we can see no talk of concrete harmonization in many critical questions; most often harmonization is spoken about in terms of debt collection, consumer protection, accounting standards and health care. And, even if the last might seem like a safeguard, the EU experience has shown that harmonized standards can actually lead to far lower standards in some countries. (2)

The one area where a revolutionary change could be carried out is in the area of wage harmonization – for example, an EU-wide minimum wage, and industrial standards. (The reason an EU minimum wage in itself is no solution and why industrial minimums would have to be employed is that, for example, you presently can find some experienced nurses and dental assistances from Poland working in North England for the minimum wage, which is not up to any industrial standards, is highly exploitative and is still driving wages down.) But this will never be proposed by the Eurocrats, nor is it likely to be proposed by certain segments of organized labour who doubtlessly predict that they will either be forced to negotiate down standards or, for some of the lower-waged workers, remove the one incentive people had for hiring them.

It begs then to ask which solutions are being proposed? Controlled labour market migration is the political solution de rigueur, but it is not only a one-sided solution, but also a basic violation of the principle of freedom of movement. I say that it is one sided because we hear all the time about how “X country needs qualified so and so” or “doesn’t need” something else; the other side of the situation reflects a power relationship where the richer country can afford people like qualified doctors and engineers while the poorer suffers a brain drain. Ultimately, the brain drain and lack on progress on wage and living standards in one country will just exacerbate the problem.

Many of the anti-Bolkesteiners remain silent on that question. Like the early “anti-globalization” movement, it hopes to draw a wide segment of oppositionists into a coalition, and indeed it has. While the calls for “protecting” labour may seem noble enough, I’d like to ask who and what they envision the protecting force to be (although I already know it’s the state). I’d also be interested in how the social model is to be exactly protected? By improving labour standards and leveling real wages throughout the EU or by closing off the workplace and service market to foreigners? Or do they expect governments to implement measures to force businesses in the EU to maintain high labour costs?

A Radical Perspective
When we perceive that an initiative will undermine the position of the average worker, we should attack it because each additional concession to capitalism is further consolidation of its power. Thus it is perfectly natural to rally around slogans such as “Stop Bolkestein” – but like most single-issue campaigns, even a victory would be a limited one because we have only prevented the exacerbation of the problem but not done anything to get rid of it. Furthermore, it is more than likely that if this Directive fails, something else will come along to try to achieve the same aim. With this cynicism, I do not mean to be discouraging, but rather to call for a wider approach and vision.

Within the context of protest politics, we often find even radical activists calling for “protection” and “rights”, which rests on the assumption that there is a body, be it the nation state or an extra-national institution, which regulates for the good of society, above the interests of capital. This illusion is becoming more and more appallingly naïve; money making and capital interests are firmly entrenched in government. The moments where the state plays social protector are acts of cheap PR played out with our public funds which we have worked for and earned and opposition to the bottom line can only take place in relation to the power and wealth of the society; in this, some nation states are at a distinct disadvantages in the spectacle known as “protecting its subjects”.

Many leftists envision the transition of the state from power broker and capital enabler to social protector and insurer. While this (arguably) may be a considerable improvement in its role, there is also the perspective of decommissioning it and replacing it with workers’ self-government and international federalism. The underlying principle, the creation of a libertarian society, would presuppose various mechanisms for the elimination of material deprivation and disparity, and, most importantly, the elimination of the causes of inequity. Within the restraints of this article, it would not be possible to explore the framework for the creation of such a libertarian society, but we are convinced of the following: the key to the creation of any future socially equitable society lies in divesting capital and state of its powers.

We see the challenge of the international labor movement, (or in the case of this particular issue, of the European one), not in pressing for more hollow promises from insincere politicians, nor even in achieving the scrapping of the Directive, but in experiencing the mobilization in a different way. Rather than marching in pre-coordinated marches as one of an orchestrated mass, we would like working people to experience a sense of self-activity and interconnectivity. We do not see the challenge in getting labour leaders in negotiations with state and EU functionaries, or even in talks amongst themselves, but in rank and file workers deciding on a strategy of activity and horizontal organization as opposed to participating at the bottom of a top-down movement as a protected subject. The discussion needs to begin on a much wider scale as to the possibilities of international grassroots coordination and direct action with a view to libertarian organizational and revolutionary possibilities.

With this, we call on like-minded people and organizations to take up the opposition to the Bolkestein Directive from a more radical perspective and to promote a revolutionary vision of self-organization and self-management in the framework of this campaign. Stopping Bolkestein is not enough. Neither is stopping capitalism.

Laure Akai

(1) Labour ministers maintain that labour flexibility can co-exist along with a high-level of social security. Some labour leaders seem to have tragically misread the subtext of the Agenda, believing it is actually a strategy for preserving the social model. As late as last year, the Guardian published an article on the Lisbon Agenda where leaders such as John Monks of the European Trade Union Confederation said that they had “done well in reviving the agenda only a week after many thought that social Europe was dead". For them, the implementation of the strategy seems to be still up to question. "The Lisbon Strategy must be implemented in a manner that is economically, socially and ecologically balanced."

(2) There are numerous examples of this but one that comes to mind is food standards. We were able to see in some areas of food production that when Poland adopted EU standards, they were sometimes much lower than the old local standards, especially in terms of the amounts of food additives permissible.

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Jan 29 2006 10:49


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