(6) The Lisbon Treaty

The EU and human rights: a new era under the Lisbon treaty?

European development policy



The General Framework or Primacy of the Social Dimension (Principles)


Human-developmental Goals and the Lisbon Treaty

To see labour law in developmental terms would by no means be an entirely novel approach in the context of EU social policy. Significant elements of the existing corpus of EU labour law can be understood using this model. The substantial body of equal treatment law which originated in the equal pay provisions of the Treaty of Rome and was later broadened to include a much wider range of prohibited grounds of discrimination provides one example.51 It is in this context that the use of the capability approach to justify a social rights-based interpretation of discrimination law has already entered the discourse of the Court.52 There is considerable scope for the further operationalization of the capability approach at the level of juridical analysis.

The issue to consider here is how far this process can be advanced by the changes made by the Lisbon Treaty. As stated above, there are three changes of particular relevance to labour law: (i) the restatement of the values and objectives of the EU; (ii) the clarification of the competences of the EU and the Member States; and (iii) the recognition accorded to fundamental social rights in the form of the Charter.

Article 3 TEU states that the Union ‘shall establish an internal market’ and goes on to say that in addition it shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment.

The internal market is to be ‘established’, while sustainable development is a goal to be ‘worked for’ through mechanisms which include the social market economy but also price stability and ‘balanced’ growth. The social market economy is, apparently, put on an equal footing with price stability as a means to an end, while the establishment of the internal market is stated to be a goal in itself. This is not at first sight an advance on the old Article 2 of the EC Treaty, under which the establishment of the common market, along with economic and monetary union and a number of other common policies, was stated to be a means of achieving various ends, namely, a harmonious, balanced and sustainable development of economic activities, a high level of employment and of social protection, equality between men and women, sustainable and non-inflationary growth, a high degree of competitiveness and convergence of economic performance, a high level of protection and improvement of the quality of the environment, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.

The internal market, together with the other objectives set out in the new Article 3 TEU, can however been seen as means of achieving the values listed in Article 2 of that Treaty, namely ‘human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities’. Thus the internal market remains a means to various ends, not an end in itself.

Moreover, the objectives set out in Article 3 include not just the reference to sustainable development based on (among other things) the ‘social market economy’, but the ‘[combating] of social exclusion and discrimination’ and the ‘[promotion] of social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child’. The structure of Article 3 implies that the promotion of these social objectives is seen as a goal of the Union on a par with the establishment of the internal market, rather than being viewed as a consequence of it, as the old Article 2 TEC implied. On this interpretation, the taking of active steps to promote social goals separately from those taken to establish the internal market is now one of the Union’s principal purposes.

In the context of these changes, it would be inappropriate to confine the idea of the social market economy by reference to its ordoliberal origins. The reference to the social market economy in the draft Constitutional Treaty was described as not simply conceptually flawed, but as ‘empty’ of meaning given that the ‘the historical compromise that the concept once embodied is no longer alive’.53 The postwar conditions in which the idea of the social market was mobilised no longer hold. Ordoliberalism, as a body of thought, has become increasingly aligned with Hayekian and neoliberal positions, thereby losing any sense that it offers a justification for social policy within a market-based economic order. Leaving aside the anachronism of the idea of the social market, the view that labour law is needed to offset some of the negative consequences of economic integration retains some validity. But this is a very limited conception of the economic role of labour law. To see labour law as intervening, ex-post, to soften the worst effects of an integration process that in other respects is allowed to be carried on without restraint, would be to return social policy to the marginal and subordinate role that it occupied in the Rome Treaty.

The promotion of social justice and protection, gender equality and solidarity between generations, as set out in Article 3 TEU, imply a more ambitious role for social policy within the EU legal order, which is compatible with a human development agenda. It is nevertheless the case that the Lisbon Treaty creates no new powers at EU level for the implementation of these objectives. This brings us to a consideration of the issue of competences.

Under Article 2 TFEU, social policy is an area of shared competence, meaning that the Member States may exercise law-making powers to the extent that the EU has not exercised its competence. This does not in itself appear to change the asymmetry between free movement law and national labour law-making powers under Viking and Laval: the Court can, apparently, use freedom of movement jurisprudence to create a new layer of industrial action law at EU level, while the Member States are prevented by Article 153(5) TFEU from enacting a new Directive in this field. The Court’s formalist view, that its free-movement jurisdiction is in no way affected by the absence of powers to adopt harmonising legislation in the collective labour law field, is just one of the ways in which it explicitly rejected the original compromise over competences put in place by the Rome Treaty. The Court simply refused to see European labour law in the round, as consisting of complementary levels of regulation at the state and transnational level.

In practice, however, the Court’s intervention on this point is less powerful, and less destructive of the powers of the Member States than appears at first sight. The Court rulings in Viking and Laval have been not enough in themselves, so far, to trigger a race to the bottom. Precisely because the Member States retain the critical competencies which the Lisbon Treaty confirmed, their response to Viking and Laval has made all the difference to how those decisions impact on national labour law regimes. The response to Laval in the Nordic systems has taken the form of attempts to shore up the national models which that decision put in question. The Swedish legislature has gone furthest in accommodating the Court’s rulings, but even then has taken steps to restore the right to strike over the application of national-level collective agreements to foreign service providers. The most significant concession to Laval was the restriction of strike action to the defence of the minimum forms of protection set out in collective agreements, in line with the Court’s ruling in Luxembourg.54 Post-Laval legislation in Denmark did not go this far in accommodating the Court, reaffirming the right to take strike action in support of a range of collectively-bargained terms and conditions. The Norwegian courts and the EFTA Surveillance Authority have so far upheld extension legislation in Norway which enables terms of collective agreements above the basic floor to be applied to service providers.55 In Germany, the Land of Lower Saxony has responded to Rüffert by re-enacting its law on the application of sector-level agreements by extending it beyond public procurement cases, in an attempt to comply with the Court’s reading of Article 3(8).56

These legislative initiatives illustrate the continuing vitality of labour law systems at Member State level and a determination on the part of legislatures to maintain the distinctive features of national models wherever possible. The Lisbon Treaty’s reaffirmation of Member State competence in areas where the Union has not acted is a reminder that the Union’s competences remain limited, even in respect of the free movement principle, and that the Court’s attempts to use internal market law to level down labour law protections at national level will generate a response in favour of preserving national models as long as local political conditions are favourable to this.

Article 152 TFEU commits the EU to recognising and promoting ‘the role of the social partners at [EU] level, taking into account the diversity of national systems’. The reference to national diversity in this particular context is double-edged. While it could imply a constraint on the use of social dialogue to establish norms of general application, it can equally well be taken as an indication of the role social dialogue can play in preserving national diversity in the face of the levelling down that arises from free-movement jurisprudence. In this regard, it is relevant that among the responses to Viking has been an EU-wide framework agreement on the implications of the reflagging of vessels for the social protection of workers, which has been implemented in the form of a Directive. This, in turn, is intended to come into force alongside an ILO Convention on which it is modelled.57 The conjunction of social dialogue with ILO standards, in this case, suggests that there are numerous options for filling gaps left by the Court’s deregulatory interventions.

The legal recognition granted to the Charter of Fundamental Rights is also potentially significant. The Charter does not operate as a floor of rights, and no new legal competences are associated with the status conferred on it by the Lisbon Treaty.58 While referring to a long (if still somewhat incomplete) list of social rights, it also incorporates entrepreneurial and economic rights which could in future be invoked in support of the Court’s approach in Viking and Laval. These caveats notwithstanding, the Charter makes it more difficult to argue that economic freedoms prevail over social rights, as the Court decided in those cases. It is more plausible to argue that the relationship between them is one of parity.59 This view is compatible with the human developmental conception of European labour law set out above.

Viking and Laval were part of a wider shift from an ordoliberal conception of the EU’s economic constitution to a neoclassical one, associated with the deepening of the internal market programme and the implementation of the economic and monetary union. The Lisbon Treaty provides some basis for a rebalancing of economic freedoms and social rights and points the way to what this paper has described as a ‘human-developmental’ conception of labour law. The context provided by the financial crisis is highly significant in this respect. In the long run, the near-collapse of the global financial system in 2008 makes the idea of the self-equilibrating market implausible.

The idea will not, however, fade immediately. In the context of the EU, a continuing problem remains the embedding of the self-equilibrating market model in the constitution of the ECB and the institutional design of the currency union and, now, of mechanisms for financial stabilisation. This currently poses an even greater threat of a race to the bottom in social policy than Viking and Laval.

The first phase of the financial crisis ended with the stabilisation of the banking system in the first half of 2009, but it then gave way to a sovereign debt crisis which has had far-reaching implications for the single currency and for social policy. Throughout 2010 and 2011, the Member States within and outside the Eurozone used this new phase of the crisis to initiate ‘austerity’ measures aimed at reducing budget deficits. Meanwhile, a new agenda of ‘economic governance’ was emerging alongside the financial stability mechanisms put in place in an attempt to deal with fiscal imbalances and the associated risk of sovereign debt default in the certain Member States.

The loans organised by the Eurozone states and IMF were made conditional on ‘structural reforms’ which included cuts to welfare benefits and measures of labour law deregulation in the Member States receiving financial support. These developments threaten to undermine national autonomy in social policy still further.

The practical lesson to draw from these unfolding events is that if the Union is to realise the value and objectives set out in the Lisbon Treaty, it will have to address the linking of economic and social policy in a more systematic way than in the recent past. In the short run, economic stabilisation measures which ignore the social context of the financial crisis or, worse still, use the crisis as a pretext for further weakening of the welfare state, are likely to prove counterproductive. In the longer run, institutional reforms are needed which will address the adverse social implications of fiscal and economic imbalances and not simply their impact on the financial system.

Such reforms might look far off at present. The financial stabilisation agenda will have to run its course before they can be implemented. However, the end of orthodoxy may come sooner than we think. The contradictions inherent in a policy of enforced deflation and deregulation will inevitably come to the fore. When that happens, the next phase of the EU’s institutional development can begin. This paper has suggested a future role for social policy which would be consistent with the EU’s long-term goal of promoting social progress within the framework of an open market economy.

51. S Deakin, ‘Capacitas: Contract Law, Capabilities, and the Legal Foundations of the Market’ in S Deakin and A Supiot (eds), Capacitas: Contract Law and the Institutional Foundations of a Market Economy (Oxford: Hart Publishing, 2009).

52. Case 478/03 Astley v Celtec Ltd [2007] IRLR 647, Opinion (Maduro AG).

53. Joerges, ‘What is left?’(n 9) p 34.

54. M Rönnmar, ‘Laval Returns to Sweden: the Final Judgment of the Swedish Labour Court and Swedish Legislative Reforms’ (2010) 39 Industrial Law Journal 280.

55. T Skjeie, ‘European Economic Integration: A Threat to the Scandinavian Labour Law Systems?’ (LL.M. Dissertation, Faculty of Law, University of Cambridge, 2010). See now case E-2/11, STX Norway Offshore As V Norwegian State, EFTA Court, Judgment, 23.12.2012.

56. S Sciarra, ‘Notions of Solidarity in Times of Economic Uncertainty’ (2010) 39 Industrial Law Journal 223.

57. Council Directive 2009/13 implementing the agreement concluded by the European Community Ship Owners’ Associations and the European Transport Workers’ Federation, OJ [2009] L 124/30; ILO Convention No. 186 on Maritime Labour, adopted 23.02.2006; see Sciarra, ‘Notions of Solidarity’ (n 50) pp 232–233.

58. Syrpis, ‘Much Ado’ (n 3); see also the chapter by Filip Dorssemont (ch 2 in this volume).

59. On this, see Case C-515/08 Santos Palhota [2010] ECR I-000, Opinion, paras 51–53 (Cruz Villalon AG); Case 271/08 Commission v Germany (Occupational Pensions) [2010] ECR I-000, Opinion, paras 183–190 (Trstenjak AG).



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