To appear in: R. Nielsen, U. Neergaard and L. Roseberry (eds), Integrating Welfare Functions into EU Law: From Rome to Lisbon, (DJØF Publishing, Copenhagen, forthcoming in 2009)
The Spatial Restructuring of National Welfare States within the European Union: the Contribution of Union Citizenship and the Relevance of the Treaty of Lisbon
Michael Dougan*
1. Introduction
This paper explores the contribution of Union citizenship to the emergence of a “European welfare space”, characterised by the continued pre-eminence of national systems of social solidarity, but complemented by novel subnational and supranational dimensions to individual welfare rights and expectations (section 2). In particular, we shall explore the caselaw of the Court of Justice on the residency, equal treatment and movement rights of migrant Union citizens vis-à-vis their host and home states, highlighting the two main bodies of academic criticism prompted by that caselaw (section 3). First, the allegation of social engineering, i.e. that Community law is interfering in a top-down fashion with complex national welfare processes, so as to promote an understanding of social solidarity at odds with the traditional relationship between individual rights and collective interests. Secondly, the allegation of judicial activism, i.e. that the welfare rights and obligations associated with Union citizenship have been forged by the Court of Justice, despite the limited regulatory competences conferred upon the Community by the Treaty, and sometimes even in the face of the legislative choices expressed by the Union’s accountable political institutions. Although the Treaty of Lisbon 2007 itself appears to have little formal impact on this debate,[1] it is arguable that the broader post-Laeken constitutional reform process (including the negative referenda in France, the Netherlands and Ireland) exposes the fragility of the normative basis upon which this controversial judicial experiment has been constructed, thereby raising difficult questions for the future direction of the Court’s caselaw (section 4).
2.The Restructuring of Welfare State Spaceswithin the European Union
2.1.Global restructuring and processes of deterritorialisation and reterritorialisation
In his work on New State Spaces, Neil Brenner highlights the fact that, for much of the 20th century, social science scholarship was able to assume the nation state to be the normal geographical container for the operation and understanding of social, economic, political and cultural relations.[2] With time, however, analysts came to understand that such a state-centric model of territorialisation could not be taken as a natural given. In fact, the emergence of globalisation (or global restructuring) means that previous assumptionsabout enclosing social etc relations within such a bounded geographical space must now be viewed as deeply problematic.[3] Nevertheless, the task of identifying new and alternative modes of spatial analysis has proven difficult. In particular, contemporary processesof global restructuring have entailed neither the absolute reconstitution of previously diverse societies onto a new global scale; nor their complete disintegration into a “distanceless, placeless, or borderless space of flows”.[4] Rather, globalisation might be understood as having prompted a process of deterritorialisation and reterritorialisation.
On the one hand, deterritorialisation refers to the circumventionand dismantlingof historically entrenched scalar hierarchies, whereby familiar nationally defined configurations of social etcorganisation are unsettled and rearticulated.[5] On the other hand, such deterritorialisation is closely intertwined with a phenomenon of reterritorialisation, through which new subnational and supranational socio-spatial configurations are being constructed, though without entailingthe outright denial of the nation state’s continued relevance as a major locus of social etc organisation.[6] The national territorial state – albeit significantly rescaled – therefore serves as the crucial geographical infrastructure for an ongoing dialectic: mutually constitutive, if highly conflictual, processes of deterritorialisation and reterritorialisation succeed in reshuffling entrenched hierarchies of scalar organisation; social etc spaces are continually produced, reconfigured and transformed; qualitatively new geographies of state regulation emerge – albeit through a process which is highly variegated and path-dependent, according to a host of context-specific institutions, actors and influences.[7]
Brenner’s vision of the interface between historically inherited and newly emergent state spaces, as a focal point for understanding the restructuring of social, economic, political and cultural geographies in contemporary capitalist societies,[8]will no doubt ring many familiar bells with scholars of European integration.[9] In particular, that vision tallies well with the recent experience of the European welfare systems.[10] It seems fair to observe that the inherited space of the national welfare states is indeed undergoing a dialectic process of deterritorialisation and reterritorialisation: on the one hand, certain historically entrenched assumptions associated with the post-war national welfare systems have increasingly become challenged and unsettled; on the other hand, there is greater recognition of the emergence of local and regional, as well as international and supranational, dimensions to the conception, construction, organisation and delivery of welfare goods and services. We shall explore this idea further, with reference to the relationship between the state space of the national welfare systems and the influence of EU membership, particularly since the introduction of Union citizenship and its transformation in the hands of the Court of Justice.[11]
2.2.Challenges to national welfare states and the “constitutional asymmetry”of EU welfare policies
There seems widespread agreement that the European welfare states, for all their distinctive national characteristics, face certain common challenges, especiallyconcerning the viability of traditional values such as the principle of universal coverage and the provision of relatively generous levels of support.[12] The greatest pressure appears to emanate from internal factors: for example, social changes in fields such as labour market participation, population aging, divorce rates and single parent families; the recognition of a broader range of social risks and the costs of new medical treatments; a more widespread faith among political elites and the population at large in the supposed ability of market forces to play a constructive role in public services.[13] Even if important structural differences remain, the flavour of reform in many countries is now familiar: promoting work rather than protecting labour; selective targeting of support rather than universal entitlement; emphasis on the social obligations of citizens rather than the social right to welfare; and expanding use of the private sector rather than purely public administration for the delivery of welfare services.[14]
Many scholars tend to ascribe to external factors – such as the (real or perceived) economic and budgetary pressures posed by greater global competition – aprimarily aggravating role in this essentially internal process of welfare state reform (or at least one which remains mediated through and thus reshaped by domestic institutions and actors).[15] However, the (quasi-exogenous) demands arising from membership of the European Union are acknowledged to exercise a much greater (or at least more tangible) influence upon national welfare policies.[16] That influence derives, in particular, from the constraints imposed by economic integration within the Single Market: whether direct,through the application of free movement and competition rules to specific domestic choices about the organisation and delivery of welfare goods and services;[17] or indirect, such as the widespread assumption that more intense competition to retain and attract mobile undertakings or capital within the Single Market, or to stimulate economic performance by national economic operators obliged to compete with foreign rivals, induces Member States to reduce the labour costs and / or overall tax burdens implied by their existing levels of welfare support;[18]coupled with the risk that the budgetary constraints imposed by participation in economic and monetary union may produce a negative impact upon the financing of national social protection systems.[19]
All of that provides the basis for the well-known critique of the EU’s alleged “constitutional asymmetry”: the pressureson national social choices exerted by European economic integration are not matched by the availability at Union level of countervailing resources for the purposes of protecting and promoting social rights in general, or welfare provision in particular.[20] Save for relatively marginal activities such as the CAP and the Structural Funds, the EU is generally characterised by the performance of extremely limited direct redistributive functions, the exercise of rather weak regulatory powersin the field of welfare (as compared to other areas of social policy such as labour law) that might instead seek to compel domestic resources to be employedalong particular redistributive pathways, and a default tendency to rely on soft law instruments, such as the open method of coordination within the context of the Lisbon Strategy, to achieve many of the Union’s welfare policy objectives.[21] Of course, the Union’s restricted welfare competences may be interpreted as a natural reflectionof its impoverished legitimacy – among MemberState political elites and the general population alike – to assume any more far-reaching independent social mandate.[22] Indeed, it has been argued that, when it comes to the Union’s social and welfare policy objectives, more actually means less.[23] Nevertheless, the accusation of “constitutional asymmetry” has stuck and seems to cut deeply into the psyche of many of the Union’s supporters and detractors alike: in theory, the national welfare states remain pre-eminent; in practice, that pre-eminence tends to be undermined rather than supported by the Union.
2.3.Union citizenship and domestic welfare boundaries based on nationality and territoriality
The introduction of Union citizenship was seen by many commentators as an opportunity partially to redress that balance,[24] and ultimately, to provide an important new source of affiliation to and legitimacy for the process of European integration.[25] Even in the absence of extensive redistributive or harmonising competences in the sphere of welfare provision, the evolution of a workable “European social citizenship” could still be realised through action to promote more universal rights to free movement across the Union territory for all Community nationals, and the creation of novel expectations of social solidarity based upon the shared identity of Union citizenship, going beyond the traditional restriction of mobility and equal treatment rights under Community law to persons deemed economically active in an employed or self-employed capacity. Such a “European social citizenship” would obviously be much more modest in its ambitions than any ordinary “national social citizenship” – not least in that its benefits would be reserved primarily to that relatively small proportion of the population who do in fact exercise rights to free movement in another Member State – but it would at least be attainable within the existing constitutional constraints and limited competences available to the Union.[26]
It is apparent that the benefits even of any such modest “European social citizenship” – more extensive and more secure rights, both as regards residency and to social support, for economically inactive persons previously excluded from the full protection of Community law – are to be discharged vicariously by the Member States themselves. The line between creating new models of social solidarity derived from Community law, and recasting old forms of social solidarity as they exist under national law, is a fine one.[27] Indeed, that prospect raises a fresh set of challenges for the national welfare systems or, to put it differently, another dimension to the dialectic process of deterritorialisation and reterritorialisation acting upon our inherited state welfare spaces. After all, two of the strongest spatial characteristics displayed by national welfare states in their formative post-war period were nationality and territoriality; those twin criteria have traditionally served, in principle, to distinguish eligible members of the domestic welfare community from outsiders excluded from its protection and benefits.[28]
The limitation of certain (particularly non-contributory) social rights to own nationals reflects the close interrelationship between the welfare state and the nation state: the community of interests derived from shared national identity provides much of the moral force required to justify the redistribution of wealth through social security and other welfare benefits; conversely, the community of interests derived from the shared assumption of responsibility for individual social well-being helps build and reinforce a shared national identity. That same sense of community underlies the traditional restriction of certain social rights to those resident within the domestic territory: citizens who chose to go abroad, and no longer share in the national community – or for that matter, pay taxes to the national exchequer, or submit themselves to supervision by the national authorities – forfeit the expectation of welfare support from their country of origin.[29] As Halfmann has observed, “the concepts of equality and solidarity associated with the modern welfare state cannot be understood without the original restriction of welfare state policies to the members of the nation…. welfare policies are meant to impose a territorial criterion on the politics of inclusion in the political system [including] the attempts of the nation state to restrict the welfare state benefits to its citizens or to demand the consumption of the benefits on the state territory”.[30]
While the centre of gravity for comprehending welfare relations in contemporary Europe undoubtedly remains anchored (legally, politically and financially) at the domestic level, internally and externally driven processes of restructuring mean that nationality and territoriality can no longer claim an absolute monopoly in defining membership of and exclusion from the domestic solidaristic communities: the dialectic of deterritorialisation and reterritorialisation has surely already led to greater recognition for more diverse (subnational and supranational) dimensions to social and welfare provision.[31] That is true not least as regards economic integration within the context of the Single Market: as hinted at above, Community law has long insisted that an economic contribution by foreign migrants to the host society must be recognised, in principle, as a valid ticket for entry into the national solidaristic community;[32] similarly, the Community’s rules on the cross-border coordination of national social security systems, currently containedin Regulation 1408/71[33] but shortly to be replaced for most purposes by Regulation 883/2004,[34]have long sought to detach the payment of certain benefits from a purely territorial basis.[35] Nevertheless, the prospect of a “European social citizenship” – premised upon greatly expanded rights to free movement, residency and equal treatment for all Community nationals, regardless of their economic status or contribution – would directly and significantly challenge the traditional links between an individual’s legitimate right to claim welfare support and her / his membership of each Member State’s solidaristic community,either according to historically accepted ties of belonging based upon nationality and residency, or on the basis of well-established Community principles relating to the facilitation of economic mobility.[36]
The remainder of this paper will explore the interface between the inherited spaces of MemberState welfare systems based on the historic criteria of nationality and territoriality; and the emergent spaces of supranational identity suggested by the construction of new welfare rights and obligations for Union citizens under Community law. We shall see that EU membership and the impact of Union citizenship both contributes to the partial dismantling of the welfare state’s entrenched spatial identity and simultaneously seeks to offer new dimensions in its more complex reconstruction (section 3.1). However, this interaction between the EU and its MemberStates in reframing the spatial identity of welfare provision in the light of Union citizenship deserves to be interrogated critically in the light of its specific institutional and policy contexts. In the first place, there are questions about the impact of Community law on social solidarity: what benefits Community law brings to individuals, and what challenges this might pose for the national welfare states (section 3.2). In the second place, there are questions about the constitutional implications of the recent transformation of Union citizenship for Community law itself: how that transformation affects the distribution of competences between the Union and the MemberStates, and the separation of powers between the ECJ and the Community legislature (section 3.3).
3.A Critical Assessment of the Welfare Rights Associated with Union Citizenship
3.1.Summary of the current legal framework
At the risk of neglecting its myriad nuances, the current legal framework governing the welfare rights associated with Union citizenship – derived from the primary Treaty provisions, secondary measures adopted by the Community legislature, and of course, the extensive interpretative caselaw of the ECJ – may be summarised as follows.[37]
As regards relations between an economically inactive migrant and his / her host state, the inevitable compromise between (on the one hand) the desire to offer meaningful benefits to Union citizens regardless of their economic or financial status and (on the other hand) the need to respect the Member State’s limited willingness and ability to pay for the upkeep of foreign nationals who might otherwise present an unreasonable burden upon its public finances, has gradually manifested itself in the task of identifying a “real link” between migrant and host society.[38] The closer the bond between the individual claimant and the Member State, the more secure will be the claimant’s right to reside within the territory, free from the fear of expulsion on economic or financial grounds;[39] and the more extensive his / her right to equal treatment within the host society, as regards welfare and other social benefits.[40] Union citizenship, combined with a tangible shared experience between the individual and his / her host society, has therefore become a legitimate gateway into membership of the domestic welfare community.
As regards relations between a migrant Union citizen and his / her home state, a similarapproach has emerged in parallel in the caselaw.[41] The tension between (on the one hand) the desire not to hinder the movement of Union citizens who may be dependent upon some form of public support and (on the other hand) the political, financial and practical constraints that favour respect for the territorially bounded nature of (particularly non-contributory) welfare provision has also been resolved through resort to a “real link” principle.[42] In this context, the Court seems sensitive to whether the relevant benefit is funded by the claimant’s own contributions or instead through general taxation, and the degree to which it may be linked to the specific economic and social environment of the competent Member State: the stronger the relationship between a given welfare benefit and the domestic system of social solidarity, the weaker the force of the argument for severing the cord connecting payment of benefits to residence within the national territory.[43] In addition, however, the Court will examine the degree to which the individual claimantmay assert membership of his / her home state’s welfare community, even after having left the national territory, on the basis of past or present links other than continuing residence alone, which are nevertheless sufficient to warrant a right of access to the relevant benefits.[44]