The central issue in the ongoing debate about globalisation is how much of the socio-economic structure of society is being transformed by this process and how much of this structure will resist change.

The EU social model naturally features prominently in this debate. The question is: Will this model stand the test of time? In attempting to answer this question, this article will argue that the threats to the social model of Europe are real. Whether the mechanism supporting this model is dynamic enough to enable the EU to adjust itself in response to these challenges is a moot point.

The European dream

The objectives of the EU, spelt out in various documents, have always stressed the importance of giving the people of Europe a unique blend of economic well-being, social cohesion and a high overall quality of life. The social model that emerged from this set of objectives fashioned a European culture, a European way of thinking and a European pattern of behaviour that tried to translate the abstract concepts of citizenship, equity and affluence into practical realities.

Based on principled pragmatism rather than a utopia, this social model attempted to create the necessary climate for the establishment and collaboration between capital and labour that would ensure a combination of a high rate of economic growth with a high level of equality. In its pursuance of sensible and responsible monetary and fiscal programmes designed to operate along with the publicly funded welfare states, the European Commission tried to create a rare blend of market economics and social policies.

These policies were set to restrain the power of capital and the free market to determine people's worth and to dominate or commercialise human relations. In other words, the norms of social and cultural life and the human needs are not governed by the imperatives of the market.

The human face of the Union is more deeply embedded in its structure and operations than credit is given for. This however should not be taken to mean that this model is underpinned by a passive social dimension simply to generate, among European citizens, sentimental gestures towards the less well off. It is more an active social dimension based on the enforcement of the work ethic encapsulated within the Community Charter of Fundamental Social Rights of Workers.

The shared values emanating from this charter form the basis of the European model, for it underpins the conviction that economic growth and social progress must go hand in hand. According to this European model competitiveness and solidarity have both to be taken into account in building a successful Europe.

Thus the vision of the European dream of an affluent and equitable society was meant to be different from the American dream based on the unfettered market model. Dreams of course do not always translate into reality. Indeed, there have been many social analysts and commentators who, expressing their disbelief in the enforcement of this social model, have highlighted the gaps between the dream and reality. What preoccupies them is that some of the policies adopted by the EU Commission go against the principles underlying the preservation and development of social cohesion.

For example, the detractors of the EU social model point to the Common Agricultural Policy (CAP). The objectives of this policy, which absorbs a huge amount of the EU budget, are far from creating greater equity. This lack of sensitivity to the principles of equity, inbred within the CAP, has not only raised complaints within EU institutions but has also evoked protests by the anti-globalisation movement at World Trade Organisation meetings, where the EU plays a leading role.

Opposition to globalisation is not being instigated simply by the plight of people in the less developed world but also by the new socio-economic scenario of the developed. These protests should not be dismissed as mere displays of romanticism or as a rebellion without a cause. By pointing out the ambiguities and contradictions distorting the ideal vision of social cohesion, they may indeed be the inner voice or the super ego of the social conscience of Europe.

Threats to social model

The ideal of this social model may be threatened by macro-economic policies that put pressure on the state to moderate wage polices, introduce labour market reforms that promote the low wage sector and insecure forms of employment, and reform the pension and health schemes with inadequate concern for the social consequences.

These policies, which may push more people into the poverty trap, are based on the conventional wisdom that advanced industrial societies must respond to the challenges posed by global integration and technological change by limiting government spending and insisting on a deregulated and liberalised labour market.

The issue of labour standards stands at the core of this debate as it is considered to be closely related to competitiveness, growth and job protection. Some argue that excessive high labour standards blunt companies' competitive edge. At a time characterised by the intensification of international trade and heightened competitiveness, which are the hallmarks of the globalised economy, this argument is becoming more forceful to justify a policy aimed at removing many of the elements which capitalists claim are hindering the operation of a free market.

What is disconcerting to many is that this process of globalisation is far from being experienced as an evolutionary change leading towards a better way of life. There seems to be no evidence that this globalised economy is contributing to a fairer share of wealth and resources. Evidence may indeed point to a wider gap not only between rich and poor countries but even between the core and peripheral workers in the industrial countries.

Cynicism is bound to prevail when the globalisation argument is used to justify the fall in wages, the reduction of social welfare benefits, spiralling unemployment, more casual and part-time work and insecure jobs.

The high unemployment that has plagued most of Europe for the past two decades has actually led to such cynicism. Employment growth for 2002 to 2004 has been low. Overall employment rates remain seven per cent below the employment target rate for 2010. Low growth and persistent high unemployment are jeopardising EU policy-making to reduce poverty.

The economic slowdown, accompanied by rising unemployment and fewer job opportunities, has put more people at risk of poverty. Economic restructuring, without the proper measures to cushion the adverse effects it may have on some workers, exacerbate this problem. People at risk of poverty will increase unless social and labour market policies fail to address the issue of opportunity and employability, through the provision of skills and steps to promote the workforce flexibility being demanded by industry in this globalised economy.

An activation policy not complemented by other measures aimed at supporting job creation and opportunities will sound hallow and irrelevant to people who due to their inactivity, induced by this high rate of unemployment, feel socially excluded.

Reconciliation of ambiguities

To reconcile high social standards with the capacity to compete in world markets, the EU must give top priority to creating new jobs enabling all its citizens to integrate into the economy and society. What may inhibit such reconciliation is the tendency among some policymakers and advocates of the free market to look for 'culprits', rather than focus on the solution and on opportunities for economic and social cohesion. The three main culprits that are generally attacked are:

1. A bloated public sector which, it is claimed, crowds out private investment and

stifles individual initiative;

2. A trade union movement accused of wielding power irresponsibly by being trapped in a mindset of the previous century and using the same rhetoric language of the past; and

3. The policymakers who, by introducing labour market rigidities to improve or maintain the welfare state, are held to be responsible for scaring away capital investment, thus exacerbating unemployment.

Although an appraisal of the situation may assign some validity to these three assertions, there seems to be a tone of scapegoating. Markets are essential to the effective functioning of all modern economies, but they have to function well within the parameters of sensible regulations monitored and administered by the state, an effective system of social dialogue and the provision of a strong safety net.

There is logic in the argument that trade unions should strive to provide the foundation for social cohesion and adapt to change. By the same token, employers should redefine corporate social responsibility by directing it towards the enhancement of the human aspect of work rather than simply conforming to the terms of stock market forces.

Companies have to acknowledge the fact that besides profit there is a social dimension to their activities. A different approach is needed to replace the 'shareholders model' by the 'stakeholders model', which may be more effective in finding the right balance between the different interests by looking at the employees as partners in business.

The directives on European Works Councils and the European Company emphasise that corporate social governance entails management-labour relations in which employee participation in decision making is statutorily recognised and guaranteed. An open, consultative and consensual style of management is more becoming to progressive and professional managers.

The final challenge lies in education. Management education should aim at creating a cadre of progressive and professional managers able to cope with a new workplace that demands new forms of employee relationships. The proliferation of Masters degrees in Business Administration (MBA) would serve no purpose if this business education fails to develop complete, rounded leaders.

The challenge however regards the entire education system. Education has always been perceived as one of the public utilities that has been instrumental in legitimising society's claim to equity. Subjecting the education system to the whims of the market may harm rather than enhance this image of equity.

The introduction of market competition in the school system may lead to polarisation between schools, with the ones attracting an intake of highly motivated pupils outperforming the others.

This type of polarisation is not conducive to the implementation of the principles of equity. Citizens' rights in education policy have to be reasserted against the current trends of marketisation which can make education become a private consumption good. What the principles of equity demand is that high quality education is accessible to all.

Meeting the challenge

To meet this challenge ways have to be found to create wealth in business by generating the dynamics of entrepreneurship without the dilution or repeal of social regulations that are designed to protect workers and consumers.

Northern European countries have shown that it is possible to pursue sensibly prudent and responsible financial polices without undermining the public funded welfare state. A high level of institutional consensus is conducive to such a scenario where each of the social partners tries to make possible the structural change that is needed and at the same time improve the quality of working lives.

At a time when more people have to face a riskier life due to a higher level of insecurity inherent in a society characterised by continuous technological changes, there might be more rather than less need for social policy. While the profound changes currently affecting the EU may call for a reform of social policy, new ways have to be found to consolidate and build on the achievements of the past.

Social policy has evolved as a corrective to perceived failings of previous policies. Solidarity can only be achieved if we practise our belief of mutual consideration and restrain our egotistical attitudes. An inclusive society, an ideal espoused by the EU since its inception, has to protect the most vulnerable, such as those who cannot gain a foothold in the economy because of long-term unemployment, disability, old age and gender.

A strong policy committed to the creation of a labour market open to all is essential for an inclusive society. One of the most positive outcomes in Europe in the last decade has been the increasing number of women in the labour market. Despite these gains, however, the gender gaps in the labour market remain pronounced. Malta has the highest gender gap in the EU. Given the current predominance of women in post-secondary and tertiary education levels, a lower activity of women in the labour market militates against greater competitiveness. The contribution that women can make to revitalise the economy is one of the reasons why the issue of equality should be seen as a key element to be taken into account in social policy.

The growing number of women in the labour market and the increase in dual-worker families has brought to the fore the issue of work-life balance. Childcare has become a major problem for the two-earner family and demographic trends have moved the issue about the responsibility of the elderly and dependants up the social agenda.

New social infrastructures are needed to support the household and the institution of the family. Failure to provide adequate facilities and support for working parents will make the discourse about enhancing the solidity of the family sound as mere glib talk.

The foregoing indicates that the issues relevant to the social dimension are complex and give rise to dilemmas. The high level of commitment needed to solve these complexities has to be complemented with openness to the views of others. Social dialogue in this context should not be viewed as a mere brokerage of trade-offs between different interests. It should be seen as a mechanism to help the social partners and members of civil society to gain clarification on what matters most in a specific context, and to understand from what viewpoint it should best be tackled and what balance has to be struck.

The need for joint solutions, with long-term positive results for all sides, become more imperative at a time when deep transformations are taking place. Bargained solutions will still be the key solution of complex problems that would otherwise be very costly to solve. The governing principles of EU directives have always stressed the need for a broad political consensus.

In the globalised economy, state, capital and labour not only have to find a modus vivendi to maintain order and stability but through a consensual ethic should try to provide a policy innovation forum to solve the pressing needs of an intensely competitive market.

The aim of social dialogue should be to distinguish between economic and social fields by strengthening the institutions concerned with their respective issues. It will have to be cognisant of the need of more solidarity between the more successful workers and those at risk of being marginalised.

This involves capacities to work with internal contradictions and value conflicts while sustaining relationships with those engaged in the process. The outcome is not of a winner raising the trophy and a loser licking the wounds. It is rather a new learning that enables the social actors involved in social dialogue to adapt to the values, beliefs or behaviours to reach a socially useful result. This takes time and sustained commitment.

The European social model can, or rather should, constitute an alternative model of globalisation through its commitment to respect human rights and social cohesion. This model is standing the test of time as forces from within and without are putting pressure on the states to standardise their model of society in deference to the free market economy and the neo-liberal ideology that have become the tenets of this globalised economy.

The EU should make the social model an important point of reference in the globalised economy. The building of a prosperous Europe after the devastation of war can be defined as the fulfilment of a dream. In the midst of the turbulences instigated by a new international order we should keep on dreaming that the Europe to which we aspire would retain the social dimension.

Saviour Rizzo is acting director of the Centre for Labour Studies at the University of Malta.