 countries. (An indication of the differences in levels is given in Table 16.5.) In the member states that have high social standards (1994 figures ranging from 3.6 to 5.8), labour cost will be higher than in states with low standards (1994 figures ranging from 0.9 to 3.1). This has given rise to the accusation of social dumping: employment will be lost in the former and won in the latter because firms faced with losses in market shares will relocate to low-cost, low-protection locations. Those demanding protection against this social dumping can neither use the instruments that apply to goods and service markets (free movement), nor those of a macro-economic nature (a devaluation is precluded by the monetary union). So, they advocate countering a downward pressure upon social conditions by setting for all member states minimum wage levels, social provisions and health and safety standards.16 We will go further into the remedies for these two problems in the following sections, where it will be seen that the major EU policy instrument against unemployment is the Social Fund, and against social dumping the harmonisation of national social security systems. Gradual development of policy European social policy is a complement to national social policies. Social policy is closely associated with, and may even encompass, labour market policy, which addresses issues like unemployment but also education, training and working conditions. It is generally defined to include also the fight against problems such as poverty, social exclusion and illness (Hantrais, 1995). The promotion of social cohesion requires the reduction in disparities, which arise from unequal access to employment opportunities. Many other social problems are aggravated by the unemployment problem, so it is only logical that the EU has placed the fight against unemployment at the centre of its policy actions. The objectives and actions of the European Social Policy have changed as the EU has moved into higher stages of integration (Degimbe, 1999). Beginnings (1952-74) The experience of the ECSC proved profitable when the social policy paragraphs of the EEC Treaty were devised. Redistribution: Cohesion Policies 419 While the countries of Europe were still discussing the need for economic integration, the need for a complementary social policy had already been recognised (ILO, 1956). However the preparatory discussions for the Treaty of Rome did not produce a clear-cut view on such a policy, so that the relevant Treaty articles form rather a mixed bag. For a long time the situation has been characterised by a dichotomy between aims and means. Indeed the aims set are broad and ambitious (Article 136): 'the member states agree upon the need to promote improved working conditions and an improved standard of living for workers, so as to make possible their harmonisation, while the improvement is being maintained'. However the instruments provided are not very specific; the 'improvement is largely to be achieved through the beneficial effects of the Common Market'. The same dichotomy of aims and means is found in Article 137. The first part of this article states that the Commission's tasks are to promote close cooperation in a very widely defined social policy field. The second part of the same article allows very limited means to realise these tasks: the Commission is asked to undertake studies, arrange consultations and so on. More initiatives (1974-85) As a reaction to the deterioration of the economic situation, the Council agreed in 1974 to an action programme for social policy. Objectives were the improvement of living and work conditions, codetermination of workers and full employment. It proved very difficult to move forward. At the end of this period some bits and pieces of social legislation had been passed, but the overall situation of a limited practical involvement of the EU in social policy matters had not changed. Up to the mid-1980s EU social policy has in practice mainly dealt with two subjects: • the Social Fund, which has the task of'rendering the employment of workers easier and of increasing their geographical and occupational mobility' (Article 146); this was meant to ease the adaptations made necessary by the Common Market; • coordination of social security systems (Article 42) to secure freedom of movement for workers; workers who migrate from one national system of social security to another need protection to safeguard their rights, but that does not necessarily mean that the systems themselves need to be changed; further harmonisation of social security systems may be envisaged (Articles 136-137). Social Charter and Single European Act (1986-92) The discussion assumed a different perspective when the plans for the single market were set up (CEC, 1988c). There was much concern that the 420 The Economics of European Integration increase in economic efficiency would entail considerable social problems, for two reasons. First, the adaptation to new circumstances would lead to unemployment. Second, the competition from low-wage countries that also have low social protection would lead to an erosion of the high social protection in the richer countries. (In this respect the argument of social dumping was often advanced.) So the Commission, the Parliament and the ESC asked for minimum standards to be applied throughout the EU. As existing international agreements, such as the ILO Convention,17 proved inadequate, the EU set up its own Social Charter of fundamental social rights of workers. This covers aspects such as working conditions, freedom of movement, social protection, collective bargaining, worker participation, health and safety, and so on. The rights listed in the Social Charter are often qualified so as to take account of national practices. Unfortunately the subjects treated are a very mixed bag and do not fall into coherent categories of objectives. Notwithstanding this, real progress on their realisation has been made: most of the programme has been implemented (Addison and Siebert, 1994). The Treaties of Maastricht and Amsterdam (1993-) The Social Protocol of the TEU (commonly referred to as the Social Chapter) has consid- erably broadened the scope of the action of the EU in the social field (minimum hours of work per day, social security, health and safety requirements and so on). The concern for subsidiarity has meant that the Protocol expressly excludes certain areas from EU involvement (wages, strikes and so on). An innovation is that the Protocol provides for a direct consultation of the social partners which may give a new impetus to the activities of the Economic and Social Committee, which up to now have not been of much consequence (CEC, 1993d). The Treaty of Amsterdam introduces the possibility of a European policy to promote employment. This will take the form of guidelines for national policies. Any action has to take into account two other objectives: sustainable development (environment) and equal opportunities between men and women. European Social Fund; instrument for employment creation The original objective of the European Social Fund (ESF) is to increase the occupational and geographical mobility of workers in the EU, thus serving both an allocational purpose (to increase the efficiency of the European labour market) and a redistribution purpose. This was to be achieved mainly through vocational retraining and resettlement allowances, but aid could also be granted for the benefit of workers whose employment was reduced or temporarily sus- Redistribution: Cohesion Policies 421 pended as a result of conversion. The fund was to be administered by the Commission, assisted by a committee of representatives of governments, trade unions and employers, an arrangement that is still valid. The tasks of the fund have been continuously changed under the influence of new political demands and new economic and social circumstances. Four periods can be distinguished (Collins, 1983; Degimbe, 1999), marked by major reforms. 1958-72 (EU6). In this period the ESF was almost entirely devoted to enhancing the allocational efficiency of the EU labour market; in other words, occupational mobility. In the period considered, 97 per cent of the fund's resources went into the financing of vocational training or retraining schemes. Only a minor portion (10 million euro) of the total amount of 320 million euro of grants paid in this period were channelled into schemes for resettlement, for the purpose of stimulating geographical mobility. The reasons are not hard to find: the shortages on the labour market were already calling forth large external immigration flows. Nothing was done to encourage conversion, mostly because member states could not agree on the type of project that would be eligible for aid. 1973-83 (EU9). In this period, the financial scope was gradually increased from some 250 million euro to 1500 million euro. The fund was able to contribute up to 50 per cent to the training and related costs of programmes for specific target groups. In this period the redistribution objective overtook the allocation objective. Indeed half the fund's money went to the less developed regions. In that realm, the European Social Fund worked alongside the ERDF, the latter helping to create job opportunities, the ESF helping the labour force to acquire the skills needed for the new jobs. Almost 30 per cent of the grants paid by the ESF were used to improve employment prospects for young people, because much of the burden of rising unemployment appeared to be shouldered by the young. 1983-88 (EU12). The fund's volume was increased to 2500 million euro in 1986. First priority was given to young people: 75 per cent of the fund had to be spent on their education, training and initial hiring. In allocation of the fund's resources, emphasis was placed on the redistribution towards the most distressed regions; 45 per cent of total ESF aid accrued to the following: all regions of the three poorest countries of the EU (Greece, Portugal and Ireland), the Italian Mezzogiorno and large parts of Spain. 1988-present. The structural funds have been integrated (Agricultural Guidance, Regional and Social). For the Social Fund part, the main objective set was developing high quality employment (objective 3 in Table 16.4), in particular by promoting the reinsertion of the unemployed in jobs and the development of human resources (also in innovation, technology and so on). 422 The Economics of European Integration The European Council has on several occasions declared that the fight against unemployment is the number one priority of the EU. The member states should