Where Now for European Social Democracy? - Policy Network

66WHERE NOW FOR EUROPEAN SOCIAL DEMOCRACY?impact on jobs and competitiveness. EU-wide regulation can promotecompetitiveness by setting standards that apply across a huge market,the best example of which is how the GSM standard has made Europethe world leader in mobile telephony. EU-wide regulation can howevercost jobs in internationally competitive markets, if Europeancompanies are expected to adhere to more costly standards than theiroverseas competitors, as the Germans fear in the case of the presentdiscussions over the Chemicals Directive.Also, social democrats have to recognise that ‘Social Chapter’regulation can pose a particular burden on small firms. The LabourGovernment in Britain supports the concept of a floor of socialstandards, which since 1997 has become more solid and widely based.But there has to be flexibility in application. We have to accept thatthere may be trade-offs between the creation of new jobs and theimposition of costly social standards. All one can do is strike a balance,case by case.It is simply not good enough to argue that, in the long run, allEurope can be winners from more open markets. In the long run, weare all dead, as Keynes famously quipped. Certainly, we need strongaction at European level to strengthen the Single Market, such asbacking for the European Commission’s present proposals to extendthe Single Market in services and more determined enforcement ofexisting rules on competition and state aids. But we also need fullconsideration of imaginative proposals like those contained in the Sapirreport for ‘restructuring credits’ that redundant workers could puttowards the costs of moving home or retraining 11 . Social democratsneed to sharpen Lisbon’s policy focus on the problem of assisting thelosers from market integration.Equally, reform of the Stability and Growth Pact matters to bothmembers and non-members of the euro alike. The present Pact isinimical to the Lisbon objective of ensuring stable macro conditions forgrowth. Several countries have been forced by the Pact into policiesthat aggravate the economic cycle. This is not just a matter thataffects members of the euro. Perverse economic policies outsideeurozone areas are damaging to countries like Britain outside the eurowith over half their export markets in the eurozone. The decision by