11.1 Introduction

In this chapter, we compare the policy orientation of the new economic governance (NEG) prescriptions that the European Commission and Council of finance ministers (EU executives) issued to Germany, Ireland, Italy, and Romania (2009–2019) across our two cross-sectoral policy areas (employment relations and public services) and three public services sectors (transport, water, and healthcare). To what extent have they been informed by an overarching policy script that sought to commodify labour and public services? This question is crucial from this book’s labour politics perspective, as the presence of a commodifying script is a necessary (albeit not sufficient) condition for transnational countermovements that could alter the setup and policy direction of the EU’s NEG regime.

Certainly, commodifying EU interventions as such do not necessarily trigger countervailing protest movements, especially not transnational ones (Dribbusch, Reference Dribbusch2015). Successful social movements depend also on activists’ ability to construct a shared sense of injustice among people and to identify fitting targets for their grievances (Kelly, Reference Kelly2012 [1998]). Agency-oriented factors, such as activists’ framing of the problem and their interactions with workers, allies, and the public in general, are important for successful labour and social movements, including in the case of transnational collective action (Diani and Bison, Reference Diani and Bison2004; Erne, Reference Erne2008; Nunes, Reference Nunes2021; Szabó, Golden, and Erne, Reference Szabó, Golden and Erne2022). This does not, however, mean that labour activists can build transnational movements as they please.

The policy direction of the NEG prescriptions and the nature of the NEG regime shape the prospect of countervailing protests too (Erne, Reference Erne2015). Many commodifying EU laws have passed unchallenged (Kohler-Koch and Quittkat, Reference Kohler-Koch and Quittkat2013), but most transnational protests in the socioeconomic field have been triggered by commodifying EU laws (Erne and Nowak, Reference Erne and Nowak2023), for example by the Commission’s draft Services Directive or its draft Port Services Directives (Chapters 6–10). When draft EU laws favoured labour, unions usually endorsed them, for example in the case of the EU Working Time Directive in 1993 (Chapter 6). This shows that unions are primarily concerned not about the national or the EU level of policymaking but rather about its substantive outcomes and policy direction.

The key role of interest groups in policyformation processes has been acknowledged by both neo-functionalist and intergovernmentalist EU integration scholars (Haas, Reference Haas1958 [2004]; Moravcsik, Reference Moravcsik1993, Reference Moravcsik1998; Niemann, Lefkofridi, and Schmitter, Reference Niemann, Lefkofridi, Schmitter, Wiener, Börzel and Risse2019). Even so, EU integration scholars from both traditions have focused their attention on institutional actors (Stan and Erne, Reference Stan and Erne2023). However, whereas intergovernmentalists look at the relations between national governments, as they aggregate different societal interests into a single national interest (Moravcsik, Reference Moravcsik1993: 483), neo-functionalists focus on the European Commission, as it is trying to strengthen its role in the EU polity in collaboration with transnational interest groups (Niemann, Lefkofridi, and Schmitter, Reference Niemann, Lefkofridi, Schmitter, Wiener, Börzel and Risse2019). This explains the dominant focus in the EU integration literature on national or supranational institutions (Bauer and Becker, Reference Bauer and Becker2014; Bickerton, Hodson, and Puetter, Reference Bickerton, Hodson and Puetter2015); but, if one approaches EU integration from a labour politics perspective, the policy orientation of EU laws and NEG prescriptions is as important as the EU’s and the NEG regime’s institutional setup.

Accordingly, we have gone beyond the EU governance literature’s dominant institutional focus and analysed the – commodifying or decommodifying – policy orientation of EU governance in two cross-sectoral policy areas (employment relations and public services) and three public service sectors (transport, water, and healthcare). Concretely, in Chapters 6–10, we first outlined EU governance in these fields prior to the shift to NEG. Then, we analysed the policy orientation of EU executives’ NEG prescriptions for Germany, Ireland, Italy, and Romania (2009–2019) in their particular semantic, communicative, and policy contexts. Finally, we drew on our novel transnational European socioeconomic protest database (Erne and Nowak, Reference Erne and Nowak2023) to relate unions’ and social movements’ transnational protest actions to commodifying EU interventions since 1997 in all five empirical chapters.

This chapter summarises the findings of the preceding empirical chapters and compares the policy orientation of NEG prescriptions across time, countries, policy areas, and sectors, following the comparative research design outlined in Chapters 4 and 5. We distinguish between qualitative and quantitative prescriptions, as this distinction captures two key dimensions of commodification: the quantitative dimension of curtailment (of workers’ wages and public services’ resources) and the qualitative dimension of marketisation (of employment relations and public services). We discuss quantitative and qualitative prescriptions separately, as this allows us to compare those on employment relations with those on public services more easily.

Concretely, section 11.2 compares the commodifying and decommodifying patterns of quantitative and qualitative NEG prescriptions in our two cross-sectoral policy areas of employment relations and public services (Chapters 6–7). Section 11.3 replicates this approach and applies it to our findings for the transport, water, and healthcare sectors (Chapters 8–10). These comparisons reveal the pre-eminence of commodification in terms of the number of NEG prescriptions and their coercive power, policy rationale, and logic of deployment. Apart from a few exceptions, all qualitative NEG prescriptions across all countries and sectors pointed in a commodifying direction, tasking governments to marketise employment relations and public services. Most quantitative prescriptions of EU executives equally tasked most national governments to curtail wages and public expenditures. Over time, however, quantitative NEG prescriptions not only became less coercive but also progressively pointed in a decommodifying direction, for example, by tasking governments to invest more in public services. It is nevertheless misleading to speak of a gradual socialisation of the NEG regime (Zeitlin and Vanhercke, Reference Zeitlin and Vanhercke2018); not just because of the much weaker coercive power of decommodifying prescriptions (Jordan, Erne, and Maccarrone, Reference Jordan, Maccarrone and Erne2021; Stan and Erne, Reference Stan and Erne2023) but also given their explicit semantic links to policy rationales that are compatible with commodification (rebalance the EU economy, boost competitiveness and growth, enhance private sector involvement, expand labour market participation) and their scant links to policy rationales that may counterbalance NEG’s dominant commodifying script (enhance social inclusion, shift to green economy) (see Tables 11.2 and 11.4).

In section 11.4, we summarise the consequences for labour politics of the shift to NEG. Did the latter trigger transnational countermovements by unions and social movements, as one might expect, given the commodifying policy script that had obviously been shaping EU executives’ NEG prescriptions since 2009? Or did NEG’s country-specific methodology effectively prevent the prescriptions’ politicisation across borders – at least until March 2020 when the spread of the coronavirus across borders compelled the Commission and Council to suspend the Stability and Growth Pact (SGP)? In section 11.4, we thus assess how transnational collective actions of trade unions and social movements challenging NEG fared comparatively in the two cross-sectoral policy areas and the three public services sectors.

11.2 NEG Prescriptions on Employment Relations and Public Services

Tables 11.1 and 11.2 group the commodifying and decommodifying prescriptions received by the four countries from 2009 to 2019 under the categories operationalised in Chapter 5. In these tables, we present the quantitative and qualitative NEG prescriptions separately to facilitate the comparison of those on employment relations with those on public services.

Table 11.1

Commodifying NEG prescriptions on employment relations and public services (cross-sectoral)

Quantitative prescriptions            Quantitative prescriptions

	Employment relations					Public services
	DE	IE	IT	RO		DE	IE	IT	RO
2009				▲3					▲8	2009
2010		▲3		▲3			▲6		▲8	2010
2011		▲2		▲2			▲6	△	▲5	2011
2012		▲		▲			▲4		▲	2012
2013		▲		▲3			▲3	△	▲5	2013
2014	△			△						2014
2015				△						2015
2016				△			△			2016
2017				△						2017
2018				△						2018
2019				△						2019

Source (employment relations): Table 6.2; Online Appendix, Tables A6.1–A6.4.

Categories: △ = wage levels; □ = bargaining mechanisms;

⚪ = hiring & firing mechanisms.

Coercive power: ▲■⦁ = very significant; = significant; △□⚪= weak.

Country code: DE = Germany; IE = Ireland; IT = Italy; RO = Romania.

Qualitative prescriptions            Qualitative prescriptions

	Employment relations					Public services
	DE	IE	IT	RO		DE	IE	IT	RO
2009									⦁ ■2	2009
2010		■					■		⦁3 ■	2010
2011		■	□ ⚪	■ ⦁			■	⚪	⦁4 ■3 ♦	2011
2012		■		■ ⦁			■	2	⦁2	2012
2013		■	□ ⚪	■ ⦁		⚪2	■	⚪4 □	⦁4 ■5	2013
2014						⚪		4	⚪3 □2	2014
2015								3 2	□	2015
2016								3 4	□2	2016
2017						⚪		3	⚪ □	2017
2018								2 2	⚪	2018
2019								2	⚪ □	2019

Source (public services): Table 7.2; Online Appendix, Tables A7.1–A7.4.

Categories: △ = resource levels; ⚪ = sector-level governance mechanisms;

□ = provider-level governance; ◊ = cost-coverage mechanisms.

Coercive power: ▲⦁■♦ = very significant; = significant; △□⚪ = weak

Superscript number equals number of relevant prescriptions.

Table 11.2

Decommodifying NEG prescriptions on employment relations and public services (cross-sectoral)

Quantitative prescriptions            Quantitative prescriptions

	Employment relations					Public services
	DE	IE	IT	RO		DE	IE	IT	RO
2009										2009
2010										2010
2011		▲i								2011
2012	△a							△cj		2012
2013	△a b							△a cj		2013
2014						△2 bc				2014
2015						△2 bc				2015
2016						△2 bcj			△a ☆a	2016
2017	△b					△d bc	△a cg		☆a	2017
2018	△be					△ bc	△ad c			2018
2019	△be					△d bcj		c	☆a	2019

Source (employment relations): Table 6.2; Online Appendix, Tables A6.1–A6.4.

Categories: △ = wage levels; □ = bargaining mechanisms;

⚪ = hiring & firing mechanisms.

Coercive power: ▲ = very significant; △□⚪ = weak.

Figures in superscript = number of prescriptions.

Semantic link to policy rationale: a = Enhance social inclusion;

b = Rebalance EU economy; e = Enhance social concertation; f = Reduce labour market segmentation; i = Reduce payroll taxes.

Bold letters = semantic link to commodification script.

Qualitative prescriptions            Qualitative prescriptions

	Employment relations					Public services
	DE	IE	IT	RO		DE	IE	IT	RO
2009										2009
2010										2010
2011										2011
2012										2012
2013	⚪f									2013
2014	⚪f									2014
2015										2015
2016	⚪f									2016
2017	⚪f									2017
2018				□e						2018
2019										2019

Source (public services): Table 7.2; Online Appendix, Tables A7.1–A7.4.

Categories: △ = resource levels; ☆ = coverage levels.

Coercive power: = significant; △☆ = weak.

Figures in superscript = number of prescriptions.

Semantic link to policy rationale: a = Enhance social inclusion; b = Rebalance EU economy; c = Boost competitiveness and growth; d = Shift to green economy; g = Expand labour market participation; j = Enhance private sector involvement.

Country code: DE = Germany; IE = Ireland; IT = Italy; RO = Romania.

In employment relations, we distinguished a quantitative category of NEG prescriptions (wage levels) and two qualitative ones (bargaining mechanisms and hiring and firing mechanisms). In public services, we distinguished two quantitative categories: resource levels for public services provision and coverage levels, which defines the scope of public services that users can access or the population covered by public schemes. The three qualitative categories include two on the mechanisms that govern their provision (sector-level and provider-level governance mechanisms) and one on users’ access to them (cost-coverage mechanisms).

The different shades of category symbols in Tables 11.1 and 11.2 depict NEG prescriptions’ coercive power as very significant (black), significant (grey), or weak (white), as operationalised in Chapter 5. In Table 11.2, the superscript figures indicate the number of prescriptions in that category in a given year; the superscript letters signify the semantic links between the decommodifying NEG prescriptions and the policy rationales informing them. The bold superscript letters indicate semantic links to policy rationales that are compatible with NEG’s overarching commodification script; the regular letters refer to policy rationales that may run contrary to NEG’s commodification script and thus indicate potential institutional change (Crouch and Farrell, Reference Crouch and Farrell2004).

A bird’s-eye comparison based on Tables 11.1 and 11.2 reveals the dominance of commodifying NEG prescriptions in terms of their number and, most importantly, their coercive power. The tables also show that the NEG prescriptions on public services pointed more consistently than those on employment relations in commodifying policy directions across our selected countries.

The latter finding mirrors pre-NEG developments in the two areas. In employment relations, pre-NEG EU interventions by laws often pointed in a decommodifying direction (Chapter 6). By contrast, EU leaders had already promoted the commodification of public services through vertical EU interventions by law before the EU’s shift to NEG (Chapter 7). That said, the horizontal market pressures unleashed by the making and enlargement of the internal market and monetary union also commodified employment relations, albeit much more indirectly. Increased competitive horizontal market integration put pressure on unit labour costs (ULC). The Europeanisation of product markets also put pressure on national multi-employer collective bargaining systems, which had been designed to take workers’ terms and conditions out of competition (Chapter 6). As the increasing horizontal market pressures affected different locations differently, market integration led not to social and territorial convergence but to severe imbalances between core and more peripheral locations in the EU’s political economy. This explains the radical policy shift of national political and business leaders, who previously rejected EU governance interventions in collective bargaining and wages policy (Léonard et al., Reference Léonard, Erne, Marginson and Smismans2007), towards vertical NEG interventions in this field after 2008 (Chapters 2 and 3).

By contrast, decommodified public services are not subject to horizontal market pressures, except when financed through payroll taxes given their impact on ULC, as in the case of German sickness funds (Chapter 10). Decommodified public services had typically been sheltered from horizontal market pressures, but EU policymakers made public expenditure subject to the fiscal constraints set by the Maastricht Treaty’s debt and deficit criteria, as operationalised by the EU’s SGP. In addition, EU executives advanced the exposure of public services to market pressures through commodifying EU laws and court rulings. The Commission’s commodification attempts remained nevertheless incomplete because of transnational protests and the ensuing legislative amendments by the European Parliament and Council. In the 2000s, the European Parliament increasingly used its new powers as a co-legislator to curb the Commission’s enthusiasm for public service commodification (Chapter 7). The creation of the NEG regime after 2008 thus provided EU executives with a new governance mechanism to advance public service commodification, namely, one that circumvents the potential roadblocks caused by countervailing legislative amendments by the European Parliament (Chapter 3).

Tables 11.1 and 11.2 show that the patterns of commodification and decommodification in our two cross-sectoral policy areas differed across countries and over time. Moreover, commodification advanced through different channels, with implications for the countervailing actions of unions and social movements. We thus assess the prescriptions in these areas in more detail, starting with those that target the quantitative aspects of employment relations and public services. After that, we compare the prescriptions that intervene qualitatively in these areas.

11.3 Comparing NEG Prescriptions on Transport, Water, and Healthcare Services

By comparing NEG prescriptions for Germany, Ireland, Italy, and Romania (2009–2019) across the public transport, water, and healthcare services sectors, we pursue two objectives. First, we map the patterns of their commodifying or decommodifying policy orientation (Chapters 4, 8–10). Second, we assess the extent to which prescriptions across the sectors mirror an overarching commodification script. We do that because the manifestation of a pan-European commodification script informing NEG’s country-specific policy prescriptions is a necessary (but not sufficient) condition for the emergence of countervailing transnational movements.

Tables 11.3 and 11.4 reveal the dominance of commodifying NEG prescriptions across all three sectors and four countries, especially in our qualitative categories. NEG’s focus on qualitative policy reforms is crucial, as reforms are more difficult to reverse than the quantitative curtailment of resources for the provision of public services.

Table 11.3

Commodifying NEG prescriptions on public services (sectoral)

Quantitative prescriptions
	Transport				Water				Healthcare
	DE	IE	IT	RO	DE	IE	IT	RO	DE	IE	IT	RO
2009													2009
2010												▲	2010
2011				▲								▲	2011
2012				▲						▲		▲	2012
2013									△	▲		▲3 ★	2013
2014													2014
2015													2015
2016												△	2016
2017												△	2017
2018												△	2018
2019												△	2019

Qualitative prescriptions
	Transport				Water				Healthcare
	DE	IE	IT	RO	DE	IE	IT	RO	DE	IE	IT	RO
2009				⦁4									2009
2010				⦁2 ■		♦				⦁		♦	2010
2011	⚪2			⦁18 ■4		■ ♦			⚪	⦁		⦁ ■ ♦	2011
2012	⚪			⦁12 ■2		■ ♦			⚪			⦁ ■ ♦	2012
2013	⚪		⚪3	⦁6 ■5	⚪	■ ♦	⚪		⚪	⦁ ■2		⦁2 ■3 ♦	2013
2014	⚪		3	⚪ □	⚪				⚪	2		⚪2	2014
2015	⚪		2	□									2015
2016				⚪ □						⚪			2016
2017			2		⚪								2017
2018										⚪			2018
2019			2	□						⚪		⚪	2019

Source: Tables 7.2–10.2; Online Appendix, Tables A7.1–A10.6.

Categories: △ = resource levels; ☆ = coverage levels; ⚪ = sector-level governance mechanisms; □ = provider-level governance mechanisms; ◊ = cost-coverage mechanisms.

Coercive power: ▲★■⦁♦ = very significant; = significant; △□⚪◊ = weak.

Superscript number equals number of relevant prescriptions. Country code: DE = Germany; IE = Ireland; IT = Italy; RO = Romania.

Table 11.4

Decommodifying NEG prescriptions on public services (sectoral)

Quantitative prescriptions
	Transport				Water				Healthcare
	DE	IE	IT	RO	DE	IE	IT	RO	DE	IE	IT	RO
2009													2009
2010													2010
2011													2011
2012			ch								g		2012
2013			△a j								△g	▲h ☆a h	2013
2014											g	☆a	2014
2015					△bc							△a h ☆a	2015
2016	△bj	△c		△a	△bcj	△c		△a ☆a					2016
2017		△c			△b	△c							2017
2018		△ad cj		△ch	△b	△ad cj		△c				☆a	2018
2019	△d j	△ad cj	d hj	△ad	△bcj	△ad cj					g	☆a	2019

Qualitative prescriptions
	Transport				Water				Healthcare
	DE	IE	IT	RO	DE	IE	IT	RO	DE	IE	IT	RO
2009													2009
2010													2010
2011													2011
2012													2012
2013												♦a i	2013
2014												◊2a h	2014
2015													2015
2016												◊a	2016
2017												◊a	2017
2018													2018
2019													2019

Source: Tables 7.2–10.2; Online Appendix, Tables A7.1–A10.6.

Categories: △ = resource levels; ☆ = coverage levels; ◊ = cost-coverage mechanisms.

Coercive power: ▲♦ = very significant; = significant; △☆ = weak.

Semantic link to policy rationale: a = Enhance social inclusion; b = Rebalance EU economy; c = Boost competitiveness and growth; d = Shift to green economy; g = Expand labour market participation; h = Improve efficiency; i = Reduce payroll taxes; j = Enhance private sector involvement.

Bold letters = policy rationale linked to commodification script.

Country code: DE = Germany; IE = Ireland; IT = Italy; RO = Romania.

As the profitable segments of the Romanian water sector had already been privatised in the 2000s, EU executives focused their sector-specific prescriptions instead on the Romanian transport and health sectors. By contrast, EU executives focused their sector-specific prescriptions for Ireland on the water and healthcare sectors, as Irish governments had already turned Ireland’s public transport companies into formally independent, semi-state corporations. After 2008, Irish governments simply cut their subsidies to them, as part of their attempts to curtail public expenditure in general (Chapters 7 and 8).

Tables 11.3 and 11.4 show that EU executives issued only a few decommodifying prescriptions. Most of them appeared after 2016, tasking governments to invest more in transport and water but not in healthcare services. Despite their decommodifying orientation, most of these prescriptions did not question NEG’s commodifying logic. As in the case of the cross-sectoral prescriptions for public services (Table 11.2), the expansionary prescriptions for water and transport services had weak coercive power. They were also usually linked to policy rationales that were subordinated to an overarching logic of public service commodification. Finally, most expansionary prescriptions linked their calls for more resources for public services to the term ‘resource prioritisation’. This meant that any increase in public resources for some public services had to be matched with cuts elsewhere. In the following paragraphs, we compare NEG prescriptions for transport, water, and healthcare in more detail.

11.4 NEG’s Commodification Script and Transnational Collective Action

In this section, we problematise the impact of the EU’s shift to NEG on European labour politics. We do that by assessing the patterns of transnational protests by trade unions and social movements in Europe on socioeconomic issues across two distinct historical periods. The first period spans the time from 1997, when the EU leaders agreed the original SGP in the run-up to EMU, until the advent of the financial crisis in 2008. The second period begins in 2009 and ends in 2019, that is, before EU executives opened a new era of NEG in March 2020 when they suspended the SGP’s fiscal constraints after the advent of the Covid-19 pandemic (Chapter 12).

We proceed with our analysis in two steps. First, we present and discuss our general findings, comparing the salience of transnational, socioeconomic protest events at company, sectoral, political, and systemic level across the two time periods. This comparison reveals that transnational protests targeting EU legislators (EU law) or EU executives (NEG prescriptions) clearly outnumbered the protests targeting private employers, national governments, European public employers, global trade agreements, or the transnational capitalist system in general. This highlights the salience of EU interventions as an important trigger of countervailing protests by trade unions and social movements and confirms that it is easier for them to politicise vertical EU interventions rather than horizontal market integration pressures.

Second, we further differentiate the protests targeting EU legislators (EU law) or EU executives (NEG prescriptions) to assess in more detail the effects of the shift to NEG on labour politics. First, we split the protest category targeting EU law in two, distinguishing protests with a narrow focus on a particular law (e.g., EU Services Directive) from those with a broad focus on an entire thread of EU laws and policies (e.g., NEG regime). Second, we classify the protest events in the resulting categories by public service sector also. This allows us to relate the protests to the unequal patterns of commodification across public services sectors by specific EU laws, clusters of EU laws, and NEG prescriptions across the two distinct periods.

On 11 March 2020, the World Health Organisation recognised the Covid-19 outbreak as a global pandemic. On the same day, the Financial Times reported that the ‘Coronavirus “tsunami” pushes Italy’s hospitals to the breaking point’, despite the greater number of critical care beds per person in Italy compared with most European Union (EU) member states (Johnson and Ghiglione, Reference Johnson and Ghiglione2020). To prevent the collapse of their healthcare systems, European governments implemented strict containment measures, colloquially known as lockdowns. Governments also massively increased their public spending to fight the Covid-19 outbreak and to counteract the social and economic side effects of lockdown measures.

EU executives actively supported this policy response. On 17 March 2020, Commission President Ursula von der Leyen told the EU heads of states and governments at a European Council video conference that activation of the general escape clause of the Stability and Growth Pact (SGP) was imminent. In 2011, EU legislators had introduced this clause to allow the Council, on the recommendation of the Commission, to suspend the application of the preventive and corrective arms of the SGP in a situation of generalised crisis caused by a severe economic downturn in the eurozone or the EU as a whole (see Regulation (EC) 1466/97, Arts. 3(5), 5(1, 2), and 9(1), as revised by the Six-Pack of EU laws of 2011). On 20 March 2020, the Commission published its Communication (COM/2020/123 final), which called for activation of the clause. On 23 March 2020, the Council endorsed this request at a video conference and published a corresponding press ‘Statement of EU ministers of finance on the Stability and Growth Pact in light of the COVID-19 crisis’ (Council of the EU, 2020). The suspension of the application of both the preventive and the corrective arms of the SGP for all member states was remarkable, as a leading institutionalist scholar of the NEG regime had argued just before the outbreak of the pandemic that ‘we cannot expect EU institutional actors to reverse stability rules and numerical targets that have become embedded in their practices as well as touted in their discourses’ (Schmidt, Reference Schmidt2020: 303). Yet, this is precisely what happened.

The activation of the dormant general escape clause articles of Regulation 1466/97 allowed EU executives to shift the trajectory of NEG’s policy enforcement regime without having to change a single article of either primary or secondary EU law. Who would have thought that this would be possible? After all, EU scholars from very different intellectual traditions agreed that suspending the SGP rules would be virtually impossible, given that they were deeply ingrained in the discursive practices of EU executives (Schmidt, Reference Schmidt2020) or given the constitutional nature of EU neoliberalism (Gill, Reference Gill1998). Nonetheless, EU executives not only effectively suspended the SGP but did so based on tools that are formally very weak, namely, a Commission Communication (which is a non-binding legal instrument of the EU) and an informal press statement by the Council of the EU (2020) endorsing the Commission’s Communication. Although the Council’s decision arguably marked the start of a new era in EU economic governance, the corresponding Council document, because of its informal nature, does not feature on the official EUR-Lex website of EU laws and documents of EU institutions.

As in the case of the EU’s shift to the NEG regime after 2008 (Chapter 2), EU executives again invoked a state of exception to break the existing trajectory of the EU’s economic governance regime and to justify the shift to a new post-Covid version of it. This time, however, the EU executives’ ‘transnational exceptionalism’ (Kreuder-Sonnen and White, Reference Kreuder-Sonnen and White2022) did not lead to the same societal backlash against them, given its different policy orientation (Schmidt, Reference Schmidt2022). EU finance ministers justified the suspension of the SGP rules as a necessary step to ensure ‘the needed flexibility to take all necessary measures for supporting our health and civil protection systems and to protect our economies’ (Council of the EU, 2020). Like in the NEG case, EU executives first responded to the Covid crisis with ad hoc measures before EU legislators institutionalised the EU’s crisis response. In this chapter, we thus first assess EU executives’ initial ad hoc interventions after the outbreak of the pandemic. In section 12.2, we describe the institutionalisation of the EU’s crisis response in the form of the Recovery and Resilience Facility (RRF) Regulation (2021/241). Given our overarching interest in EU governance and labour politics as drivers of the social, economic, and political restructuring of Europe, we discuss in the chapter’s conclusion whether we can still describe the post-Covid NEG regime as a system that mimics ‘corporate governance structures that aim to hamper transnational trade union solidarity through the use of whipsawing tactics that put workers from different subsidiaries in competition with one another’ (Erne, Reference Erne2015: 358).

12.1 Preventing the EU’s Disintegration by New Means?

By suspending the SGP sanctioning regime for all member states, EU executives implicitly recognised the commodifying NEG prescriptions’ negative impact on public services in general, and healthcare services in particular (Chapter 10). As outlined in Chapter 11, EU executives had perceived healthcare expenditure as a threat to healthy public finances rather than as a productive infrastructure investment that would boost the EU’s growth and competitiveness. This perception changed, however, after the outbreak of the pandemic, when the role of healthcare as an essential public service became strikingly evident for everyone. At long last, EU executives seemed to recognise that the cuts in public hospital beds, along with the managerialisation of healthcare services resulting from NEG prescriptions (Chapter 10), reduced the capacity of national healthcare services to cope with the steep rise in patient hospitalisations during the pandemic (Stan and Erne, Reference Stan and Erne2023).

After the advent of the Covid pandemic, the Commission also effectively suspended its competition policy rules limiting state aid, as it had done in 2008 to allow member states to bail out insolvent banks (Chapter 2). This time however, the relaxation of the EU’s state aid rules benefitted not only private businesses but also public service providers. In fact, the relaxation of state aid rules allowed governments to cover the heavy losses that public service providers suffered as a consequence of the containment measures, for example in the public transport sector.

In terms of setting up a common EU fiscal response to the pandemic, the reaction of EU leaders was much slower. Initially, the European Council was divided on the issue, replicating the same fault lines between surplus and deficit countries as during the 2008 financial crisis. In March 2020, the governments of Belgium, France, Greece, Ireland, Italy, Luxembourg, Portugal, Slovenia, and Spain called for the creation of Corona bonds to address the consequences of the pandemic by issuing joint EU debt. However, the governments of many surplus countries firmly opposed them: Austria, Denmark, the Netherlands, and Sweden. The German government, led by a grand coalition of Christian and Social Democrats at that time, initially sided with the latter.

In April 2020, the Eurogroup of eurozone finance ministers reached a first compromise on a joint EU stimulus package that totalled approximately €540bn (Eurogroup, Press Release, 9 May 2020). The package had three main components. Firstly, a fund run by the European Investment Bank would be able to raise up to €200bn on the markets to finance loans to private companies. Secondly, the SURE (Support to mitigate Unemployment Risks in an Emergency) programme, run by the Commission, aimed to aid member states to finance temporary short-time work schemes through up to €100bn in (cheap) loans (Andor, Reference Andor2020). This measure was meant to prevent mass layoffs as a result of the shutdown of EU economies, modelled on the German Kurzarbeitergeld that had contributed to the speedy recovery of the German economy after the 2008 crisis (Schulten and Müller, Reference Schulten and Müller2020).

Finally, a Pandemic Crisis Support of up to €240bn in loans from the European Stability Mechanism (ESM) was available to all eurozone states to cover pandemic-related healthcare costs up to 2 per cent of their GDP. The ESM credit line was the most contentious element of the package, given the strong MoU conditionalities attached to ESM loans issued after the financial crisis (see Chapter 2). The final agreement reached by the Eurogroup foresaw lighter conditionality and stipulated that member states should use the money to pay for ‘direct and indirect healthcare, cure and prevention-related costs due to the COVID 19 crisis’ (Eurogroup, Press Release, 9 May 2020). Given the ESM’s role during the financial crisis (Chapter 2), however, ESM loans were still politically toxic in most member states, and this explains why no government dared apply for an ESM pandemic credit. Moreover, the total amount of the package agreed by the Eurogroup was small in light of the magnitude of the economic crisis that had hit the global economy, especially compared with the responses adopted by other advanced economies such as the United States. The Eurogroup thus also mentioned the idea of a joint EU Recovery Fund, if only the European Council could work out a corresponding agreement (Eurogroup, Press Release, 9 May 2020).

As had happened previously (Anderson, Reference Anderson2009), it was a Franco–German deal that broke the deadlock. On 18 May 2020, Chancellor Merkel and President Macron issued a joint call for the creation of a €500bn Recovery Fund, which, crucially, would be composed of grants rather than loans. Whereas the French government had been supporting the idea of Corona bonds since March, the shifting position of the Merkel government was notable, given its enduring opposition to any form of debt mutualisation at EU level. In the midst of the eurozone crisis in 2012, Chancellor Merkel had declared that sharing debt liability would be ‘economically wrong and counterproductive’ (Reuters, 26 June 2012). Now, she was willing to support a deal that foresaw the EU borrowing cash on financial markets to distribute as grants to member states.

One explanation for this sudden shift in Merkel’s position relates to a court judgment that the German Constitutional Court had delivered only two weeks earlier. In the judgment, the court found that the bond-buying programme implemented by the European Central Bank (ECB) since 2015 would be illegal under German law, unless the ECB provided an acceptable justification for it. Although the court also stated that the judgment did not affect the ECB’s new pandemic purchase programme, many observers, including within the German government, thought otherwise and therefore demanded a more stable, political solution to tackle the social and economic crisis caused by the pandemic (Mallet, Chazan, and Fleming, Reference Mallet, Chazan and Fleming2020). More important, however, were the economic reasons behind Merkel’s policy shift, namely, the renewed importance of the EU internal market for the German manufacturing sector, given the disintegration of transcontinental supply chains and growing difficulties in accessing Asian export markets in times of strict Covid restrictions (Schneider and Syrovatka, Reference Schneider and Syrovatka2020; Ryner, Reference Ryner2023; Schneider, Reference Schneider2023). Furthermore, the Federation of German Industry (BDI), the leading organisation of German industrialists, but also prominent entrepreneurs of export-oriented family businesses such as Reinhold Würth (Reference Würth2020), supported the EU debt mutualisation programmes in order to prevent a repeat of the ‘mega catastrophe’ of Berlin’s ‘small-minded’ stance in the financial crisis, which divided the EU and only aided Europe’s competitors in China, Russia, and the United States (Würth Reference Würth2020: 7; see also Syrovatka, Reference Syrovatka2022a: 460), and to foster structural reforms in member states receiving EU funds (Schneider, Reference Schneider2023). This is notable, as the BDI supported the imposition of EU austerity programmes in the financial crisis but not the shift to a new EU economic governance regime, as the BDI predicted that the shift to NEG would lead to a shift of national competences in labour and social policy to EU level (Chapter 2). The northern European business associations and metalworkers’ trade unions supported the idea of EU debt mutualisation too, not least because they thought that increased RRF funding would benefit their export-oriented industries, despite the opposite views of many Scandinavian politicians on EU fiscal federalism (Ekman, Møller Stahl, and Ryner, Reference Ekman, Møller Stahl and Ryner2023). Business Europe (2020a), which had stood behind the EU’s shift to NEG after the 2008 crisis (Chapter 2), publicly endorsed the shift in favour of EU debt mutualisation too.

Crucially however, EU leaders in general and the Merkel government in particular changed their positions on the matter of EU debt mutualisation for political reasons also. The national and EU institutions’ imposition of austerity and commodifying structural reforms after the 2008 crisis substantially increased workers’ and citizens’ dissatisfaction with their political leaders at national and EU level (Armingeon, Guthmann, and Weisstanner, Reference Armingeon, Guthmann and Weisstanner2016; Bojar et al., Reference Bojar, Bremer, Kriesi and Wang2022), especially in countries that had received the most constraining, commodifying NEG prescriptions. This had led to significant national and transnational protest movements, growing Euroscepticism among trade unions and workers, as well as a rising share of votes for Eurosceptic parties in successive national and EU elections (Chapter 11; van Middelaar, Reference van Middelaar2021; chapter 4; Béthoux, Erne, and Golden, Reference Béthoux, Erne and Golden2018). Hence, if EU executives had failed to agree to an expansive response to the economic fallout caused by the pandemic, they would have jeopardised the prospects of EU integration, which was still recovering from yet another low-point – Brexit.

The Franco–German deal on debt mutualisation broke the impasse and paved the way for a corresponding European Commission (2020b) plan that was part of its proposal for the next seven-year EU budget outline, the Multiannual Financial Framework (de la Porte and Jensen, Reference de la Porte and Jensen2021). The Commission’s Next Generation EU plan added €250bn in loans to the €500bn in grants as suggested by France and Germany. In July 2020, final agreement was reached at a special European Council meeting. The total amount of the package was left unchanged, but the share of grants was lowered to €390bn (European Council, Conclusions, Brussels, 21 June 2020) to secure its unanimous approval. The final Next Generation EU package includes seven programmes and is partly a repackaging of pre-existing structural and investment funds,Footnote ¹ but its cornerstone is the RRF, endowed with €360bn in loans and €312.5bn in grants. The RRF is meant to finance reforms and investments in member states from 2020 until 2026, and its funds are to be distributed to EU member states based on criteria that only partially reflect the impact of the pandemic, namely, member states’ GDP, size, and unemployment levels.

The Next Generation EU package was meant to be temporary and did not imply any mutualisation of existing debt. Even so, the then SPD finance minister (and future German chancellor) Olaf Scholz hailed this decision by the EU member states as Europe’s Hamiltonian moment, akin to the agreement reached in 1790 by Alexander Hamilton, the then US Secretary of Treasury, to federalise the debts of the nation’s united states. Be that as it may, the political agreement in favour of the package still had to be institutionalised and integrated into a coherent post-Covid NEG regime.

12.2 The RRF Regulation: Institutionalising the EU’s Post-Covid NEG Regime

After the 2008 crisis and the EU’s shift to the NEG regime, the European Semester process became a key tool of EU economic and social policymaking (Chapter 2). After the 2020 Covid emergency however, the Semester’s role in the EU’s NEG regime changed significantly. In 2020, EU executives continued issuing country-specific recommendations (CSRs), even though the suspension of the SGP’s preventive and corrective arms meant that almost all NEG prescriptions had lost their coercive power. This pandemic context also affected the policy orientation of the prescriptions, as we shall see in section 12.3 and in Chapter 13.

In 2021, the Commission and Council went even further, as they did not issue any CSRs at all in that year. This, however, did not mean that their impact on national economic and social policymaking vanished. Instead of drafting any country-specific NEG prescriptions, the Commission asked the governments to draft National Recovery and Resilience Plans (NRRPs) and to apply for RRF funds. To get any RRF funding, each government must convince the Commission that its plan complies with the criteria set by the RRF Regulation of the European Parliament and Council (2021/241). If this happens, then the Commission will send draft NRRPs for adoption to the Council. As a result, the Commission has further increased its leverage in EU policymaking. By contrast, the European Parliament has no say on the content of NRRPs, despite the plans’ strategic role as a central steering tool of EU policy-making. The European Parliament’s negligible role in the post-Covid NEG regime is largely self-inflicted, as was its marginal role in the NEG regime after the financial crisis (Chapter 2). After all, the Parliament was a co-legislator in both cases, when it approved the Six-Pack laws in 2011 (which institutionalised the NEG regime) and when it approved the RRF Regulation in 2021 (which institutionalised the post-Covid NEG regime), in both cases by very large majorities.

Each NRRP needs to detail the measures that a member state will implement to meet the conditions laid out in the regulation for RRF funding and the concrete targets and milestones for their implementation. The latter are crucial, as EU executives can freeze or withdraw RRF funding even after having approved an NRRP if the Commission concludes that a member state has failed to meet the agreed implementation targets and milestones specified in it. The targets and milestones are meticulously detailed in the annex to each country-specific Council Implementing Decision (CID). The Council’s CID thus not only endorses the Commission’s evaluation of the NRRPs, which gives the Commission the green light to start disbursing RRF funds to a given country, but also specifies the policy conditionalities for the disbursement of subsequent RRF tranches. In this respect, the CIDs and their annexes very much mirror the Memoranda of Understanding (MoUs) and their updates for countries under bailout conditionality.

At first sight, this similarity might not seem threatening for labour and public services. Whereas MoUs prescribed austerity cuts, NRRPs are framed as investment plans, but, as countries received MoU bailout funding only if they also implemented the NEG prescriptions specified in MoUs and their updates, RRF funding equally depends on the implementation of accompanying policy prescriptions outlined in CIDs and their annexes. This means that the coercive power of all CID-related NEG prescriptions is very significant for all countries, irrespective of their location in the pre-pandemic NEG policy enforcement regime. However, whereas EU executives were free to add to a given MoU whatever ad hoc conditionality they pleased, EU legislators have at least specified some criteria that the Commission must use when assessing an NRRP and the implementation of the corresponding NEG prescriptions.

Article 19(3) RRF Regulation sets out the broad assessment criteria for the Commission’s evaluation of the national plans. These are further detailed in the regulation’s Annex V. According to the Annex’s Art. 3, a member state must get an A grade from the Commission in four areas to get RRF funding (see Table 12.1), as well as at least an A and a B grade in two additional areas.

The crucial four core assessment areas are the following. Firstly, all NRRPs must address ‘all or a significant subset’ of challenges identified in the CSRs issued within the European Semester (Art. 19(3) RRF Regulation). This condition is important, as it ties the RRF firmly to the EU’s NEG regime. Notably, the RRF regulation does not specify which Semester cycles shall be considered. The Commission (SWD (2021) 12 final) thus specified that governments should consider not only the post-pandemic 2020 CSRs when drafting their NRRP but also those issued in 2019. The link to the 2019 NEG prescriptions is important, as they pointed much more clearly in a commodifying policy direction (Chapter 11). It is thus hardly surprising that Klaus Regling (Reference Regling2021), the then director of the ESM, was pleased to note that the RRF would still be geared towards structural reforms. Whereas before 2021 member states could disregard NEG prescriptions whose coercive power was weak (see Chapter 2), this was no longer the case after the EU’s shift to the post-Covid NEG regime, as the Commission linked the payment of RRF funds to all CSRs. In so doing, the Commission increased the coercive power of all NEG prescriptions, regardless of their legal base or the country’s location in the NEG enforcement regime (Chapter 2). According to Article 10 of the RRF Regulation, the disbursement of RRF funds is conditional not only on the particular NRRP targets and milestones that a member state must reach but also on its ‘sound economic governance’ in general. This means that the Commission can propose to suspend all or part of the RRF funding to penalise governments that fail to adequately implement EU macroeconomic or fiscal corrective action plans.

Secondly, NRRPs need to get an A score in a social assessment criterion. Concretely, an NRRP must include measures that strengthen ‘the growth potential, job creation, and economic, social and institutional resilience of the Member State, contributing to the implementation of the European Pillar of Social Rights’ (emphasis added) (Art. 19(3c) RRF Regulation). Compared with the first criterion, which links RRF funding to the implementation of concrete NEG prescriptions, the wording of the second criterion is far less constraining, as the plans must only contribute to the implementation of the European Pillar of Social Rights. This vague wording gives EU executives and governments a lot of leeway (Rainone, Reference Rainone2022).

A third criterion, also requiring an A grade, is linked to the shift to a green economy. At least 37 per cent of an NRRP’s funds must be allocated to foster the green transition. This mirrors the rise in the number of NEG prescriptions semantically linked to a ‘shift to the green economy’ policy rationale after 2018, as outlined in Chapter 11. The criterion’s clear numerical benchmark also facilitates its evaluation, as member states must simply direct 37 per cent of their RRF spending to investments that the Commission considers to be green. The regulation also states that all NRRP measures must respect the ‘do no significant harm’ principle (Art. 5 RRF Regulation), which stresses the role of green objectives in the post-Covid NEG regime. As outlined in Table 12.1, the no significant harm principle is an additional assessment criterion on its own – one, however, in which getting a B grade may be sufficient. This suggests that the EU’s green transition NRRP assessment criterion is not linked to ecological rationales only.

As shown in Chapter 9 with regard to water charges, the pursuit of a green agenda can indeed also go hand in hand with the commodification of natural resources. As Adam Tooze wrote in a Financial Times editorial, just putting ‘money into the NextGenEU kitty is an evasion’ (Tooze, Reference Tooze2023). If EU executives want to bring the population with them, the green transition must include ‘some element of public ownership’, for example, a ‘much closer involvement of trade unions in framing industrial policy … as a counterweight to business influence, but also because labour is so crucial to the transition’ (2023). Tooze’s critique is very warranted, as the European Green Deal strategy, which Commission President Ursula von der Leyen unveiled in December 2019 (Commission, Communication, COM (2019) 640 final), followed the ecological modernisation leitmotif, which is compatible with EU executives’ commodifying NEG policy script. Instead of seeking social change, EU executives linked the green transition to technological innovations (e.g., hydrogen and carbon dioxide removal technologies) to improve the global competitiveness of the EU economy (Haas, Syrovatka, and Jürgens, Reference Haas, Syrovatka and Jürgens2022: 247). Accordingly, the high share of RRF funding that EU legislation allocated to the green transition thus also mirrors the intense lobbying of ‘green’ energy and technology corporations, such as Shell, which also wanted to profit from the EU’s green RRF funding (European Commission, 2023a). Although the Commission’s DG EMPL recently also set up a unit on Fair, Green, and Digital Transitions Research in its DG Employment, Social Affairs and Inclusion, the fair transition elements in the EU’s green transition policy remain very weak. The Council Recommendation on ‘ensuring a fair transition towards climate neutrality’ (2022/C 243/04) that followed on a corresponding Commission proposal of 14 December 2021 merely ‘invited’ member states to ‘adopt and implement, in close cooperation with social partners as relevant, comprehensive and coherent policy packages, addressing the employment and social aspects to promote a fair transition … as well as to make optimal use of public and private funding’ (Art. 2, emphasis added). As the latter indicates, EU executives proceeded to semantically link their calls for green investments to commodifying policy rationales, as they did in earlier NEG prescriptions on public services generally and on transport and water services in particular (Tables 11.2 and 11.4).

The fourth criterion is that NRRPs must funnel at least 20 per cent of the RRF funds towards the digital transition of the European economy.Footnote ² As mentioned in Chapter 10, digitalisation was a policy goal that already appeared in NEG prescriptions in 2013 as a necessary tool for the operation of case-based (rather than needs-based) funding mechanisms in hospitals. In her candidacy speech for the position of Commission President, Ursula von der Leyen (Reference von der Leyen2019: 4) also pledged that ‘Europe must lead the transition to a healthy planet and a new digital world’ (emphasis added). Concretely, she committed herself to ‘prioritise investments in Artificial Intelligence, both through the Multiannual Financial Framework and through the increased use of public–private partnership’ (2019: 13, emphasis added). The lobbyists from Digital Europe, the association of both the national and the global digital tech industry in Brussels, were thus knocking on an open door when they demanded that a dedicated amount of RRF funding must be set aside for their industry (Digital Europe, 2020). In view of the fact that the digital technology industry corporations were already among the major economic winners of the pandemic, given the increased demand for IT equipment and services during the lockdown consequent to the shift to online shopping, distance education, and remote working arrangements, the decision of the European Parliament and Council to award up to €134.5bn of public RRF funding to the information technology sector was breathtaking. By contrast, all pleas by European unions and social NGOs to the European Commission, Parliament, and Council to include a minimum target for social expenditure in the RRF Regulation failed (Vanhercke and Verdun, Reference Vanhercke and Verdun2021), even though the pandemic put member states’ social services, particularly healthcare, under the greatest stress. Before the pandemic, EU executives had already issued NEG prescriptions that tasked governments to prioritise public spending for the allegedly more productive network industries rather than on healthcare services, as revealed in Chapter 11. Hence, European unions’ and social NGOs’ failure to secure an RRF quota for social (including healthcare) expenditure after the pandemic is all the more striking. This observation is of both practical and academic interest, as the absence of binding social spending benchmarks questions the ‘social’ investment paradigm that has moulded many contributions to the NEG and social policy literature (see Chapter 5).

The RRF’s structural anti-social services bias is even more apparent in the RRF Regulation clause that delimits the range of eligible RRF expenses, leaving unchanged the principles of earlier EU budget cycles: ‘Support from the Facility shall not, unless in duly justified cases, substitute recurring national budgetary expenditure’ (Art. 5(1) RRF Regulation). As public services are typically financed through recurring national budgetary expenditure, EU legislators nominally barred recurring public sector expenditures, namely, public sector wages, from RRF funding. This provision mirrors a very formalistic view on the division of competences between the EU and its member states (Commission official, intervention, UCD–Cornell study trip, Brussels, 18 November 2022). Accordingly, member states are not allowed to use RRF funds to address the acute staffing crisis in public healthcare services, as the ‘organisation and delivery of health services and medical care’ is – according to Art. 168(7) TFEU – an exclusive competence of member states. Such EU competence arguments, however, did not stop EU executives from issuing NEG prescriptions that tasked governments to curtail public sector workers’ wages, as shown in Chapters 6, 7, and 10. Hence, EU competence arguments are typically political arguments that policymakers use instrumentally to justify the EU’s inaction in a field (Chapter 3; Stan and Erne, Reference Stan and Erne2021b). When policymakers want to see EU action in a field, however, EU competence arguments quickly lose their currency. Incidentally, of all governments, it was the nationalist Orbán government that called for greater EU involvement in the provision of national public services: the Hungarian government submitted an NRRP that dedicated some RRF funds to personnel rather than infrastructure costs, given the acute staff shortage crisis in public services (Szabó, Reference Szabó2022), which is virulent stark not only in Hungary but across the entire EU (EPSU, 2022a).Footnote ³ Conversely, the left-wing Spanish government accepted the RRF’s funding bias for private suppliers but then – paradoxically – tried to turn that pro-business bias into an advantage for labour, by telling Spanish capitalists that they would be the biggest losers if the EU froze its RRF funding. In December 2021, Spain’s left-wing labour minister, Yolanda Díaz, would hardly have been able to get the consent of the Confederación Española de Organizaciones Empresariales for her decommodifying labour market reform had Spanish business not feared missing out on RRF funding (Wise, Reference Wise2021).

Given our interest in EU economic governance interventions and countervailing protests that they might trigger as drivers of the political restructuring of Europe, we must take a step back to see the broader features of the post-Covid NEG regime. We do this in section 12.3.

12.3 EU Governance after Covid: Still Mimicking Transnational Corporations?

As outlined in Chapters 2 and 3, the NEG regime that the EU adopted after the financial crisis did not follow the classical state-centred (intergovernmental or federal) governance paradigms that still dominate the EU legal and political science literature. Instead, the NEG regime mimicked the corporate governance mechanism of transnational corporations (TNCs), which steer their subsidiaries’ activities using whipsawing tactics, coercive comparisons, and subsidiary-specific ad hoc interventions (Erne, Reference Erne2015). As shown in Chapter 11, adopting this corporate governance strategy helped EU executives constrain transnational protests by unions and social movements, as the methodology of the European Semester makes strikes against specific NEG prescriptions ‘almost impossible’ (CGIL union official, cited in Maccarrone, Reference Maccarrone2020: 259). However, the social and economic measures that governments adopted at national and local level to implement NEG prescriptions still triggered significant union and social-movement protests (Maccarrone, Reference Maccarrone2020; Naughton, Reference Naughton2023). After 2008, most protests in Europe were triggered by economic rather than culturalist grievances (Kriesi et al., Reference Kriesi, Lorenzini, Wüest and Häusermann2020). Given the protests’ clear socioeconomic motivations however, EU executives could no longer dismiss them as objections of eternal nationalists (van Middelaar, Reference van Middelaar2021: chapter 4), as happened in the case of the mobilisations against Commissioner Bolkestein’s EU Services Directive and the French, Dutch, and Irish referendums on the EU constitution and the Lisbon Treaty (Béthoux, Erne, and Golden, Reference Béthoux, Erne and Golden2018). To prevent the EU’s disintegration, EU executives thus overlaid the NEG mechanisms that mimicked TNC’s labour control regimes with new governance tools that cannot be found in TNCs, namely, debt mutualisation and a pledge to strengthen the EU’s social pillars.

13.1 Introduction

By adopting the Recovery and Resilience Facility (RRF) Regulation in 2021, European Union (EU) legislators added two new governance tools to the EU’s new economic governance (NEG) regime. The first tool is the National Recovery and Resilience Plans (NRRPs) that governments must draft in close collaboration with the Commission to get RRF funding. The second tool is the Council Implementing Decisions (CIDs) of the Council (of finance ministers). With its CIDs, the Council endorses the Commission’s assessment of an NRRP, including the timeline for the implementation of its milestones and targets. This is crucial, as the Commission will only release RRF funding – which comes in funding tranches up to twice a year – once the member state has met the milestones and targets outlined in the corresponding CID.

As the Commission possesses considerable leeway in assessing member states’ progress in implementing their NRRPs, a full assessment of the post-Covid NEG regime’s policy orientation will be possible only after 2026 when the NRRP phase of the NEG regime is completed. This flexibility stems from the RRF Regulation’s qualitative evaluation criteria for NRRPs that give EU executives significant scope for interpretation when assessing governments’ progress in meeting the CID benchmarks (Table 12.1). Furthermore, some governments, such as those of Ireland and Italy, sought EU executives’ permission to amend their NRRPs to take account of changing circumstances, such as the Russian invasion of Ukraine in 2022, rising inflation, or unforeseen technical obstacles. Nevertheless, given the pivotal role of the EU’s 2019 and 2020 country-specific recommendations (CSRs) for the drafting of NRRPs and the corresponding CIDs, we are already able to outline the likely policy orientation of the post-Covid NEG regime in our fields.

The RRF Regulation’s evaluation scoreboard for NRRPs and their implementation includes four core assessment categories (Chapter 12). Of these, the CSR-related scoreboard category is the most important one. Whereas NRRPs must merely ‘contribute’ to ‘economic, social and territorial cohesion’ and the ‘green’ and the ‘digital transition’, all NRRPs must ‘address … all or a significant subset of challenges identified in CSRs’ (RRF Regulation, quoted in Table 12.1, emphasis added).

In this chapter, our analysis of the EU’s post-Covid economic governance regime based on a) the CSRs issued in the 2019 and 2020 cycles of the European Semester process, b) the targets and milestones included in the NRRP’s CIDs, and c) recent EU laws. As in Chapters 6 to 10, we analyse the policy orientation of the post-Covid NEG prescriptions across two areas (employment relations and public services), three sectors (transport, water, and healthcare services), and four countries (Germany, Ireland, Italy, and Romania). Pursuing our methodology (Chapters 4 and 5), we do so by considering the NEG prescriptions included in CSRs and CIDs in their broader semantic, communicative, and policy contexts.

13.2 EU Governance of Employment Relations: Towards Decommodification?

As shown in Chapter 6, Ireland, Italy, and Romania recurrently received commodifying NEG prescriptions on wages, collective bargaining, and hiring and firing mechanisms until 2019. By contrast, EU executives asked German policymakers to pursue more expansionary wage policies – not, however, for social reasons but to rebalance the EU economy (Chapter 11). Hence, all NEG prescriptions on employment relations that EU executives issued after the financial crisis were compatible with NEG’s overarching commodifying script – with the exception of the 2018 prescription that asked the Romanian government to enhance social dialogue and the earlier prescriptions that asked the German government to curtail the use of mini-jobs. This situation changed after the outbreak of the pandemic.

In April 2020, the Council created the SURE unemployment insurance support fund to back the creation and operation of short-time work schemes across the EU. This allowed employers to keep their workers on payroll during the Covid lockdowns (Chapter 12). Accordingly, the CSRs issued in 2020 encompassed NEG prescriptions that urged member states to prevent a rise in unemployment by developing flexible working arrangements and activation measures, including access to short-time work schemes (Rainone, Reference Rainone2020).

Two years later, the European Parliament and Council adopted the EU directive (2022/2041) on adequate minimum wages. This directive signified a real EU labour policy volte-face (Maccarrone, Erne, and Golden, Reference Maccarrone, Erne, Golden, Clegg and Durazzi2023) that went even further than the Commission’s 2020 proposal (COM (2020) 682 final). EU legislators specified the setting of a national minimum wage ‘with the aim of achieving a decent standard of living, reducing in-work poverty, as well as promoting social cohesion and upward social convergence, and reducing the gender pay gap’ (Art. 5(1) Directive 2022/2041). Whereas EU executives urged governments to curb wages after the crisis in 2008 (Chapter 6), the 2022 directive returns to what Marshall (Reference Marshall1950: 69) called the right to a ‘living wage’, defined as ‘the right of the citizen to a minimum standard of civilised living’. To monitor the implementation of this goal, the directive sets statutory EU reference values for national minimum wage levels: ‘60% of the gross median wage and 50% of the gross average wage’ of a fulltime worker (Art. 5(4)). Following this, 18 per cent of the EU’s workforce was in line to get a wage increase (Schulten and Müller, Reference Schulten and Müller2021: Table 1). Only in France were the statutory minimum wage levels higher than the new EU reference values (2021: Table 1).

Furthermore, EU legislators recognised that workers’ wages would be set best through collective bargaining. Their Minimum Wage Directive thus also commits member states to increase the ‘collective bargaining coverage’ rate and to facilitate ‘the exercise of the right to collective bargaining on wage-setting’ (Art. 4(1)). To monitor the implementation of this goal, EU legislators again provided an EU reference value: an 80 per cent collective bargaining coverage rate in each member state. In 2022, only sevenFootnote ¹ of the twenty-seven member states reached this benchmark (Commission, Communication, COM (2023) 40 final: Graph 1). The Minimum Wage Directive thus obliges member states to (a) strengthen the social partners’ capacity to engage in collective bargaining on wage-setting at sector or cross-industry level, (b) protect workers and union representatives from acts that discriminate against them, and (c) protect unions from any acts of interference by employers (or their agents) in their establishment, functioning, or administration (Art. 4(1)).

The directive’s approval by a very large majority of the European Parliament and Council shocked North American and European business leaders (Erne, Reference Erne2023b) and not just because the directive represents a U-turn in EU wage policy-making. Business leaders had been confident that they would be able to defeat any Commission proposal in this field,Footnote ² as the EU would not have the legal competence to legislate on it. After all, opponents of EU collective bargaining laws had effectively used such arguments in the past (Cooper, Reference Cooper2015). This time, however, their EU-competence arguments no longer worked,Footnote ³ paradoxically because Business Europe (2020b) and its national affiliates compromised them by their own actions during the financial crisis when they lobbied EU executives to prescribe wage cuts and to decentralise bargaining systems (Chapters 3 and 6; Maccarrone, Reference Maccarrone2020). Aptly, European trade union leaders simply flipped the EU competence argument by asking EU executives the following question: How can one say that the EU has no right to provide a framework for adequate minimum wages, after a decade of binding EU prescriptions that tasked governments to curb wages and to marketise collective bargaining mechanisms? (Erne, Reference Erne2023b). Not only did arguments about the apparently lacking EU competences in the field no longer work to prevent the adoption of the EU Minimum Wage Directive, they also failed to stop the Commission from proposing additional directives in the field of pay and employment relations policy in 2021 and 2022, namely,

• • the Pay Transparency Directive (COM (2021) 93 final) to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and equal pay enforcement mechanisms, which came into force on 10 May 2023 (Directive (EU) 2023/970);

• • the Directive on Improving Working Conditions in Platform Work (COM (2021) 762 final) to make it harder for companies in the gig economy to impose bogus self-employment (which triggered fierce opposition from platform companies, such as Uber, and still had to be adopted by EU legislators at the time of writing);

• • the Directive on Corporate Sustainability Due Diligence (COM (2022) 71 final), which obliges companies and their suppliers to adopt measures to curb human rights abuses (forced labour, child labour, inadequate workplace health and safety, exploitation of workers) and activities that negatively affect the environment and the climate. This proposal also triggered the opposition of some capital factions; and also still had to be adopted by EU legislators at the time of writing.

These legislative proposals show that the European Commission reoriented its employment relations policy in a decommodifying policy direction. In the 2019 and 2020 CSRs for Germany, Ireland, Italy, and Romania, however, this policy shift was not yet very visible. In addition to the references to the short-time work schemes mentioned above, the CSRs issued to these four countries contained only two sets of prescriptions on employment relations.Footnote ⁴ The first tasked the Romanian and Irish governments to strengthen ‘the resilience of the health system, in particular with regard to health workers’. The second tasked the Romanian government to ‘improve the quality and effectiveness of public administration and the predictability of decision-making, including through adequate involvement of social partners’ (Council Recommendation Romania 2020/C 282/23, emphasis added).

Prescriptions on employment relations were also largely absent in the four NRRPs. The Irish NRRP contained only one in relation to healthcare workers. Given the proposal to establish a single-tier healthcare system (see below), it stipulated public-only employment contracts for doctors, with increased salaries for new entrants. More important for Irish employment relations, however, were the new EU laws regarding pay. Consequent to the EU directive on adequate minimum wages, the Irish government announced the introduction of a statutory ‘living wage’ to be set at 60 per cent of the median wage, matching the EU directive’s reference value. The government also set up a tripartite high level working group, which proposed a strengthening of Ireland’s sectoral wage-setting mechanisms. These developments are significant, as they reversed measures implemented in the period of MoU conditionality after the financial crisis (Chapter 6; Maccarrone, Erne, and Regan, Reference Maccarrone, Erne, Regan, Müller, Vandaele and Waddington2019).

The 2019 and 2020 CSRs for Italy did not entail any prescriptions on workers’ terms and conditions while in employment. Even so, Italy’s NRRP contained a decommodifying prescription on wages. It stipulated that procurement procedures for publicly funded cultural events would have to include social and environmental criteria, including decent wages. Surprisingly however, this prescription did not apply to all instances of public procurement. Instead, the plan tasked Italian policymakers to reduce the restrictions on subcontracting currently contained in the Public Procurement Code, potentially therefore putting labour standards under increased competitive pressures.

In their 2019 CSR, EU executives tasked German policymakers to support higher wage growth. Nonetheless, the NRRP did not include any such measure. The narrow victory of the SPD led by Olaf Scholz in the federal elections in September 2021, however, paved the way for a sizable increase in the minimum wage from €9.82 to €12 in October 2022. The €12 rate came very close to the 60 per cent of the median wage that the Commission had included in its 2020 proposal for an EU directive on adequate minimum wages, thereby facilitating the adoption of the EU Minimum Wage Directive by the German labour minister in the Council. However, although the government programme of the SPD’s traffic-light coalition with the Greens and the neoliberal Free Democrats (FDP) included the one-off increase of the minimum wage to €12, the FDP prevented the inclusion of the EU’s reference values in it. As a result, the German minimum wage commission was able to remove the 2022 gains of minimum wage workers by setting wage rises for 2024 and 2025 well below the EU’s reference values for adequate minimum wages (Zeit.de, 1 July 2023). After all, German lawmakers had not yet transposed the new EU directive into German law.

EU executives repeatedly tasked the Romanian government to use ‘objective criteria’ for setting the minimum wage between 2014 and 2019. As outlined in Chapter 6, these prescriptions pointed in a commodifying direction, as EU executives had issued them to prevent unilateral wage increases by social democratic governments against the will of employers. After the approval of the EU Minimum Wage Directive however, the meaning of the term ‘objective criteria’ changed, as the implementation by March 2024 of the EU’s new reference values for adequate minimum wages and the corresponding CID benchmark (Annex to the Council Implementing Decision … for Romania 12319/21 ADD 1: 449) may lead to significant minimum wage increases. In 2022, its government had already increased the minimum wage by 17.65 per cent, which was the third largest increase in the EU (Eurofound, 2023).

The Romanian NRRP also contained another prescription on wages, namely, a call to implement a unitary pay scale in the public sector. When Romania was under bailout conditionality, this call had been linked to budgetary retrenchment (Chapters 6 and 7). In 2022 however, its meaning changed when Romanian public sector unions, such as the healthcare workers’ union Sanitas, were leveraging the NRRP prescription to demand the inclusion of the social partners ‘in the process of designing the new law on the salaries of budgetary staff – which the government has assumed through the NRRP – so as to guarantee a direct correlation between salary income and purchasing power and the cost of living’ (Sanitas, 2022).

In addition, Romania’s NRRP included a prescription on hiring and firing mechanisms: the introduction of hourly tickets, or vouchers, which employers can use to pay domestic care workers in a tax compliant manner. The rationale provided in the plan is a decommodifying one, namely, ‘to provide incentives to create formal employment for domestic workers who are currently recorded as unemployed or inactive’ (Annex to the Council Implementing Decision … for Romania 12319/21 ADD 1: 449). Given the Italian experiences with such vouchers however, their introduction might not end informal employment as such but only lead to a regularisation of some working hours. If used widely, they may even lead to more precarious employment, as vouchers create incentives for employers to use them instead of standard contracts of employment, given their lower costs (Anastasia, Bombelli, and Maschio, Reference Anastasia, Bombelli and Maschio2016).

Most importantly however, the CID also included a hard benchmark on intersectoral employment relations, as it tasked Romania’s legislators to revise its collective labour law by the end of 2022 in order to secure the payment of the subsequent tranche of RRF funding:

This binding EU benchmark enabled the Romanian social democrats to overcome the opposition of their centre-right coalition partners from the Partidul Național Liberal (PNL), which initially resisted reversing the 2011 collective labour law reforms that the then centre-right Romanian government adopted under MoU conditionality (Chapter 6). Subsequently, on 22 December 2022, the Romanian legislators adopted a new Law on Social Dialogue (‘Legea privind dialogul social’ nr. 367/2022), which strengthened workers’ and union rightsFootnote ⁵ and re-established multi-employer bargaining structures at sectoral and intersectoral level. This may be a ‘real game changer’ (industriAll Europe, 2023), as sectoral collective bargaining broke down in almost all sectors following the adoption of the 2011 Social Dialogue Law (Chapter 6). This change would not have been possible without EU leaders’ changing policy orientation, the persistent lobbying of the ETUC and its affiliates for the EU Minimum Wage Directive, and the concurring mobilisations of Romanian unions for the revision of the Romanian collective labour law. The latter included a five-day-long protest ‘Caravan of Social Rights’ by trade unionists from Bucharest to Brussels in July 2021, which politicised the EU Minimum Wage Directive, the Romanian NRRP, and its demand for reform of the Romanian labour law (Table 13.1). Powerful employers, such as all foreign-owned banks operating in Romania, accepted the return to sectoral bargaining too, to create a level playing field in ‘a tight labor market’ (De Spiegelaere, Reference De Spiegelaere2023: 9). National and EU policymakers, however, would hardly have shifted the direction of their labour policy interventions in a decommodifying direction had they not feared popular discontent and a revival of collective union action following the cost-of-living crisis that ‘has pushed millions of people into poverty’ (Vanhercke, Sabato, and Spasova, Reference Vanhercke, Sabato and Spasova2023: 7).

Overall, our assessment of the four NRRPs, the corresponding CIDs, and the recent EU laws has revealed a substantial change of direction in EU policymaking in the area of employment relations. Whereas EU executives prescribed wage cuts and commodifying reforms of collective bargaining and hiring and firing mechanisms after the financial crisis in 2008, the EU interventions in the field predominantly pointed in a decommodifying policy direction after the outbreak of the Covid pandemic. The same, however, cannot be said of their interventions in the field of public services, as we outline below.

13.3 EU Governance of Public Services: Public Investment for Private Gain

Before the pandemic, the EU NEG prescriptions had already shifted away from demanding a curtailing of resources for public service providers. Instead, EU executives prescribed greater investments in sectors that would be critical for economic development. Most of these expansionary quantitative NEG prescriptions, however, remained subordinated to NEG’s overarching commodification script, given their semantic links to policy rationales – such as boost competitiveness and growth, rebalance the EU economy, and enhance private sector involvement (Table 11.2) – that are compatible with public service commodification.

Conversely, all qualitative NEG prescriptions pointed clearly in a commodifying policy direction across all four countries and all years until 2019 (Table 11.1). In the 2019 Semester cycle, EU executives tasked the Italian government to ‘address restrictions to competition … through a new annual competition law’ (Council Recommendation 2019/C 301/12), and Romania was required to improve the efficiency of public procurement (Council Recommendation 2019/C 301/23). Italy was asked to reform its public administration, whereas the Romanian government was told to strengthen the corporate governance of state-owned enterprises (SOEs), ‘with a view to upgrading operational performance, limiting risks to the government budget and improving their functioning in the economy’ (Council Recommendation 2019/C 301/23).

In response to the Covid-19 pandemic, member states massively increased their public spending. EU leaders supported this response by temporarily suspending the Stability and Growth Pact (SGP) (Chapter 12). The Council’s 2020 NEG prescriptions reflected this new reality, as most governments were told to take all necessary measures, in line with the SGP’s general escape clause, to effectively address the crisis caused by the pandemic (Council Recommendations for Ireland (2020/C 282/07), Italy (2020/C 282/12), and Germany (2020/C 282/05)). Even so, EU executives toned down these expansionary prescriptions by requesting a return to restrictive fiscal policies once the situation improved. Furthermore, in 2020, EU executives expected the Romanian government to limit the public deficit with a view to bringing it below 3 per cent of GDP in 2022. After all, Romania had been made subject to an excessive deficit procedure just before the outbreak of the pandemic (Council Recommendation 2020/C 116/01). In 2021, EU executives nonetheless extended to 2024 the deadline to bring the deficit below the SGP threshold, given the negative impact of the pandemic on the Romanian economy (Commission SWD (2021) 530 final). This shows that the fiscal flexibility granted to governments was temporary and still constrained by the overarching EU fiscal framework. This, we expect, will clearly be the case if EU leaders re-enact a constraining SGP regime, a question to which we return below. In addition, EU executives did not ask governments to increase resources for all public service providers. Instead, they asked governments to ‘front-load’ approved public investment projects and to ‘focus’ investment on the green and digital transition (Council Recommendations for Ireland 2020/C 282/07, Italy 2020/C 282/12, and Germany 2020/C 282/05). As shown in Chapter 7, however, the prioritisation of investments in some areas at the expense of other areas does not have a decommodifying effect on public services in general. In addition, the prescriptions in the area of provider-level governance mechanisms issued to Italy and Romania also pointed in a commodifying direction, tasking the two governments to ‘improve the effectiveness of public administration’ (Council Recommendations for Romania 2020/C 282/23 and Italy 2020/C 282/12). Given that the pandemic’s devastating impact underlined the importance of adequate and accessible public services, we expected to find more prescriptions in the 2020 Semester cycle on people’s access to public services. However, only Romania received a prescription to extend the coverage of essential public services (Council Recommendation 2020/C 282/23), as in previous Semester cycles (Chapter 7).

The four NRRPs prescribed a similar policy mix, combining calls for more public investments with demands for marketising public sector reforms. These patterns were most notable in the Romanian and Italian NRRPs; this is hardly surprising, as EU executives matched those countries’ greater share of RRF funding to more policy conditionalities. Given the RRF Regulation’s evaluation criteria, the NRRPs channelled public expenditure towards capital (rather than personnel) spending and towards the green and digital transitions. Most green and digital investments were directed towards specific sectors, as we shall see below. If we look at green investments across sectors, only those for spending on the energy efficiency of Irish, Italian, and Romanian public buildings stand out in their respective NRRPs, in which, by contrast, digitalisation played a more prominent cross-sectoral role.

All four NRRPs first committed governments to digitalise public administrations and then operationalised the corresponding expenditure and reform targets in more detail. All plans prescribed measures to increase the digital delivery of public services, with the stated aim of increasing citizens’ access to them. Other measures concerned the internal operation of public administration, such as the creation of shared cloud services and data centres or the provision of training on digital skills for public service workers. The Romanian NRRP also committed the government to automate laborious, repetitive, and rule-based tasks in the public sector. This could have a commodifying or a decommodifying impact, depending on whether automated services will be used to reduce the public sector workforce or to expand public services. All NRRPs presented digitalisation as a means to increase citizens’ access to public services, but only Romania’s plan foresaw additional measures to increase access to, and the quality of, local-level services. These measures mirrored the decommodifying prescriptions on the same issue that Romania received in the 2019 and 2020 Semester cycles. At the same time however, Romania’s NRRP linked digitalisation to commodifying public services reforms, that is, to the creation of digital platforms for human resource management (HRM).

More generally, the Italian and Romanian NRRPs combined decommodifying (quantitative) prescriptions for more investments with prescriptions for commodifying (qualitative) public sector reforms. In the sector-level governance mechanisms category, the Italian NRRP committed the government to remove obstacles to competition in the services sector, both public and private, through the introduction of annual law to further competition. This had been a recurrent theme in the CSRs for the Italian government up to the 2019 cycle (Chapter 7). In the NRRP, the Italian government thus committed itself to foster competitive tendering for local public services; to curtail the possibility of in-house delivery of public services; and to reduce the length of public concessions contracts in several areas, such as ports, highways, electric charging stations, and hydropower. The Italian NRRP also required the simplification of Italy’s procurement rules to accelerate the awarding of public contracts, which was a recurring theme in the NEG prescriptions for Italy, albeit not in the 2019 and 2020 cycles. The theme of increasing the efficiency of public procurement was very present in the NEG prescriptions for Romania too, including the 2019 ones. In turn, the Romanian NRRP committed the government to fully implement its National Public Procurement Strategy approved in 2015. Another commodifying measure of both the Italian and the Romanian NRRPs was the commitment to strengthen spending review procedures, mirroring NEG prescriptions that EU executives had already issued before the 2019 and 2020 Semester cycles (Chapter 7).

Both the Italian and Romanian NRRPs also contained prescriptions on provider-level governance mechanisms. The reform of HRM practices in public administration had been a long-standing theme in NEG prescriptions for Italy and Romania, including in the 2020 cycle. Accordingly, they featured prominently in the NRRPs too. The Italian NRRP prescribed an update in public sector job profiles, a reform of hiring procedures and career trajectories, and new provisions on public sector workers’ horizontal and vertical mobility. In addition to these commodifying goals, the plan mentioned some decommodifying ones, including a stronger commitment to gender equality. In addition to the digitalisation of HRM practices discussed above, the Romanian plan prescribed a reform of the recruitment procedures for public sector workers and the introduction of a unitary pay system in the public sector, which may or may not be linked to budgetary retrenchment, depending on its implementation. Moreover, the Romanian NRRP addressed another recurring theme in NEG prescriptions, namely, the reform of governance mechanisms in SOEs. EU executives thus set implementation targets that tasked the Romanian government to insulate SOEs’ senior management from government interventions by separating SOE ownership and regulatory functions and to ‘remove any direct or indirect advantage that might derive from State ownership’ (Annex to the Council Implementing Decision … for Romania 12319/21 ADD 1: 474–475).

In sum, the post-Covid EU governance interventions on public services at cross-sectoral level very much mirrored the patterns of NEG prescriptions that EU executives had issued before the pandemic. The NRRPs committed governments to spend more in certain areas, but the quest for greater investments continued to be predominantly linked to policy rationales that did not question NEG’s overarching commodification script in public services. The NRRPs’ qualitative prescriptions on public services reforms largely pointed in the same commodifying direction as the qualitative NEG prescriptions that EU executives had issued before the pandemic (Chapter 11). Accordingly, unions and social movements tried to politicise EU economic governance interventions through transnational union protests in 2021 and 2022 also (Table 13.2).

As EU executives’ commodifying public service NEG prescriptions continued to be country-specific, protest organisers used very general watchwords to mobilise people, such as ‘no to privatisation and commercialisation’, which somewhat shielded the specific NEG interventions – such as the NRRP commitment for Italy to liberalise local public services – from their politicisation in the transnational public sphere.

Having assessed the EU’s post-Covid NEG prescriptions and the corresponding transnational actions by trade unions and social movements in our two intersectoral areas, we now turn to the analysis of the post-Covid prescriptions in our three public sectors.

13.4 EU Governance of Transport Services: Still Commodifying

Before the pandemic, EU executives’ prescriptions on resource levels for public services had already taken an expansionary turn, especially in sectors regarded as critical for economic growth, including transport and water services but not healthcare (Chapter 11). In the 2019 Semester cycle, they promoted investment in sustainable transport for Germany, Romania, and Ireland and quality infrastructure for Italy after the collapse of the Morandi Bridge (Chapter 8). The prescriptions also promoted investment to address regional disparities in Romania, Ireland, and Italy. These quantitative NEG prescriptions pointed in a decommodifying direction – although with some qualifications, given their semantic links to policy rationales such as ‘enhance private sector involvement’, which were compatible with NEG’s commodification script (Table 11.4).

Conversely, all qualitative prescriptions on transport services issued in 2019 pointed in a commodifying direction (Table 11.3). EU executives tasked the Romanian government to reform governance of its SOEs and urged the Italian government to introduce each year a bespoke annual ‘competition law’ (Council Recommendation 2019/C 301/12) to expose in-house public service providers (namely, public transport and water services) to greater market competition.

The prescriptions issued by EU executives in the 2020 Semester cycle mirrored the patterns of previous years. All four countries received a decommodifying prescription for greater investment in the ‘green and digital transition’ (Council Recommendations Germany 2020/C 282/05, Ireland 2020/C 282/07, Italy 2020/C 282/12, Romania 2020/C 282/23). At the same time, EU executives again tasked the four governments to combine public and private investment, effectively diluting the decommodifying component in favour of commodification.

After the end of the Covid lockdowns and the return to workplaces, public transport operators faced challenges in terms of getting people back to using their services. Whereas private car usage surged with car manufacturers capitalising on public fears, a declining trend persisted in public transport. On account of the central role of transport in the transition to a green economy, however, it featured consistently across the four countries’ NRRPs, channelling a substantial share of RRF funds into this sector. This is in line with the 2019–2020 CSRs on investment and, more generally, the 37 per cent minimum spending threshold on the green transition mandated by the RRF Regulation (Chapter 12).

Nevertheless, each NRRP differed in terms of the funds for transport and mobility, with the four countries planning to spend between 17 and 26 per cent of the RRF funds on them (European Parliament, 2022). The plans also differed in content. Whereas all NRRPs stipulated investments in railways, electrification was envisaged in the case of Ireland, and the Italian plan included the building of new rail connections, increasing capacity on (high-speed) passenger and freight rail transport, and upgrading regional rail lines. The German NRRP foresaw the replacement of old diesel trains with 280 new ones using alternative fuels and the roll-out of zero-emission buses. The Italian plan also envisaged greening regional fleets with 150 trains and, along with Romania’s plan, investing in regional and urban transport networks. Both the Romanian and the Italian plan included cycle tracks in urban areas and the development of cycle routes to promote cycling tourism.

The NRRPs thus mirrored the quantitative expansionary prescriptions on transport that EU executives had issued in the 2019 and 2020 Semester cycles, but the plans also implemented the qualitative 2019 prescriptions that pointed clearly in a commodifying direction. The Italian plan included the implementation of the bespoke annual competition law, which EU executives had requested in 2019 and before without success, which will also affect local public transport services. The Romanian plan likewise included a clear commitment to reform the governance structures of SOEs, including in the transport sector. To that aim, the NRRP tasked the Romanian Ministry of Transport and Infrastructure to ‘contract/select through competitive public procurement an International Financing Institution or an international auditing company, recognised for the competence and expertise in state-owned enterprises’ performance. The recommendations from this independent assessment shall be implemented by 30 June 2023’ (Annex to the Council Implementing Decision … for Romania 12319/21 ADD 1: 103). The OECD provided the blueprint for such a corporate governance reform. It urged the government to further centralise control over SOEs by setting up an ‘independent public agency … not otherwise involved in the ownership and regulation of SOEs’ and to create ‘a level playing field with other [e.g., private] companies’ (OECD, 2023b). On 28 June 2023, the Romanian president Klaus Iohannis promulgated the new lawFootnote ⁶ that established such an agency (Agenția pentru Monitorizarea și Evaluarea Performanțelor Întreprinderilor Publice, AMEPIP) to be set up under the aegis of the government’s general secretary, who is also a member of Iohannis’ centre-right PNL party (ADZ.ro, 06 July 2023).

After the pandemic, governance interventions by law also triggered some interesting developments. At national level, the German monthly €9 ticket valid on all local buses, trams, metros, and regional trains nationwide garnered considerable attention as a radical measure incentivising the use of public transport. Although the initiative lasted only three months, it put the question of green public transport front and centre. In May 2023, Germany’s federal legislators therefore amended its regionalisation law (Regionalisierungsgesetz), in turn enabling its Länder to introduce a permanent successor ticket for €49. On the other hand, the largest NRRP investment in the German transport sector involves support for the purchase of electric vehicles, a ten-year tax exemption, and the establishment of a comprehensive charging infrastructure. In other words, car-dependent transport systems will continue to the detriment of alternative (public) transport modes, despite the climate emergency.

At EU level, in December 2020, the Commission published an ambitious legislative new transport policy agenda called ‘Sustainable and Smart Mobility Strategy’ (Commission, Communication, COM/2020/789 final). Although the Commission linked it to the green transition, the creation of a single EU transport market remained its principal goal. The Commission also opened proceedings against Europe’s biggest publicly owned rail-based cargo operators, as the state aid that they had received would disadvantage their (road-based) competitors (Commission, Announcement (2023/C 131/13), Fret SNCF; Commission, Announcement (C/2022/639), DB Cargo). These actions are revealing, as a further weakening of the EU’s biggest rail freight operators in the name of market competition will hardly reverse the ongoing decline of rail freight, which began in the 1990s after the EU started liberalising its transport policies (Chapter 8). How this will further the green transition is unclear.

The Commission’s continuing quest for the marketisation of transport services has also informed its draft implementation guideline for a Public Service Obligation Regulation that was part of the fourth package of EU railways laws (Chapter 8), which infuriated the ETF (2023), as the Commission’s draft guidelines wrongly insinuated that direct PSO concession awards of national and local governments to their public rail companies would no longer be legal. The Commission’s draft implementation guideline triggered not only a response from the European Parliament in which it reiterated that it would not accept any attempt by the Commission to alter the spirit of the regulation without involving the Council and Parliament in a co-decision procedure but also a European demonstration of rail workers in Brussels (see Table 13.3).

Despite another transnational strike and demonstration day in June 2022 against the thirty years of transport liberalisation, commodifying policy objectives continued to shape the Commission’s transport policy, regardless of the need to foster a green transition. On 11 July 2023, the Commission proposed its ‘Greening freight for more economic gain’ package of two draft EU laws, which included:

• • the draft Monster Lorry Directive (COM (2023) 445/2), which aims to increase the productivity of road transport operators by removing the current maximum height and weight restrictions for low emission lorries (Politico.eu, 11 July 2023);

• • the draft Rail Capacity Management Regulation (COM (2023) 443/2), which aims to make rail more attractive for cargo companies by replacing the current national rail capacity management systems that would hinder ‘the functioning of the Single Market’ by a single EU system that gives freight operators ‘non-discriminatory’ access to all railway lines according to an ‘industry-led’ rail capacity management plan for the entire ‘single European railway area’ (European Commission, 2023b).

In sum, neither Covid nor the climate emergency triggered major changes in the EU governance interventions in the transport sector. Although all NRRPs foresaw greater transport infrastructure investments, the NRRPs’ policy conditionalities and the Commission’s 2023 draft transport laws still clearly point in a commodifying, transport-service-marketisation direction.

13.5 EU Governance of Water Services: Towards a New Commodification Push?

In the 2019 and 2020 Semester cycles, EU executives explicitly prescribed more resources for local public services (including water services) for all four countries except Romania. As in preceding years, EU executives tasked the German authorities in 2019 to ‘achieve a sustained upward trend in private and public investment, in particular at regional and municipal level’ (Council Recommendation 2019/C 301/05). This is relevant for water services, as they are normally located at local level. Similarly, the 2019 and 2020 CSRs urged Ireland to focus investment on green transition in sustainable water services. These prescriptions followed up on earlier ones of ‘investment prioritisation’ issued since 2016. Italy received a similar prescription in 2020 to ‘focus investment on the green and digital transition, in particular on … waste and water management’. In 2019, Romania did not obtain any explicit prescriptions on higher resource levels, even though Recital 19 to its 2019 CSR lamented the country’s deficiencies in water and wastewater infrastructure. Instead, it got a decommodifying prescription in 2020, which tasked the government to ‘extend social protection measures and access to essential services for all’. Water was not mentioned in the main CSR text, but its Recital 19 considered water services as essential: ‘Social and essential services remain largely insufficient, including in areas such as water and sanitation, energy and housing.’ We categorised all these expansionary prescriptions as decommodifying, as they represented a shift away from the austerity cuts of 2009–2014 by advocating higher resource levels for public service providers or higher public service coverage levels (Chapters 9 and 11). When assessing the semantic links of the recent quantitative NEG prescriptions to their underlying policy rationale however, we found that most of the policy rationales behind the expansionary prescriptions, such as ‘rebalance the EU economy’, ‘boost competitiveness and growth’, or ‘enhance private sector involvement’, were compatible with NEG’s commodification script (Table 11.4). Since 2018 however, the ‘shift to a green economy’ rationale has also gained traction in relation to these prescriptions.

Conversely, the qualitative prescriptions concerning the mechanisms governing the provision of water services continued to point in a commodifying direction. Despite the 2011 Italian referendum vote in favour of public local (water) services, and a subsequent 2016 Constitutional Court decision (Chapter 8), EU executives tasked the government to increase ‘the efficiency and quality of local public services’. This prescription does not sound commodifying, but Recital 24 of the same CSR document clearly discloses its policy direction: ‘A new legislative initiative is thus needed to promote the efficiency and quality of local public services, including by prioritising competitive bids over in-house solutions or direct grants’ (emphasis added).

The four countries’ NRRPs pursued commodifying qualitative and decommodifying quantitative objectives too. As mentioned in Chapter 12, each NRRP had to allocate at least 37 per cent of its RRF funds to support the green transition. According to the Commission’s Recovery and Resilience Scoreboard,Footnote ⁷ member states promised to spend approximately 2 per cent of their RRF funds on the sustainable use and protection of water and marine resources. At the same time, the spending targets differed greatly across countries. Water did not feature in the German NRRP and was only marginally present in the Irish one, which mentioned wastewater management as part of the Irish River Basin Management plan. By contrast, the Italian and Romanian NRRPs included sections on the management of water services.

The Italian plan included several qualitative reform commitments. The first mirrored the commodifying prescriptions on the sector- and provider-level mechanisms governing local public services that Italy received in the 2019 and 2020 Semester cycles, namely, the commitment to adopt bespoke ‘Annual Competition Laws in 2021, 2022, 2023 and 2024’ to increase ‘competitive procedures to award public service contracts for local public services’, including ‘transport’ (see section 13.4) and ‘water’ services (Annex to the Revised Council Implementing Decision … for Italy 10160/21 ADD 1 REV 1: 188–189). In addition, the plan criticises the fragmentation of the Italian water sector and sets out incentives to regional governments to integrate small water providers into single operators per at least 40,000 inhabitants. The Italian NRRP thus committed the Italian authorities to introduce new laws and regulations on water services that shall ‘at least reduce the number of water service providers’ and introduce new ‘pricing policies … to facilitate a more sustainable consumption of water’ (Annex to the Revised Council Implementing Decision … for Italy 10160/21 ADD 1 REV 1: 370–371). Hence, EU executives are again instrumentalising green arguments as a means to increase users’ water charges, as happened earlier (Chapter 8). Water services also featured in the first component of Romania’s NRRP, which included far-reaching governance reforms of the water sector and aimed to extend access to water services by ‘support to families and single people with low incomes … to cover the costs of connection to the public water supply and sanitation system’ (Annex to the Council Implementing Decision … for Romania 12319/21 ADD 1: 3). Whereas this prescription at face value points in a decommodifying policy direction, we must recall that Romania privatised its lucrative water service providers long ago (Chapter 9). This NRRP prescription thus amounts to a call to subsidise privately owned water providers to incentivise them to set up water services in rural areas that still have no access to any water and sanitation systems.

In sum, the quantitative measures prescribed in the CSRs and the NRRPs called for more public investment across all four countries, although the water sector played only a marginal role in the German and Irish cases. The same policy documents called for higher water service coverage levels for Romania to give more people access to drinking water and wastewater service grids. As shown in Chapter 11, calls for greater public investments can go hand in hand with qualitative prescriptions that point in a commodifying policy direction, as in the case of the Italian NRRP that prescribed several reforms that further advanced the commodification of the mechanisms governing the public provision of water services.

The future orientation of the post-Covid EU governance of water services will also depend on the outcome of the ongoing discussions about new EU laws in the field. In 2020, EU legislators adopted the Recast Drinking Water Directive (2020/2184). This directive contains a decommodifying provision on people’s rights to access drinking water, thanks in part to political pressures created by the successful Right2Water European Citizens’ Initiative (Chapter 9). More legislative changes are in the pipeline. In 2022, the Commission proposed a new Water Directive (COM (2022) 540 final) and the Recast Urban Wastewater Treatment Directive (COM (2022) 541 final). The former aims to reduce the pollution of groundwater and surface waters across the EU and the latter aims to set higher EU standards for the extraction of pollutants from wastewaters. If adopted, the latter in particular will require much higher investments in water treatment plants. So far, these proposals have not triggered any protest actions by public service advocates, but both public and privately owned water operators have lobbied EU lawmakers to force polluting industries to contribute more to their higher prospective wastewater treatment costs. Even so, the need to invest more in greener water treatment facilities may lead to a renewed push to privatise water services and renewed social protests later, namely, when EU leaders terminate the suspension of the SGP.

13.6 EU Governance of Healthcare Services: Growing Discontent

In the years preceding the pandemic, the prescriptions for our set of four countries displayed a combination of mostly commodifying healthcare prescriptions, with few decommodifying ones (Chapter 10). In 2019, in the first category, we saw prescriptions to shift from inpatient to outpatient care (Romania) and to increase cost-effectiveness (Ireland) and cost-efficiency (Romania) in healthcare; and in the second, the prescription to improve users’ access to long-term care (Italy) and to healthcare (Romania).

After the outbreak of the Covid-19 pandemic, EU member states faced a significant increase in the numbers of patients in need of highly specialised care. In March 2020, the importance of well-equipped and well-staffed public hospital services became apparent to almost everyone. In response, in the 2020 Semester cycle, EU executives introduced a general prescription that urged member states to ‘strengthen the resilience of the health system’. The concrete substance of the prescription remained vague however, as its language neither defined ‘resilience’ nor clearly outlined how it should be ‘strengthened’. By considering other healthcare-related texts in CSRs and recitals, we tried to unearth the meaning of the ‘strengthen the resilience of the health system’ prescription, as indicated in brackets in Table A13.1 of the Online Appendix. This enabled us to establish that the prescriptions for the four countries to ‘strengthen the resilience of the health system’ were meant to direct more funding towards healthcare infrastructure and healthcare workers, to secure long-term financing (Germany) or investment in healthcare (Romania), to improve healthcare infrastructure (Ireland), and to address the needs of healthcare workers (Ireland) and their retention in the healthcare system (Germany, Italy, Romania). These prescriptions were thus quantitative and expansionary and pointed in a decommodifying policy direction. Nonetheless, in a context where healthcare systems in all the four countries had already been affected by service commodification before (Germany, Italy, Ireland) or after (Ireland, Romania) the 2008 crisis, greater public spending may actually benefit private providers more than public ones. Tellingly, the prescriptions referred to ‘the health system’ rather than to public health service providers. In this context, increased healthcare financing may also be used to boost the profits of private providers of medical services and products or of the builders of healthcare infrastructure.

In addition to these 2020 prescriptions on resource levels, we found several prescriptions on users’ access to healthcare services to ‘improve accessibility of the health system’ and ‘ensure universal coverage to primary care’ (Ireland) and to ‘improve access to healthcare’ (Romania), all pointing in a decommodifying direction. These prescriptions are a continuation of similar exhortations in previous years in recitals for Ireland and in CSRs for Romania (Chapter 10; Online Appendix, Table A10.4). The same caveat applies to these prescriptions as to those seen above: in significantly commodified healthcare systems, calls to increase accessibility may also translate into measures seeking to redirect public funding towards private providers. Overall however, EU executives reoriented their quantitative NEG prescriptions in 2020 towards higher resource levels for healthcare providers and higher service coverage levels for its users, away from their curtailment. This development is notable, as healthcare did not profit from the earlier shift of EU executives’ prescriptions in favour of more investment that occurred in allegedly more productive sectors (including transport and water) from 2016 onwards (Table 11.4).

Finally, the 2020 CSRs also included prescriptions on the sector-level governance of healthcare services. Germany was tasked to deploy e-health services, mirroring EU executives’ earlier prescriptions calling for healthcare digitalisation to advance their commodifying agenda. As shown in Chapter 10, although e-health has been presented as a means for increasing patient choice, in practice it was introduced as a tool to reorganise health systems along managerialist financial control lines. Italy’s prescription to ‘enhance coordination between national and regional (healthcare) authorities’, which we classified under the same category, leaves space for both commodifying and decommodifying possibilities inasmuch as neither the nature of this coordination nor the means to achieve it were specified.

The subsequent NRRPs had to address both 2019 and 2020 CSRs, and this is where both commodifying and decommodifying streams in healthcare prescriptions for the two years became relevant. On the decommodifying side, the 2020 prescriptions to ‘strengthen the resilience of the health system’ were translated in the CIDs of the corresponding NRRPs into very detailed measures seeking to improve healthcare infrastructure, service provision, and access to health services (Online Appendix, Table A13.2). On the infrastructure side (our category of resource levels for service providers), the four NRRPs included measures aimed at improving emergency services (Germany); de-institutionalised health services, the use of local pharmacies as health services, community health houses, homecare services, community hospitals, hospital equipment, and intensive care services (Italy); community health networks (Ireland); and GP practices, integrated community services, preventive services, long-term care services, and hospital infrastructure (Romania). In the area of users’ access to services, NRRPs included measures to simplify access to health services for people with disabilities and the elderly (Italy) and to extend the range of services covered by the national insurance fund (Romania).

Prescriptions to ‘strengthen the resilience of the health system’ also led to measures concerning healthcare workers, which fell under our resource level category too. Its NRRP committed the Irish government to issue public-only healthcare service contracts for medical consultants, a measure that pointed in a decommodifying direction. Romania’s NRRP in this area, however, was more ambivalent. On the one hand, pointing in a decommodifying direction, it committed its government to establish, and fund from the state budget, two skills and development training centres for healthcare workers and to build houses for healthcare professionals in marginalised communities. On the other hand, the plan obliged the government to fund skills and integrity training programmes, opening new business opportunities for private training operators. In addition, the plan required the government to introduce performance-based rewards mechanisms for health professionals, a clearly commodifying measure.

This brings us to the commodifying side of the NRRPs’ healthcare-related measures, mirroring 2019 NEG prescriptions to increase ‘cost-effectiveness’ (Ireland) or ‘cost-efficiency’ (Romania), which meant marketising the provider- and sector-level governance mechanisms of healthcare services (Chapter 10). All NRRPs emphasise digitalisation, either in the form of digitalising hospitals (Germany and Italy) or in terms of digitalising healthcare data for the purpose of financial management (Italy, Ireland, Romania). In addition, the Italian NRRP committed the government to simplify public procurement rules, which is a measure seeking to commodify provider-level governance. In turn, the Romanian NRRP tasked the government to introduce further spending reviews in budgetary processes and additional performance-based mechanisms to finance healthcare providers. These measures sought to commodify the governance of healthcare services at sector level: the first sought to further entrench budgetary discipline in healthcare management, continuing the line traced by the prescriptions to strengthen budget control mechanisms for hospitals issued to Romania between 2011 and 2014; the second sought to generalise to all healthcare providers the prescription issued in 2013 to introduce performance-based payments in primary care (Chapter 10).

This commodifying orientation could be reinforced also by developments taking place through the ordinary legislative procedure, namely, the Commission’s draft Regulation on the European Health Data Space (COM (2022) 197 final). The draft regulation not only obliges all healthcare practitioners to input their patients’ data into a European database to facilitate the management of healthcare services and to create a European healthcare union but also entitles private companies to access the proposed European database for ‘secondary use’ to facilitate their commercial research and innovation. Although the big tech TNCs, the pharmaceutical industry, and private healthcare providers ‘stand to benefit’ from the draft regulation (Politico.eu, 27 October 2022) and despite the popular critiques of digital capitalism, for example by Shoshana Zuboff (Reference Zuboff2019), no transnational protests against the proposed regulation took place until February 2023 (Table 13.4). However, the EU’s own in-house privacy regulator, the European Data Protection Board, raised concerns about the sharing of certain data with industry, echoing the disquiet of other not-for-profit organisations representing patients, healthcare professionals, hospital pharmacists, payers, and healthcare institutions that advocate for a ‘society-centred digitisation of healthcare’ (AIM et al., 2022). An EPSU (2022b) press release struck a similar tone: ‘We cannot trust nor rely on an approach that would give commercial interests (from companies seeking profits) any role in a health data sharing space. Health is not a commodity and commercial interests can have no place in our public and private health issues.’ Instead, however, of mobilising their members against the proposed European Health Data Space, EPSU, but also the rank-and-file European Network against Privatisation and Commercialisation of Health and Social Protection (ENPCHSP, or the European Network), organised several transnational protests that responded to the more burning challenges for health services and healthcare workers caused by the Covid-19 pandemic (see Table 13.4).

The pandemic made the negative consequences of NEG’s insistence on cuts in healthcare spending more visible, notably in terms of public hospital bed, staff, and equipment shortages. Healthcare workers called for better working and employment conditions in response to the heavy toll that the pandemic had taken on them (Vandaele, Reference Vandaele2021). The European Network held an action day in April 2020 called ‘Against the commercialisation of health and social protection’, but it had to be confined to actions on social media and a press conference because of Covid lockdowns. In October 2020, EPSU organised a European action day ‘Fighting for health and care beyond the pandemic’, which focused on ‘higher wages, more staff and quality of care for all [Table 13.4]’, mirroring the International Trade Union Confederation’s call for a Global Day of Action on ‘Investing in care now’. The European Network’s 2021 action day focused on ‘universally accessible and affordable’ access to Covid-19 vaccines, in support of the ‘No profit on pandemic’ European Citizens’ Initiative launched by members of the European Left and supported by both the European Network and EPSU. However, by embracing the cause of fighting the larger commodification of health by pharmaceutical companies, the European Network drifted away from the more specific issue of healthcare commodification, although the pandemic did not reverse the EU executives’ healthcare commodification agenda. The fight against the ‘commercialisation’ of healthcare services nonetheless remained a central theme in the protests of European healthcare workers – as shown by the cover picture of this book, which was taken on 9 December 2022 at the EPSU demonstration before the Council and Commission buildings in Brussels.

13.7 Continuity and Change in EU Economic Governance after the Pandemic

After the financial crisis, EU executives’ NEG prescriptions followed similarly commodifying trajectories in employment relations and public services. After the Covid-19 emergency, however, the trajectories of their governance interventions on employment relations and public services clearly pointed in opposite directions. Whereas EU executives virtually stopped prescribing commodifying qualitative prescriptions in employment relations, public services continued to be targeted by commodifying qualitative prescriptions also after the pandemic.

In the employment relations area, the most relevant developments took place outside the NRRP framework, following the approval of the aforementioned EU directive on adequate minimum wages. Only the Romanian NRRP addressed the issue directly, namely, by prescribing the 2022 labour law reform that sought to increase collective bargaining coverage and better protect union and workers’ rights and by reversing the commodifying 2011 Social Dialogue Law introduced under the EU–IMF economic adjustment programme. In Ireland, improvements to the legislation underpinning collective bargaining are also forthcoming, but as an effect of the Minimum Wage Directive and not of the NRRP. In October 2022, the Scholz government substantially increased the German minimum wage, through an ad hoc intervention, to €12, almost matching the reference values of the EU directive. So far however, given the opposition of the FDP, the German government has not yet proposed any national legal changes transposing the EU directive into German law; this explains why the German Minimum Wage Commission has been able to propose derisorily low minimum wage increases for 2023 and 2024. Nevertheless, both EU executives and legislators clearly adopted a decommodifying U-turn in their wages and collective bargaining policies, as they came to realise even before the advent of the pandemic that they could hardly re-establish some popular legitimacy for the EU integration process without attempting to re-integrate workers and trade unions into the process (Ryner, Reference Ryner2023).

At the same time, our analysis has shown that these attempts to increase the popular legitimacy of the EU integration process did not involve any significant deviation from the overarching commodifying policy script informing EU executives’ NEG prescriptions on public services. Before 2019, NEG’s overarching commodification script had already been more visible in the EU executives’ prescriptions on public services compared with those on employment relations. Although EU executives tasked governments to pursue qualitative commodifying structural reforms in both areas up to 2019, they gradually adopted more expansionary prescriptions on wages and public service resource levels from 2016 onwards – not to address pressing social concerns but to rebalance the EU economy and to boost its growth and competitiveness.

Accordingly, EU executives committed member states to prioritising public investments in allegedly more productive public sectors, excluding, however, public healthcare services from the allegedly social investment turn in EU executives’ NEG prescriptions (Tables 11.1–11.4). Whereas water and transport had already been identified in prescriptions as deserving more investment before 2020, healthcare had not (Chapter 11). This oversight, in turn, contributed to making healthcare systems less able to respond to the Covid-19 emergency (Stan and Erne, Reference Stan and Erne2023). After the pandemic, even DG ECFIN Commission officials stopped perceiving healthcare expenditure primarily as a drag on healthy public finances, as they had done before the pandemic (Chapter 10). This, however, did not lead them to see public healthcare as a common good. Instead, they began their thematic analysis of the NRRPs in healthcare by stating the following: ‘Healthcare services constitute one of the most important economic sectors in Europe, accounting for almost 10 per cent of GDP, 15 per cent of government expenditure and 8.3 per cent of the total workforce in the EU’ (emphasis added) (European Commission, 2021: 2). Hence, healthcare also became a sector worth investing in, as it ‘contributes to higher productivity and boosts economic growth’ provided that the NRRP investments and reforms addressed the ‘structural weaknesses in health systems across the EU’ (2021: 2).

The policy orientation of the post-Covid NEG regime in public services thus did not shift dramatically. After the pandemic, EU executives reinforced trends detected in the previous empirical chapters and summarised in Chapter 11: combining expansionary prescriptions on resource levels with calls for commodifying structural reforms. However, although EU executives had already prescribed commodifying policy reforms, for example on the digital transition of public services, before the pandemic (Chapter 11), the EU funding conditionalities specified in the RRF Regulation significantly increased the coercive power of their corresponding prescriptions even in countries that were not subject to an excessive deficit procedure or a macroeconomic imbalance procedure (see Chapters 2 and 12).

In terms of the post-Covid NEG prescriptions on people’s access to public services, we uncovered more continuity than change. Where there were decommodifying prescriptions before 2020 to increase the coverage levels of public services, they remained also after 2020, circumscribed to specific sectors or countries, namely, Romania. This is striking, as the pandemic showed the need for accessible public services across all sectors and countries. Calls for increased investment did not target public services in general but remained sector-focused. Among the sectors that we analysed, water and, especially, transport were obvious targets of increased investment in the green and digital transition in the NRRPs. Although healthcare investments were not shaped by concerns about the green transition (apart from the retrofitting of hospital buildings), they were meant to advance the sector’s digitalisation.

Although we classify prescriptions aimed at increasing resources for public services as decommodifying, both pre- and post-Covid NEG prescriptions remained silent on whether increased public investment should go to public or to private services operators. It is too early to study the implementation of the NRRPs now but, to be able to fully assess the orientation of the post-pandemic NEG regime, this is something that future research will need to address. In light of the RRF funding criteria discussed in Chapter 12, however, it is indeed quite likely that the public money channelled through NRRPs will end up fuelling private profits (Bellofiore and Garibaldo, Reference Bellofiore and Garibaldo2022).

Regarding qualitative NEG prescriptions on public services, this risk is even greater. Indeed, across the public transport, water, and healthcare sectors, as well as public services across sectors, almost all post-Covid prescriptions on sector- and provider-level governance mechanisms pointed in a commodifying policy direction. Both national and EU executives thus used RRF funding not only to address underinvestment but also as a leverage tool to advance additional commodifying, structural reforms of public services.

However, the picture concerning intersectoral employment relations differs. It is in relation to qualitative prescriptions on employment relations that a break with the pre-Covid NEG regime is most evident. In the 2019 and 2020 Semester cycles, EU executives issued only a few prescriptions on employment relations. Consequently, NRRPs addressed employment relations issues in only a few cases. More precisely, the Romanian NRRP included a commitment to reform Romania’s 2011 collective labour law to foster social dialogue. The trajectory of EU interventions in employment relations shifted in a decommodifying direction, as shown also in the adoption of the EU Minimum Wage Directive in 2022. The directive not only set EU reference values that should lead to minimum wage increases in almost all EU member states but also shifted EU executives’ views on decommodifying multi-employer collective bargaining mechanisms. In the public sector however, workers remain subject to post-Covid prescriptions advocating commodifying structural public sector reforms. The coercive power of these prescriptions has even increased significantly given the threat of withdrawal of RRF funding in the case of non-compliance.

Notwithstanding the change in EU executives’ perspective in favour of healthcare investments after the Covid pandemic, the contribution of the €37bn of RRF healthcare funding directed at addressing the acute staff shortages in Europe’s public healthcare systems was very limited, as ‘support from the Facility shall not, unless in duly justified cases, substitute recurring national budgetary expenditure’ (Art. 5(1) RRF Regulation). Accordingly, the RRF investments in this regard were typically limited to supporting staff training initiatives provided by public but also private operators. Moreover, all NRRPs directed a large amount of investment (€15bn) towards the ‘digital transition in healthcare’ to achieve ‘the target of allocating at least 20% of their total budget to the digital transition’ (European Commission, 2021: 3), a measure with the potential to use technology for the long-term replacement of staff – further indicating that public services have become a key site for capital accumulation (Huws, Reference Huws2012).

13.8 Conclusion

In sum, the trajectories of the EU’s post-Covid governance of employment relations and public services have increasingly pointed in opposite directions. The policy direction of forthcoming EU laws and NEG prescriptions governing employment relations and public services, but also the forthcoming EU laws on the revised Stability and Growth Pact, will determine whether we shall see a continuation of this polarising trend.

The recent strengthening of decommodifying EU labour law was certainly important. After all, EU executives did not dare to adopt NEG prescriptions that explicitly went against existing EU labour laws, even before the outbreak of the pandemic. By contrast, neither national law nor the EU Treaty’s primary law on the EU’s competences stopped EU executives from prescribing commodifying structural reforms across all policy areas (Chapter 3), for instance in relation to pay and collective bargaining (Chapter 6) or healthcare services (Chapter 10). For workers and unions, and for public services users and social movements, the policy direction of secondary EU law is thus of utmost importance.

Advocates of a more social Europe thus would be well advised to focus their energies on the fight for decommodifying EU laws; for example, new EU laws prioritising non-profit-oriented public services for the common good over private operators that seek to maximise their profits. We believe that this would be much more promising than the attempts to ‘socialise’ the NEG regime through the inclusion of social scoreboards in its technical procedures or the addition of a ‘“Social Imbalances Procedure” (SIP) complementing existing fiscal and macroeconomic procedures’ (emphasis added) (Vanhercke, Sabato, and Spasova, Reference Vanhercke, Sabato and Spasova2023: 147).

Our analysis has also shown that any socialisation of the NEG regime is very difficult to achieve, given the exclusion of national parliaments, the European Parliament, unions, and social movements from the NEG (and even more so the post-Covid NEG) policymaking process. NEG’s technocratic and country-specific design makes it indeed very difficult for unions and social movements to politicise its prescriptions in a transnational political sphere through collective action that can shift the balance of power in their favour (Erne, Reference Erne2015).

At the same time, unions and social movements should politicise the NEG regime as a whole. The looming threat of EU executives re-enacting the full constraints of the Stability and Growth Pact in 2024 and the Commission’s April 2022 proposal for a new packageFootnote ⁸ of EU laws governing the NEG regime represent important opportunities to do that, notably given the latter’s explicit goal to use greater leeway in terms of quantitative budgetary austerity as a tool to advance qualitative structural reforms. This will in turn substantially increase the capacity of national and EU executives to further enforce qualitative structural reforms, as has already happened in the case of the NEG prescriptions included in NRRPs and the corresponding CIDs analysed above.

This book offers a novel theoretical and methodological approach to understanding the EU’s new economic governance (NEG) regime in employment relations and public services (Chapters 2–5) and presents significant empirical findings (Chapters 6–13) that are crucial for understanding the prospects of the EU integration process, social justice, and democracy in Europe. The book makes three major analytical contributions.

First, we argue that to understand EU policies in employment relations and public services, we need to consider the actions not solely of EU institutional actors but also of trade unions and social movements (Chapter 3). In looking at EU executives’ NEG interventions in employment and social policy areas from the perspective of labour politics, the book upscales insights on the historical role that trade unions and social movements have played in the development of democracy and social welfare states at national level, in order to shed light on corresponding processes at the supranational level of the EU polity. Our approach thus goes beyond the institutionalist studies of EU policymaking that focus their attention on institutional actors operating in national capitals and Brussels’ EU quarter. Equally, our focus on collective action in the field of labour politics complements the EU politicisation studies that focus on media debates, opinion polls, and elections and referendums. This is vital, as social justice and the democratisation of the EU polity requires transnational collective action by social actors, including trade unions and social movements (Erne, Reference Erne2008).

Second, we show that the introduction of the EU’s NEG regime represents a crucial shift in the dominant mode of EU integration (Chapter 2), namely, from a market-driven mode of horizontal integration to a much more political mode of vertical integration (Chapter 3). This shift echoes the resurgence of a much more political form of capital accumulation across the globe, in which capitalists’ rate of return increasingly hinges on political power (Harvey, Reference Harvey2004; Crouch, Reference Crouch2016; Durand, Reference Durand2020; Riley and Brenner, Reference Riley and Brenner2022). In Europe, this shift became very visible after the financial crisis of 2008 when European business and political leaders realised that the single market and monetary union did not lead to the desired market-driven convergence of national economic, employment relations, and social policies but to threatening macroeconomic imbalances. To insure the ‘proper functioning’ of the EU’s economic and monetary union (Art. 2, Regulation No 1176/2011), its leaders consequently started a ‘silent revolution’ from above (Barroso cited in ANSA, 2010) that involved a significant upscaling of employment and social policymaking powers from national to EU level and the deployment of commodifying policy prescriptions, thereby further increasing social inequality and the EU’s democratic deficit.

EU executives combined the shift to a supranational NEG regime of policy formation with a country-specific deployment of NEG prescriptions. Their NEG interventions thus offer contradictory possibilities for initiating countervailing trade union and social-movement action. The supranational location of the interventions’ origin provides labour across countries with common targets. However, the country-specific deployment of the interventions, which mimics the governance modes of transnational corporations in relation to their subsidiaries, risks fragmenting collective action along national divides. Moreover, the shift from a horizontal to a vertical mode of EU integration has sapped the assumed autonomy of national labour and social policymaking institutions, rendering the methodological nationalism of the varieties of capitalism literature anachronistic (Chapter 3). We have therefore developed a novel comparative research design that can capture both the supranational formulation of NEG policies and the uneven deployment of NEG prescriptions across countries, years, areas, and sectors, as well as their uneven coercive power (Chapter 5).

Third, we argue that the key dimension of the policy orientation of NEG prescriptions in employment and social policy areas is commodification (Chapter 4). Given the historical role played by trade unions and social movements in the extension of social rights through the decommodification of employment relations and public services, commodification captures the fundamental stakes of labour movements in EU executives’ NEG interventions in these policy areas (Chapter 3). Our focus on commodification also mirrors the fact that public services provision itself has become a key site of capital accumulation. Moreover, we distinguish between the qualitative and the quantitative dimensions of commodification to map the deployment and intertwining of curtailment (austerity) and marketisation (structural adjustment) in NEG prescriptions on employment relations and public services. This conceptual framework allowed us to overcome the methodological difficulties encountered by studies that selected other policy orientation dimensions (Chapter 4). This is important, as earlier studies’ implicit focus on the quantitative aspects of NEG, whether in terms of social investment or austerity measures, made it difficult for them to capture the relevance of the structural changes stipulated by EU executives’ NEG prescriptions, which, unlike their quantitative counterpart, are more difficult to reverse.

The book also makes three major empirical contributions. First, our research has revealed that the EU executives’ NEG prescriptions are informed by an overarching commodification script, across the two areas (employment relations and public services), three sectors (transport, water, and healthcare), four countries (Germany, Italy, Ireland, and Romania), and eleven years (2009 to 2019) under consideration (Chapters 6–10). We have shown that commodifying NEG prescriptions mirrored an overarching commodification script not simply and solely because the commodifying prescriptions were more numerous than the decommodifying ones but also because the logic of their deployment was one of advancing commodification in the areas, sectors, and countries that, up to 2008, lagged behind others in terms of commodification. This makes NEG a mechanism of reversed differentiated integration (Chapters 3 and 11). The NEG regime enabled EU executives to issue a battery of prescriptions with significant coercive power in quantitative (curtailment) and qualitative (marketisation) terms, depending on the receiving countries’ location in the uneven NEG enforcement regime. From the mid-2010s onwards however, their coercive power decreased, given the gradual recovery of European economies from the 2008 financial crisis. The number of commodifying quantitative NEG prescriptions also decreased, echoing a shift of EU executives’ preferences in favour of a new policy mix blending qualitative marketising structural reforms with greater public investments. Our analysis shows that the latter did not amount to an alternative, decommodifying policy script that would vindicate those that saw a socialisation of the NEG regime. Rather, decommodifying prescriptions on investment were subordinated to the dominant commodification script, as most of them were semantically linked to commodifying policy rationales and had only a weak coercive power (Chapters 6–10, see Chapter 11 for a detailed comparative analysis).

Second, the book shows that NEG’s commodifying script unleashed a plethora of countermovements, namely, in the public services that had been exposed to commodifying NEG prescriptions more consistently across countries. Unions and social movements politicised economic governance interventions not only at national and local level but also transnationally, as evidenced by the findings of our transnational socioeconomic protest database (Chapters 6–11). Unions and social movements framed their protests with reference to transnational political divides along the commodification–decommodification axis, rather than to divides along a national versus EU politics axis; for example, in the successful Right2Water European Citizens’ Initiative (Chapter 9) or the yearly ‘Our health is not for sale’ European action days (Chapter 10). Despite these countermovements, EU executives maintained their course: from the mid-2010s on, they indeed softened the commodifying bent of their quantitative NEG prescriptions – but only to better keep the focus on commodifying structural reforms. Concretely, EU executives shifted the direction of quantitative prescriptions in public services from austerity to greater investments but limited the decommodifying potential of this shift by confining investment prescriptions to what they viewed as ‘productive’ public services (transport and water), by articulating such investment prescriptions with policy rationales compatible with the overarching commodification script that they pursued in NEG, and by ensuring that the sparse prescriptions with a truly decommodifying potential had only weak coercive power. In employment relations, the European Commission and Council agreed to open discussions on new EU instruments to secure stronger social pillars for the EU integration process, but until 2019 they kept their advancement at a snail’s pace. Already at this stage, however, the UK’s Brexit vote raised the spectre of responses to commodifying EU interventions taking a nationalist turn, which would ultimately mean the EU’s implosion.

Finally, we show that, when the Covid-19 pandemic hit Europe, EU executives changed direction. With the suspension of the Stability and Growth Pact (SGP) in 2020 and the establishment of the Recovery and Resilience Facility (RRF) in 2021, they sought to mitigate this new crisis with an injection of public EU money also in areas that had not benefitted from their pre-Covid NEG prescriptions for more public investments, including healthcare. At the same time, EU leaders made the receipt of RRF funding conditional on the implementation of their NEG prescriptions, regardless of their unequal legal basis and the receiving country’s location in NEG’s policy enforcement regime. EU executives thus replaced, at least for the time being, the financial sanctioning mechanisms of the SGP with the threat of withholding RRF funding in the event of non-compliance with their NEG prescriptions (Chapter 12). As the amount of RRF funding at stake is substantial in many member states, the coercive power of post-Covid NEG prescriptions has increased further.

In employment relations, EU executives did not use the increased leverage of their post-Covid NEG prescriptions to demand commodifying reforms (Chapter 13). A telling example is the following. Whereas in 2011 they tasked the Romanian government to abolish intersectoral social dialogue and to decentralise multi-employer collective bargaining, in 2022 they prescribed a decommodifying reform of the 2011 Romanian labour law, which led in December 2022 to the adoption of a new law that restored trade union rights and intersectoral and sectoral collective bargaining. This policy shift mirrors continued union pressures, growing worries among EU executives about popular support for the EU integration project, and a more positive assessment of multi-employer bargaining by factions of organised capital (Chapter 13). EU executives’ volte-face in this policy area also led to a resurgence of decommodifying EU laws, starting with the adoption of the EU directive on adequate minimum wages in 2022. By contrast, the post-Covid policy orientation of the NEG regime in public services has not changed so much. Given the institutional setup of the post-Covid NEG regime (Chapter 12), EU executives’ continued insistence on public services marketisation through EU laws and NEG prescriptions (Chapter 13), and the legacy of decades-long marketising public sector reforms, it is highly likely that the massive RRF funding will boost private rather than public service providers.

The shift to NEG has posed direct threats to European democracy ever since its introduction in the wake of the 2008 financial crisis. Its technocratic governance design eschewed citizens’ and workers’ political rights to have a say in policymaking; and the commodifying bent of its prescriptions importantly eroded their social rights to be protected from the vagaries of the market. After the pandemic, the technocratic bent in the EU’s economic governance nonetheless endured, as the National Recovery and Resilience Plans, which are the key documents for unlocking RRF funding, were co-designed by national and EU executives, without any meaningful input from trade unions and social movements and without the possibility of national parliaments and the European Parliament making any amendments. The commodifying direction of the post-Covid NEG regime also endured, albeit with some concessions, most notably in employment relations. In the last decades, EU executives embraced commodification; more recently though, they have had to face the prospect that the hollowing out of social rights, that resulted from commodification, is pushing important sections of electorates towards eurosceptic parties.

In the current unstable context, labour politics matters a lot. Trade unions and social movements are essential in framing the social and political struggles about the policy direction of EU economic governance along a commodification–decommodification axis, rather than a national–EU politics axis. Future research based on our transnational – but also context-specific – analytical approach on the role of labour politics in the next iteration of the EU’s NEG regime is thus not only of academic interest but also of upmost importance for the future of the EU integration process and the prospects of democracy in Europe.