The Issue of Social ‘Dumping’
Regional integration such as the development of the European Union (EU) has brought significant implications for industrial relations.65 In the Treaty of Rome (1957), some consideration was given to social policy issues related to the creation of the European Community. In the EU, the terms ‘social policy’ or ‘social dimension’ are used to cover a number of issues including in particular labor law and working conditions, aspects of employment and vocational training, social security and pensions. There have been a number of significant developments in EU social policy over the past four decades. The Social Charter of the Council of Europe came into effect in 1965. In 1987, the major objective of the implementation of the Single European Act was to establish the Single European Market (SEM) on 31 December 1992, in order to enhance the free movement of goods, money and people within the SEM. The social dimension aims to achieve a large labor market by eliminating the barriers that restrict the freedom of movement and the right of domicile within the SEM. The European Community Charter of the Fundamental Social Rights of Workers (often referred to simply as the Social Charter) was introduced in 1989, and has guided the development of social policy in the 1990s.66 Naturally, the social dimension has been the subject of much debate: proponents defend the social dimension as a means of achieving social justice and equal treatment for EU citizens, while critics see it as a kind of ‘social engineering’.67
The current treaty for the EU is the Treaty of Lisbon which came into force in December 2009.68 The Treaty of Lisbon guarantees the enforcement of a Charter of Fundamental Rights that covers civil, political, economic and social rights, which are legally binding not only on the EU and its institutions, but also on the member states as regards the implementation of EU law. It also reaffirms important steps to outlaw discrimination on the grounds of gender, race and color and mentions social rights applied within companies, e.g. workers' rights to be informed, to negotiate and take collective action – in other words, the right to strike. The European Commission
The Issue of Social ‘Dumping’
One of the early concerns related to the formation of the European Union was its impact on jobs. There was alarm that those member states that have relatively low social security costs would have a competitive edge and that firms would locate in those member states that have lower labor costs. The counter-alarm was that states with low-cost labor would have to increase their labor costs, to the detriment of their competitiveness. There are two industrial relations issues here: the movement of work from one region to another and its effect on employment levels; and the need for trade union solidarity to prevent workers in one region from accepting pay cuts to attract investment, at the expense of workers in another region.
With the expansion of the EU in 2004 to include ten new members (most relatively low-income states, some of whom are still working to overcome the heritage of state socialist economic systems and limited recent experience with parliamentary democracy) there has been an increased sensitivity to the problem of social dumping .70 This is particularly so since the global financial crisis in 2009. An internet search using the term ‘social dumping’ will turn up webpages reflecting concerns from multiple perspectives – trade union, societal and business. We examine these multiple perspectives in the next section of this chapter where we look at the issue of monitoring global HR practices.