EMU, EU enlargement, and the European Social Model: Trends, challenges, and questions

The paper discusses the possible implications of the challenges facing the 'European Social Model' (ESM) caused by the European Monetary Union (EMU) and the enlargement of the EU to include central and eastern European countries. The strains produced by the two challenges on the European welfare states and industrial relation systems are regarded as considerable, adding to the wide variety of country-specific solutions and leading to increased inequality both across and within member countries. However, there are no signs indicating that the two challenges lead to the abolition of welfare standards, despite the need for 'recalibration,' or that labor market institutions are being dismantled. On the contrary, the need to search for viable alternatives to the status quo appears to strengthen attempts to improve the long-term sustainability of welfare states and to improve the performance of established labor market institutions. Moreover, the challenges foster new European policy approaches like the 'open coordination' mechanism.