Reconsidering the drivers of country-specific recommendations: The Commission's ideological preferences on wage policies
| Author | Joshua Cova |
| DOI | http://doi.org/10.1177/14651165221102696 |
| Published date | 01 December 2022 |
| Date | 01 December 2022 |
| Subject Matter | Articles |
Reconsidering the drivers
of country-specific
recommendations: The
Commission’s ideological
preferences on wage
policies
Joshua Cova
Hertie School, Berlin, Germany;
Department of Social Sciences, Humboldt University, Berlin, Germany
Abstract
As part of the European Semester, the European Commission issues country-specific
recommendations for all member states. I contribute to the literature on this political
instrument, by considering the determinants of recommendations calling for greater
wage moderation and enhanced cost competitiveness. For the most part, research on
European economic governance has either understood the European Commission as
a politicized and ‘ideological’institution or as a de-politicized, technocratic actor.
My analysis shows that the European Commission’s ideological preferences on labour
markets and wage bargaining institutions are more convincing predictors than explana-
tions based on economic indicators. By testing a series of multilevel models, I find that
irrespective of developments in competitiveness, countries with stronger social actors
are more likely to be recipients of country-specific recommendations calling for wage
restraint.
Keywords
Country-specific recommendations, European Commission, European Semester,
wage‐setting
Corresponding author:
Joshua Cova, Department of Social Sciences, Humboldt University, Luisenstr. 56, Berlin, 10117, Germany.
Email: j.cova@phd.hertie-school.org
Article
European Union Politics
2022, Vol. 23(4) 639–661
© The Author(s) 2022
Article reuse guidelines:
sagepub.com/journals-permissions
DOI: 10.1177/14651165221102696
journals.sagepub.com/home/eup
Introduction
The global financial crisis (GFC) and the Eurozone crisis have significantly enhanced the
role of European Union (EU) institutions in the regulation of member states’labour
markets. In the absence of currency devaluations, recommendations on labour market
policies have acquired a particular importance for Eurozone states. In fact, labour
market reforms leading to greater wage moderation are a key tool to improve countries’
competitiveness indicators. Moreover, as policymakers have often understood the
Eurozone crisis as a competitiveness crisis, wage and labour costs developments have
become important macroeconomic variables to monitor in the context of a more inte-
grated European policy cycle.
This article examines the European Commission’s (henceforth ‘Commission’) prefer-
ences on labour market policies by focusing on one instrument in particular, which is
country-specific recommendations (CSRs): a yearly set of member state-specific policy
recommendations monitoring member states’policies in a wide variety of different
areas. By doing so, I seek to make two contributions: one on the economic, political
and institutional determinants of CSRs and the other on the preference formation of
the Commission in the context of the new European economic governance and the
increasingly important role this institution plays in member states’labour markets.
Existing literature on the post-crisis’EU economic governance has identified two dom-
inant strands of preference formation for the Commission: the first conceives the
Commission as a de-politicized and technocratic institution implementing a rules-based
system, the second instead considers the Commission as a politicized actor, whose
recommendations are informed by a set of ideological preferences (Van der Veer and
Haverland, 2019). While the dichotomy between these research strands has animated
investigations on the Commission’s labour market policy preferences (Bokhorst, 2022;
Schulten and Müller, 2015; Syrovatka, 2021b), an empirical investigation on the determi-
nants of the Commission’s recommendations on wage policies has thus far been missing.
In this article, I show that the analysis of wage policies constitutes an important area of
research for EU studies. As laid out in the Five Presidents’Report (Juncker et al., 2015),
the need for a greater coordination on wage developments and competitiveness indicators
has been found to be an important steppingstone in completing Europe’s Economic and
Monetary Union (EMU) and ensuring greater synchronicity between member states’
labour markets. Moreover, recent policy initiatives by the Commission on adequate com-
pensation for short-time work schemes, transparent working conditions and ‘fair’
minimum wages are indicative of the institution’s growing interventionism in member
states’labour markets and industrial relations. Finally, as in the years 2011–2019, calls
for wage restraint and enhanced cost competitiveness have featured in 30% of all
CSRs. This is clearly a policy area in which the Commission has been particularly active.
This article explores the question of whether CSRs on wage policies are more likely to
occur in the presence of an economic downturn and when productivity indicators fall
behind wage growth or whether, on the contrary, CSRs are more likely to be predicated
upon institutional labour market characteristics. My findings show that the Commission
is more likely to recommend reforms in wage policies in member states where social
640 European Union Politics 23(4)
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