EMU and the Shift in the European Labour Law Agenda: From ‘Social Policy’ to ‘Employment Policy’

This article examines the interaction between EMU and the European Union (EU) employment strategy and its implications for law. It focuses on the importance of EMU as a catalyst in the development of the EU's social and employment policy in the years following the Treaty on European Union in 1992, up to the inauguration of a new employment policy in the Treaty of Amsterdam. In analysing the EU's discourse on labour market regulation, it is arguable that a shift has occurred in the EU's position on the ‘labour market flexibility’ debate: that the EU institutions are more readily accepting of the orthodoxy that labour market regulation and labour market institutions are a major cause of unemployment within EU countries and that a deregulatory approach, which emphasises greater ‘flexibility’ in labour markets, is the key to solving Europe's unemployment ills, along with macroeconomic stability, restrictive fiscal policy and wage restraint. As the EU's employment strategy has matured, this increased emphasis on employment policy has come to displace discourses around social policy. This change in emphasis has important implications for EMU since it signals a re‐orientation from an approach to labour market regulation which had as its core a strong concept of employment protection and high labour standards, to an approach which prioritises employment creation, and minimises the role of social policy, since social policy is seen as potentially increasing the regulatory burden.