One of the EU’s goals is to establish a social-market economy aiming at full employment and social progress. This is laid down in Article 3 of the Treaty on European Union (TEU). In other words, the EU aims to improve the living and working conditions of its citizens through its European social policies. These aspirations are complemented by provisions in the EU’s Charter of Fundamental Rights. They grant EU citizens the right to invoke the fundamental social rights laid down in the Charter of Fundamental Rights vis-à-vis the EU. Examples of these rights are workers’ rights, social security and the inclusion of persons with disabilities. They are listed in Articles 26 - 35 of the Fundamental Rights Charter.
To make these social-policy goals a reality at the European level, the EU undertakes its own social-policy initiatives. However, due to the principle of subsidiarity, the EU can only become active on issues which the Member States cannot effectively tackle alone. This means that in the field of social policy, the EU has significantly fewer powers than in other policy areas such as agricultural policy. Article 4 (2) of the Treaty on the Functioning of the European Union (TFEU) describes this division of powers as shared competence of the EU and the Member States for social policy. In concrete terms this means that the EU can advance EU-wide harmonisation on many labour-law issues. This is set out in Articles 153 - 157 TFEU. However, the EU does not have the competence to define the basic features of social legislation. Rather this is the domain of the individual EU Member States. In accordance with Article 153 (5) TFEU questions of pay, the right of association, the right to strike and the right to impose lock-outs are also exclusively the domain of national legislators.
In addition to the adoption of legislation, tools for shaping European social policies are cooperation between Member States, measures designed to encourage cooperation between Member States (Articles 153 (2) and 156 TFEU) and the social dialogue at the EU level enshrined in Articles 154 and 155 TFEU.
National and European social policies are often closely intertwined with economic and fiscal policies. Social-policy decisions for example influence economic activity and public budgets, but at the same time macro-economic developments impact social protection systems. For this reason, European social policies are closely interwoven with the European Single Market. The Single Market in turn must be further developed both economically and socially so that the people living in the EU Member States can draw maximum benefit from it. European social policies for their part must ensure that economic progress and success do not lead to a lowering of social standards. Competition and a strong economic performance should also have a positive impact on social-policy leverage.