In March 1990, Lithuania became the first republic to break away from the Soviet Union. One by one, the Soviet republics, as well as other states behind the Iron Curtain, declared their independence. As the Soviet Union dissolved, the countries of Eastern and Central Europe (CEEC) turned westward. Over the following decade, these states increasingly joined Western organizations, such as NATO and the EU. The culmination was two successive waves of EU enlargement, increasing the number of EU Member States from 15 to 27. The CEEC all share a legacy of centrally planned economies and non-democratic political systems. The path to EU membership was far more demanding for these countries – and hence institutional change was also more far reaching – than during previous rounds of enlargement. Furthermore, the speed of adjustment was rapid. The period between the dissolution of the Soviet Union and accession to the EU took little more than a decade. Among the new Member States are the Baltics: Estonia, Latvia, and

Lithuania. These were the only states among the other CEEC that were fully integrated into the Soviet Union. Besides the economic and political transition experienced by all the CEEC, the Baltic states had to either heavily transform – or even create – their entire state apparatus, including governmental, legislative, and administrative bodies. These circumstances left the Baltic states with the paramount challenge of meeting the political, economic, and administrative requirements laid down by the Copenhagen Criteria, but also with a potentially greater openness to external influence in terms of

policy, administrative structures, and organizational practices. In this chapter, we will look at the EU’s influence on labour market and employment policy in the Baltics. The EU exerts its influence on national public administrations through a

variety of channels. The most prominent is perhaps the nearly 100,000 pages of the acquis communautaire. Member States must also have the ability and resources to transpose, implement, and monitor the entire body of EU legislation. Throughout accession, the European Commission stressed the need for all areas of public administrations to be ready for full membership after May 2004, and the EU was an active player in national administrative reform. Another channel of influence is the Structural Funds, which provide financial resources aimed at reducing regional economic and social disparities within the EU. However, not all mechanisms of EU influence are as obvious or as direct as

hard law and the financial incentives of the Structural Funds. The acquis includes both hard legislation and soft rules and guidelines, which are often accompanied by monitoring and assessment mechanisms. In this study, we examine labour market and employment policy, where coordination is achieved primarily through soft law. How have the Baltic states responded to the EU’s political ambitions and governance activities in this field? We study Europeanization by looking at changes in 1) organizational structures and 2) policymaking procedures and practices. In conclusion, we discuss the relative importance of different Europeanization mechanisms in this field, as well as in the post-socialist context more generally. Examining the impact of the EU on public administrations and policy-making practices is particularly interesting in the case of the Baltic states, since the entire employment policy field in these countries was created after 1989. The study is based on official policy documents and interviews with some

60 national experts, including ministry officials, staff at local and national implementing agencies, social partners, foreign policy advisors, and domestic researchers. We also interviewed the country desk officers for Lithuania and Estonia at DG Employment in the European Commission. The interviews in Latvia were conducted in June 2003 and June 2004; the interviews in Lithuania in March and April 2004 and June 2005; and the interviews in Estonia in May 2004 and May 2005.2

While there is a well-established body of literature on the Europeanization of the 15 ‘old’ Member States (e.g. Knill and Lehmkuhl 1999; Radaelli 2003; Cowles et al. 2001), attention has recently turned to the new accession countries. For example, Grabbe identifies five mechanisms of Europeanization in Eastern Europe: models, money, benchmarking and monitoring, advice and twinning, and gate-keeping (Grabbe 2003: 312). These mechanisms have played a part in interactions between the EU and the old Member States, but they seem to

have been even more important in the last two enlargements. In particular, power asymmetry has been a significant mediating factor between the EU and the CEEC during accession. Membership conditionality, in combination with the CEECs’ strong motivation to become members, has led to power asymmetry. Comparative studies have consequently found more homogeneous outcomes of Europeanization in the newmembers than in the EU-15 (Schimmelfennig and Sedelmeier 2005; Grabbe 2003). These studies suggest two possible explanations for more uniform outcomes in the CEEC: 1) strong accession conditionality; and 2) the double burden of political and economic transformation, which reduced institutional inertia and increased openness to external influences. Thus, the effects of Europeanization on the CEEC are likely to be much

greater across all policy sectors, even in areas with ‘soft’ EU influence. In the case of the European Employment Strategy (EES), conditionality is likely to have affected employment policy adjustment in the Baltics, since the strategy was institutionalized long before their accession. In addition, they had little input into the development of the strategy. The special relationship with the EU resulting from membership conditionality, coupled with the fact that employment is a very new policy field, provides a solid basis for studying Europeanization of labour market policy in the new Member States. Although the EES has a constitutional basis through the Employment

Chapter of the Amsterdam Treaty, the common EU objectives are a form of soft law. This type of soft governance (Jacobsson 2004a, 2004b) gives considerable leeway for national policy makers to make their own decisions about how to adapt policy-making structures, procedures, and policies to EU demands. However, although there is no legal penalty to ensure implementation of EU objectives, the ‘hardness’ of the strategy increases when we consider its close connection to the European Social Fund (ESF), which provides strong economic incentive for developing policies in line with EU objectives (Hartwig 2007). This is even more apparent in the new Member States, which are more dependent on EU resources to achieve national goals. For the new Member States, employment and social policy were covered by

Chapter 13 of the acquis communautaire. This includes areas where there is binding legislation, such as health and safety at work, labour law, and equal treatment of men and women. However, employment falls under the ‘soft acquis’, where no formal legal compliance is required but where there is nonetheless strong pressure to meet EU standards. Progress on meeting the obligations of Chapter 13 was monitored by the European Commission in its Regular Reports. Moreover, great emphasis during accession was placed on the new Member States’ ability to manage and absorb the Structural Funds. Special PHARE programmes prepared the public administration for the ESF prior to accession. Other PHARE programmes included projects to foster the development of internet technology, capacity building and preparation for implementation of the EES upon accession, and bipartite social dialogue. Collaborative twinning projects were also undertaken to help build up administrative capacity (Svensson 2007; Tulmets 2005).